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news you can trust I **wednesDAY 24 april 2019 I vol. 15, no 295 I N300

Buhari inaugurates Lagos Airport Road, Ayinke House today JOSHUA BASSEY ome key projects undertaken by the outgoing administration of Governor Akinwunmi Ambode of Lagos State are listed for inauguration today as President Buhari Muhammadu Buhari arrives the state on a one-day official working visit. The visit is President Buhari’s first to any state since winning the February 23, 2019 presidential election. The president is expected to touch down the presidential wing of the Murtala Mohammed

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Olam stirs competition with N130bn offer for Dangote Flour Mills O

ODINAKA ANUDU, BALA AUGIE, OLUFIKAYO OWOEYE & GBEMI FAMINU

lam has offered N130 billion to acquire Dangote Flour Mills, Nigeria’s third-largest miller by market capacity, in a deal that could transform the

Singaporean company into the biggest flour player in Africa’s biggest economy, with 43 percent market share. Flour Mills of Nigeria (FMN) has remained the market leader over the years with a 32 percent share, with Olam squaring 24 percent, and Dangote Flour having 19 percent share. Chagoury

Group (11 percent) and Honeywell (10 percent) come fourth and fifth in market ranking, while others share the remaining about 4 percent, according to a 2016 research report by KPMG on Nigeria’s flour milling industry. But a potential 43 percent (24 plus 19) market share by capacity is in the offing when the deal

between Olam and Dangote is completed. “I think it is a business strategy by Dangote,” Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said in a telephone interview. “I suspect Dangote wants to Continues on page 34

WATCH OUT FOR SPECIAL REPORT ON AMBODE’S TENURE – MONDAY International Airport (MMIA), Lagos, by 9.30am where a brief reception will be held in his honour, before proceeding to the tasks of the day. Continues on page 34

Inside Fidelity on course to be among Nigeria’s tier-1 banks by 2022, says CEO P. 2

Tony Elumelu(r), chairman, United Bank for Africa plc, with Kennedy Uzoka, group managing director/CEO, at the 57th annual general meeting of the bank in Lagos, yesterday.

Wednesday 24 April 2019

BUSINESS DAY

NEWS Fidelity on course to be among Nigeria’s tier-1 banks by 2022, says CEO MICHAEL ANI

L-R: Osa Owieadolor, MD, Platform Petroleum; Dumo Lulu-Briggs, chairman, Platform Petroleum; Bashiru Idowu, representing MD, Newcross Petroleum, and Pulak Sen, MD, Power Gas Ebedei Limited, after the signing of the Novation Gas Sales and Purchase Agreement between Platform/Newcross JV and Power Gas Ebedei Limited in Lagos.

ith key financial ratios staying comfortably within regulatory threshold, Fidelity Bank is very much on track to joining the league of tier-1 banks by 2022, the lender said. By keeping an eye closely on Capital Adequacy Ratio (CAR), capital base and on the quality of loans to customers, the bank says it will achieve the target enshrined in its five-year strategic plan which would be driven mainly by organic growth. “We have been able to drive our strategies to a point where the numbers are making us feel that we are doing things rightly even though we are yet to get to where we are going,”

Nnamdi Okonkwo, the bank’s CEO, said, noting that the bank is somewhat around 44 percent implementation of the plan. In full year 2018, Fidelity Bank sustained an impressive performance trajectory in its key financial ratios. The bank saw a 0.7 percent increase in its CAR from 16 percent to 16.7 percent. This represents a 1.7 percent improvement when compared with the 15 percent minimum threshold of the Central Bank. Similarly, non-performing loans (NPL) for the bank declined by 0.7 percent to 5.7 percent in 2018, from 6.4 percent in the previous year. Liquidity ratio also improved 3.1 percent to 3.9 percent, from 35.9 percent in 2017. Okonkwo noted that keep-

Continues on page 34

Nigerian least paid worker needs N41,327 Communication blackout looms as NCAA threatens shutdown of 7,000 telecom masts to maintain 2011’s purchasing power OLUWASEGUN OLAKOYENIKAN

or Nigerian lowest paid worker to purchase, in March 2019, the same amount of goods and services bought in August 2011, the employee would need to earn at least N41,327.88 monthly, BusinessDay calculations have shown. Nigerians heaved a sigh of relief when President Muhammadu Buhari signed the new National Minimum Wage Bill of N30,000 into law. However, although the N30,000 new minimum wage represents an increase of 67 percent from the previous N18,000, its real value remains lower compared to the N18,000 when the amount was approved in 2011. As a result, Nigerian workers would not be able to purchase more goods and ser-

vices today compared to the last time the national wage was hiked, no thanks to inflation that is fast diminishing the value of the workers’ pay and their purchasing power. In August 2011, the President Goodluck Jonathan-led Federal Government agreed to pay a new minimum wage of N18,000 in nominal terms. At that time, the Consumer Price Index (CPI), which measures the composite changes in the prices of consumer goods and services purchased by households over a period, was 122.3. If the effect of inflation was taken into consideration by dividing the nominal minimum wage by the CPI for the period and multiplying all by 100, the real income of Nigerian lowest paid worker, as at August 2011, would be N14,717.91. The amount continued

to fall as the nation’s CPI, a measure of inflation rate, sustained its upward trend over the years on a monthly basis. Eight years after, figures obtained from the National Bureau of Statistics (NBS) show the CPI rose more than double to 280.8 as at March 2019, plunging the worth of Nigeria’s N18,000 minimum wage to N6,410.26 in real terms. But with the recent national wage hike, the inflationadjusted value of the nation’s new minimum wage was bolstered to N10,683.76. This shows that to maintain the August 2011 purchasing power despite the impact of high inflation, Nigerian lowest paid employee is expected to earn N41,327.88. The amount, which indicates the real value of August 2011’s N18,000 in March 2019, was obtained by dividing the previous nominal wage by

the corresponding CPI and multiplying all by the current month’s CPI figure. Similarly, the new N30,000 minimum wage is lower in value when compared to the previous N18,000 in dollar terms as at August 2011. Official exchange rate data obtained from the Central Bank of Nigeria (CBN) revealed that the average exchange rate of naira to the United States dollar in August 2011 was N150.2/USD, implying N18,000 was equivalent to $119.84. Nigeria’s currency, however, fell in value against the US dollar in March 2019 as the average exchange rate of naira to the dollar for the month depreciated to N305.92/USD. Going by this, the new minimum wage represents only $98, more than 18 percent lower than employees’ salaries in 2011.

NNPC’s bleeding pipelines cost Nigeria $295m in December DIPO OLADEHINDE

igeria lost a total of $295 million in December 2018 due to shut-in of production from leaking pipelines carrying crude oil from wells to flow stations in the Niger Delta, where more than 90 percent of the country’s crude is produced. The loss comes from 8.17 million barrels of crude oil that the Nigerian National Petroleum Corporation (NNPC) said in its December monthly report that it could not take to the market due to shut-in of pipelines in November. In Africa’s biggest oil pro-

ANALYSIS ducing country, petroleum and associated products are transported through extensive network of pipelines in the Niger Delta. They are usually susceptible to sabotage from militants who usually break the pipelines to illegally tap crude oil. But sources in the oil and gas industry also admit that most of the pipelines are old and hence easily susceptible to damage and leakages. The NNPC report revealed that in the month of December alone, pipelines leading to eight loading terminals for crude exports suffered major www.businessday.ng

leakages costing the country several millions of dollars in lost revenue. The NNPC monthly report for December showed production in the month was cut back by shut-down of Bonny terminal and Trans Ramos Pipeline due to leakages at the Odimodi area and planned maintenance at Okoloma and Imor facilities, respectively. “Production was also disrupted at Abo, Brass, Akpo, Qua Iboe, Usan, Tulja and Erha terminals due to maintenance, technical issues, flooding, leakages and system upgrade,” NNPC said. Combined production shut-in from all the eight ter-

minals in December was 5.1 million barrels worth, with a total value of US$295 million, using the average price of the international Brent crude, the benchmark for Nigerian crude oil which sold for an average price of $57.36 in December. A breakdown of the various shut-ins showed that 2,730,000 barrels worth $156 million were lost when the Akpo terminal was shut down for 26 days due to “full field maintenance”, while another 1,299,000 barrels were lost on Usan terminal due to “north loop pigging scheduled downtime and also for maintenance activity over

Continues on page 34

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JUMOKE AKIYODE-LAWANSON & IFEOMA OKEKE

f the Nigerian Civil Aviation Authority (NCAA) goes on to carry out its threat of shutting down 7,000 telecommunications masts in the country over Aviation Height Clearance, it may lead to communication blackout, according to stakeholders who spoke to BusinessDay on the matter. NCAA alleges that the telecommunications masts it plans to decommission were erected without Aviation Height Clearance(AHC)andthereforeconstitute a danger to safety of air navigation. It adds that it is, therefore, compelled to shut down those critical telecom infrastructures within 30 days after its letters to operators were ignored. The regulator said the maximum height of any mast erected is dependent on the topography of the area, which will be approved by it. It said this applies to all parts of the country, adding that an operator may not know the flying zone or hovering area and so have to follow due process. “A 30-day ultimatum has therefore been given to defaulting GSM providers in Nigeria to regularise their operations with NCAA forthwith. NCAA assures that if there is similarly no response, NCAA will immediately embark on mass decommissioning and demolition of all their masts and towers in Nigeria,” it said in a statement. But stakeholders say they are hoping that the NCAA does not take laws into its hands by going to decommission telecom infrastructure near the airport because if it does so, it is going to jeopardise communication around the airport. “Travellers can’t make calls. @Businessdayng

A lot of the aviation companies need communication for their ticketing, check-in and other controls. If they do so, there will be total communication blackout across the country and I think we need to forewarn that they should not do anything to jeopardise security and safety,” said Gbenga Adebayo, chairman, Association of Licensed Telecommunications Operators of Nigeria (ALTON). The telcos also say they had no prior issues with the authority pertaining to violation of air space laws. Responding to the NCAA ultimatum, Adebayo told BusinessDay that it came as news to operators as there was no way a mast would stand without approval from relevant authorities. “There is no way we could have erected a mast around flying spaces without permission or approval. Those infrastructures don’t grow overnight. Our understanding very clearly is that we would need AHC for masts and towers on the flight path,” Adebayo said. “We had a meeting where we were made to understand that the NCAA Act demands them to approve any height of masts because of low-flying aircraft but we argued that approval is to be done once because the masts don’t grow higher, so once it is cleared for erection, it is done, you don’t have to go every year again to renew because the height doesn’t change and this was part of the issues that we discussed with NCAA. “We didn’t have any case of dispute at all; no case of infraction was reported to us. There was issue of annual renewal that we spoke about and it ends at that,” he said.

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Whither the socialist spirit of the early church? Okechukwu Keshi Ukegbu

he early church was a perfect socialist setting. This was strongly exemplified in Acts 4:32-35 thus:” And the multitude of them that believed were of one heart and of one soul: neither said any of them that ought of the which he possessed was his own; but they had all things common. And with great power gave the apostles witness of the resurrection of of the Lord Jesus: and great grace was upon them all. Neither was there any among them that lacked :for as many as were possessors of lands or houses sold them, and brought the prices of the things that were sold, and led them down at the apostles’ feet: and distribution was made unto every man according as he had need “.

The question that agitates the minds is:” why has the spirit with which the early church operated, and that added members to them massively left the present church. Our present christian denominations have turned to centres of massive extortions with the leaders of the churches driving in choice cars and adorning designer’s clothes at the expense of poor members whose contributions are pooled to provide these luxuries but walk the streets in near rags. The “dog eat dog system” in which the philosophy of capitalism is anchored has found its fullest expression in the church, especially in Nigeria. Poor members contribute for projects such as building institutions of learning for the church but could not afford to send their wards to those institutions because their fees are at the high heavens and out of the reach of the poor members. No wonder the rush to be ministers of God. Every Dick and Tom and now called, negating the call for the five-fold ministries captured in Ephesians. The five-fold ministries are now refuge for those who have tried their hands in numerous ventures but have been haunted unabatedly by failure. There is strong emphasis on the prophetic ministry because that

is where the action is. These commercial ministers would be quick to condemn “Simon the Sorcerer” but their activities are more dangerous than that of Simon. They have thrown away the biblical injunction that God’s gift is neither bought or sold. If they doubt this, the following scripture presents a sound warning for them and those who patronise them:”Now for some time a man named Simon had practiced sorcery in the city and amazed all the people of Samaria. He boasted that he was someone great, and all the people, both high and low, gave him their attention and exclaimed, “This man is rightly called the Great Power of God.” They followed him because he had amazed them for a long time with his sorcery. But when they believed Philip as he proclaimed the good news of the kingdom of God and the name of Jesus Christ, they were baptized, both men and women. Simon himself believed and was baptized. And he followed Philip everywhere, astonished by the great signs and miracles he saw. When the apostles in Jerusalem heard that Samaria had accepted the word of God, they sent Peter and John to Samaria. When they arrived, they prayed for the new believers there that they might receive the Holy Spirit, because the Holy Spirit

‘

The “dog eat dog system” in which the philosophy of capitalism is anchored has found its fullest expression in the church, especially in Nigeria

had not yet come on any of them; they had simply been baptized in the name of the Lord Jesus. Then Peter and John placed their hands on them, and they received the Holy Spirit. When Simon saw that the Spirit was given at the laying on of the apostles’ hands, he offered them money 19 and said, “Give me also this ability so that everyone on whom I lay my hands may receive the Holy Spirit.” Peter answered: “May your money perish with you, because you thought you could buy the gift of God with money! You have no part or share in this ministry, because your heart is not right before God. Repent of this wickedness and pray to the Lord in the hope that he may forgive you for having such a thought in your heart. For I see that you are full of bitterness and captive to sin .”-Acts 8:9-23. Until the modern church refrains from these excessive capitalist tendencies and cater for the needs of the vulnerable among them, as admonished in James 1:27 :”Religion that is pure and undefiled before God, the Father, is this: to visit orphans and widows in their affliction, and to keep oneself unstained from the world,” the world will continue to be in disarray. The church has an onerous responsibility to provide an alternative in a decayed world.

Curbing the menace of kidnapping Bola Ajao

ccording to a Freedom House report, Nigeria recorded one of the highest rates of kidnapping in the world in 2013. Similarly, the US Department of State’s Country Reports on Human Rights Practices for 2013 indicates that kidnapping and related violence were “serious” problems in Nigeria. In Nigeria, kidnapping grew to become a national phenomenon courtesy the menacing activities of Niger Delta militants in 2006 that originally were campaigning against environmental degradation. The agitation, fear of the unknown and unending calls for the release of beloved ones escalated the demands of kidnappers and contributed in no small measures to the increasing rate of kidnapping cases. Often, family members of victims go through traumatic experience while some even lose their lives in the process of meeting the tough demands of the kidnappers. In some cases, ransoms were paid and captive unreleased while some were released dead or later recapture to make stiffer demands. The effect is more enormous on the victim, who may likely live with depression, everlasting fear and above all lost of trust in people which might likely lead to depression. Initially, the menace was limited to the oil servicing employees, particularly the expatriates within the southern axis of the country, where security and safety became a matter of negotiation. The dearth of loose money from the multinationals eventually made kidnappers shifted

attention on perceived rich individuals. So, the charade continues unchecked, bargaining continues and money continues to come in for the kidnappers and their powerful god fathers. In 2015, the world woke up to the dramatic turn in the method of kidnapping and abduction in Nigeria as Boko Haram members abducted 150 girls from Girls Secondary School, Chibok, Maiduguri. Naturally, global attention was focused on Nigeria for the safe return of the school children. Five years after, Nigerians are still waiting for the safe return of the remaining girls still held hostage by the abductors. It later became a frequent operation in the area as the Dapchi abduction in February, 2018, followed the pattern. Kidnapping has, no doubt, become a booming venture in our nation. This is partly as a result of security lapses, inability to sustain the integration system of amnesty beneficiaries properly into the system, lack of basic amenities, unemployment, corruption, fragrant flaunt of wealth by the rich and, perhaps, most importantly lack of transparency and accountability of stewardship by Public Office. Lack of political will on the part of government to implement capital punishment as enshrined in the constitution is also a strong factor in the upsurge of kidnapping in the country. Legally, kidnapping attracts life sentencing or jail terms between 10/30 years for convicted person, but even the famous reported case of Evans , the self-styled Lagos based kidnapping kingpin, is yet to be concluded months after the arrest. The result is that kidnappers have become more audacious in their approach to the business and more parts of the country are becoming highly prone to the menace. The business of kidnapping has become an unchecked menace, hitting deep into our system

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and causing havoc and agony with everlasting devastation and bitter taste in the mouth of victims and their families. Recently, eight States which include, Zamfara, Rivers, Lagos, Jigawa, Delta, Kogi, Bayelsa and Kaduna State were listed as places with the highest rate of kidnapping cases. In Lagos, kidnappers with swimming skill make use of the waterways to perpetrate their heinous crime. Riverine communities, thus, become a hidden place for these criminals who often mingle freely with unsuspecting natives. It has been revealed that criminals are harbored within the community for a give a way token or with threat of coming back for reprisal if their identity or existence is revealed. Some of the natives allegedly volunteer to carter for the hostages or source for intelligence for the kidnappers as a result of economic hardship and ignorance of the evil being perpetrated. Their method of operation varies. Sometimes, their targets could be very important personalities while they could also go after petty traders, peasant farmers and the likes. All is business in as much as their demands could be met. A top Public Official who was recently released from the den of kidnappers disclosed that the experience is better imagined than experienced as they were exposed to all sorts of torture, trauma and threats to life, if demands were unmet by family members. Eating became a privilege, marching through the forest unguided at night, transiting from base to base on unstable river, all these and many more looming dangers are what the victims are confronted with, all alone with deadly dangers away from the comfort of their homes. Like a tree, the perpetrator are branched, connected and well equipped with state of the art modern devices that make tracking cumbersome and are always a step ahead of the security

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in terms of professionalism, information gathering and management. Whether we like it or not some of the bad eggs in the security agencies are snitches that are planted and on the enemies’ pay roll that reveal and divulge vital information to the perpetrators for an agreeable fee. Collectively we can rid our country off this evil or reduce it to barest minimum. Since the evil agents have learnt how to work as a team, our security agencies and other vital stakeholders also need to operate as a team and give information that will ensure swift tracking and rescue of victims. Similarly, the police needs to build the confidence of the people in doling out information and need to have their eyes to the ground. Our country is bigger than all the evil doers and as such all hands must be on deck to curb this menace to ensure our nation is investors’ freely. As expected, no rational investor would put his money in an unsafe environment. So, kidnapping grossly undermines the country’s economic prospect. Not only this, it is an embarrassment to the image of the country. It doesn’t do our nation much good to have a demeaning global reputation of a haven of rogues and criminals. Many a times, these criminals have dealt in the most inhuman and callous ways with expatriates working, particularly in the oil industry as well as other sectors. This isn’t right as it does more havoc to the image our nation when it is seen as an unsafe place to transact business. Therefore, we all need to frontally confront this evil. It is a task for all of us. So, if you know something, please say some. This might save a life and bring succor to a family. God bless Nigeria. Ajao is of the Lagos State Ministry of Information and strategy, Alausa, Ikeja, Lagos

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comment IMF and the AMCON sunset debate

UCHE UWALEKE

hould the Asset Management Corporation of Nigeria be winding down pursuant to a sunset clause like the case of the National Asset Management Agency of Ireland after which it was originally patterned or should the AMCON Act be amended to accommodate an extension of its lifespan possibly in perpetuity similar to the case of the Korea Asset Management company? That is one burning issue in the country’s financial systems’ discourse regarding which the International Monetary Fund seems to have taken a position in support of the argument for the activation of the sunset clause. It will be recalled that AMCON was established in July 2010, following the signing into law of the AMCON Bill by the President, with the aim of reviving the financial system via the resolution of the non-performing loan assets of banks in Nigeria. Among the achievements listed on its website include the fact that the corporation ‘has acquired the Eligible Bank Assets (EBAs) or Nonperforming Loans (NPLs) of various Eligible Financial Institutions (EFIs) in three different phases/ tranches with the top five EFIs representing 58.18 per cent of all purchased EBAs’. Recently, the Minister of Finance, Mrs Zainab Ahmed, provided what appears to be an update of the activities of AMCON, while inaugurating its Board under the chairmanship of Mr Muiz

Banire, when she stated that as of the end of 2018 the corporation had been able to recover over N1trillion while its total debt obligation to the Central Bank of Nigeria was in excess of N5trillion. The Minister was quoted to have said that the corporation at inception ‘’acquired over 12,000 non-performing loans worth approximately N3.7 trillion from 22 commercial banks and injected N22trillion as financial accommodation to 10 banks. The direct impact of that action is seen in the protection of N3.66 trillion of depositors’ funds and about 14,000 jobs were saved’’. Against this backdrop, she asserted, the ‘corporation has made significant progress in its management of toxic assets in the financial sector’. This view is also shared by some who argue that AMCON has become an important institution in the Nigerian financial system considering the significant reduction in the NPLs of the banking system to nearly single digit compared to about 35 per cent in 2009. But the IMF seems to take a different view. At the end of the Fund’s Article IV consultation with Nigeria in March this year, the Executive Board of the IMF had, while applauding the decline in nonperforming loans and the improved prudential banking ratios, also noted that ‘restructured loans and undercapitalized banks continue to weigh on financial sector performance’. Consequently, the Board recommended, among others, the ‘establishment of a credible time bound recapitalization plan for weak banks and a timeline for phasing out the state backed asset management company AMCON’. This is not the first time that the Breton Woods Institution is making such recommendation. Following the conclusion of the 2012 Article IV Consultation with Nigeria, the IMF had also recommended the winding down of the operations of AMCON in order

to curb what the Directors described as ‘moral hazard and fiscal risks’. On the issue of moral hazard, it is contended by pro AMCONists that the challenge of a moral hazard is somewhat addressed by the punitive price at which AMCON purchases toxic assets from defaulting operators. In any case, AMCON is known to have discontinued the purchase of NPLs since December, 2012. Be that as it may, the concern about moral hazard should not be completely swept away. The recent call by the Managing Director/Chief Executive Officer of AMCON, Ahmed Kuru, for the federal government to revisit the Failed Bank Act seems to justify the fears expressed by the IMF concerning the need to curb moral hazards in the banking industry. Mr Kuru is reported to have not only made a strong case for the return of the Failed Bank Act, but also decried the resurgence of toxic loans in the banking sector noting that these days “credits are booked with impunity without any intention of paying back and there is the urgent need to revisit the failed bank act so that operatives become responsible for their actions’’. Even by AMCON’s own admission, it is near impossible for the bad bank to recover all loans by 2023 to 2024 when the corporation is expected to wind down. Mr Kuru underscores this fact when he admitted that ‘’even if you extend the life of AMCON for 20 years, it will not be able to recover all the loans’’. AMCON is said to be carrying a total portfolio of over 12,000 loans of various sizes and in different sectors that are still outstanding many years after the corporation was established despite outsourcing over 6,000 accounts of such portfolio to Asset Management Partners. In order to justify its going-concern status, AMCON should borrow a leaf from the Korea Asset Management

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‘

In order to justify its going-concern status, AMCON should borrow a leaf from the Korea Asset Management company (KAMCO) which has taken on new business models to complement its status as a perpetual restructuring institution or bad bank of Korea

company (KAMCO) which has taken on new business models to complement its status as a perpetual restructuring institution or bad bank of Korea. Besides the purchase and resolution of non-performing loans of financial institutions and implementing the restructuring plan of corporations, the company, established since 1962, also undertakes the agency business of the government such as the disposal of government-seized properties, management of state-owned properties and liquidation of corporate bodies taken over by the government. The corporation also performs the tasks of investigating the property of persons responsible for repayment of nonperforming bonds and debts as well as operates real estate-related trust businesses associated with companies subject to structural improvement. In addition, it conducts personal credit funding programs to help delinquent borrowers repair their credit standings. As a quasi-governmental entity, it is equally engaged in collection of overdue taxes. In the light of the IMF recommendation, what has become clear is that the Business Philosophy of AMCON which is to ‘acquire Eligible Bank Assets (EBAs) from Eligible Financial Institutions (EFIs) at a fair value and put these assets to economic use in a profitable manner’ is very narrow and needs to be broadened to accommodate new business models similar to the KAMCO example. To this end, the AMCON Act should be amended to enable a reorganization of the corporation to be able to handle new tasks besides its core mandate. This will bring to a logical end the longstanding debate on the sunset clause for the nation’s bad bank. Uche Uwaleke is a Professor of Capital Market and the Head of Banking & Finance department at the Nasarawa State University Keffi

LCCI and AMEN collaborate to clarify mining and metals export

BABATUNDE ALATISE

o much has been said about the solid minerals sector of the Nigerian economy as having the prospects of being a major contributor to the nation’s Gross Domestic Product (GDP). In fact, the Economic Recovery and Growth Plan (2017 to 2020) as set out by the federal government, projected that the minerals and metals sector will be one of the sectors that will drive Nigeria’s economic recovery. It is estimated that the sector’s contribution to GDP would grow from N103 billion (recorded in 2015) to N141 billion in 2020, at an average annual growth rate of 8.5%. According to the National Bureau of Statistics (NBS), the production of solid minerals in Nigeria hit 55.85 million tons in 2018 representing a growth rate of 22% in 2018, despite the fact that the mining and quarrying sector received the lowest credit from the banking sector to the private sector.

It must however be noted that this growth was achieved more in the quarrying segment where limestone, granite and laterite production grew and contributed more than 63.7% of the total solid minerals production in the country; limestone alone grew by 95% (27.1 million tons) in 2018 as against the 2017 production of 13.9 million tons. Most, if not all, of these productions were consumed in the infrastructure industry of the country. Growth of the high value and foreign exchange earning metals sector has remained rather very sluggish. Investments have been insignificant despite the quantum of proven and estimated reserves of various metals in the country. Some efforts have been made to sensitize investors on the potential of this sector, but these efforts seem not to have addressed the issues of presenting the sector as a veritable and robust business opportunity to investors. Presently local investment in the segment pales in value and volume in comparison with investments by foreign companies. There is a need to attract critical local investment to the sector in order to maximize the benefits of the industry to the nation. It is in the light of these gaps that the Lagos Chamber of Commerce and Industries (LCCI) and the Association of Metals

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Exporters of Nigeria (AMEN) are coming together to organize the first Nigeria Mining and Investment summit. The summit, which is a local initiative, is designed to take a practical look at mining and the ancillary businesses that make up the mining value chain. The summit will also view the sector from an investor’s perspective and would be bold enough to explore avenues of attracting investable equity funds and structured de-risked debt facilities to boost the sector. Some of the objectives of the summit include the identification and appraisal challenges in mining and metals exports in Nigeria, and a clear definition of the value chain in mining and metals exports in Nigeria. Further, the summit will attempt to appraise existing financing opportunities for mining and metals export in Nigeria, if any. More importantly, it will proffer practical and workable solutions to the challenges militating against mining and metals exports in Nigeria. One of the targets of the summit is the production of an investor’s guide in mining and mining business for investors and potential investors in the Nigerian mining sector. Stakeholders will also use the opportunity of the summit to review recent events in the Nigerian solid minerals sector, as they pertain to mining and metals

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exports. The event which is a two-day program that will run from the 23rd to the 24th of April 2019, is slated for the OPTS Hall, LCCI Conference and Exhibition Center, Plot 10A Nurudeen Olowopopo Way, Behind MKO Gardens, Ikeja, Lagos. The summit has been designed to offer local and international players in the industry an opportunity to meet and deliberate on the fortunes of the industry with a view to making Nigeria indeed an investor’s destination in mining and metals exports. Expected to be in attendance are key regulators of the industry, captains of industry, investors and budding investors in the sector, financiers, bankers and insurance companies and all critical players to the successful development of any business venture. Speakers at the event have been drawn from practitioners with hands on experience in the industry, providers of financial services, regulators and renowned business development consultants. The aim of the summit is to unravel all the mysteries surrounding mining and mining business in order to present it as an attractive business opportunity to the investing community. Otunba Alatise is the chairman, mining, solid mineral & allied services group of Lagos Chamber of Commerce and Industries (LCCI), Lagos.

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The road less travelled Character Matters with Daps

Dapo Akande

y dad, Pa Samuel Babafemi Akande who we lost 6 years ago at the grand old age of 91 was a great man. Not because he rose to the pinnacle of his chosen career to become a Permanent Secretary in the Federal Civil Service during the Yakubu Gowon and later, Murtala Mohammed years. Not even because he was largely responsible for the establishment of the National Youth Service Corp, which many can rightfully argue has passed it’s “sell by” date, but because during the course of his life he touched so many lives. Truth be told, the transient achievements seldom mean much to God as we’re all equal before him. I read in a Christian daily study manual just the other day something that really pressed this home for me and it said, “your name in heaven is not based on your fame on earth”. Deep down I think most of us know this but it’s often easy to forget. It would do our country a great deal of good if we could all remember this. Born in a rather remote Ekiti state village, Ipoti-Ekiti of late Colonel Ariyo and more recently Yinka Ayefele fame, I dare say he was the original grass to grace hero with no shoes. Sorry o President Jona. Despite this, my dad gave and gave and gave of himself until there was little left to give. I recall a story we heard that when he eventually became the proud owner of a pair of shoes it turned out to be a rather bitter-sweet experience for

him. Sweet, because finally, he no longer had to walk the streets barefoot but also tinged with a little sadness because of how bad he felt. Why? His best friend would still walk the dusty village streets barefoot. He remedied this the only way he felt he could. Whenever they were together he would give his friend one shoe while he wore the other. So the two friends would hit the town wearing one shoe each! As ludicrous as this sounds, that was the heart of the man. Always looking to make others happy and often moved to tears when he saw the anguish of the less fortunate. “I wondered why somebody didn’t do something. Then I realised, I am somebody.” - Lily Tomlin My siblings and I had many a feud with him for turning his home into a commune of sorts. At any given time there were no less than twenty people living under his roof. The highest recorded was twenty seven! People he sheltered, educated and fed day and night. I remember an evening in his room when his food was brought in and noticed there was only one piece of meat in it. I was horrified and quite annoyed but dad, stubborn Ekiti man as he was till the very end, insisted that he was okay with it. Little did I know he decided to cut back his intake so that the meat available would go round as things were a little austere at the time. He was giving. With time, we his children came to realise that being able to give and doing so was what made life worth living for him and if we truly wanted the best for him we should just allow him to live his life the way he deemed fit. “The generous will themselves be blessed, for they share their food with the poor” – Proverbs 22:9 We lost count of the number of people, relatives and otherwise who passed through that house. Nor can I even attempt to count how many people’s education he sponsored. Some we only

discovered when the beneficiaries told their story at his Service of Songs and Wake keep ceremonies. Many, I’m sure we will never know. I’m not ashamed to admit that we his children were incredulous when dad decided to send one of his long serving driver’s children to the prestigious Babcock High School and further on to Babcock University. We found it difficult to understand why he couldn’t just find a decent enough public school instead. As it happens, this brilliant girl passed out with a First Class in Accountancy. Yet another of Nigeria’s brightest who could have easily fallen through the cracks if it wasn’t for someone’s love inspired timely intervention. I became as proud of her and her remarkable achievement as if she was my own daughter. I was just as proud of my dad too who saw more wisdom in listening to the voice of God than that of man. “The true meaning of life is to plant trees, under whose shade you do not expect to sit.” Whatever it is you think you have or own, be it money, intellect, certain talents or skills, wasn’t given to benefit you alone. God gave them so you can be a blessing to humanity, to your neighbour. That’s what pleases God and that is good success. As should be expected of someone who lived as long as he did, daddy encountered his own fair share of tragedies. He tragically lost his eldest sister on a day of celebration, his wedding day. True to her stoic type, his mother betrayed no obvious sign of this unquantifiable loss in her disposition and kept mum about it for several days. A few decades later tragedy struck yet again when he lost his first wife, Esther to illness, just as his glorious career was taking off and they were about to start enjoying the joyous fruits of their labour. Some decades after that, he lost his second wife, Comfort too. The merciless hands of death were

‘

I wondered why somebody didn’t do something. Then I realised, I am somebody

not done yet as in his old age he lost his beloved first child Bola (Mrs Oyelese) and her amiable son, kunle, his grandson, just a few months apart. But you know what, he faithfully absorbed it all with his ever famous words, “that’s how God wants it”. A literal translation from Yoruba. His uncommon faith was his strength and it never let him down. It’s funny because whenever we found ourselves in the unenviable position of having to relate unpalatable news to him, we his children would strategise endlessly on how best to break the news, considering the possible repercussions due to his age. He surprised us every single time though without exception, as he always ended up being the one consoling us instead. I guess he had seen it all. More importantly however, his faith in God and His ultimate plans were simply never in doubt. On the 21st of April, 2013 we lost you Dad. At a grand old age of ninety one we were still not quite ready to let you go. I guess we were never going to be. Telling us with all assurance that you were set did little to comfort us. Lovingly yet sternly, you set out to instill virtue, character and compassion in us at a time when the society was very different to the one we now know. A world where such was still greatly valued. I will forever remain grateful for entrenching in me a deep resolve to do my own little bit to recreate that world of civility, integrity and decency that you painstakingly taught us to believe in. Especially for the sake of your grand children and great grand children. I for one believe the word that says one with God is a majority therefore if God is on our side we cannot but succeed. If not, well we would have done it the only way we know how. Pa SB, as you were so fondly called, sun re o. Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

Waiting for the next phase of restructuring move

Vincent Nwanma

uddenly, there is a lull in the vociferous demand for restructuring in Nigeria. A few months ago, the demand filled the airwaves and dotted the pages of newspapers. But do not mistake this for the end of the struggle. The clamour will not go away soon. It’s probably a case of tired dancers and resting drums. Soon, all will be up again and the game will resume. Demand for restructuring in Nigeria must be situated properly and the best way to view it is simply as a continuing process of building the country called Nigeria. Engineers say that in the world any structure that was not made by God is a product of engineering process. This should include nations, because nations, especially the nations of today, are products of economic, social, political and other forms of engineering. And these processes go on continually. Nation states do not drop off the skies, ready-made. Nigerians understand this. Ask them and many will tell you that part of the country’s prob-

lems today is that not enough engineering was or has been done to weld together or determine the proper structure to unite the various peoples that came to form what became Nigeria. Therefore the current wave of clamouring for restructuring in Nigeria, especially the call for a modification of its federal structure, is a direct interrogation of the terms of the federation that has operated in the country. This calls for a reappraisal of the foundations on which the union has rested so far with a view to determining whether and to what extent it still satisfies the objectives and hopes of the federating units. Federalism has in recent times received increased attention due to the tensions that have developed in countries practising or misapplying it. The difference between many of those countries and Nigeria is that the calls for change have led to reforms in the structures. An example is Belgium. In the 23 years from 1970 to 1993, Belgium changed its constitution four times, moving from a centralised structure to one with greater degree of power devolution. There are several reasons for which a country can adopt federalism as a political structure. And whether the structure survives or is modified through agitations for change such as Nigeria is witnessing now depends on whether that system helps the country achieve those goals. The typical reasons given for the adoption of federalism theoretically fit Nigeria’s situation: unity in diversity and power sharing among tiers of government where otherwise higher-level authorities would subjugate others. Yet, these may not be achieved if the building blocks are not fitted

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properly in the fundamental engineering stages. There is a need to examine the fundamental sources of the discontent within the federation. This will reveal the real reasons for the rising demand for a restructuring or redefinition of the terms of the union. Often, the number of the ethnic groups that make up the Federal Republic of Nigeria- put by some sources as large as 250 is presented as a significant part of the wobbling performance of the union and the difficulty in knitting the units together. This makes Nigeria an example of a multinational federation. As noted above already, this is an example of a federal system formed to accommodate diverse nations in one. However, federations are also formed to foster economic and security interests among the units, especially in the case of a mono-national federation. This point has often been overlooked in discussions on Nigeria’s federal system, vis-a-vis the current call for change. The point about Nigeria’s federalism is not just about accommodating diverse nationalities; it also about the economic interests of the federating units. How equitably is the economic interests of the federating units taken care of? Therefore, while the number of ethnic nationalities in Nigeria is obviously large, the country’s challenge is not necessarily in the numbers, otherwise what would one say about India, which is probably the most diverse of federations, with ethnic groups. The trouble with Nigeria lies in the failure by our leaders to accept the fact that the ethnic nationalities have not formed a whole yet. Nigeria’s march towards a political structure

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began effectively in 1900, when the British assumed total administration of the area currently known as Nigeria. For the ease of administration, it divided the area into three protectorates: Lagos Colony, Southern and Northern Protectorates. In 1906 Lagos Colony was merged with the Southern Protectorate to form the Lagos Colony and the Protectorate of Southern Nigeria. This search for administrative convenience was achieved in 1914 with the amalgamation of the Northern and Southern Protectorates by Lord Lugard. From then Nigeria has changed from a two-region structure to three, and four. The country even toyed with a unitary system and later came back to federalism, now with six geopolitical zones. But the fundamental problems have remained. One factor that will sustain the demand for restructuring in Nigeria is the lopsided nature of the country’s federal structure. As it is today, the federation is skewed in favour of the centre. A strong centre, politically and economically, vitiates the aim of federation, especially one that is expected to accommodate diverse interests that seek degrees of freedom or self-determination. A concomitant development to power devolution in this process will be the adoption of a true fiscal federalism. This will eliminate most of the frustrations being expressed by the proponents of restructuring. This is at the heart of the strident calls from Southern and Middle Belt leaders, who are the fulcrum of the demand for restructuring. Nwanma, a Knight-Bagehot Fellow and World Bank Scholar, is Deputy News Editor at BusinessDay

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Wednesday 24 April 2019

BUSINESS DAY

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Public communication and the contradictory narratives of the PMB team

editor Patrick Atuanya

growing misalignment in the narratives of Nigeria’s status in several areas by officials of the Federal Government speaks to fundamental problems with public communication and information management. It leaves analysts, investors and the ordinary citizen confused. It also makes it challenging to get the willing buy-in of citizens into government’s programmes. Many are the stories coming out of government that stand in contradiction to each other. Just in the week before Easter, three government sources spoke on the state of the nation. First was Information & Culture Minister Lai Mohammed. He claimed that “our country is safer today than it was before the advent of this administration in 2015, thanks to the political will shown by the administration and the commitment of our security agencies.” Chief of Army Staff Lt. Gen Tukur Yusuf Buratai has been on a publicity binge positioning himself as the Chief Strategist of all times who has secured peace in Nigeria and defeated Boko Haram insurgency and the various threats

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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

to the order of Nigeria. He has commissioned a book to celebrate The Legend of Buratai based on this alleged peace at a time of national outcry about the insecurity in 20 of Nigeria’s 36 states and the FCT. A few days later, President Muhammadu Buhari without meaning to do so repudiates Mr Mohammed’s claim. In a moment of candour, PMB lamented the poor state of the country in his April 19, 2019, Easter message. The President declared, “Our nation is currently gripped with gloom over unfortunate killings, kidnappings and violence, as seen in the recent tragic incidents in some states of the federation.” PMB then made a solemn pledge. “This administration will do all it takes to adequately equip and motivate our armed forces and other law enforcement agencies to enable them successfully confront these security challenges. We will not allow merchants of evil and death to overwhelm the nation. Under my watch, the nation will triumph over them – terrorists, bandits, kidnappers and the like”. From economic statistics to performance in various areas of agriculture, manufacturing, foreign investment inflow and more, officials of the Federal Government

engage in a concerted effort to show alternate realities. Just a random check at any of the agencies keeping records disproves their claims. It has led to a situation where citizens in their various capacities are now openly challenging government spokespeople. Special Adviser to the President on Media and Publicity Mr Femi Adesina faced that challenge April 18 at the 2nd annual lecture of Freedom Online. He claimed that the Nigerian economy has been growing since 2016 but for the blindness of the opposition and citizens. He then reeled out statistics of such growth including claims of abundant production of local rice dislodging imported ones. Adesina stated, “In 2017, agriculture grew in export and before we export, it means that we have enough to satisfy local consumption. The opposition tends not to see the growing economic trend and impact in the country.” He added, “We have abundant rice production in Nasarawa, Kebbi and neighbouring Ogun states”, adding that millions of dollars are saved daily on rice importation. Citizens responded on the spot. Prof Akin Onigbinde who represented Ekiti State Governor Dr

Kayode Fayemi countered, “I have patronised the open market and live in Bodija, Oyo State. I cannot see this rice in the open market. Femi is my brother; he has a duty to direct our gaze to what we cannot see. Even in my own imagination, I have not seen the rice in Abeokuta in the last four years.” Aare Ona Kakanfo of Yorubaland Chief Gani Adams also disagreed. He asked the presidential spokesman to deliver the message to the President that citizens are hungry. The exchange points to a wide gap in perceptions between officialdom and the citizenry. There is a need to bridge this gap through proper structuring of the content, delivery and messaging on the government. All spokesmen must speak to credible, evidence-based information and sing from the same hymnbook. Trust in government communication is a desideratum for effective governance. The sincerity of the President in his Easter message is reassuring. It represents a shift from the efforts at painting pictures at variance with the lived reality of citizens everyday. It says to citizens that the Head of State is abreast with the actual situation. It is the right approach and the way to go in the days ahead.

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Huge pangolin seizures linked to Nigeria worry conservationists …urge FG to investigate shipments Josephine Okojie

he recent huge shipments of pangolin s c a l e s i n t e rc e p t e d by the Singaporean authorities within a space of a week and linked to Nigeria have raised concern from some conservationists in the country. The two containers which were Vietnam-bound contained 12.9 and 12.7 tons of pangolin scales worth about $52.3 million and $51.6million, respectively. The single shipment of 12.9 tonnes is said to be the largest so far in the history of pangolin scales trafficking, and now followed by the second discovered haul. But Nigerian conservationists say the country currently does not have the population of pangolins to produce this quantity of scales. “The scale of this trade is escalating and mounting enormous pressure on the population of pangolins that may be left in Africa, a figure that no one at present has any idea of,” Olajumoke Morenikeji, chair, PCWGN also known as Pangolin Conservation Guild Nigeria, said in a statement made available to BusinessDay.

“What remains unclear about this present illegal trade discovery and in fact the more recent ones that have been claimed to originate from Nigeria is, if the country has such population left of pangolins to make that volume of scales,” Morenikeji said. She stated that the pangolin scales seized from both shipments linked to the country were derived from two species- the white bellied

and the giant ground pangolins. According to her, the giant ground pangolin was last cited in the country seven years ago, quoting a former Nigerian head of wildlife trade division and CITES as saying so. She called on all Nigerians to collaborate in the quest to tame the illegal pangolin trade in the country. “Given that if this current rate of

Nigeria leads in Western, Central Africa seed hub, study finds … as Value Seeds tops access to seeds index …still have few companies into planting breeding Gbemi Faminu

i g e r i a - b a s e d Va l u e Seeds came top in a new research on seed companies operating in Western and Central Africa, a new study by the Amsterdam-based Access to Seeds Foundation says. According to the study, Value Seeds, like most of the other companies from the re gion, operates exclusively in its home country of Nigeria and stands out for its maize and rice ‘value kits’, all-in-one input packages tailored for smallholders. The company also provides capacity building activities that specifically target women and nextgeneration farmers, the study adds. “ W h a t b o t h Va l u e S e e d s an d Te ch ni s em repres ent is the importance of partnerships to improve access to seeds in the region,” said Ido Verhagen, executive director at Access to Seeds Index. “In the case of Value Seeds, its partnership with the Alliance for a Green Revolution in Africa (AGRA) paid off, as its grant-based support

enabled the company to improve its products and intensify its outreach to smallholder famers,” Verhagen said in a statement. The study states that while there is a growing number of seed companies that are active in the region, both home grown and international, less than half of the 23 companies researched conduct plant breeding in Western and Central Africa. This limits the release of new varieties adapted to the region, and explains the high number of varieties that are older than five years offered in company portfolios, the study notes. Other Nigerian companies that also dominate the top half in the rankings are Maslaha Seeds, Premier Seed, and Da-Allgreen Seeds, showing the relative strength of the seed industry from Nigeria. According to the study, openpollinated varieties still dominate across the region, in contrast with Eastern Africa and South Asia. The exception is maize, for which hybrid varieties are more commonly available. In addition, research shows that for almost half (48%) of the crops, the most recent www.businessday.ng

variety is older than five years, with only a fifth (21%) having a variety less than three years, the study says. The lack of newly developed varieties seriously impacts the resilience to a changing climate and emerging disease and pests, which reduces yields C o m p a re d t o a d o z e n o f companies active in Nigeria and Senegal, only one company is active in each of Central African Republic, Equatorial Guinea and Guinea-Bissau. “Our study shows the potential of home-grown seed companies. However, most operate only in their home markets, which causes geographic imbalances in seed sector development,” said Verhagen. “This also means that capacity building activities offered by companies only reach farmers in a handful of countries. This limits the adoption of new technologies by farmers in overlooked countries,” he added. “The seed industry has a vital role to play in helping farmers to adapt to climatic challenges while simultaneously raising production levels,” he adds.

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exploitation goes on unchecked, in no short time the death knell will be sounded on the pangolin and they may be gone forever. This is a fate we can prevent by working cohesively.” Morenikeji urged the Federal Government to investigate these large seizures linked to the country and provide tighter border surveillance while equipping, training and empowering

enforcement agents to arrest and prosecute poachers. “The Pangolin Conservation Working Group Nigeria (PCWGN) is using this opportunity to appeal to the Nigerian Presidency in particular and every other stakeholder in order to save pangolins,” she said. The International Union for Conservation of Nature (IUCN) has categorized all four African species as vulnerable, while in 2016, the Convention on International Trade Endanger Species (CITES) listed all 8 species in the world to Appendix 1 to prohibit trade and afford some form of protection. The CITES’s decision in effect has resulted in many shipments being discovered, but it has often not nabbed the suspects involved in this trade network. PC WGN has created a lot of awareness on pangolins in Nigeria. The guild have rescued, rehabilitated and released some pangolins into protected forest areas. The group is now planning a rescue and rehabilitation centre for the pangolins in Nigeria in order to help address this kind of trading and exploitation in the country.

FG needs to commit Nigerian banks to support agribusinesses, says expert

deniji Kolawole, managing director of Niji Group, has called on the Federal Government to commit financial institution operators in the country to lend more to agribusinesses. Speaking at launch of 50 units of tractors of Sonalinka assembled by Niji tractors at Ilero, Oyo state recently, Kolawole said that if truly the government wants to support agriculture in Nigeria it should ensure agribusinesses are able to easily access cheap credits. According to him, most Nigerian banks do not understand agribusiness, adding that agriculture is an unusual business and banks cannot use office logics to solve the problems of agriculture. “Agriculture is not like any other business you do and you can’t use the system in the office to solve it,” he said, “The banks need to come down to the farm, spend like six months and look at what the farmers suffer, before they say they want to support. If not, we can’t move forward,” he said. On how the 50 units of tractors assembled by Niji tractors came about, he said that when Bank of Industry (BoI) approved the money to First City Monumental Bank (FCBM) for Tractor Owners and Operators Association of Nigeria (TOOAN) to acquire the tractors after meeting all the loan conditions, the Nigeria Incentive@Businessdayng

Based Risk System for Agricultural Lending (NIRSAL) declined, allegedly without giving reasons. “That was when we went to Africa French Development Bank for support to guarantee what NIRSAL cannot guarantee, after four months of TOOAN paying for the loan they didn’t actually receive. NIRSAL decline the transaction that they are supposed to support for no reasons knowing fully well that this group is well organised and they are on ground,” he explained: “What will make NIRSAL not to guarantee a good transaction that will develop agriculture in Nigeria which we have to go to another country for guarantee. This means we are not ready for agribusiness in the country,” he said. He lamented that the farmers were already paying interest on a loan they are yet to receive which makes loan payback almost impossible for farmers. Also speaking at the event, TOOAN National President, Elesa Bitrus Yakubu, said the acquisition of the tractors would go down in histor y. According to him, the association approached the bank for a loan to finance 50 units of tractors, successfully negotiated, met the loan conditions and secured approval for the N500 million without intervention from government or any intermediary.

Wednesday 24 April 2019

BUSINESS DAY

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Amo Farm alleviates rural poverty, tackles malnutrition with Noiler Bird Initiative Josephine Okojie

n a bid to empower and improve the living standards of people in the rural areas, especially women, Amo Farm Sieberer Hatchery Limited (AFSH) has resolved to alleviate poverty and address Nigeria’s high malnutrition rate through its Noiler Bird Initiative. Noiler bird is a multicoloured dual purpose breed that is suitable for backyard rearing that can help Nigeria achieve one of the key targets of the United Nations 2030 Agenda for Sustainable Development. The initiative which is a rural development effort by Amo Farm is targeted at reducing rural poverty especially among women by improving their quality of life through the rearing of Noiler birds for chicken and egg production. According to the United Nations International Children’s Emergency Fund (UNICEF), Nigeria has the highest burden of stunted and malnourished children globally with a national prevalent rate of 43 percent of children under five To change the narrative of the burden of malnutrition in the country, Ayoola Oduntan, group managing director, AFSH said the Noiler bird initiative was designed to

A woman in the rural community rearing the noiler bird at her backyard

empowered households with chicken and eggs for their daily protein requirement. “Malnutrition is caused mainly by protein deficiency and it has been proven scientifically that next to breast milk, chicken and egg are the best sources of protein and if you can place the chicken and eggs in the

backyard of the rural poor, we will immediately from the very first day solve the problem,” Oduntan said. “The population of Nigeria that we are targeting with Noiler are those that unless we empower them cannot afford to eat chicken from an average poultry farm,” he said.

He noted that the initiative is designed to ensure that the 90,000 Nigerian children whom UNICEF says could die of acute malnutrition are safe and quality of life in rural areas especially for women is improved by enhancing their income opportunities while also providing quality source of protein for them and their

children. Oduntan estimated that Nigeria’s per capita poultry meat consumption at 2.3 kg and egg consumption at 60 per person yearly is below the recommended requirement. He added that AFSH started the research in 2003 to look into the production of dual purpose bird with low maintenance to sustain the rural people while addressing the challenges they face. “If UNICEF says more than 240 Nigerian children die of hunger each day, it is the duty of all of us to ensure the figure is drastically reduced. “We cannot continue to approach international communities with caps in our hands for alms when we have all it takes to curb hunger and poverty in a nation described as the giant of the continent,” he added. Oduntan stated that the Ecuador model in tackling stunting and malnutrition which has been a rallying point for the farm to develop the Noiler bird pointed way for the country to also address its own issues of stunted growth in children. Giving details of the business model of the initiative, Anand Burra, chief op erating officer, AFSH said the programme would help eradicate poverty and malnutrition in the country, especially in the rural areas. Burra noted that the

Noiler birds are affordable and easy to rear because of its ability to feed on remnants from the kitchen and farms. “Noiler bird can lay four times the number of eggs the local birds lay and can grow two and half times bigger,” he said. According to Burra, the Noiler offspring is resistant to diseases like the local birds and the beef is tastier than the local breeds and can be reared with no antibiotics and chemicals as they can be transformed into ‘organic chicken. Poultry feed constitutes 70 percent of farmers expenses in running a poultry business in the country. But with the Noiler initiative, farmers spends spend less in feed as Noiler birds can feed on household remnants. He disclosed that the commercial Noiler chicks will be produced by the company owned hatcheries in different parts of the country and supply the day old chicks to Mother Units across the country. In a testimonial, Marian Adepoju a beneficiary of the Noiler bird initiative said she has made more profit form the initiative more than she did when she invested into some financial products. “As a retiree, the noiler far ming pays me more than putting my money in investment houses,” Adepoju said.

Kebbi, Kano Zamfara and Kwara states for rice farmers. Anant Badjatya, CEO, Stallion Group stated that the group is committed to the growth of Nigerian economy and its contribution to government’s backward integration initiative. He further spoke on the drive of Popular Farms to do things right, hence the ground breaking ceremony of the project in Kano. Badjatya commended the inventiveness of President Muhammadu Buhari and the policy direction of the agricultural sector been driven by Agric Ministry and CBN, remarking that farms rice is already making the difference and bringing positive benefit to the

Nigerian Economy. He urged the Federal Government not to relent in its quest to provide an enabling environment for the sector. He lamented the unabated smuggling of rice through the porous borders and praised the efforts of the Rice Processors Association of Nigeria (RIPAN) for its fight against the scourge. He added that the group is steadfastly in support of all efforts aimed at stopping the smuggling menace. Speaking at the ceremony, Audu Ogbe, Minister of Agriculture praised the farm for its ingenuity and contributions not only to the agric sector in Nigeria but the efforts and commitment to reducing unemployment.

Popular Farms expands operation in Kano Adeola Ajakaiye, Kano

n furtherance of its goal of spearheading the rice revolution and attain food sufficiency quest of the President Muhammdadu Buhari’s administration, Popular Farms and Mills Limited has expanded its rice mill by 140,000MT per year milling capacity in Kano. The company has also laid the foundation for 44,000 MT per year Sesame Processing Plant to boost sesame seed production in the country. Popular Farms and Mills is a member of the West African Conglomerate – Stallion Group, a renowned stakeholder in the Nigeria’s

food sector with commercial interest in rice value Chain, where it currently has an installed capacity for 430,000 metric tons with planned expansion to 1.5 million tons of paddy rice processing per annum. The inauguration of the expanded multi billion naira rice mill attracted dignitaries from both public and the private sector had Mallam Munir Mohammed, the Emir of Kano who was representing Au d u O gb e h, Mi n i s t e r of Agriculture, His Royal Majesty, Sanusi Lamido Sanusi 11, represented by Alhaji Yusuf Ibrahim Madakin and the Central Bank Governor, Godwin Emefiele, represented by www.businessday.ng

Hassan Tom among others. Welcoming dignitaries to the well-attended event, Amit Rai, managing director, Popular Farms, acknowledged the meticulous and inclusive approach of the Nigerian government with regards to the agricultural sector. Rai stated that over 80,000 farmers across rice and sesame supply chain are going to be positively affected while saving the country the much needed foreign exchange it would have spent on the importation of rice. He added that over 1,500 direct and indirect jobs will be created, saying that the initiative will also further boost the Popular Farms’

initiative in empowering farmers in the rice & sesame value chain to become better business people with strong technical and business knowledge & skills. According to Rai, the farm is currently in direct contact with over 40,000 farmers and approximately 1,000 rice cooperative societies across the country, and with its flagship training programs for intensive farming at no additional cost to the farmers will increase economic scaling in rice farming to over 36,000 outgrowers scheme. The farm has wellestablished sixteen ‘Popular Aggregation Centre’s’ in Adamawa, Taraba, Benue, Niger, Gombe, Jigawa, Sokoto,

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Wednesday 24 April 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

The Companies and Allied Matters Act (repeal and re-enactment) bill 2019 – what you need to know

Pg. 16

ANALYSIS

Tinubu, Avuru top list of highest paid CEOs of quoted Nigerian companies Akin Akinfemiwa Group CEO Forte Oil Plc Akinfemiwa is the GMD of Forte Oil, who earns about N191 million per annum in 2018. He studied Mechanical Engineering at the University of Ibadan and also studied at the University of Lincolnshire and Humberside for a Master’s in Business Administration, with specialisation in Information Technology. He is also an alumnus of the Said Business School, University of Oxford. Prior to this time, he worked at FSB International Bank Plc as a Business Process Analyst.

OLUFIKAYO OWOEYE

ortunes of most Chief Executive Officers (CEOs) often rise and fall with the companies’ performance. In a bid to ensure that value is delivered to the organization, and shareholders, the board uses compensation contracts to align executives’ actions with company success. Analysis of 2018 financial results of listed companies shows that CEOs in oil & gas industry led the list of top earners. Public listed companies typically disclose the highest paid directors in the annual report, which mostly represents the emoluments paid to MD/CEOs. Wale Tinubu Group CEO Oando Plc Top on the list of executive compensation is Wale Tinubu CEO Oando Plc who earned a total of N568 million per annum in 2018 representing a 67 percent increase in his executive compensation compared to the previous year. Tinubu studied Law at the University of Liverpool, graduating in 1988. By 1989, he had earned a Master’s of Law from the London School of Economics. He has since garnered many years of professional experience, having started out working in his family’s law firm. He currently sits on the boards of many companies in different capacities such as Director, MD, and Chairman. Some of these companies include Ocean and Oil Holdings Limited, Avante Capital, West African Refinery Company (WARCO) Sierra Leone, Ocean and Oil Services, Econet Wireless Nigeria, etc. He is a member of many associations, including the Institute of Directors and also, the Nigerian Bar Association. Augustine Ojunekwu Avuru, Managing Director/CEO Seplat Plc Augustine Avuru sits one of Nigeria’s leading crude oil exploration companies, Seplat Petroleum Development Corporation Plc. A firm he co-founded and is currently listed on both the London Stock Exchange and the Nigerian Stock Exchange. As expected, being at the helm of affairs of such a big corporation has availed him compensation totalling N483 million per annum a meager increase from N476 million earned in 2017. Avuru has a degree in Geology, having graduated from the University of Nigeria, Nsukka, in 1980. He also studied for a Postgraduate Diploma in Petroleum Engineering at the Univer-

OIL & GAS

Baker Magunda CEO of Guinness Nigeria Plc Baker Magunda CEO of Guinness Nigeria Plc who joined Guinness Nigeria from Diageo owned Meta Abo Breweries in Ethiopia in May 2018. Magunda earned an annual salary of N461 million in 2018 a significant increase from N186million paid the brewer CEO in 2017. He had his first degree at Makerere University in Uganda and Makerere University Business School. He started his career as a Market Development Manager at Coca-Cola Sabco century bottling company from 1996 till 1999. Joseph Makoju Group CEO Dangote Cement Plc Joseph Makoju of Dangote Cement Plc earned a total of N429 million per annum in 2018. He was appointed to the Board of Dangote Cement in 2010 and became its Acting Group Chief Executive in January 2018. Prior to his appointment, he has worked in several world-class corporations including Shell BP, Blue Circle (UK) and WAPCO (now Lafarge Africa), which he led as Managing Director/CEO for a decade before taking up the appointment as Managing Director/CEO of the National Electric Power Authority. He also served as Special Adviser (Electric Power) to the President of the Federal Republic of Nigeria, under two separate administrations. Segun Agbaje CEO GTBank plc With his over nineteen years’ banking experience, Mr. Segun Agbaje is the CEO of tier one lender, GTBank, also

one of the most compensated Nigerian CEOs, with an interesting annual emolument of about N384 million in 2018 as compared to N224million paid in 2017. Agbaje had a stint at Ernst & Young in America before joining GTBank in 1991 as one of the company’s pioneer staff members. He became an Executive Director in 2000, and then a Deputy Managing Director in 2002, before eventually becoming the CEO. Agbaje has an MBA from the University of San Francisco. He is also a Harvard Business School alumnus. Yaw Nsarkoh, MD Unilever Nigeria Plc Next on the list of top earners is Mr. Nsarkoh, MD Unilever Nigeria Plc, of one of Nigeria’s leading manufacturing companies who takes home a total annual package of N330million in 2018 a 50.6 percent increase from what he earned in 2017 Nsarkoh has had a long career with Unilever, heading several regional headquarters of the global manufacturing company, particularly in Africa. He has also served as a Strategic Assistant to Unilever’s President for Asia, Africa, Central, and Eastern Europe. Other top positions he has occupied at the company include African Regional Brand Manager, Production Manager for Unilever Ghana, etc. He studied Chemical Engineering at the University of Science and Technology in Kumasi, Ghana. He also holds a Postgraduate Diploma in Management from Henley Management College, Henley-on-Thames, United Kingdom. Mauricio Alarcon, Managing Director/CEO Nestle Nigeria Plc Alarcon is compensated to the tune of about N210million per annum in 2018. He assumed his position in the company on October 1st, 2016. He is a graduate of engineering from Manchester University; class of 1997. And since 1999, he has been under the employ of Nestle global.

Jordi Borrut Bel Managing Director/ CEO, Nigerian Breweries Plc. Jordi Borrut Bel is the CEO of the nation’s biggest brewer, Nigerian Breweries Plc. Borrut earned about N190milllion in annual salary in 2018. A significant drop to 340million paid in 2017. Prior to his appointment in January 2018, he was the Managing Director of Brarudi S.A, a Heineken subsidiary in Burundi. He has also held different top management positions of different companies across the world. He is an alumnus of Harvard Business School. Kennedy Uzoka Group Managing Director of United Bank for Africa Plc Uzoka is the Group Managing Director of United Bank for Africa Plc (UBA) who earned n139 million per annum in 2018. Uzoka has worked at UBA for more than twenty years, a career that has seen him heading different critical departments and portfolios, examples of which include Head of Strategy and Business Transformation, and Head of Resources. He also supervised the bank’s businesses in New York and London. He holds a degree in Mechanical Engineering from the University of Benin, as well as Master’s in Business Administration from the University of Lagos. He also has an AMP from Harvard Business School. Amir Shamsi, the former Managing Director Cadbury Nigeria Plc Amir Shamsi, the former Managing Director of Cadbury Nigeria Plc earned N128million per annum in 2018. The confectionery giant recently announced the appointment of Mrs. Oyeyimika Adeboye, as its new Managing Director. Adeboye is the first woman to be appointed Managing Director since the establishment of Cadbury Nigeria over five decades ago.

Peter Amangbo Managing Director/CEO Zenith Bank Plc. Mr. Amangbo is Zenith Bank’s Group Managing Director/CEO who earned a total annual package of N125 million in 2018. The bank recently announced the appointment of Kennedy Onyeagwu as its new Group Managing Director/CEO. Amangbo studied at the University of Benin, where he graduated with a degree in Electrical and Electronics Engineering. He also graduated from the University of Warwick, Coventry with a Master’s in Business Administration (MBA). He is a Fellow of the Institute of Chartered Accountants of Nigeria (FCA). Urum Kalu Eke, Group Managing Director, FBN Holdings Plc Urum fondly called U.K is the GMD of FBN Holdings Plc and receives an annual package of about N121 million. He assumed this office in January 2016 and with over three decades of professional experience, Eke is one of the most accomplished bankers in Nigeria. He began his career with Deloitte Haskins & Sells and resigned from the company as a Senior Audit Consultant. He also worked at Diamond Bank for about 19 years, reaching the position of an Executive Director. Eke studied Political Science at the University of Lagos. He also has a Master’s in Business Administration from the Federal University of Technology in Owerri. He is also undergone training at Harvard Business School, Stanford University, Lagos Business School, etc. Herbert Onyewumbu Wigwe, General Manager and CEO of Access Bank Plc Herbert Wigwe earned N85.16 million in annual salaries in 2018 the same amount earned in the previous year. He has a degree in Accounting from the University of Nigeria, Nsukka. He also has a Master’s degree in Banking and International Finance from the University of North Wales, and another Master’s degree in Financial Economics from the University of London. He is also a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN). Mr. Wigwe was appointed the General Managing Director of Access Bank in 2014. This was barely twelve years after he joined the bank in 2002. Prior to his time in Access Bank, he worked in Guaranty Trust Bank for over a decade

Rakunity‘s 2018 bottom-line shrugs off plunge in proceeds from PMS, DPK

ISRAEL ODUBOLA

sity of Ibadan, graduating in 1992. He is a Fellow of the Nigerian Association of Petroleum Explorations, an organization of which he was once the President. Prior to founding Seplat, he worked with the Nigerian National Petroleum Corporation (NNPC), where he worked in various capacities for twelve years, including in positions such as Production Seismologist, Reservoir Engineer, etc.

Shamsi has moved to a new role within Mondel International, the parent company of Cadbury Nigeria.

he after-tax profit of Rakunity Petroleum Plc, the least-capitalized firm in the Nigerian oil & gas sector, was not significantly battered by huge decline in receipts from Premium Motor Spirit (PMS) and Dual Purpose Kerosene (DPK), thanks to reduced direct costs and operational expenses. The oil firm’s post-tax profit contracted some 200 basis points in 2018 to N29.6 billion, despite earnings from PMS and DPK plunged 44 percent and 52 percent respectively in the review

period. Rakunity’s top line pared at a singledigit rate of 7 percent to N9.6 billion amid dip in receipts from three of its four product lines, owing to an appreciation in earnings from core product, Automotive Gas Oil (AGO). AGO, which accounted for more than 75 percent of Rakunity’s 2018 topline, grew 14 percent to N7.3 billion, an uptick from N6.4 billion reported in the previous margin. The oil firm explained that a significant portion of its revenue is sold through a related company, Asharami Synergy Plc.

The company also has an agreement with So Energy which has by a court sanction moved to Asharimi Synergy Plc, to wherein Asharmi procures products and sells to customers with 5 percent commissions on margin made on sales. Going by key metrics, the oil firm posted slim improvement in profitability. Gross margin was up some 0.21 percent points to 4.04 percent in 2018, compared with 3.83 percent a year before. Likewise, operating margin rose 0.05 percent points to 0.47 percent. Net profit margin grew 0.04 percent points

to 0.32 percent in 2018 compared with 0.29 percent last year. This means that the oil firm kept N40 as profit from every thousand naira earned as revenue before settling indirect expense, retained N4.7 after meeting variable costs, and further kept N3.2 after settling interest and tax. A further look at its financials revealed that the oil firm bettered profitability minimally as a result of 8 percent contraction recorded in cost of sales to N9.2 billion, and 3 percent dip in operational expenses. Total assets appreciated slightly more than half to N2 billion in 2018, an

uptick from N1.3 billion in 2017, buoyed by 50 percent rise in current assets to N1.8 billion. Total liabilities doubled to N1.4 billion on surge in trade payables, while shareholders’ fund grew some 419 basis points to N597 million. The firm did not declare dividend in 2018, making it the third time in six years of not paying dividends to shareholders. Rakunity Plc is basically into the sales and distribution of petroleum products, and has 56.62 million shares outstanding, in which 85 percent is owned by major investor, Toparte Nigerian Limited.

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

Wednesday 24 April 2019

BUSINESS DAY

COMPANIES&MARKETS THE COMPANIES AND ALLIED MATTERS ACT (REPEAL AND RE-ENACTMENT) BILL 2019 – WHAT YOU NEED TO KNOW PART 8 – COMPANY REGISTERS, SEALS & TEMPLATE CONSTITUTIONAL DOCUMENTS

By Udo Udoma & Belo-Osagie BACKGROUND The Companies and Allied Matters Act (Chapter C20) Laws of the Federation of Nigeria 2004 (CAMA) was enacted in Nigeria as a decree of the military government in 1990, and in the past 28 years, there have been no significant amendments to the CAMA. This is, however, all set to change if the Companies and Allied Matters (Repeal and Re-enactment) Bill 2019 (CAMA Bill), which was passed by the Nigerian Senate on 15th May 2018 and by the House of Representatives on 17th January 2019, is passed into law. In this series, which is scheduled to run for 12 weeks, Udo Udoma & Belo-Osagie will provide insights and digestible excerpts on the effect of key changes proposed by the CAMA Bill.

sealing. In such circumstances, the Bill provides that the relevant document would be deemed to have satisfied the provisions of that law or regulation if the document is signed by (a) a director, secretary, or other authorised officer of the company; or (b) as a deed by (i) a director and the secretary of the company (ii) at least 2 directors of the company; or (iii) a director of the company in the presence of at least one witness who has attested the signature. If a company chooses to have a common seal, the design and the use of the seal must be regulated by the company’s Articles. The CAMA Bill also requires that the name of the relevant company must be engraved in legible characters on the seal. Other entities that are permitted, under the CAMA Bill, to have a common seal, if they so choose, are limited liability partnerships and incorporated trustee.

TEMPLATE CONSTITUTIONAL DOCUMENTS

NEW STATUTORY REGISTERS

The CAMA currently contains templates of articles of association (“Articles”) for different types of companies. These are all set out in Table A of the First Schedule and contain provisions relating to classes of shares, meetings and voting. These templates have been deleted in the CAMA Bill and the Bill provides that the Minister of Finance may, by regulations, prescribe model Articles for companies. In practice, these regulations would be prepared by the CAC and issued to the public after they have been approved by the Minister. This change is progressive as it will ensure that the form of constitutional documents can be amended by the CAC and Minister as required without the need for an amendment of the Act through the formal legislative process.

The CAMA Bill introduces a new statutory register that must be kept by companies. This register, called the Register of Directors’ Residential Addresses, is required to state the usual residential addresses of the company’s directors. This register differs from the Register of Directors that CAMA currently requires companies to maintain; the Register of Directors only contains information on the “service address” of a director which, in some cases, is the company’s registered office. If, however, a director’s usual residential address is the same as his service address (as indicated in the company's Register of Directors), then the Register of Directors’ Residential Addresses only needs to contain an entry to that effect. If there is any change in the information contained in the Register of Directors or the Register of Directors’ Residential Addresses, the company must notify the CAC of such change within 14 days.

Under the CAMA Bill, different models of Articles would be prescribed for different types of companies, and companies would be permitted to adopt all or any of the provisions of model Articles. In relation to existing companies, any amendment of model Articles by regulations will not affect companies that were incorporated before the amendment takes effect. For new companies that are incorporated after the CAMA Bill is signed into law, upon incorporation, the relevant model Articles in force as at the date of registration of the new company will form part of that company’s Articles (even where the company has registered Articles at incorporation), unless the relevant model Articles are specifically excluded or modified. THE COMMON SEAL Under the CAMA, every company is required to have a common seal, the use of which must be regulated by the company’s Articles. This seal, which is also usually referred to as the “Company Seal” is typically affixed to agreements, deeds and other official documents executed by companies. The requirement for every company to have a common seal has been deleted in the CAMA Bill. Thus, a company may choose to have a common seal but need not have one. The CAMA Bill addresses situations where another law or regulation requires a document to be executed under the common seal of a company or prescribes consequences for not

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To address questions of security, the CAMA Bill provides that information relating to a director’s usual residential address is considered to be protected information and, this information does not cease to be protected information when the director resigns from the board of that company. What this means is that the company cannot use or disclose this information in relation to any director without the consent of the relevant director unless it is for the purpose of (i) communicating with the relevant director (ii) complying with the requirements of the CAMA Bill or (iii) complying with a court order. There are similar restrictions on the CAC’s ability to use or disclose such protected information. The CAC may, however disclose such information to a credit reference agency or to a public authority subject to any regulations issued by the Minister prescribing conditions that must be satisfied before protected information relating to a director may be disclosed to any such public authority Udo Udoma & Belo-Osagie actively participated in the drafting of the CAMA Bill. Corporate Partner, Ozofu 'Latunde Ogiemudia was the chairperson of the Technical Advisory Committee set up by the office of the Senate President to advise on the CAMA Bill and the bill to amend the Investments and Securities Act 2007. Managing Associate, Christine Sijuwade was a member of that committee and led the drafting sub-committee on the CAMA Bill.

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Wednesday 24 April 2019

BUSINESS DAY

CITYfile Rivers: 4 in police net over cultism

Solar Fish Drying Kits donated by National Commision for Refugees, Migrants and Internally Displaced Persons (IDPs), to some beneficiaries of its empowerment scheme for Bakasi returnees in Yenagoa. NAN

C’River shuts 14 health facilities for quackery PATRICK ABANG with agency report

ourteen health facilities have so far been shut by the Cross River Private Hospital Regulatory Board for alleged medical quackery and substandard operations. Chairman of the board, Norbert Mogar, who disclosed this, Monday, in Calabar, said the facilities were shut between 2017 and 2019. Mogar listed some of the facilities to include, Destiny Medical Consult in Calabar, Holy

Trinity Clinic and Maternity in Bekwarra Local Government and Divine Favour Clinic and Maternity in Ugaga in Yala. According to him, the board had to intensify surveillance with a view to curbing the rate of medical quackery in the state, especially in the remote communities. He said the anti-quackery crusade has helped to reduce reckless and unwarranted loss of lives. The private hospital regulatory board was inaugurated in 2007 and has so kept faith with

the campaign to address quackery in the medical profession. W h i l e h ig h l ig ht i ng the achievements of the board, Mogar said it carried out a mapping of all private facilities across the state for easy evaluation. According to him, the board also developed a regulatory framework for the monitoring and regulating of private facilities in the state. It also recovered some facilities that were operating illegally without government licence while such facilities are now reg-

istered and paying taxes and other levies to the government. Morgar said the board also established a strong bond with stakeholders in the state health sector and security agencies for effective and efficient enforcement of the regulations. “Through the closure of some of these facilities, the board was able to guarantee the utilisation of government facilities by residents. “We have returned a degree of sanity to the private health sector, as those

offering the services have been kept on their toes through routine inspection activities,’’ he said. Mogar thanked the state governor, Ben Ayade for giving the board the needed support towards sanitising the sector, saying the exercise was highly desirable. He also commended the ministry of health and the Nigerian Medical Association for their support in the fight against quackery in the state, adding that their collaboration helped the board to stay on top of its job.

Lawmaker decries poor access roads in Badagry

member of the Lagos State House of Assembly, Victor Akande, has lamented the poor state of roads in the Badagry division and appealed to the governor-elect of the state, Babajide SanwoOlu, to fulfill promises made to the area upon his assumption of office. Akande, representing Ojo constituency I at the House of Assembly, made the appeal on Monday just

as he emphasised the need for the governor-elect to prioritise rehabilitation of roads in Badagry division. Akande, who described Sanwo-Olu as an embodiment of knowledge based on his antecedent, said: “We don’t have a solid government presence in the division and our roads are bad. “We want Sanwo-Olu to look into this and meet the promises he made to our people by giving us access www.businessday.ng

roads. He should give us electricity to change the commercial activities of the state. We want Lagos state to be industrialised and the only way that can be done is through power supply, which is another aspect he wrote down in his diary during his electioneering,” he said. Akande also advocated for investment in the youth, saying that “a state or country that does not develop the youth will be

in comatose. On the quality of cabinet members for the governor-elect, Akande said that the selection would be done by the leaders of the party, who had the technicality of doing that over the years. “Since the time of Bola Ahmed Tinubu, to that of former governor Babatunde Fashola and now Akinwunmi Ambode, we have been having best brains as our cabinet

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members in Lagos and we have been achieving. “Now, our agitation is that we are going to the next level. We will do that by harnessing the best brains to work with the governor-elect. “It is not just for one person to do. The governor-elect cannot do it alone. The leaders will sit down and select those people that will make the dreams of the state become a reality,” he said. @Businessdayng

he police in Rivers have arrested four cult kingpins suspected to have mastermind incessant cult wars in Rumuolumeni, Obio/ Akpor local government area of the state. Spokesperson of the Rivers police command, Nnamdi Omoni, said in Port Harcourt that the suspects were arrested during a sting operation by operatives of the Rumuolumeni Divisional Police Station on April 18. The suspects were allegedly arrested with one English made revolver pistol and 3 live ammunition. “Meanwhile, efforts are ongoing to arrest other members of the gang, and they will be charged to court as soon as investigations are concluded,” said Omoni. He added that the war against armed banditry in the state was on and will better with the support of the public. He urged residents to always report suspicious characters and movements to the police.

Troops kill 6 bandits in Zamfara

roops from the Nigerian Army have eliminated six bandits in various clearance operations in Zamfara villages and arrested 18 of their informants, including a village head. The acting director army public relations, Sagir Musa, confirmed this to newsmen in a statement, saying the operations took place on Saturday in Kirsa and Sunke villages in Anka local government Area as well as in Doka and Mutu villages in Gusau local government area of the state. He added that two AK 47 rifles, two dane guns, five motorcycles, and two machetes were recovered from the suspects. Musa quoted Hakeem Otiki, a Major General and force commander, ‘Operation Harbin Kunama III’, as restating the resolve of troops to tackle banditry and other forms of criminality in Zamfara and surrounding states.

Wednesday 24 April 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

Why data science teams need generalists, not specialists ERIC COLSON

n “The Wealth of Nations,” Adam Smith demonstrates how the division of labor is the chief source of productivity gains, using the vivid example of a pin factory assembly line: “One [person] draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it.” With specialization oriented around function, each worker becomes highly skilled in a narrow task leading to process efficiencies. Output per worker increases many fold; the factory becomes extremely efficient at producing pins. This division of labor by function is so ingrained in us even today that we are quick to organize our teams accordingly. Data science is no exception. An end-toend algorithmic business capability requires many functions, and so companies usually create teams of specialists: research scientist, data engineers, machine learning engineers, causal inference scientists and so on. Specialists’ work is coordinated by a product manager, with handoffs between the functions in a manner resembling the pin factory: “one person sources the data, another models it, a third implements it, a fourth measures it” and on and on. Alas, we should not be optimizing our data science teams for productivity gains; that is what you do when you know what it is you’re producing — pins or otherwise — and are merely seeking incremental efficiencies. The goal of assembly lines is execution. We know exactly what we want — pins in Smith’s example, but one can think of any product or service in which the requirements fully describe all aspects of the product and its behavior. The role of the workers is to then execute on those requirements as efficiently as possible. But the goal of data science is not to execute. Rather, the goal is to learn and develop profound new business capabilities. Algorithmic products and services like recommendations systems, client engagement bandits, style preference classification, size matching, fashion design systems, logistics optimizers , seasonal trend detection and more can’t be designed up front. They need to be learned. Coefficients, models, model types, hyper parameters, all the elements you’ll need must be learned through experimenta-

tion, trial and error, and iteration. With data science, you learn as you go, not before you go. When the product is still evolving and the goal is to learn, specialization hinders our goals in several ways: 1. IT INCREASES COORDINATION COSTS.Those are the costs that accrue in time spent communicating, discussing, justifying and prioritizing the work to be done. 2. IT EXACERBATES WAIT TIME.Even more nefarious than coordination costs is the time that elapses between work. While coordination costs can typically be measured in hours — the time it takes to hold meetings, discussions, design reviews — wait-times are commonly measured in days or weeks or even months! Until then, iteration and learning languish. 3. IT NARROWS CONTEXT.Division of labor can artificially limit learning by rewarding people for staying in their lane. Telling symptoms can surface when data science teams are run like pin factories, for example in simple status updates: “waiting on data pipeline changes” and “waiting on ML Eng resources” are common blockers. However, I believe the more insidious impact lies in what you don’t hear, because you can’t lament what you haven’t yet learned. Perfect execution on requirements and complacency brought on by achieving process efficiencies can mask the difficult truth: that the organization is blissfully unaware on the valuable learning they are missing out on. The solution to this problem is, of

course, to get rid of the pin factory. In order to encourage learning and iteration, data science roles need to be made more general, with broad responsibilities agnostic to technical function. That is, organize the data scientists such that they are optimized to learn. This means hiring “full stack data scientists” — generalists — that can perform diverse functions: from conception to modeling to implementation to measurement. It’s important to note that I am not suggesting that hiring full-stack data scientists results in fewer people overall. Rather, I am merely suggesting that when organized differently, their incentives are better aligned with learning vs. efficiency gains. With fewer people to keep in the loop, coordination costs plummet. The generalist moves fluidly between functions, extending the data pipeline to add more data, trying new features in the model, deploying new versions to production for causal measurement, and repeating the steps as quickly as new ideas come to her. Of course, the generalist performs the different functions sequentially rather than in parallel — she is just one person after all. However, doing the work typically takes just a fraction of the wait-time it would take for another specialist resource to come available. So, iteration time goes down. We are not seeking functional excellence or small incremental improvements. Rather, we seek to learn and discover all-new business capabilities with step-change impact. It is important to note that this amount of autonomy and diversity in skill granted

to the full-stack data scientists depends greatly on the assumption of a solid data platform on which to work. A well-constructed data platform abstracts the data scientists from the complexities of containerization, distributed processing, automatic failover and other advanced computer science concepts. In addition to abstraction, a robust data platform can provide seamless hooks into an experimentation infrastructure, automate monitoring and alerting, provide auto-scaling and enable visualization of debugging output and algorithmic results. These components are designed and built by data platform engineers, but to be clear, there is not a handoff from the data scientist to a data platform team. It’s the data scientist that is responsible for all the code that is deployed to run on top of the platform. This process of iteration assumes low cost of trial and error. If the cost of error is high you may want to rethink (i.e., it is not advised for medical applications or manufacturing). In addition, if you are dealing with petabytes or exabytes of data, specialization in data engineering may be warranted. Similarly, if keeping a business capability online and available is more important than improving it, functional excellence may trump learning. Finally, the full-stack data science model relies on the assumption of great people. They are not unicorns; they can be found as well as made. But they are in high demand and it will require competitive compensation, strong company values and interesting work to attract and retain them. There are other downsides to functional specialization. Smith himself criticizes the division of labor, suggesting that it leads to the dulling of talent. While specialization may provide process efficiencies it is less likely to inspire workers. By contrast, generalist roles provide all the things that drive job satisfaction: autonomy, mastery and purpose. Autonomy in that they are not dependent on someone else for success. Mastery in that they know the business capability from end-to-end. And, purpose in that they have a direct connection to the impact on the business they’re making. If we succeed in getting people to be passionate about their work and making a big impact on the company, then the rest falls into place naturally.

Eric Colson is chief algorithms officer at Stitch Fix.

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Wednesday 24 April 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

Case Study: Sell Direct-to-Consumer or Through Amazon.com? — the Experts Respond 1 and 2 STEPHAN AARSTOL AND GIL EFRATI

hould PedalSpark sell its new, lower-cost bike through Amazon. com? PedalSpark should sell on Amazon for as long as it makes sense. Amazon is using PedalSpark and other brands until it doesn’t need them anymore, so PedalSpark should do the same with Amazon. Because the retail landscape is constantly changing, selling there in 2019 is very different from selling there two years ago. And in two years it will be different again. If Mark and his team determine that margins on sales through Amazon now are good enough, they might as well test out the marketplace. Amazon does take a healthy cut of transactions and requires brands to pay just to be seen, so those margins could be slim. But the extra exposure might make up for it. Mark will need to keep a careful eye on how his niche evolves on Amazon and how margins change over time, however. When — not if — selling on Amazon isn’t profitable, he can pull the new e-bike from the platform and offer it exclusively on PedalSpark’s site. No matter what PedalSpark does, Amazon will get a ton of data on e-bikes and will jump in with its own products eventually. The company is known for its AmazonBasics label but has other, higher-tech house brands, and most consumers buy them without realizing it. In fact, perhaps PedalSpark should try to sell its original luxury bike on Amazon instead. The margins on the new, cheaper bike will inevitably be lower, so why not put the established, high-end offering on Amazon and introduce new customers to it? That may cannibalize some sales, but so will other comparable offerings on Amazon, and in the meantime Amazon is an exponentially bigger market. If the cheaper bike goes on Amazon first, that’s what customers will associate with the firm’s brand. Is that really what Mark and the CEO want? They need to think about the long term. They should use Amazon primarily to build the PedalSpark brand, with a view to driving customers to their firm’s own site for future sales. Wisely using Amazon is not just about increasing shortterm transactional volume. This case study is loosely based on my experience as the founder of Tower Paddle Boards, a startup that’s one of the biggest success stories from the TV show “Shark Tank.” But when we started selling on Amazon, back in 2012, the

market was new, there weren’t many competitors, advertising wasn’t required for visibility and the margins on the site were much higher. It was just easier to succeed. As Amazon evolves, it looks more and more like an online convenience store with traditional retail markups. It has everything — but it’s getting too crowded. I suspect that many of the best brands will start to pull their products from the platform and return primarily to direct sales, as we did recently. Long term, the best value for consumers will be buying from direct-to-consumeronly brands. We’re trying new ways of advertising and selling, and we’re mapping out a future in which we’ll be fine without Amazon. If you have a great product and know how to sell it, customers will find you, wherever you sell.

hould PedalSpark sell its new, lower-cost bike through Amazon.com? Before thinking about selling on Amazon, PedalSpark has to build a brand customers recognize. If it doesn’t do that first, its e-bikes may get lost in a sea of similar products on the site. When you’re a young consumerproduct maker, success depends on differentiation — on the way you stand out. On its own site, PedalSpark controls the user experience and owns the sales process; it knows its customers, can promote loyalty and can create scarcity by limiting the ways to get its product. On Amazon that’s all nearly impossible to do. These days the platform is

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essentially the product search engine. Shoppers love it because it lets them comparison-shop and has an easy checkout process, responsive customer service, and speedy, low-cost shipping. But they’re loyal to Amazon, not necessarily the brands they’re buying. And Amazon keeps their data and controls the relationship; the brands know very little about these customers and have no way to contact them to upsell them. Gideon is right that Amazon offers access to a huge new market that cannot be reached any other way. There’s no question it can be an extremely effective distribution channel for established brands. But PedalSpark must build its name so that it can operate from a position of strength. It needs customers to be searching not just for “e-bikes” but for “PedalSpark e-bikes.” High-end brands can sell on Amazon because people are looking for an iPhone or Versace sunglasses, not merely browsing categories. Startups such as Warby Parker, Bonobos and BarkBox have had more success with direct-to-consumer sales. My company, Nectar Sleep, has begun selling some of our high-quality mattresses on Amazon, but we did so only once our brand was strong enough to succeed there. People do search for our products and give us good reviews, so we feel we can withstand the competition, even from Amazon, which sells mattresses through a private label. We work to offer a better customer experience on our own site, where the vast majority of our sales happen. When people buy from us directly, they get a @Businessdayng

365-day trial, a lifetime warranty and other benefits. Most important, we know who they are and can direct them to other products they’ll like. It sounds as if PedalSpark is doing a good job with its own online channel, but there’s always room to improve, whether by enhancing the user experience, offering targeted discounts, creating a bigger social-media presence or doing guerrilla marketing. If the goal is quick sales that boost cash flow, selling on Amazon will do the trick. But it won’t necessarily lead to long-term growth and profitability. History shows that no strong direct-toconsumer brand has emerged by selling on Amazon. PedalSpark would be wise to create a loyal following and brand equity for its e-bikes before betting big on the platform.

Stephan Aarstol, the founder and CEO of Tower Paddle Boards and the No Middleman Project, responds to the case study “Sell Direct-to-Consumer or Through Amazon.com?,” A response from Gil Efrati, the chief marketing officer at Nectar Sleep.

Wednesday 24 April 2019

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

Houston visit opens Nigerian insurer’s eyes on cost reduction to boost profitability Stories by Modestus Anaesoronye

ouston Insurance Industry, a major insurance market in the United States of America operates a near paperless process, which help operating firms reduce cost of operation. This is a typical advanced market in the underwriting industry, which Nigeria believes could be emulated to enhance efficiency and service delivery to customers. Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance Plc and president, Chartered Insurance Institute of Nigeria (CIIN) said in Lagos during a media parley that the industry have something to learn from the Houston Market. Efekoha after leading a delegation of key players in the insurance industry for an International Executive Programme in the United States said it’s important that local insurance firms consider running a paperless operation. Efekoha said, this approach will not only enhance efficiency, it will reduce management expenses of firms, which is a major concern for the industry. He explained that the institute had in the past visited countries that had a more advanced insurance market than Nigeria, under an exchange programme. He said they decided to change the name of the exchange programme to International Executive Programme because there has never been an exchange per-se; rather we go to the countries to gather knowledge. He disclosed that the structure of Houston market is a little different but

L-R: Benjamin Agili, managing director, Royal Exchange General Insurance Company: Ose Oluyanwo, president, Professional Insurance Ladies Association (PILA) and Wale Banmore, managing director, Royal Exchange Prudential Life Assurance during the visit by PILA executive to the headquarters of Royal Exchange Plc in Lagos

developed and advanced, noting that technology is advance and they have used it to drive the business. “We decide to go to Houston being a major insurance market in the US and also the centre for oil insurance, knowing that a lot of oil activities take place there” “We visited companies that are paperless in Houston insurance market and in fact, since we came back with that mindset,

Sovereign Trust Insurance profit before tax up 167%

espite the challenging economic environment that characterized operations of most businesses in the country in 2018 and also the seeming lull in the insurance sector, Sovereign Trust Insurance Plc was able to put up a brilliant performance in the year under review when compared with the company’s performance in 2017. The company during the period recorded a 167 percent leap in profit before tax totaling N540 million as against N202 million recorded in 2017. Olaotan Soyinka, managing director/ CEO of the underwriting firm said the development is heart-warming, underscoring the level of work and commitment by board and management during the 2018 business year. The Gross Premium written in 2018 stood at N10.5billion compared to the N8.5billion written in 2018, representing a 23 percent increase. Another outstanding highlight of the 2018 accounts which could be described as very encouraging is the rise in the company’s profit after tax to N344 million as

network to get better with the work we do.” Efekoha said the only regret was that the regulator was not part of the delegation, as their presence would have enable regulatory buy-in to some of the innovations they saw. He said efforts would be made to ensure that the regulator participants in future International Executive Programmes so that everyone will be on the same page to drive process.

Lloyd’s reforms ‘painful” but delivery ‘essential”, says expert

against N157 million in 2017 representing 118 percent increase. As the company grew its balance sheet in 2018, so did it also increase its claims payout? In 2018, a total of N4.2 billion was paid as claims against N1.9 billion that was paid in 2017.The net claims expense grew to N1.7 billion from N1.3 billion in 2017. This in a way underscores the company’s claims paying ability resulting in a 37 percent net claims expense. The total assets also grew by a marginal 5 percent to N11.3 billion in 2018 from N10.8 billion in 2017. Soyinka while briefing newsmen in Lagos said the management of the company is really committed to meeting and surpassing the expectations and aspirations of its shareholders and stakeholders alike. “These performance levels are a confirmation of the management’s determination to effectively and strategically position the company as one of the leading insurance companies in the country while at the same time propel the company to a profitable height for shareholders’ delight”. www.businessday.ng

we are looking at changing things. When you come here in Nigeria you will see people with just a laptop, an ipad and his phone, but over there a staff has more than three monitors that he can work on at the same time and with this they are able to carry out an efficient system. “We learnt other couple of things that they do as well. The takeaways for us will vary with individuals but it has broadened our view and

t’s going to be a “painful process”, but the specialist Lloyd’s of London insurance and reinsurance marketplace is finally starting to address its high expense issue and deteriorating profitability, reports Berenberg. Overall, Berenberg believes that the Lloyd’s and wider London market has finally started to reform, with initiatives underway across the marketplace to lower costs and improve profits after years of high expense ratios and declining underwriting profits, which ultimately became unsustainable. “The London market finally seems to be committed to make the reforms necessary to tackle the operational and financial challenges it faces,” says Berenberg in a recent report, titled Insurance – A Brave New World. The report highlights both the Performance Management Directive (PMD) and the Target Operating Model (TOM). The first is designed to address under-performance of irrational underwriting behaviour, while TOM, which includes things such as the electronic placement scheme PPL, has the potential to improve efficiency across the London market. “These initiatives will prove challenging

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for some; however, delivery is essential to restore market profitability,” says Berenberg. The implementation of the Lloyd’s performance review, which looks to tackle the performance of the worst performing Syndicates, led to improved results for the Lloyd’s market in 2018. The marketplace then announced the introduction of risk-based oversight for underperforming syndicates as part of its ongoing performance review, all of which targets improved underwriting profitability. The implementation of TOM is the London market’s attempt at improving the technological capabilities of Lloyd’s, increasing automation and making it a more efficient and simpler place to do business. “Delivery on this is essential in order to cement Lloyd’s position as the international insurance hub,” warns Berenberg. Another area of focus for Lloyd’s is costs, with the marketplace being a notoriously expensive place to do business. The market “clearly has a cost problem,” says Berenberg, noting that some have suggested that this is threatening its position as a leading, global hub for insurance and reinsurance business.

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Wednesday 24 April 2019

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

‘Nigeria has the opportunity to increase health insurance to 70% to guarantee universal coverage’ Nigeria’s health insurance sector is evolving with a lot of untapped potentials, requiring key roles from stakeholders including the government and the private sector. Tope Adeniyi, CEO of Axa Mansard Health Limited in this interview with Modestus Anaesoronye shares his thought on developments in the industry, growth opportunities, innovations in Axa Mansard Health and other issues affecting insurance coverage in the country. Excerpt: What exactly does Axa Mansard Health do as a company? xa Mansard Health is an entity of Axa Mansard in Nigeria; it focuses on health insurance and is basically an HMO (health maintenance organization) which operates health insurance through a managed health structure, meaning that the entity is focused on providing care insurance for its members and enrollees. It allows its enrollees access medical care without necessarily paying on the spot. We are able to guarantee care when it is needed both at preventive and curative level and that gives you protection and assurance that your financial assets will not be diminished at the point of incidence. Also it guarantees opportunity to have a long productive life because you are able to live healthy and able to restore back to healthy lifestyle whenever you fall ill, so, this care assurance is a whole package for customers in the Axa Mansard Health. How has the acceptance of health insurance evolved today and what do you think is the future of health insurance in Nigeria? By way of background, health insurance predated NHIS where people try to ensure that they have a form of pre-payment made, typically pursued from the hospital side where sometimes there can be prepayment by clients, individuals and businesses. Then it became more structured when government launched the National Health Insurance Scheme which becomes the regulator and the umpire for health insurance in Nigeria as far back as 2003. Federal Government staff were to kick start that scheme which got about 2-3 million people enrolled and the industry since that time has grown slowly to cover about 8 million people, which is still a wide gap given the country’s population of about 200 million. Adoption has been growing slowly in the private sector, though not as we expected. We still want to have a lot of it because it is a big need for every economy, for the citizen to be healthy because it’s key to productivity; wellbeing to everything people stand for to be able to operate properly. While the adoption is not yet as significant as we expect it to be, it is still growing gradually and comparing with other countries of similar economy, Nigeria is still falling behind .Ghana has made above 15 percent in that aspect, South Africa is about 20 percent which is the same in other developing countries. Nigeria has a huge opportunity to improve health insurance beyond 4 percent to almost 70 percent because that is what guarantees universal health coverage. There is huge opportunity and potential for the health insurance adoption in Nigeria. People have not bought not because they cannot buy or lack capacity essentially, but simply need a convenient and conducive atmosphere. So operators need to simplify the cost margin and customer experience, convenient payment mechanism, more awareness, how the health insurance system works so when all these are in place it will increase the adoption. Government also has a role by making insurance mandatory, which is what state governments are doing presently. But beyond the

Tope Adeniyi

mandatory law, it is to create an environment that will make it functional which includes the hospitals. They provide the care, so there must be quality structure that is delivering these services constantly. So government has a role to play in terms of regulation, mandatory policy, providing mechanisms to ensure quality healthcare services are delivered to people while the private sector has a huge role to play which is why Axa Mansard continues to play actively towards the universal coverage. Who is responsible for creating awareness, products and means of payment? From Axa Mansard point of view, it is the responsibility of both the private and public sector to increase awareness. Everybody has a stake. The residents of the nation are the citizens that build the productivity and sovereignty of the nation and make the nation work, so there must be increase in awareness. So Axa Mansard continues to increase awareness on health insurance and health care particularly through different platforms- radio channels, TV advertorials, digital media sponsorship events on healthcare, CSR activities on healthcare both in the formal and informal sectors to ensure that awareness really increases, for example radio presentations are translated into various Nigerian languages. Although some form of enlightenment has come from Axa Mansard, but is there any reason why the sector lack investors and investor confidence? There is no particular barrier, rather what www.businessday.ng

the sector requires is a more enabling environment which the government needs to continue to improve on, where there is a functional and structured regulatory framework and enabling legal framework in a way that we have systems that work both at the delivery side, as well as the demand side. So when these things are constantly evolving and improving, you will see more people getting to the health sector. But there is a lot of work investors are doing maybe at the infancy stage, there are activities going on in the health sector both at the supply and demand side and Axa Mansard and a couple of other people are looking on how to heavily invest in the sector so things are still going on fairly well although not at the expected speed. Can people still use health insurance as a kind of financial planning i.e beyond taking care of their immediate health; does it offer any other rewarding experience? There are two sides to this, if you look at it as a form of protecting your financial plan, health insurance is a perfect tool which means that you have businesses to run, families to cater for and keep your job running, if you fall ill and cannot pay with any reserve you will have to sell your property, assets to pay for health care but the health insurance will step in and help with health bills. Secondly it is on the preventive side, as health insurance makes a conscious effort to make sure you prevent chronic situation which can come up in future if your lifestyle is not well modified to deal with that. So we do

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health checks, educate enrollees on how to live a healthy life and on a long term that is a form of financial protection. So in those two ways, you have a bit of financial planning as well as financial protection on your assets by putting health insurance in place. The theme of this year’s world health which just ended its universal health coverage for everyone, everywhere; how does this align with your vision? Universal health coverage (UHC) is open to every nation because health is wealth. Health is important to every nation because the productivity and survival of a nation depends on its wellbeing. So UHC should be like a right to every citizen in which case everyone is given access to good health when it is needed. UHC is focused on ensuring that you have affordable and quality healthcare for all residents and Axa Mansard is passionate about the goal of sustainable development of the world health as well as the Nigerian goal of the national health coverage. Axa mansard with its business and activities fully aligns with ensuring UHC . We partner to empower our people to live a better and healthier life and give access to healthcare when needed. Activities that we engage in are reflected in our products, services and the channels we use. We have products that focus on the middle class, the upper and lower income earners. This is to ensure that everyone has access to basic healthcare so we have products like easy care that is applicable to those in the informal sector, those with low income earnings, even people that cannot not afford more than N2,000 a month can still have access to health care. We have care that will be distributed through large distribution channel like telcos, banks where people with just 500 will have access to healthcare. We partner with Lagos State Governments to administer Lagos state compulsory insurance scheme which gives access to majority of Lagosians about 20 million people as a potential that they can have access to basic healthcare at a very affordable pricing. So in every way, we are creating products, services and channels that will make health care accessible affordable and sustainable. There are a lot of competitions in the market, so what is uniquely different about you? Axa mansard thinks differently about competition, our competitions are ignorance and alternative things people actually look for whenever health issues are coming up because we have 200 million Nigerians who constantly require excellent services which is provided by Axa mansard. Our drive is always passionate service for the customer. We want to simplify customer service and experience in healthcare so all the time customers are always looking forward to all the things that make them better and stronger and that is what we are committed to doing at all times. We simply customer experience and deploy best technology and best process to have the best healthcare experience; we remain different with our people, the way we operate, our customer service even outside the country. Continues online: @www.businessday.ng

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Wednesday 24 April 2019

BUSINESS DAY

PENSION today

In Association with

Multi-fund structure as investment strategy for contributory pension scheme

he traditional thinking has been that members in defined contribution (DC) schemes bear all the investment risks and rewards and receive benefits (based on whatever contributions and investment returns are produced at retirement), which are adjusted automatically, as asset values move up or down, therefore limiting the need to immunize asset/ liability movements. It is normally assumed that such schemes have limited or no actuarial involvement. On the other hand, a DC scheme such as the Contributory Pension Scheme (CPS) operating in Nigeria that forces compulsory contribution rates (section 4(1) of PRA 2014) and entails significant tax concessions (section 10 of PRA 2014) should not, under reasonable circumstances, be left to require members to bear all risks over many decades of membership. Thus, the introduction of guaranteed minimum pension (GMP) as an underpin (section 84(1) of PRA 2014) is quite appropriate with the aim to reduce the risk of volatility of standard of living in retirement facing the pensioners. Conceptually, the determination of the GMP and the appropriate investment strategies requires an actuarial methodology.In view of the above, PENCOM should also be aware that offering even a minimal defined benefit(DB) underpin can result in the CPS needing to meet DC regulation as well as DCregulation. Prior to the introduction of Multi-Fund Structure in July 2018,the Pension Fund Administrators (PFAs) operated low risk investment strategies, without taking into account the scheme members’ duration (age) / risk profiles and their freedom of choice of investment funds. Furthermore, there had been an over concentration of pension funds invested in debt instruments (e.g. Government bonds) with limited growth potential for the retirement funds. The Contributory Pension Scheme also had only two investmentFunds to invest in,namely RSA Active Fund and RSA Retiree Fundwhere all active contributors’ and “retirees’funds were being invested in respectively. Over the long term, these low strategies are likely to result in lower emerging pensions than might have been expected of life-style investment strategies for investment portfolios with different risk profiles. The foregoing narratives are the overarching considerations for the introduction of the Multi-Fund Structure. Life-style Investment Strategy for Defined Contribution Scheme A typical lifestyle investment strategy is gen-

Pius Apere

erally carried out by the fund administrators to a defined contribution schemeat an individual member level. Each member’s assets under management (AUM) are being invested initially in risky assets, such as equities, (during the saving phase) and then reducing the allocation to risky assets in an individual’s portfolio (move assets into cash and bonds)as scheme members approach retirement age(i.e. duringthe retirement income phase starting from 5 - 10 years before retirement). The objective is to give the assets a chance to grow but have a chance to recover from any fall in asset values in the early years and avoid the impact of such a fall just prior to retirement. However, a group approach is gaining more popularity whichretains some pooling and risk sharing for employees within the group.The saving phaseis expected to adopt a diversified multi-asset fund approach whereby the asset switches are triggered as age limits are hit rather than particular investment returns achieved. The Multi-Fund Structuremethodology as described below is a reflection of the group approach. Multi-Fund Structure forContributory Pension Scheme in PRA 2014 Section 85 (1) ofPRA 2014 states that Pension Fund Administrators shall invest pension fund assets with the objectives of ensuring safety and maintenance of fair returns on amount

invested.In other words, Contributory Pension Schememembers’ are expected toreceive pension benefits as at when due and also have sustainable standard of living in retirement. PENCOM’s regulation (on investment of pension fund assets) in February 2019specified six investment Fund Typesunder the MultiFund Structure with a given overall maximum percentage exposure to variable income instruments for each Fund Type. The Pension Fund Administrators (PFAs) shall allocate contributors to various Fund Types according to the following criteria: Membership of Fund I (75% of Portfolio Value) shall strictly be by formal request by a Contributor. Active Contributors who are 49 years and below as at their last birthdays shall be assigned toFund II (55% of Portfolio Value). An active Contributor in Fund II who wishes to be assigned to Fund I shall make a formal request to the PFA. Active Contributors who are 50 years and above as at their last birthdays shall be assigned to Fund III (20% of Portfolio Value). An active Contributor in Fund III who wishes to be assigned to Fund II shall make a formal request to the Pension Fund Administrator (PFA) but not allowed to choose Fund I. Fund IV (10% of Portfolio Value)shall strictlybe for Retirement Savings Account (RSA) retirees only and they shall not be allowed to choose Fund I. Fund V (5% of Portfolio Value) shall strictly be for contributors under the Micro-pensionScheme. Fund VI (55% of Portfolio Value) shall be for those that choose to have their contributionsinvested in Non-interest Money and Capital Market Products. An active contributor in Fund I, II or III who wishes to move toFund VI shall make a formal request to the Pension Fund Administrator. An active Contributor may switch from one Fund Type to another Fund Type within a given Pension Fund Administrator, once in 12 months without paying any fees but any additional requests for switches among Funds within a Pension Fund Administratorby theactive Contributor shall attract a fee. The concept and implementation of the Multi-Fund Structure are well conceived,highly commendableand suitable for the members of Contributory Pension Scheme with different risks profiles. However, the Multi-Fund Structure has its own challenges and/or complexities, particularly when the appropriate investment strategies to meet the guaranteed minimum

pension under PRA 2014 areto be considered. Challenges of Multi-Fund Structure for Contributory Pension Scheme The Multi-Fund structure which offers members with investment choices/optionsis likely to create the following challenges for the Pension Fund Administrators (PFAs): Members may make inappropriate investment decisions due to lack of knowledge to make a choice. This risk can be reduced by providing access to education, advice and/or communication to ensure the members understand what is being offered and the potential consequences of the choices that they make but this is at a cost to Pension Fund Administrators. The projections of the future pension benefits will be more complexbecause ofmany overlaps between some Fund Types. Thus, the range of investment options (Fund Types) provided will impact on cost of administration of Pension Fund Administrators. For a defined contribution scheme that offers an underpin (a guaranteed minimum pension), there is a risk that members will choose a more risky investment strategy than they otherwise might have, since they know they have a minimum benefit promise or members will choose a very safe investment strategy with relatively low expected returns. Both of these approaches increase the likelihood of the underpin biting. A pragmatic approach for allocation of investment returns within a given Fund Type amongst contributors may be adopted to take into account of each individual contributor’s asset under management (AUM) and/or duration profile (in years) within the Fund Type. The assessment of cost of guaranteed minimum pension as an underpin (using stochastic modelling techniques)and the appropriate investment strategy (i.e. a “matched” investment position which would involve holding a portfolio that will behave in the same manner as the guaranteed minimum pension liabilities) may become a great challenge for the Contributory Pension Scheme with Multi-Fund Structure without an actuarial involvement. Conclusion The implementation of the Multi-Fund Structure for Contributory Pension Scheme under PRA 2014 is expected to maximize the investment returns for Retirement Savings Account (RSA) holders prior to retirement and this will in turn likely to increase their pension benefits at retirement. Pius Apere (PhD/FCII), Actuarial Scientist and Chartered Insurer

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail:

RC634453

Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com www.businessday.ng

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diamondpfcbusday@yahoo.com

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Wednesday 24 April 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Apapa gridlock takes toll on over N200bn investment at ports – report Stories by amaka Anagor-Ewuzie

erminal operators at the nation’s seaports are now concerned about the dire implications of the persistent gridlock that has taken toll on the over N200 billion investment at the ports, the 2018 Nigerian Logistics and Supply Chain Report, has said. According to the report, terminal operators are now groaning and complaining for not being able to meet their Guarantee Minimum Tonnage (GMT), on which their payments are benchmarked. Precisely, terminal operators, clearing agents, importers have continued to suffer untold hardship due to the deplorable condition of the port access roads and the attendant traffic gridlock that have characterised the routes. Confirming, the Lagos Chamber of Commerce and Industry (LCCI) in its maritime report stated that about

L-R: Iheanacho Ebuebogu, NPA general manager, Security; Ifeora Celine Amaka, deputy director, monitoring and enforcement, Nigerian Shippers Council (NSC), and Albert Onyeka, principal manager, Security, NPA, who is also the vice president, Task Force on Apapa Traffic Gridlock (TFOATG) at PEBEC’s interactive session with stakeholders in the Maritime Industry held recently in Lagos.

5,000 trucks seek access into Apapa and Tin-Can Island Ports in Lagos on daily basis. LCCI stated that these trucks have continued to plunder port environment owing to the fact that the access road to the ports were originally meant to accommodate only 1,500 trucks. Meanwhile, Nigerian Lo-

gistics and Supply Chain Report said that due to gridlock, the cost of transportation from Apapa has increased by about 400 percent. For instance, movement of consignment from Apapa to Trade Fair Complex in Lagos, which used to be between N80,000 – N120,000 for 20 feet and 40 feet containers

respectively, is now between N550,000 – N600,000. “Seaport Terminal Operators Association of Nigeria (STOAN) estimated that the nation is losing N20 billion daily to the avoidable traffic situation,” the report said. Vicky Haastrup, chairman of STOAN, was reported to have said in an interview

Here’s how NIMASA plans to end Cabotage waivers in Nigeria

fter years of loss of seafarers’ jobs and businesses by indigenous Nigerian owned vessels to foreign vessels, the Nigerian Maritime Administration and Safety Agency (NIMASA) has finally rolled out plans to enable it put an end to granting of waivers to foreign owned, manned, built and flagged vessels participating in Cabotage trade, which is solely reserved for Nigerians. Coastal and Inland Shipping Act (Cabotage), which became an Act in 2003, was enacted to ensure that more Nigerian ship operators become involved in the nation’s shipping business that have been dominated by foreigners. The Act, however, reserved coastal trade exclusively to vessels owned by Nigerians, manned by Nigerians, built in Nigeria and registered in Nigeria to fly Nigerian flag. Unfortunately, the Act has not been able to achieve its purpose largely due to the inability of Nigerians to acquire standard vessels and trained qualified seafarers to take Cabotage jobs. As result, Federal Ministry of Transportation started

granting waivers to foreign owned to either use vessels built abroad because Nigeria is yet to develop her shipping building capacity or to use foreigners to crew Cabotage vessels. This for years has created more opportunity and job losses for indigenous Nigerian players. To reduce waiver granting, NIMASA recently said that it wants to grow capacity in ship building by encouraging establishment of shipyards; creating affordable credit facilities to enable Nigerians acquire vessels; creating tax incentives for importing built vessels and building of qualified Nigerian seafarers. Speaking at a 2-day Stakeholders’ Consultative Meeting for the Cessation of Cabotage Waivers organised by NIMASA in Lagos recently, Dakuku Peterside, director general of NIMASA, said the agency is engaging with the Federal Ministry of Finance and the Nigeria Customs Service (NCS) to create a special tax incentive for Nigerians bringing vessels into the country. The plan, he noted, will also involve creating special incentives that can enable ship building yards to bring www.businessday.ng

in components for building vessels in-country. He added that the government is also determined to ensure that Ajaokuta Steel Mill and Aluminum Steel Company in Akwa Ibom State come on stream to provide the needed raw materials for ship building yards. “The current tax regime makes it impossible for Nigerian ship owners to compete with their foreign counterparts. For instance, foreigners bring in vessels for a short period and they have special tax regime that enable them pay little to nothing for their vessels to work and live in Nigeria. Whereas, a Nigerian is charged a full range of all tax applicable (14 percent), making it near impossible for their Nigerian vessels to compete,” Peterside explained. According to him, NIMASA is determined to ensure that in the next five years, certain categories of vessels (yet to be listed) are built in-country. This, he said, will put an end to issues around bringing in all kinds of vessels from outside the country and its attendant capital flight and job losses. “NIMASA is engaging

with the office of the Vice President on the possibility of creating incentives for shipyards. We believe it will encourage a lot of entrepreneurs to invest in ship building. We are also working in partnership with the Nigerian Content Development Monitoring Board (NCMB) and have commissioned an audit of all shipyards in order to identify a level support that will help revive shipyards in Nigeria,” he said. Greg Ogbeifun, former president, Ship owners Association of Nigeria (SOAN), expressed concern that NIMASA might not be able to achieve it desire to put an end to granting of waiver for ship built abroad, because Nigeria’s ship building industry is nowhere. He said it was unlikely for Nigeria to develop capacity to bracket waiver in the next five years especially in the area of using ships built in Nigeria for Cabotage trade. Margret Orakwusi, a ship operator advised NIMASA to ensure that Ajaokuta Steel industry come on stream and also ensure that Nigerians are enabled to obtain loans at single digit interest rate.

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that terminal operators are finding it extremely difficult because the dollar generated from services rendered was not enough to pay the royalty and lease fees, which are paid in dollar, and it has also becomes difficult to meet their dollar obligation to the Nigerian Ports Authority (NPA). Haastrup, who said concession agreement had specific things the concessionaires are required to do in terms of port development, assured that all the terminal operators are fulfilling those areas of the concession agreement. “I do not know of any terminal operator that has not done that. I think most of us have done much more than that. So, we have an agreement that states exactly what terminals operators are expected to do and I think, we have done far above that,” she added. Bu s i n e s s Day u n d e rstands that concessionaires invested over $475 million (N76 billion) on acquisition of modern cargo handling

equipment and $450 million (N72 billion) on terminal development from 2006 till 2013. The investment started in 2006, when the port reform programme was executed and cargo handling operations removed from the functions of the Nigerian Ports Authority (NPA) and handed over to private companies. Though, most of the port terminal owners have made more investment in acquisition of additional cargo handling equipment, training of personnel and terminal development between 2013 till date, but the persistent traffic congestion in and out of Apapa port city, has become a serious threat to the existence of these investments. The traffic also threatens other businesses including the huge sum put into export and import trade by shippers, whose cargoes are trapped in the port for days before shipment or clearing due to delays as a result of traffic.

NIMASA promotes IMO representative, 256 others across all grades

ikko Bala, Nigerian Alternate Permanent Representative at the International Maritime Organisation (IMO), has been promoted to the position of a director. This was in line with the approval of the governing board of the Nigerian Maritime Administration and Safety Agency (NIMASA), under the chairmanship of major general Jonathan India Garba (rtd), a statement by Isichie Osamgbi, head, public relations unit of NIMASA, said. Also promoted to the position of director in the Agency was Rita Uruakpa, deputy director, Maritime Labour Services. Others are Kazir Musa, who was promoted to deputy director, and 18 officers, who were elevated to assistant directors. Also, 236 other staff across all grade level was promoted. Dakuku Peterside, director general of NIMASA, who congratulated the promoted @Businessdayng

members of staff, charged them to continue to be committed to the Agency’s vision of taking the Nigerian maritime sector to an enviable height. “Our determination to continue to motivate the Agency’s workforce remains unwavering. This was a rigorous but fair process,” he said. “On our part as executive management of NIMASA, we will continue to ensure that staff members are promoted as and when due to enable them, remain motivated in giving their best in the Agency’s drive to reposition the maritime industry,” he added. On his part, Garba, chairman, Governing Board of the Agency enjoined the newly promoted staff to be more dedicated to their duties, saying the promotions will come with more responsibilities. The present promotion exercise is the third under Dakuku Peterside’s management, after assuming office about three years ago.

Wednesday 24 April 2019

BUSINESS DAY

MARITIMEBUSINESS

Shipping

Logistics

Maritime e-Commerce

Refrigerated cargo, agro-commodities boost India’s export by 3% as in Nigeria …China, UAE, USA, Netherlands now top markets for India’s goods amaka Anagor-Ewuzie

ncreasing demand for refrigerated cargo from India coupled with improved trade relations with China and the introduction of favourable trade policies, has driven India’s exports to grow by a healthy 3 percent, the quarter four 2018 trade report released by Maersk, the world’s largest container shipping company, said. Just like Nigeria’s non-oil export trade, which is driven by export of agro produce and minerals, India’s agricultural sector is also faced with food wastage that force the industry to lose billions of dollars annually. Meanwhile, India has in recent time becomes the biggest destination for Nigeria’s crude oil. According to the report, the demand for India-made goods such as vehicles, cereals and rice; supplemented by refrigerated cargo such as fish, seafood, vegetables and pharmaceuticals, saw maximum growth in exports. “India’s containerised trade with the world has also grown steadily, recording an overall import-export trade growth of 6 percent

Source: Q4 2018 Maersk Trade Report in the period under review. On the other hand, imports have maintained a stable growth of 9 percent, and it was largely driven by substantial inflow of metals and paper,” the report stated. It however added that containerised trade has witnessed stable growth withstanding the fluctuations of global trade tensions. “We witnessed a stable trade environment in the last quarter of 2018, due to base effects, weakening demand of goods in China, overall contraction in manufactur-

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ing around the world and the global trade tensions between major economies, said, Steve Felder, managing director, Maersk South Asia, who commented on the overall growth in containerised trade. Felder also said the stable growth in trade indicates that the economy has been able to sail through some of these challenges, including the impact of regulatory reforms such as demonetisation and implementation of GST. “We are witnessing an

array of developments in the industry with regard to digitisation, consolidation and infrastructure upgrades which will support in propelling India as one of the top trading destinations in the world,” Felder added. Export growth from India was led by refrigerated cargo and agro-commodities, especially vegetables, seafood, fruits, nuts, cereals and rice exported to countries like China, UAE, USA, The Netherlands and smaller nations like Algeria. “Dry cargo exports re-

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mained flat this quarter, barring vehicles, which saw double digit growth in volumes. As consequence of favourable trade policies, China surprisingly became one of the key export markets for refrigerated cargo. “It also became one of the highest contributors to India’s export basket in quarter four with a 71 percent year-on-year increase. Import growth was led by dry cargo, metals followed by paper, appliances and kitchenware,” the report said. “West region saw the highest growth of imports of dry commodities with strong growth in iron and steel scrap and electrical motors, while exports were largely driven by vehicle export to Mediterranean countries like Egypt and Turkey. “On the contrary, North region saw the highest growth of exports of dry commodities with plastic and rubber being the highest exported commodity. Chemicals saw a strong 6 percent growth in export from the North India region. “The highest commodity to see unprecedented growth is seafood, with fish being the highest exported commodity to China followed by a double digit

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growth in exports to USA. Dry cargo like plastic, rubber, metal, and paper were among the most imported items in India in quarter four. Iron and steel scrap were mostly imported from countries like UK, Belgium and The Netherlands to the North and West of India, the report further said. It further revealed that India also witnessed a 74 percent rise in its pharmaceutical exports to the USA. “Unlike professional and large scale farming observed in western countries, a majority of India’s agricultural produce comes from small, rural producers based in the hinterlands,” said, Ajit Venkataraman, managing director, APM Terminals Inland Services, South Asia. Ve n k a t a r a m a n , w h o commented on the healthy growth of refrigerated cargo and agro products, said that one of the most crucial challenges faced by the India’s agriculture sector is food wastage. “An efficient ‘farm-tofork’ cold chain network managed by skilled workforce with refrigerated containers, temperature-controlled warehouses along the service trail, will help curtail this loss,” he suggested.

Wednesday 24 April 2019

BUSINESS DAY

FEATURE NLNG legal entanglement with NIMASA portends danger for FDI FRANK UZUEGBUNAM

he current legal entanglement between Nigeria LNG Limited (NLNG) and Nigerian Maritime Administration and Safety Agency (NIMASA) may spell danger for the much needed foreign direct investment (FDI). The legal tussle, over applicability of NIMASA levies to NLNG, which many thought has been laid to rest, took a new twist with the appellate court judgement delivered on March 29, 2019, mandating that the case be sent back to the High Court for fresh trial under a different judge. “The peculiarity of the present case makes the outcome of the re-trial arguable and uncertain, given that the Court of Appeal has declined to address the substantive issues raised. The glaring implication of the Appeal Court’s decision means that the judgement delivered by the Federal High Court is rendered null and incapable of enforcement by either of the parties, NLNG especially”, said Ayodele Oni, energy partner at Bloomfield Law practice. This has given rise to uncertainty of the likely outcome of the judgement of the Federal High Court this second time. Uncertainty is a definite red flag for investors. How it started On 3rd May 2013, a tug boat blockaded LNG Adamawa, an NLNG chartered vessel, at the instance of NIMASA acting through Global West Vessel Specialists Limited. The blockade, according to a maritime expert, was “a self-help effort to extract levies purportedly owed NIMASA by NLNG”. These levies according to NIMASA, include shipping levies based on gross freight on exports and imports. However, the NLNG said the Act establishing the Nigeria LNG exempts it from payment of the Sea Protection Levy, the three percent freight levies on cargo exports shipped by NLNG, and the two percent Cabotage Levy. NIMASA eventually lifted the blockade on 5th May 2013 after a meeting between the management of NLNG and NIMASA, in which it was resolved for lasting solutions to be sought under the rule of law. On 21st June 2013, and in flagrant disregard of a subsisting court order barring it from further blockade of the Bonny Channel, NIMASA effected another blockade of the Bonny Channel, preventing NLNG vessels and vessels belonging to its buyers from accessing or leaving the NLNG terminal. After a three-week blockade, NLNG was compelled to start making the disputed payments “under protest,” which led to NIMASA ending the blockade. Owing to the blockade which persisted in spite of court orders, NLNG claimed that it lost revenues of over $355 million. NLNG filed a case in 2013 at the Federal High Court, Lagos Division against the Attorney General of the Federation and Global West Vessel Specialists Nigeria Limited, seeking a judicial determination on, among other things, the legality or otherwise of certain levies sought to be imposed on NLNG by NIMASA, an agency of the Federal Government and the consequent blockade of NLNG vessels by NIMASA and Global West as a result of the dispute. On October 3 2017, the Federal High Court sitting in Lagos, delivered judgment in favour of NLNG against NIMASA, granting all the reliefs sought by NLNG in the case over applicability of the NIMASA levies. Justice Mohammed Idris ruled that NLNG was not liable to pay the three percent gross freight on its international inbound and

outbound cargoes and sea protection levy amongst other charges, to NIMASA, adding that NIMASA was wrong in blocking the NLNG from having access to its Bonny terminal for the purpose of enforcing the payments against NLNG. According to the court, all such payments already made by NLNG to NIMASA “under protest” should be refunded to NLNG forthwith. The court went further to restrain NIMASA from taking or continuing any steps to block, restrain, seize, detain or restrict NLNG (or its shareholders or subsidiary vessels or chartered vessels). The dispute can be traced to the apparent conflict between the enabling Acts of both organisations: the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act 1990 and Nigerian Maritime Administration and Safety Agency Act 2007, Merchant Shipping Act and Coastal and Inland Shipping Act. Section 2 of the NLNG Act provides the company tax waivers and other incentives for its investment in the project to harness Nigeria’s gas resources for exports. However, NIMASA contends that its establishment laws exempt only military vessels from its various revenue payments. Pyrrhic victory? The maritime regulatory agency filed an appeal against the judgement of Justice Mohammed Idris leading to the Court of Appeal directing that the case between the two parties be remitted to the Federal High Court for re-hearing. Dakuku Peterside, Director General, NIMASA, commended the appellate court judgement saying it has reaffirmed confidence in the Judiciary. “This judgement has further shown that the judiciary is unbiased and remains a beacon of hope for Nigerians. On our part as responsible government agency, we will continue to work closely with the judiciary and other stakeholders to ensure that we realise our mandate of creating a robust maritime sector in line with best global practices,” Peterside said. But then, the appellate court did not override the judgment of the trial court, neither did it uphold the decision.

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“The Court of Appeal declined the invitation to delve into the substance of the dispute between NIMASA and NLNG”, Oni said. Andy Odeh, manager, Corporate Communication and Public Affairs, NLNG, in a statement, said that “NLNG as a good and responsible corporate citizen remains committed to conducting its business in accordance with the laws of the Federal Republic of Nigeria, and to abide with all applicable laws including those that confer exemptions on and grant fiscal incentives to businesses, as a way of sustaining their operations and growing the economy.” Another legal expert who spoke to BusinessDay said that “where the case is to be heard afresh, the position of the parties would revert to what it was as at the time the case was filed, in which case no payments of the levies in dispute would be made by NLNG to NIMASA pending the re-hearing and determination of the suit. Where on the other hand the right of appeal to the Supreme Court is exercised, the status quo as of the date of the Court of

‘‘

The $12 billionTrain 7, is projected to increase the plant production by 35 percent, attracting huge foreign direct investment (FDI) of $2 billion in upstream investment and some $5 billion in construction thereby creating over 10, 000 jobs during construction

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Appeal judgment will be maintained, which is to the same effect”. Tax holiday vs. levies The issue of NLNG’s tax holiday has often created a mix-up of issues in respect of NIMASA’s levies. The NIMASA levies have nothing to do with the NLNG tax holiday. The 10-year tax holiday was a pioneer period incentive in the manner of similar relief to pioneer companies under the Industrial Development (Income Tax Relief) Act and pertains specifically to income-tax. NLNG now pays Companies Income Tax and Tertiary Education Tax which are the heads of corporate income taxes recognised under Nigeria’s laws since the end of the tax relief period. The NIMASA levies are not heads of income tax. They fall within the fiscal incentives and exemptions contained in other provisions of the NLNG Act which are not time bound. Corporate cousins? “NIMASA and NLNG are neither foes nor competitors. We are corporate cousins working together for the common good of our great country. Judgements like this only serve to strengthen our institutions and ensure greater bonding,” Peterside said. NIMASA, formerly the National Maritime Authority (NMA) is the apex regulatory and promotional maritime agency responsible for regulations related to Nigerian shipping, maritime labour and coastal waters. NLNG was incorporated as a limited liability company on May 17, 1989, to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for export. In a chat with Businessday during the recent signing of the Nigerian Content Plan Agreement for Train 7 with Nigerian Content Development Monitoring Board (NCDMB), Tony Attah, Managing Director, NLNG, recounted several feats recorded by the company which include monetising over 6.37 Trillion Cubic Feet of Associated Gas to Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs), thus helping to reduce gas flaring by upstream companies from over 60 percent to well under 20 percent. From the monetisation of gas hitherto being flared, NLNG has generated over $100 billion revenue since inception; paid over $36 billion to shareholders as dividends, of which 49 percent of that total has gone to the Federal Government by virtue of its shareholding stake. With six trains currently operational, NLNG’s plant is capable of producing 22 Million Tonnes Per Annum (MTPA) of LNG, and 5 MTPA of NGLs (LPG and Condensate) from 3.5 Billion (standard) cubic feet per day (Bcf/d) of natural gas intake. “The $12 billion-Train 7, is projected to increase the plant production by 35 percent, attracting huge foreign direct investment (FDI) of $2 billion in upstream investment and some $5 billion in construction thereby creating over 10, 000 jobs during construction,” Attah added. Ranked as the fourth LNG Company worldwide by market share, the NLNG is arguably number one in CSR in Nigeria having spent over N25 billion on community projects over the years; over N2 billion on building world-class engineering laboratories in six Nigerian Universities through the University Support Programme, and N120 billion on the construction of Bonny-Bodo Road in Rivers State. In addition, the company signed an MOU with the Bonny Island community to provide N3 billion each year for 25 years for the overall development of the Kingdom.

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Wednesday 24 April 2019

BUSINESS DAY

XECUTIVE MOTORING

Stallion sets benchmark on digital security device Pg 27

N100m new Marcopolo luxury bus enters market …As collapsed road conditions worsens MIKE OCHONMA mikeochonma@gmail.com

hile most of the Nigerian roads presents an ugly picture of a failed federal and state governments that are not willing to deliver the dividends of democracy to the masses that voted them in office, returns on investment (RoI) for luxury bus operators are once again facing a litmus test following the launch of the new Marcopolo Paradisio 1350 luxury bus into the Nigerian market. With the recent introduction of the 59 seater high capacity commercial passenger bus valued at over N100 million into the country by Weststar Associates Limited, distributors of Mercedes-Benz in Nigeria in alliance with Auto Alternative Nigeria Limited, representative of Marcopolo in the country, commuters are in for an travelling exciting, even as the road persists. The introduction of this bus highlights the growth and expansion of interstate road travel in Nigeria as the industry continues to follow suit with technological advancements from around the world. The new generation Paradiso 1350 has been designed to provide the best passenger experience and greater comfort and safety to the driver making it even better than its predecessors. It is built with the ever reliable Mercedes-Benz 0 500 RSD bus chassis developed for middle and long distance travel, it is a robust and highly durable vehicle that is built to carry 24 tonnes and a body length of up to 14 meters long. Mirko Plath, managing director, Weststar Associates Limited, commented that the introduction of the

Marcopolo Paradiso 1350 bus model marks a move in the right direction for the local bus operators. Plath believes that the bus operators are ready to take their businesses to the next level. He also stated that he appreciates the fact that they continue to put their trust in the Mercedes-Benz brand and that the collaboration with Marcopolo in Nigeria has certainly borne fruit over the years. The new Marcopolo Paradiso 1350 brings external and internal changes that raise the level of sophistication, comfort, safety and efficiency in comparism to its predecessors. A renewed exterior sees the bus appear with newly designed mirrors that offer better driver visibility, newly designed bumpers and side windows and a new visual identity in the front; while the rear comes with a larger back cover that improves access to mechanical components and rear windows with a new design. Another major feature of the exterior is the headlights with new

internal design and integrated DRL (Daytime Running Lights), also included in the headlights are LED fog lights and an elongated side wall design giving a modern feel and flow to the light assembly. The interior is totally transformed from the driver’s cabin with new lighting to the dashboard with soft touch finish and more thermoacoustic comfort. There is also an electric window next to the driver that comes as an optional extra, while the larger access steps come with injected profiles and indirect lighting for ease of entrance; other features include new floor coverings and a new roof design with superior lighting and LED details. Passengers and driver safety and well-being is highly prioritized as the space between the driver’s cab and the passengers’ section is partitioned with bulletproof glass and the drivers cab is also partitioned with a protective glass door. The O 500 RSD 2436 6x2 chassis is equipped with an OM 457 LA engine

that comes with 6 in-line cylinders. Power output is 265 kW (355 hp) at 1,750 rpm and is operated via a 6 speed manual gear transmission. The brand’s O 500 chassis is also very economical for bus operators as the electronic motors included in its engine ensure that the bus consumes lower fuel and has a longer life. With regards to safety, the chassis is equipped with safety features like the Top Brake auxiliary engine brake coupled with the conventional engine brake system. This brake system provides many advantages, such as increased braking power, higher speed on slopes, greater safety, less gear shifting, lower maintenance costs, longer life of brake and tire components and fuel economy. There is an anti-lock brake system (ABS) which offers greater safety, because the vehicle remains stable in adverse driving conditions and critical situations. In cases of sudden braking, even on smooth surfaces or rough roads, the ABS system prevents the vehicle from skidding.

Toyota in a ‘Rush’ to tackle compact SUV rivals

he rush for the all-new Toyota Rush unveiled by Toyota Nigeria Limited in January this year to bridge the gap between the demand for SUV and saloon models by the buying public appears to be looking gaining traction according to the pulse gauged by our reporter from the dealer networks of the brand across the country. Recall that Toyota Nigeria Limited last January moved to quench the apetite of new car enthusiasts and especially Toyota faithfuls looking for an elegant but affordable small sport utility vehicle with the unveiling of the Toyota Rush to the nation’s automobile market. Bringing it into the market to tackle rivals like the Huyndai Creta and Ford Edge was aimed at meeting the aspirations of individuals that love the comfort of the status of an SUV with excellent drive and an affordable price. The latest model was the third generation with an overall length of 4435mm and overall width of 1705mm Barely 90 days after that historic, market indicators as to the request for the the new entrant with a sales

Auto Shanghai reveals Kia’s K3, Plug-in hybrid

projection of between 200 and 300 units this year appears to be looking bullish. Authorities at TNL say it expects the new Rush compact SUV to be ab instant success. Managing Director of TNL, Kunle Ade-Ojo had said during the product launch in Lagos that the introduction of the vehicle was born out of an extensive research and the persistent

demand for the model by lovers of the Toyota brand. The vehicle, which is available in three variants, fuses dynamic energy with sharp elegant styling. The Rush adopts some design cues from bigger SUVs in the Toyota line-up. While the earlier first-generation model looked like a scaled-down version of the RAV4, the new addition

has a definite “mini-Fortuner” look to it, entwined with some Avanza cues. It is larger than the Avanza at 4,435mm long (Avanza 4,140mm), 1, 695mm wide (Avanza 1,660mm), 1,705mm tall (Avanza 1,695mm), and has a 30mm longer wheelbase (2,685mm versus the Avanza’s 2,655mm). The new Rush’s front is dictated by a large grille flanked by LED daytime running lamps and a high-set bonnet. The side view has considerable Avanza influence but flared wheel arches and a slightly higher ride height (220mm) that combines effectively to give it a more purposeful and resolute stance. In terms of the safety kit, the Rush impresses with its ‘Safe-T Plus’ package that includes six airbags, a blind spot monitor with rear-cross traffic alert, vehicle stability control and Pre-Collision System. The last item is exclusive to the 1.5S and operates like most autonomous emergency braking systems by first alerting the driver at speeds of 4-100 km/h (vehicles)/4-50 km/h (pedestrians) when an imminent collision is ahead.

ia Motors Corporation’s Chinese venture, Dongfeng Yueda Kia Motors Co. (DYK), last Tuesday revealed the new Kia K3 and K3 Plug-in Hybrid at Auto Shanghai 2019. The latest version of the mid-sized sedan has been designed and engineered specifically for the Chinese market. The new K3 features a unique exterior design, matched by a spacious, high-quality cabin and powered by a range of highlyefficient gasoline and plug-in electrified powertrains. In addition, the car is offered with a series of China-specific technologies and functionality. For Jay Yoon, Vice President and Head of Brand & Marketing Group at DYK. “The K3 has been designed and engineered with Chinese drivers in mind, and is built locally, with a range of features and characteristics aimed at exceeding the high expectations of young Chinese drivers. With more space and technology than ever, and a stunning new design inside and out, the new model isn’t just a

rational choice, but a highly desirable one, too”. Following their debut at Auto Shanghai 2019, the K3 will go on sale across China in the second quarter of the year. The K3 and K3 Plug-in Hybrid are joined in Shanghai by DYK’s new China Touring Car Championship (CTCC) competitor, the K3 CTCC, demonstrating the dynamic performance potential of Kia’s latest model. DYK is also displaying the new ‘Imagine by Kia’ concept, first seen at the 2019 Geneva Motor Show earlier this year, as well as interactive exhibitions of the brand’s latest in-car technologies. Also making its debut in Shanghai is the new K3, created exclusively for Chinese customers and offering a range of new design and technology features. The design was overseen by Vice President and Head of Kia Design China, Oleg Son. The vehicle’s bodywork is characterized by smooth, sculpted surfaces and sharp, precise lines, creating a clean, modern aesthetic that stands out on the road. Precision details give the new K3 a modern, technical appearance, including the ‘heartbeat’ light signature in its LED head- and tail-lights, a visual cue hinting at the car’s ability to quicken the pulse of its owners.

Wednesday 24 April 2019

BUSINESS DAY

EXECUTIVEMOTORING

Stallion sets benchmark on digital security device …Tasks competitions, motorists on ‘Microdot’

MIKE OCHONMA

tallion Motors Limited has enjoined competitions and motorists to fit Microdots digital security device, just as it deployed the application in select brands including Nissan, Honda, Hyundai and Changan vehicles that are assembled and distributed by the company and its subsidiaries in Nigeria. Also known as DataDots, Microdots DNA is a mechanical pepper spray that is applied in multiple discreet locations on a vehicle including older brands of automobiles to deter theft and prevent illicit trade of stolen parts, habitually pilfered from Micro-dotted vehicles by delinquents. This suggests that all Nissan, Honda, Hyundai or Changan brands of vehicles purchased from any of the Stallion Motors’ accredited dealerships have been fitted on-line with Microdots to deter theft and forestall undue vandals. Since its invention in the 1800s, when they were first used during the Franco-Prussian War as a message system until they are revamped, Microdots have showed capabilities for risk management and recovery; reducing premiums paid on insurance and enhancing frequency of recovering stolen vehicles just as it promises peace-of-mind for vehicle owners. Late last year, Stallion Motors Limited was appointed the official distributor of Microdot in

Nigeria by DataDot Technology South Africa (Pty) Limited primarily to check wanton theft of motor vehicles and traded stolen parts, while it stimulates confidence in the country’s evolving automotive industry. Meanwhile, plans are now underway to educate and inform law enforcement agents especially the police as well as insurance firms in Nigeria of the benefits of Microdots, while sensitizing motorists on the need to get their vehicles Micro-dotted. Stallion/DataDot Nigeria Head of Sales and Marketing Santhosh Kumar who gave this hint in Lagos also explained that the DataDot Technology works such that the micro-dotted vehicles including their parts are uniquely assigned with an identity that can only be linked to the rightful owner.

“This coded identity forestalls theft and intruders, and in the case of theft, it makes recovery of the stolen vehicle an easy task, while it simultaneously acts as a deterrent to thieves and intruders,” Kumar said. Already in use in sane climes, DataDot pioneered microdot technology in South Africa in 2001 and are being used extensively to protect vehicles and assets. “We are excited to introduce this new offering across Nigeria to enhance the positive experience of owning a vehicle without having to worry about the activities of vandals, who are habitually renowned for vandalizing cars,” Kumar said. Already fitted in more than four million vehicles (about 70 percent) of automobiles in South Africa, Microdot are uniquely

marked with polymer particles of 1mm or 0.5mm in diameter called microdots, which are literally the size of a pin head that can only be viewed by a magnifier and traceable to the rightful owner. Kumar said “DataDot is the number one option for your theft prevention needs and it is virtually impossible to locate let alone removing the microdots, a characteristic that makes it extremely difficult for thieves to sell micro-dotted assets without being apprehended.” He urged motorists, fleet owners including truck and equipment managers to Microdot their assets to get the authorized DataDot App, which allows users to link the DataDot PIN to the asset owner, allow users to share information, flag stolen vehicles and keep records of vehicle services.

Kewalram Chanrai begins FCA brands dealership K ewalram Chanrai Group has secured exclusive rights as the franchise representatives of FCA auto brands in the Nigeria thus earning the right to distribute all Fiat, Jeep and Chrysler automobile brands in Nigeria. The FCA Group is the renowned manufacturer of premium Italian and American auto brands such as Jeep, Dodge, Chrysler, Ram, Fiat, Alfa Romeo, Maserati, amongst others. Automobiles such as the Jeep Wrangler, Jeep Compass, Jeep Grand Cherokee, Jeep Grand Cherokee SRT version, Dodge Durango, Fiat Tipo, Fiat Pickup and the Ram Open back are already on display at the purposebuilt showroom on Victoria Island, Lagos solely dedicated to these brands. The company says more models would be added. The company has also set in motion a strong mechanism to spread the presence of the brands to other parts of the country using its already established branch network. Kewalram Chanrai’s acquisition of marketing rights for the world renowned automobiles is a major

boost to its reputation as a diverse conglomerate with strong presence in 12 countries including Nigeria. It has a distribution history spanning over 150 years. As part of its repositioning strategy to ensure dominance in the market, the company has strengthened it’s after sales services for enhanced service delivery. Company’s sources say outstanding after-sales personnel have been trained by the manufacturers’ tech-

nical staff on how to render seamless after-sales services for all the brands. “We don’t just sell, we ensure effective after-sales services”. It is seen that Chanrai was chosen as the exclusive distributor for the FCA brands in the country because of its strong pedigree in automobile business as well as its firm commitment to the provision of after-sales service. Fiat Group, the Italian auto maker had in 2014 acquired 100% ownership in Chrysler Group, the American

Evoque gets 5-out-5 European safety rating

premium car company in a move that integrated the financial and the technical aspects of the two groups into one. The merger created a multinational organization that operates in more than 140 countries. Jeep is a world class brand that has been in production for more than seven decades. Specializing only on Sports Utility Vehicles, its models like the Wrangler, Grand Cherokee, Patriot, Compass have dominated the SUV market for many decades. The brand has benefitted from renowned luxury car makers from Europe, making the brand one of the best in the market. Dodge Brand is one of the popular brands in the world. A member of the revered Chrysler family and now Fiat Group, Dodge specialises in the production of Sports Utility Vehicles, passenger cars, large pickup and multi-purpose vehicles. Some of its products include the Durango SUV, Neon sedan, Dakota pickup and minivan. Chrysler brand boasts of products like PT Cruiser, Town and Country minivan etc.

he new Range Rover Evoque has been awarded a maximum five-star Euro NCAP safety rating, confirming its status as one of the most refined, capable and safe luxury compact SUVs on the market. Not only did the luxury compact SUV score 94 per cent for adult occupant safety being the highest score of any Jaguar or Land Rover product to date, but for those with younger passengers in the back, it also received 87 per cent for child occupant safety. It means the Evoque is the latest Land Rover to be awarded a fivestar safety rating by Euro NCAP, following the most recent Range Rover Velar and Land Rover Discovery SUV. Built on Land Rover’s new Premium Transverse Architecture (PTA) to ensure maximum occupant safety, the new Evoque comes with the latest advanced driver assistance features, including emergency braking; lane keep assist; front and rear parking aids; and a rear camera as standard, to help avoid road traffic accidents. This combination of features ensured the new Evoque received the full five-star rating in the toughest Euro NCAP testing programme to date. Owners can add to this with the addition of two optional packs. The park pack adds park assist, 360-degree parking aid, rear traffic monitor and clear exit monitor, while the drive pack offers adaptive cruise control, blind spot assist and high speed emergency braking, for convenience and safety wherever the road takes you. In addition, a comprehensive system of airbags and restraints throughout the cabin including a pedestrian airbag mean owners can rest assured the luxury compact SUV will protect those inside and outside the vehicle. Finbar McFall, global product marketing director at JLR, said: “The Range Rover Evoque is at home in the city and the country, so we added the latest technologies aimed at preventing accidents and a new vehicle architecture to protect occupants in the event of an incident. The result is another fivestar performer from Land Rover.” The suite of advanced technologies on the new Range Rover Evoque includes Land Rover’s clearsight rear view mirror. Transforming into an HD video screen at the flick of a switch, it offers a wider 50-degree field of vision and superior low light visibility by displaying a rear-facing camera feed from the top of the car. It is ideal when carrying passengers in the second row or bulky items in the rear loadspace obscure the view behind. ClearSight Ground View technology is also available, effectively making the bonnet invisible by projecting camera imagery onto the upper touchscreen to show the driver a 180-degree view under the front of the vehicle. This is useful when negotiating difficult parking spaces, navigating high city centre kerbs or tackling rough terrain.

Wednesday 24 April 2019

BUSINESS DAY

Markets + Finance

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First Bank Holdings Plc: Analysts place buy ratings on stocks as profit surge BALA AUGIE

irst Bank Nigeria (FBN) Holdings Plc just released its 2018 audited financial statement that showed there were marked improvements in key performance ratio. There has been an improvement in asset quality, an impressive result that validates management and board of directors’ risk management strategy. This means the lender has surmounted the headwinds brought on by a sharp drop in crude oil price that hindered customers from paying interest on money borrowed. Feedback from the bank’s management says Atlantic Energy, a major exposure of the bank that is partly responsible for its high NPL ratio has been fully provided for. The largest lender by revenue has been taken a giant stride in the internet and digital banking space. For instance, Firstmonie Agent services, which are fully operational across the 36 states and 754 local governments in Nigeria-about 98 percent of the country)-has resulted increased transaction value and with account opening service now available to customers. Analysts at CSL Stock Brokers Ltd have placed a Buy rating on the lenders’ stock of with a target price of N12.27/s. Current price: N7.50/s. Non-interest income drives net interest income First Bank Holdings’ net interest income was up 8.45 percent to N197.25 billion in De-

cember 2018 from N191.09 billion; the growth in net interest income was due to a reduction in impairment charge. Net interest income (NII) increased by 15.73 percent to N119.29 billion in December 2018 from N103.07 billion as at December 2017 while net fees and commission income was up 20.93 percent to N75.39 billion in December 2018 from N62.34 billion as at December 2017. NII growth was driven by improved revenue from electronic banking fees (+36.18%), foreign exchange income (+54.93%), account maintenance (+84.85%), as well as brokers and intermediation ((+>100%). Cost control strategy pays off as profit spikes FirstBank Holdings’ profit before tax (PBT) increased by 19.73 percent to N65.28 billion in the period under review as against N54.22 billion the previous year. Profit after tax was up 31.35 percent to N59.74 billion in December 2018 as against N45.58 billion the previous year. The improvement at the bottom line (profit) was largely driven by cost curtailment and excellent risk management that saw impairment on assets dip. Total Operating expenses were up 9.60 percent to N258.97 billion in the period under review, albeit lower than the 11.31 percent inflation figure for the month of March. Impairment charge declined by 42 percent year on year (y/y) to N86.9 billion, compared with N150.4 billion as at December 2017, resulting in a decline in Cost of Risk (COR) to 4.0 percent compared to 6.4 percent in December 2017 and below our 5.8 percent forecast for 2018.

Investment in retail business spurs FBN Insurance to growth as profit surge

Continued penetration of the in retail insurance space, cost optimisation, and diversified

uptick in revenue and profit. Gross premium written was up 32.53 percent to N30.611 billion from a year ago, gross premium income moved by 33.57 percent to N30.38 billion from a year ago, while net premium income increased by 39.39 percent to N27.88 billion a

product base has spurred FirstBank (FBN) Insurance Limited tom growth as earnings surge. A double digit growth in revenue or premium income helped cover claims expenses while contemporaneously underpinning underwriting capacity. For instance, the insurers ‘combined ratio, a key performance benchmark, weakened to 35.46 percent in December 2018 from 43.95 percent as at December 2017. The combined ratio measures costs and claims as a percentage of premiums, so the further it is below 100 the more profitable underwriting has been. FBN insurance’s underwriting profit, another measure of operating efficiency, surged by 168.86 percent to N7.34 billion in December 2018 from N2.73 billion the previous year. The Nigerian insurers has been spending less on claims in generating each unit of revenue as loss ratio fell to 16.89 percent in the period under review from 21.50 percent as at December 2017. Obligations to policy holders have been met as total claims expenses were up 9.50 percent to N4.71 billion as at December 2018 from N4.30 billion as at December 2017. FBN Insurance investment in an array of products has yielded fruit as evidenced in an

year ago. The double digit growth at the top line (revenue) can be attributed to strong cost optimisation culture, consistent and efficient service delivery across available touch points, and exploitation of new service channels. Little wonder net income rose by 61.83 percent to N5.94 billion in the period under review while the company can take on more risk as its shareholders’ fund stood at N13.09 billion, representing a 23.80 percent increase from N10.57 billion recorded last year. FBN Insurance has turned ach Naira invested in revenue into robust profit as net profit margin increased to 21.29 percent in December 2018 from 18.35 percent the previous year. Return on equity (ROE) increased to 45.37 percent in the period under review from 34.72 percent the previous year; thanks to strong earning capacity and robust capital base, which has put the company in better stead to accommodate and sustain future growth. The Nigerian insurer has been taking advantage of the attractive government securities. This means the asset allocation strategy management and board of directors have yielded fruits as investment income increased by 168.86 percent to N7.34 billion a year ago.

BD MARKETS + FINANCE Analysts: BALA AUGIE www.businessday.ng

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BUSINESS DAY

Wednesday 24 April 2019

NEWS SAHCO breaks 4-year IPO drought on NSE ... as NSE expects 3 more to list before year end Endurance Okafor

kyway Aviation Handling Company (SAHCO) broke a more than four-year IPO drought on the Nigerian Stock Exchange (NSE) on Tuesday as it successfully listed on the Exchange at N4.65 per share. SAHCO’s Initial Public Offering (IPO) on the Nigerian bourse as way of Offer for Sale for 1.3 billion ordinary shares with a market capitalisation of N6.26 billion. The last listing on the Nigerian bourse by way of IPO was in 2016 when Seplat Petroleum Development Company plc and Transcorp Hotels plc went on the Exchange. It was a successful IPO, Basil Agboarumi, SAHCO CEO, told BusinessDay at the NSE building on Tuesday during the facts behind the listing. “We are aware that we needed 50 percent to be listed in the exchange but we were able to get 65percent of our shares sold to the public,” Agboarumi said. The financial adviser

and lead issuing House for the listing was Vetiva Capital Management Ltd while the joint issuing house and lead stockbroker were Cordros Capital Ltd and Sigma Securities Limited, respectively. The company is the second of the four-licensed aviation ground handling companies in Nigeria to be listed on the stock exchange, following NAHCO Aviance. “I congratulate the board and members of SAHCO on its successful listing on the NSE,” Oscar Onyema, CEO of NSE, said. SAHCO is a part of the SIFAX Group, a Nigerian conglomerate with diverse investments in maritime, aviation, and oil & gas among others, operating globally. The company’s history dates back to 1958 when it operated as a department of the now-defunct Nigerian Airways. SIFAX Group acquired SAHCO from the federal government in 2009, following a lengthy and complex bidding process. T hu s, t h e l i s t i n g o f SAHCO on the exchange is a part of the share purchase agreement, which was reached when the

company handed over to the SIFAX Group. The agreement started that after a period of time, some shares of the company would be sold to the public. The Lagos-based company was carved out of the defunct Nigeria Airways as part of the Nigerian government’s Ministry of Aviation reform of 1996. SAHCOL made a loss after-tax of N25.38 billion in Q1 2018, according to its financial records. The company blamed the poor performance on the drop in cargo carriage transactions resulting from China’s festival period in February. Checks by BusinessDay reveal that the air transport company depends majorly on revenue generated from its cargo division. “We expect three more companies to list on the NSE before the year end,” Alex Okoh, director-general of the Buteau of Public Enterprises, said on the sideline of the fact behind the listing of SAHCO. The DG added that before “September, one company will come on the exchange and the remaining two will come later before the end of 2019.”

Northern Nigeria under siege, leaders sleeping - Sani Abdulwaheed Adubi, Kaduna

enator repres enting Kaduna Central Senatorial District at the Senate, Shehu Sani, has blamed northern political leaders for the deteriorating situation and calamity befalling the region as a result of their lukewarm attitude towards addressing the issues. He identified one of the problems as sycophancy, which is now making the north bleeding in insecurity. “We have no Jonathan or Obasanjo to blame for the insecurity in the North,” Sani said. The Senator made the above assertion while addressing delegations of Birnin Gwari, Chikun and Zamfara people living in Kaduna on Tuesday at his Kaduna residence. Sani, who frowned at the level of insecurity in the region, said the residents must rise to question and chal-

lenge those in the position of authority to do what is right. “Kidnapping is what we used to hear from far distance in the Niger Delta and southeastern part of the country in the last fifteen to twenty years. “When people are facing this kind of danger and tragedy, the most ideal thing is to face the situation and question those that we have elected into position of authority,” he said. “The situation in Birnin Gwari is one that reflects the tragedy and danger that we are facing in the northern part of the country today. Birnin Gwari, Chikun, Kajuru, Zamfara, Katsina, Niger and some part of Sokoto State are under siege,” the senator said. “Northern Nigeria today is under siege; in the NorthWest, there are issues of banditry; n the North-Central, there are issues of herdsmen, while in the North-Eastern

Nigeria, there is terrorism,” he noted. “If the Federal Government is responsive to Zamfara issues, it is because the state government has admitted that the state is under siege of banditry and kidnappers,” Sani lamented. Sani said the situation has forced people to resorting into buying anti bullet charm for protection. He said the insecurity in Kaduna is as a result of the governor and government of Kaduna not admitting the security challenges in the state. Earlier, the leader of Coalition of Birnin Gwari Associations, Nasir Khalid, in a letter presented to the senator, said the several communities had been under attack of armed bandits from the eve of the general elections to date. He s a i d f o r t y d r i v e r s were killed in the last three months and several communities ransacked.

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Wednesday 24 April 2019

BUSINESS DAY

BOOK SERIALISATION

W H Y N OT Citizenship, State Capture, Creeping Fascism, and Criminal Hijack of Politics in Nigeria

Continued from Wednesday

Chapter VII A Path from Serfdom

any are those who desire the overthrow of such a bungling order that has put Nigeria’s potential in reverse gear in pursuit of power rather than purpose through making choices of instant gratification that damage not only the future but the present. The fruits of their stewardship are all around us. Anarchy looms everywhere we look north-east, south-south, north-west, north-central and south-east. Rage has seized the people and poverty has proved great fuel for the anger of the people. The problem has been finding an ironclad strategy for getting rid of these people who live fat on the deprivation of a society tortured by the consequences of their misrule. This came to me in a conversation with one of the smartest of the officers who dominated the military era, General Alani Akinrinade who I visited early in 2018. This was shortly after former President Olusegun Obasanjo issued a letter lampooning the stewardship of incumbent President Muhammadu Buhari. General Akinrinade admitted a sense of frustration with the state of the nation among their group of grand old generals. He had just then returned from Minna where two former military heads of state live. He could see that statements were being made without a clear strategy for achieving the outcome they desired. Strategy matters and wishful thinking does not solve problems. Most of what has been said in Nigeria on how to deal with a festering sore is more of daydreaming. Often the solution to the problem is delegated upwards, to God. Faith helps, but it seems that faith without works is futility. So, what are the options for liberation? How can we reclaim a Nigeria that has been lost by its real people? A people left hungry and angry by bad governments and a political process that is increasingly captured by cultists, voodoo champions, all categories of criminals and nascent fascists. Who will save Nigeria? And how can Nigeria be saved? A political class weakened by corruption and obsessive selfinterest and so unable to drive a developmental agenda for good

has seen Nigeria fall deep into the misery index pit. It has the most consistent ranking on misery factors like death at childbirth, infant mortality, out of school children and even such esoteric indicators as the least attractive places to be human on the planet. Not to have a strategy to change such an order, especially in a country with an evident destiny to lead a continent and race at a time of rapid change impacting the human condition, would be a great tragedy. The options that seem worthy of consideration include a people’s revolt, a mass mobilisation of voters to vote for an idea and not a party, with technology being the plug for such a passionate movement for change. Then there is the more disruptive extra-constitutional overthrow of the extant order. Even more unconventional is internationalising the challenge because of the eroding of the rule of law and the weak state of national institutions which then make supranational institutions a veritable fall back. Peoples Revolution Option When a people appear so powerless and the power-elite rush to a totalitarian domination of others as the onrushing fascism in Nigeria indicates, the push of the people in a massive show of shared antipathy to the social order has the advantage, not only of upturning the source of degeneration, but also of uniting the people behind an emerging path. As we can see in places like South Sudan where apparently popular liberation struggles fractured soon after the oppressive order was overcome, part of the problem is the failure of a unifying bond which is provided in

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I went to him and shared my strategy. We agreed it was a worthwhile track to run. I was then to make contact with some of the US political campaign and public relations firms that helped make those revolutions from Ukraine and elsewhere in the East light up the world www.businessday.ng

the charge of a people’s protest sustained over a period of time. When in 2006 it seemed clear that then President Obasanjo was trying to change the grand norm to allow himself break the term limits and serve a third term as President of Nigeria, it occurred to me that the idea of mass protests following the pattern of the type in Eastern Europe with the Orange and other colour-themed long street protest movements against the extant order might be in order. I figured that if we could have a green and white street revolution of people’s power, we would not only chase Obasanjo from power, but we would probably also forge that natural bond that had continued to elude Nigeria, making attractive those words of the old national anthem: “Though tribe and tongue may differ, in brotherhood we stand.” I saw the Obasanjo third term bid as an opportunity made in heaven to achieve the melting pot of Nigeria in confronting it. I had dreamt, from the days of my youth, of what could pull Nigerians from varied nationality and class lines together. I surveyed the field for possible partners on the project and one person stuck out. He had a history of fighting from the position of the underdog. He had surprised many by pulling off one victory after the

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other from the jaws of defeat; through the courts in claiming the south-west from PDP tsunami of election manipulations after the 2003 elections. He was also not an Obasanjo friend. I knew that clearly from feedback that Obasanjo’s anger with me came significantly from perceptions that I supported his work as Governor in Lagos. Bola Ahmed Tinubu was the person I closed in on to help work this street revolution. I went to him and shared my strategy. We agreed it was a worthwhile track to run. I was then to make contact with some of the US political campaign and public relations firms that helped make those revolutions from Ukraine and elsewhere in the East light up the world. I made my contacts and set up a visit for both of us. However, on the eve of our planned trip, something came up. I had been afraid that could happen and had been careful about setting up an appointment he would not show up for. If I could not do much to pull back the reputation of Nigerians as not so reliable, I should at least not add to the statistics of Nigerians as people whose word you could not count on. To be sure, I pressured for a firm commitment for the trip; he chose the date and I made the appointment. I knew the nature of the power game

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could make it such that something would come up for him at the last minute. Thus, I bought my own ticket to arrive Washington the day before the set meeting. It would prove prophetic insight. In the last minute, I was told something came up, so I flew to Washington and met the people alone. After initial discussions, they agreed to send two people to scope out the territory. I made initial payments to get them to come and booked accommodation for them at the Federal Palace Hotel in Victoria Island, Lagos. On return, I briefed the Governor who sounded pleased with the way things were going. I first began to wonder if I was not up against the wrong alley when a confidant of Governor Tinubu in trying to show how effective they could be in managing information, told one story I had no way of corroborating. According to that story, the Governor had asked his team to get ready to go somewhere late one night without saying exactly where. Halfway down, it became obvious they were heading to President Obasanjo’s farm in Otta and his security team got alarmed as the nature of the relationship between the two men at the time was such they could be ambushed. The murder of Attorney-General Bola Ige and several other high-profile killings were unresolved at the time; they would never be resolved anyway. As the story goes, a leading PDP south-west leader had become aware that the meeting in Otta was a trade-off on a third term deal. Everyone would be allowed their third terms and so the bill would be allowed to pass at the National Assembly. To crack the armour of invincibility of the Governor, this leader had called a press conference to reveal the information. Word of this press conference reached the team of the Governor who was on his way back from a trip to China and his media people were able to ensure that no one published a report of the press conference. It was personally devastating for me when I saw Chief Bode George years later and he confirmed the story. Evidently, while I was pressing for a movement that could be a unifying factor for Nigeria, Tinubu was cutting a deal with Obasanjo on third term so he too could have another term. The US political strategy team I had met with arrived and we visited with the Governor late one night, at his home. He provided input into their planning. They were then to return in two weeks with concrete details of what to do. The day after the Americans left Lagos, the Ken Nnamani led Senate defeated the Amendment Bill. The Atiku et al game plan had stopped Obasanjo who was in Paris on an official visit. We had to abandon my street revolution with a dent of more than $200,000 (two hundred thousand US dollars) to my pocket. The promise that we would share the bill was never made good on. It was not the additional cost

Wednesday 24 April 2019

BUSINESS DAY

BOOK SERIALISATION inflicted on my not too deep pockets by the fight to save Nigeria that got to me, it was missing the opportunity to unite the people on the streets. Many years before I had watched in admiration as Jaime Cardinal Sin, the Archbishop of Manila inspired small who armed with nothing but their rosary beads, candles and love in their heart brought down the dictatorship of Ferdinand Marcos in the Philippines. The street being where to unite the people held an appeal for me after that. When Marcos ordered General Fidel Ramos to roll out the tanks to meet the praying women, he obviously did not realise that people-power could make Ramos turn the tanks around and sack the Palace. The base of people-power in immediate post-independence Nigeria was in the student movement. From stopping the AngloNigerian Defence Pact under Prime Minister Tafawa Balewa to the “Ali Mungo” campaign under Obasanjo as a military dictator in 1978, which demanded the removal of Obasanjo’s Education Federal Commissioner (Minister) Colonel Ahmadu Ali (Ali-must-go had been adulterated into Ali Mungo), students were the anchor. Sadly, the army and politicians killed students’ unionism in Nigeria. Sadly, one of the effects was highlighted to me by the great General Alani Akinrinade whilst we were chatting sometime in 2018 about the “Not Too Young to Run” movement. He noted that Nigeria’s youth were pointing to young national leaders emerging in France, Austria, Italy and elsewhere in Europe while the young Nigerians were being more and more alienated and distanced from power. The plain truth, the General went on, was that many of those emerging leaders in Europe cut their teeth in the student movements. Like you, he said, referring to me, those movements shaped your ideals and trained you for leadership. But they killed the Students Unions and now our youth do not have the training ground to be like their counterparts elsewhere. Some hard facts indeed about current reality. I think something that is available today that was not available when we poured onto the streets for one cause or the other in the 1970s is the internet. Social media makes the mobilisation of the concerned and aggrieved easier; I saw the youth of Egypt use it at the onset of the Arab Spring. I had gone to Cairo to facilitate a retreat for the Afreximbank and for an African Trade and Investment Conference. Every evening at the Sheraton Hotel in Heliopolis where I resided, I saw proud waiters tell stories of their part in the day’s massing up in Tahir’s square. If just a little bit of the passion expended by Nigerian youths abusing each other on social media is used to target mobilisation in favour of one grand idea or the other, the

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Tinubu in trying to show how effective they could be in managing information, told one story I had no way of corroborating. According to that story, the Governor had asked his team to get ready to go somewhere late one night without saying exactly where mission of liberation would be much easier. The Enlightened Leadership RevolutionMahathir Mohamad’s leadership in Malaysia, in some ways, better illustrates the enlightened use of the democratic political process by a forwardlooking elite to advance performance, even more than the stellar case of Lee Kuan Yew in Singapore. The path that Malaysia followed is therefore worth the interrogation. When Mahathir Mohamad, as a young junior minister, questioned the Prime Minister’s policy of “Give-and-take” with the Chinese community (which dominated commerce as a minority nationality group), he was bullied out of the party. Away from the cabinet, he gave his time to writing a book, “The Malay Dilemma” which triggered social upheavals that led to the ouster of the Prime Minister and Dr Mahathir Mohamad’s return to the party and government. He would shortly become Prime Minister and lead an enlightened affirmative action initiative that attacked the Sustainable Development Goals (SDGs) of the United Nations decades before the UN articulated the SDGs. On my annual visits to Malaysia and Singapore through the 1990s and the first decade of the 21st century, I witnessed, first-hand, how a hands-on leadership that cares, transforms the lives of its people. When by 1996 the Abacha government in Nigeria turned to a visioning process to set an economic course for Nigeria, the Director of Malaysia’s Institute of Strategic and International Studies was one of the invited keynote speakers. From the Aga Khan Foundation-sponsored conference on a tripartite approach to development in Nairobi in 1985 (which triggered the Enabling Environment Forum in Nigeria), the advertisement for the enlightened leader model were being set down in Nigeria, especially with Ernest Shonekan, serving as transition head of government, and providing the platform for the www.businessday.ng

founding of the Nigeria Economic Summit Group (NESG). Sadly, the NESG did not seem able to retain leverage over the overbearing public sector that continued to take advantage of a private sector that depended too much on contracting for government and feared too much the habit of speaking truth to power. Serving on about all the major apex private sector organisations; the national council of the Manufacturers Association of Nigeria (MAN), the Nigerian Employers Consultative Association (NECA) and the council of the Lagos Chamber of Commerce and Industry in the early 1990s, I got tired of pointing in those chambers to the example of the Mauritius Chambers of Commerce. There, more decisive choices were being made in the Chamber of Commerce than Parliament. I would particularly lament the reaction to my speech at a NECA meeting in 1993 after the Babangida annulment of the elections of June 12, 1993. I was recently reminded of Joseph Makoju who as chief executive of the Lafarge Group subsidiary, West African Portland Cement Company was seating by me at that meeting when I suggested NECA request the government to get the environment of business right by establishing and following due process in the election or we would all suspend our business activities. Of course, the other executives typically played ostrich. As I recall, only the chief executive of Cadburys Nigeria, Dr Christopher Kolade, supported my motion. As history now bears witness, what I said would happen, regarding the economy happened with many of those executives losing their positions. I have long favoured the revolution of enlightened self-interest among an enlightened elite. This informed my role in the founding of the Congress of Concerned Citizens with Olisa Agbakoba, Femi Aribisala, Mohammed Garba and others in 1983 and the Concerned Professionals in 1993 as well as my pronounced role in Occupy Nigeria in January of 2012. But the complicit middle (as I call the middle class) and educated youths never managed to discover citizenship enough to act to save Nigeria. This option has, therefore, continued to lose steam. The Bush War Option It is fashionable in these times of a formal embrace of democracy to sneer at extra-constitutional disruptions. That is understandable. But when every election is literally grand treason in which the people’s will is wilfully thwarted, the legitimising attribute of elections lose virility. Sometimes, stopping the institutionalised rape of democracy as it is going is the legitimising of extra-constitutional disruption. Two of the better known of these include the traditional military coup and the bush war. The case of Rwanda and Uganda with bush war revolutions tell of the good, the bad and possibly the ugly of this track. In both of these examples,

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Paul Kagame and Yoweri Museveni have been in power too long. Kagame may have a legacy of stable progress but he may have so much brewing underbrush during his long rule while the Museveni kingship has been sad for Uganda. But the bush war option remains and in the event of the onrush of fascism and anarchy, may eventually become the only available option. Internationalising the Democratic Challenge Given the effort of such international agencies as Centre for International Private Enterprise (CIPE), the International Republican Institute (IRI), and the National Democratic Institute (NDI) from the US and their German counterparts like the Konrad Adenauer and Erich Bohl foundation, and many others, there has long been an internationalisation of the desire to deepen democracy in Nigeria. These effort by foreigners have been largely measured, respecting the traditions of national sovereignty that have been in place since the Peace of Westphalia in Europe in the 17th century. The trouble with democracy in Nigeria though is that the institutions are weak, the actors prone to impunity in their conduct with the rule of law counting for little. In those circumstances, the kind of interventions from these foreign agencies remains largely cosmetic. In my view, the idea of human solidarity and the fact that Nigeria’s weak institutions foist on a vulnerable people a new modern slavery at the hands of those who capture the state and organs of recruitment into positions of authority, such as political parties. I have therefore argued for supranational institutions and were much pleased to canvas the idea of an International Criminal Court which I celebrated with gusto when the Rome Treaty brought it into existence. I believe that an international campaign needs to be prosecuted to create the possibilities that those who abuse electoral processes could be arrested and tried in International Criminal Courts because what they do often results in conflict and as such is the moral equivalent of genocide. Reliance on supranational institutions has been a vehicle deployed often in history when there is a view that national institutions are unable to contain conduct, with repercussions for

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Two of the better known of these include the traditional military coup and the bush war. The case of Rwanda and Uganda with bush war revolutions tell of the good, the bad and possibly the ugly of this track

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global wellbeing. If you read just about any newspaper in Nigeria on November 4, 2018, it is not possible to think the Nigerian problem was not now a festering sore that threatens all of humanity. United States resident poet and writer, Niyi Osundare, described Nigeria as a failed state while others urged the government to make the country liveable so that its best talent resident abroad could return. When fascism descended on Europe through Adolf Hitler and Benito Mussolini, the world had to step in. Unfortunately, it waited too long and the cost in human life became incredible. Had the season of appeasement offered by British Prime Minister, Neville Chamberlain, not been there the cost of war may have been less. Of course, this is a factual counterpoint that will never be conclusive but at least the emerging fascism in Nigerian political parties should be seen as an early warning sign of the triggers of a coming anarchy foretold. A Time for Action We can construct scenarios and design strategies as we like, nothing happens until there is action. If the patriots are all dead, how can we see the necessary action that can draw from one or a combination of these strategic options to rescue Nigeria? A country of great potential being slowly asphyxiated in the iron fist of the cabals that are moving her down the path in which it could become a criminal enterprise viewed as a rogue nation by the international community. The awareness that Nigeria is travelling down a slippery slope and that playing ostrich is not sustainable is rising. In one more of those November 4, 2018 Sunday newspapers, Governor Udom Emmanuel of Akwa Ibom State declared, “I am ashamed of where we are as a country.” It seems clear to me that whatever the strategy opted for, we must begin by educating Nigerians regarding where we are as a country and the imperative of getting out of that place. Social media needs to be massively deployed for proper education of the people rather than its current use for hate message and hedonistic designs. At a time when the criminal gangs taking control of party machinery are beginning to make the argument that those with the education and standard to earn a living by some other means are inconsiderate by showing interest in their domain of plunder, it should be a liberating project for civil society, including commercial enterprises that stand to lose much if the predicted happens, to invest in this education of the people about the essence of the public sphere. A public sphere consciousness movement is a necessary starting point for the journey to redemption. I am confident Nigeria can come off this road to serfdom and find that path from serfdom to freedom. Continues on Thursday

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Wednesday 24 April 2019

BUSINESS DAY

Book review Proof Of The Pudding A Review of Proof of Infrastructure Across Nigeria: A Special Report on the Ministry of Power, Works and Housing Babatunde Moshood

Proof Of The Pudding Edited by Hakeem Bello

he proof of the pudding is in the eating, says an old English proverb but let’s tweak that a little to say that the proof of a sterling performance in public office may be said to lie in the quantum of verifiable evidence made available to the public. This is the first impression that strikes you upon perusing the compendium from the Ministry of Power, Works and Housing. Title “Proof of Infrastructure Delivery Across Nigeria,” a special presentation of three years of work in the three-in-one ministry. If there were any such thing it would be said that Proof of Infrastructure is a beautiful book. Hardcover, wrapped and carefully produced by people with eye for photographic quality and aesthetic page design and management. The book is pleasing to the eye and a joy to read unlike most documents that emanate from government agencies. It is a mixture of well-written first-hand accounts and if we might add, independent articles, policy papers, speeches and a surfeit of photographs of real places. Since photographs don’t lie as we say, it means an independent assessor can check out every claim made in this 320 page compendium. But we do not speak about beauty pageant and fashion show here, far from it. We are dealing with the arcana of brick and mortar. We are talking about issues that trouble the average Nigerian most viz: Power, Works and Housing. To break it down further, we are talking about the whole gamut of road infrastructure, bridges, electricity generation, transmission and distribution. We are talking about mass housing across the country especially for the low and medium income earners. Any Nigerian who cares about the situation in Power, Works and Housing in Nigeria must get a copy of this book. Journalists, analysts, private sector heads, businessmen and Nigerians generally who seek to understand issues in this sector need to go through this compendium. Particularly notable is that the publication takes us to every nook and cranny of Nigeria; indeed the pictures and words from the six regions of Nigeria are as enchanting as they are eye-opening. Readers of this book are exposed to governance in motion; perhaps for the first time in this country, Nigerians see a minister at work. The book reveals to Nigerians, Mr. Babatunde Fashola SAN at work. It shows us his leadership methods, his mindsets, his capacity and drive. It shows us how three major ministries merged into one has been lead to operate

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But we do not speak about beauty pageant and fashion show here, far from it. We are dealing with the arcana of brick and mortar. We are talking about issues that trouble the average Nigerian most viz: Power, Works and Housing

seamlessly by producing enormous results over three years. The quantum and quality of information provided in this compendium are in themselves stunning and delightful. For instance, the annual budget for this ministry rose from N57.91billion in 2015 to N467.6billion in 2016 - an increase of 700 percent under the leadership of

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President Muhammadu Buhari. With the same quantum progression, projects have literally leapt into life across the country. This compendium billed for public presentation on April 29 should be in every home and office in Nigeria. Moshood is a Lagos based freelance Journalist.

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Wednesday 24 April 2019

BUSINESS DAY

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Wednesday 24 April 2019

BUSINESS DAY

news Olam stirs competition with N130bn offer... Continued from page 1

concentrate on areas of

competitive strength and consolidate there. They would have done their numbers and found the decision right,” Yusuf said. Inearly2016,Olamacquired BUA Group’s flour business in a deal worth $275 million. Earlier in 2010, Olam had acquired Crown Flour Mills (CFM) in Nigeria and consequently expanded its capacity and set up milling operations in Ghana, Senegal and Cameroon. Dangote Flour’s current market capitalisation is N59 billion. Thabo Mabe, Dangote’s executive director, said on Tuesday that the company is debt-free, adding that while the offer is still being deliberated on by the concerned parties, it will continually be modified to suit both parties.

“This consideration will be adjusted for networking capital and net debt as of 31st March, 2019 or any other later date that may be agreed by Olam and the board of DFM to arrive at the final price payable to equity shareholders. The final price to be paid to the shareholders of the company would be adjusted downwards to exclude shares held by Olam through its subsidiaries,” he said in a statement to the Nigerian Stock Exchange. Olam, through its subsidiary, currently owns 5 million units of shares in Dangote Flour Mills. Analysts say Africa’s richest man Aliko Dangote is selling the subsidiary because he wants to exit an industry he cannot have market leadership, and not because the company is underperforming or

under serious financial threat. “If you are selling a business within the space of seven years, it then means you want to exit. It is obvious they do not want to be part of a business they do not have market leadership,” said Ifedayo Olowoporoku, consumer goods research analyst at Vetiva Management Ltd. “Since Olam is already a private company, it could delist the miller if it eventually buys it,” said Olowoporoku. Dangote Flour Mills has been recording double-digit growth in earnings since 2016, a year after Aliko Dangote repurchased it from South Africa food giants, Tiger Brand Limited. But analysis of the fourthquarter financial statement of the consumer goods giant showed it capitulated to a tough and unpredictable macroeconomic environment as it recorded its first loss in four years. For the year ended De-

cember 2018, Dangote Flour Mills posted a loss of N1.15 billion, from a profit of N15.13 billion the previous year. The company’s gross profit margin fell to 9.11 percent in December 2018, from 29.62 percent the previous year, while gross profit fell by 65.43 percent to N10.24 billion as at December 2018. The debt to equity (D/E) ratio increased to 187.57 percent in December 2018, from 185.89 percent the previous year. Low consumer purchasing power, decrepit infrastructure and multiple taxation have hindered companies in Africa’s largest economy from breaking even while margins have been under pressure. While GDP expanded by 1.9 percent in 2018, it is still below the long-term growth rate of the economy at 7.60 percent. Analysts say consumer goods firms will continue to

falter so long as there is no improvement in the living standard of Nigerians, with 87 million poor people and unemployment rate of 23 percent, according to the National Bureau of Statistics (NBS). Dangote Flour Mills’ shares traded at N11.75 on the floor of the Nigerian Stock Exchange on Tuesday with a one-year return of negative 11.99 percent. Gbolahan Ologunro, research analyst at CSL Stockbrokers, said the move by Dangote to divest from the flour mills could be a financing strategy for the ongoing Dangote Refinery and Petrochemicals. “It is possible that the owner prefers to finance the ongoing refinery through equity rather than raising debt,” he said. According to Gbolahan, it is going to be a win-win situation for the shareholders of Dangote Flour Mills. This translates to a payment

Buhari inaugurates Lagos Airport Road... Continued from page 1

Among the projects to be inaugurated, BusinessDay has been told, include the newly-completed 10lane airport road, expected to provide a refreshing

driving experience to motorists and commuters. Also billed for formal opening are the Oshodi Transport Interchange (OTI), re-equipped Maternity Home (Ayinke House) at the Lagos State University Teaching Hospital (LASUTH) and an Art Theatre, Oregun, one of the four theatres completed by the Ambode administration and ready for handing over to the public ahead of the governor’s exit on May 29. The airport road, hitherto a four-lane road connecting Nigeria’s busiest international

airport, had for decades been left in a terrible state before the intervention by the Ambode-led government. The reconstructed 10-lane road comes with a ramp bridge to provide a U-turn from Ajao Estate to the airport, flyover at NAHCO/tollgate, two pedestrian bridges, lay-bys and streetlights to meet required international standards. In an exclusive interview with BusinessDay, Ambode said the airport road in its former state used to be a source of concern to him given that it serves as first route into Nigeria for foreign visitors arriving in the country through the MMIA. “When I look at the airport road today with 10 lanes, 3.6km between Oshodi and the MMIA, I feel joy that we have given Nigerians something to be proud of,” said

NNPC’s bleeding pipelines cost Nigeria... Continued from page 2

a period of 2 days and 13 days, respectively”. Similarly, 340,000 barrels (worth $19 million) were lost on Brass terminal as Addax shut in production for four days due to operational constraints while the platform equally stopped delivery into Nigerian Agip Oil Company (NAOC) facility due to leakages in the whole of November. In Qua Iboe terminal, there was a 12-day shutdown in Asabo & Ekpe field due to “Distributed Control System/ Electronic Safety Shutdown System (ESSDS) upgrade”,

which resulted in a loss of over 568,000 barrels (worth $32 million), while at the Abo terminal there was a plant statutory shutdown for maintenance activities for nine days resulting in another loss of 108,000 barrels (worth $6.1 million). In Bonny terminal, there was a shutdown for two days due to leakages with loss of about 26,000bpd (worth $1.4 million), while another production shut-in of 16,000bpd for five days also occurred at the Okoloma and Imor facilities due to planned maintenance. The Brass Creek and Trans RamosPipelinewhichhadbeen

Fidelity on course to be among... Continued from page 2

ing close focus on capital base, compliance and risk management as well as on liquidity management has helped in the bank in bringing down its NPLs overtime. Recently, the bank announced the appointments of three new executives by its board of directors as part of corporate realignment aimed

at repositioning it for further growth. These appointments, the bank said, will help in strengthening its corporate market even as it focuses on lending to the retail sector of the market. “We are growing our market share with continued traction in our chosen business segments. Consistent with previous years, we recorded www.businessday.ng

R-L: Uzo Egbuche, head, sustainability policy commission, The Nigerian Economic Summit Group (NESG); Laoye Jaiyeola, CEO, NESG; Tifase Onyeche, vice chairperson, NESG Board; Catriona Laing, British High Commissioner; Doyin Salami, member, NESG Board; Laure Beaufils, deputy British High Commissioner, and Guy Harrison, head of prosperity, after a courtesy visit to the NESG Summit House in Lagos.

of N26.00 per share, subject to adjustments for networking capital and net debt as at March 31, 2019. The offer comes at a premium of NGN15.30 per share based on its closing price of N10.70 as at 18 April, 2019. The transaction is to be executed through a Scheme of Arrangement and is subject to the approval of the Federal High Court, shareholders, regulators, among others. Ayodeji Ebo, managing director, Afrinvest Securities, stated that flour millers have struggled with smuggling and infrastructure deficit, especially in the transportation of products through the Apapa ports. “But this acquisition by Olam industries will represent a forward integration which will mark a positive change in the sector,” he said. “Furthermore, for the existing shareholders, this will provide a platform for positive yields.” of its kind in Nigeria as it consolidates 13 motor parks hitherto scattered across Oshodi into three multi-storey bus terminals with skywalks connecting each of the terminals. It is one of the facilities incorporated into the Bus Reform Initiative of the Ambode administration targeted at the deployment of 5,000 medium and high-capacity buses in the long run. Already, 820 of the buses are set to commence operations. Meanwhile, BusinessDay will publish a 60-page special report on Monday, April 29, 2019 chronicling the giant strides of the Ambode-led administration in critical sectors of the Lagos economy in the last four years. The special report will also contain an exclusive interview with the governor by BusinessDay editors, which promises to be revealing.

Ambode. Similarly, the Ayinke House, which had been out of use for about eight years, is expected to put smiles on the faces of expectant mothers,

especially those within Ikeja and its environs, as they will no longer need to travel long distances to access care in similar facilities in other parts of the state. Fondly called

‘babies’ factory’, the facility is a 170-bed maternity home and a key intervention in the state’s health sector. The Oshodi Transport Interchange is also the first

shut down since 24 April, 2018 due to leaks in a creek crossing intheOdimodiarearesultedina loss of 35,000bpd of production into Forcados Terminal. “The line remains shut all through the month of November and to date,” NNPC said in its December report. At the Tulja terminal, there was closure of Okwuibome field for the 31 days in October due to flooding at Beneku flow station resulting in a shut-in of 22,000bpd(worthN1.2million). The combined $295 million loss to pipeline leakages also compares with just $265.15 million Nigeria received as export earnings in August, an indication that receipts from export earnings

could be twice higher if leakages can be eliminated. Further analysis into previous monthly reports of NNPC toshowdetailedrecordsofpipeline vandalism proved abortive as previous reports were no longeravailableonthestate-owned behemoth’s website. Sources in the oil and gas industry have told BusinessDay that the country’s pipelines are not only old but are poorly secured, thereby making them easy targets of repetitive attacks by vandals. The $295 million (N106bn at US$/N359.58) loss is slightly lower than N111.26 billion transferred by the NNPC into the Federation Account in December, representing sig-

nificant loss of revenues to both the federation and state governments who are already struggling with significant revenue shortfalls, forcing them to resort to raising debt to finance their governance obligations. NNPC admitted that payments into the Federation Account were affected after adjusting crude and product losses and pipeline repairs and management cost incurred during the period. NNPC pipelines suffered a total of 197 vandalised points in the 12 months between August 2017 and August 2018 fuelled mainly by crude oil theft and vandalism, with the corporation admitting that this incessant vandalism

has put it at a disadvantaged competitive position. Speaking to BusinessDay on the challenges the NNPC looks to be having with its leaking pipelines, Ademola Henry, team leader at the Facility for Oil Sector Transformation (FOSTER), questioned why government is still operating pipelines when it is such a high cost centre. “Anytime NNPC cannot find anywhere to hide expenses that they have incurred, they just record them as losses under pipeline repairs, which is very sad,” Henry said by phone.

double digits in interest income on our liquid assets, digital banking, FX and other income lines,” Okonkwo said. Since assuming office in 2014, Okonkwo has transformed Fidelity Bank significantly, pursuing a digital retail banking approach whilst focusing on niche markets. Under his watch, the bank successfully raised $400 million 5-year Eurobond with a 10.50 percent coupon which is the second largest combined

new issue and liability management offering ever by a Nigerian issuer after Ecobank. In a clear demonstration of its resilience and stability, the lender capped the year with growth in gross earnings, profitability and other key financial indicators. The results showed that Fidelity Bank posted a 5 percent growth in gross earnings to N188.9 billion, from N180.2 billion in the previous year, whilst profit before tax soared

by 30.6 percent to N25.1 billion when compared with the 19.2 billion recorded in 2017. The bank’s profit after tax grew by 29 percent to N22.9 billion in 2018, from N17.7 billion in 2017, whilst operating income rose by 13.9 percent to N97.2 billion, from N85.9 billion in the previous year. Also, the bank was able to grow its loans and advances by 10.6 percent to N30 billion despite juicy yields emanating from government securities

that have made most banks turn off their tap to lending to the real sector. Okonkwo was also pleased with the progress of the bank’s digital banking plan, with “over 42 percent of customers now enrolled in the bank’s mobile/internet banking products and more than 81 percent of total transactions done on digital platforms, resulting in 25 percent of feebased income coming from digital banking”.

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BUSINESS DAY

Wednesday 24 April 2019

NEWS Nembe creek trunk line fire outbreak under control - Aiteo HARRISON EDEH, Abuja

iteo has confirmed that the fire reported within its Right of Way (ROW) of the NCTL on April 21, 2019, has been completely put out. The indigenous oil company also confirmed that the security team conducted further inspections at various times Tuesday and confirmed this position. Ndiana Matthew, Aiteo group corporate communications manager informed in a statement that in line with regulatory requirements, a Joint Investigation Visit (JIV) comprising security and regulatory agencies as well as community

representatives and Aiteo personnel would be constituted and deployed to the site to attend to the necessary incident formalities. This team, he stated, is expected at the incident site imminently. According to the statement, the Joint Task Force on Security team has confirmed that sabotage of the pipeline at Awoba was responsible, and has identified some culprits and is set to act as necessary. Aiteo is working on further site preparation and mobilisation of specialised equipment to the swamps for further remedial action to facilitate a quick return to full functionality. Further information will be made available as soon as these occur.

Death of Christian youths: Buhari expresses sadness, calls for calm Tony Ailemen, Abuja

resident Muhammadu Buhari on Tuesday expressed deep sadness over reports of the killing of some Christian youths during an Easter procession Sunday night in Gombe State, and reprisal killing of law enforcement officials allegedly responsible for the tragic incident. Buhari, in a statement signed by presidential spokesman, Garba Shehu, described the violent actions as “very unfortunate,” even as he extended his condolences to the families of the victims, while wishing the several injured speedy recovery. According to the statement, the President while joining the Christian Association of Nigeria (CAN), Gombe State chapter, and the state g overnment in appealing for calm, also decried the reckless driving as well as “quick resort to self-help and mob action.” According to the President, “We must always be mindful of the peaceful action of others while resisting the urge to take the laws into our hands notwithstanding the gravity of provocation.” The President commended the leaderships of the police and the National Security and Civil Defence

CHANGE OF NAME

Corps (NSCDC) for steps taken in bringing the situation under control, and promised further investigations into the sad incident. President Buhari prayed Almighty God to comfort the bereaved families and grant rest to the souls of the departed victims. It would be recalled that an official of the NSCDC in Gombe State had crushed 10 memb ers of the B oys Brigade who were on their usual procession in celebration of the resurrection of Jesus Christ in Gombe. Chairman of the State Battalion of the Boys Brigade (BB), Isaac Kwadang, who narrated how the incident occurred, told reporters that the NSCDC officer, who was in the company of his policeman fr iend, though not on official duty, “met the procession while passing and after exchanging words with the youths, drove pass them, parked his car and put off the head lamps.” Over 30 others were said to have sustained various degrees of injuries, after the NSCDC official ran his car through the procession from behind, killing 10 on the spot. The youths were said to have chased the security officers, caught with them and mobbed them to death.

CHANGE OF NAME

I, formerly known and addressed

as Fayemi Abisoye Folajuwon now

as Omiyera Bola now wish to

wish to be known and addressed

be known and addressed as

as Akinyemi Abisoye Folajuwon.

Omiyera

All former documents remain valid.

former documents remain valid.

General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Ukpetenan Michelle Oselumen now wish to be known and addressed as Mrs Agbachi Michelle Oselumen Ukpetenan. All former documents remain valid. General Public please take note.

Bola

Wahab.

All

I, formerly known and addressed as Miss Uhiara Tracy Udodirim now wish to be known and addressed as Mrs Onyekwena Tracy Udodirim. All former documents remain valid. General Public please take note. www.businessday.ng

L-R: Kelvin Balogun, partner, ventures; Abayomi Olarinmoye, partner, real sector; Toluwaleke Adenmosun, partner, services, and Niyi Yusuf, managing partner, social sector, all of Verraki Partners, during the company’s media unveiling in Lagos, yesterday. Pic by Olawale Amoo

UBA shareholders excited about investment prospects ENDURANCE OKAFOR

hareholders of United Bank for Africa plc unanimously applauded the consistent strong performance of the Group, as reflected in the growth in deposits and broader balance sheet. More importantly, the shareholders lauded the Management and Board for the total dividend of N29.9bn paid from the 2018 financial year profits, even as the Group proactively retains earnings for probable implementation of BASEL III in the near term. The Group was also commended for his strides in the larger African continent, as it continues to deepen financial inclusion in those countries, with corresponding positive contribution to the Group. The foreign operations contributed 40% of the Group’s earnings, with a strong outlook to further gain market share across all the 19 other African countries, where it operates. The shareholders, who expressed their appreciation during

... applaud dividend payout the Group’s 57th Annual General Meeting in Lagos on Tuesday, praised the Staff, Management and the Board, over the proposed dividend, following the impressive performance. The President, Association for the Advancement of the Rights of Nigerian Shareholders, Faruk Umar, lauded the Management for the hard work, tenacity and commitment to the Group’s growth, particularly as he noted that the current Management is fulfilling the vision of the founders and past leaders of UBA in creating a truly Pan-African Bank. He noted that the feat that UBA has achieved on the African continent would be difficult for any other bank of Nigerian origin to replicate. He said, “I want to specially commend the Management of UBA under the leadership of the Group Managing Director/CEO, Kennedy Uzoka, for a selfless commitment and hard-work towards building an enduring institution

that we and future generations can be proud of. More so, I am impressed by the tenacity of this management in delivering on the vision of shareholders to create a leading and dominant panAfrican financial service institution with global reputation and culture. Whilst it may have taken us some time to appreciate the cutting-edge vision of Chairman, Tony Elumelu, in expanding our Group’s operation to Africa, we are today excited by the performance and contribution of these operations to our Group’s earnings.” Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie, also commended UBA for being the first in Africa to embrace Artificial Intelligence technology in the Nigerian banking space, through the introduction of Leo, the Virtual Banker. He said shareholders who are present at the AGM, who are largely Nigerians are very proud that a bank like UBA with Nigerian origin

has successful operations across the continent and even in major global financial centres; United Kingdom, United States and Paris. UBA has shown that Nigeria can make the African continent proud. Another shareholder and investment analyst, Nonah Awoh, also congratulated the bank on its 70th year celebration, and called for a consolidation of past achievements, noting that UBA has grown to become one of the great institutions in Africa and thus Management must continue to work hard to sustain the rich heritage and legacy. Addressing shareholders earlier at the event, the Group Chairman, Mr. Tony Elumelu, congratulated shareholders over the upgrade of operations in the United Kingdom and formal opening of the Mali business, adding that the team in both countries are set to change the narrative of banking, and would thus strengthen the earnings growth trajectory of the Group, through their respective positive contribution.

Alleged PMB University is a disaster to Nigeria - ASUU Akinremi Feyisipo, Ibadan

he proposed plan to establish a private university to be named after President Muhammadu Buhari by his wife Aisha has been described as a disaster by the Academic Staff Union of Universities (ASUU). The academic union states that the plan of the wife of the President confirms why her husband has continued to reduce budgetary allocation to education since he assumed office in 2015. Chairman of ASUU, University of Ibadan, Deji Omole, and former national treasurer of the Union, Ademola Aremu, both professors, while speaking in Ibadan, said the leadership of the country under President Buhari should immortalise

himself by revitalising public funded education. Wife of the President, Aisha Buhari, had over the weekend at a Town hall meeting in Yola, announced her plan to establish a private university to be named after President Buhari in partnership with some foreigners. But Omole noted, “When I also heard about the proposed private university to be named after Mr President, I just looked at it as a joke taken too far. If we have a president in a country that has simply refused to fund public education and all we get from the family of the first lady is to establish a private university in collaboration with some foreigners to me I think it is a disaster for this country and for a sitting president. “The implication is that Nigerians should know that this leadership does not believe

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in public funded education. Nigerians should support the struggle for the government to take education as a core investment upon which this country will be liberated. It is not the children of the rich that will solve the problems of Nigeria but the children of the poor and the tool they need is quality education.” Speaking further, Aremu advised the wife of the President to influence policies for her husband to immortalise himself by revitalising public funded education. “I don’t think that she is serious. We already have proliferation of universities and they are not taken care of. Since they are police makers, they will now formulate policies that will ground public universities aground for their interest to @Businessdayng

thrive. I thought we have actually left that era. “I could remember that Obasanjo established Bells and we condemned it. Atiku established his own as former Vice President. If you have private interest, you should not hold public office. If you have interest in anything private, I think it is proper to actually leave the public space for those who want to engage to serve the masses. “How many people can afford the existing private universities existing in the country? If you want to help education, then increase the capacity of the existing ones. When you are holding a public office, don’t establish a private concern. She should wait until Buhari is completely out of office before thinking of bringing a private university in whatever name.”

Wednesday 24 April 2019

BUSINESS DAY

BANKING

In Association with

CBN’s financial inclusion update with Queen Maxima at Washington D.C Stories by Hope Moses-Ashike

n the side line of the recently concluded World Bank/ IMF Spring Meetings in Washington, D.C., Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), and Zainab Ahmed, finance minister, held a bilateral meeting with Queen Maxima of the Netherlands. Queen Maxima is the United Nations (UN) Secretary-General Special Advocate leading global advocacy efforts to advance financial inclusion, opening a path to empowerment for all. Following her last visit to Nigeria in October 2017, she wanted to know what progress had been made in the area of Financial Inclusion and how she could be of help. Emefiele, who is optimistic of achieving 80 percent financial inclusion next year, gave an update on the progress. “We are happy because I remember about 18 months ago, Bill Gates mentioned that the level of financial inclusion in Nigeria was 48 per cent and they were concerned that Nigeria was not making progress. We went to work to ensure we meet 2020 target of 80 per cent. As a result of the actions we have taken, our level of financial inclusion as at last week has improved from 48 per cent to 64 per cent in the space of 18 months.”

Briefing journalist after the meeting, Emefiele said, “I feel more confident that by 2020, we should certainly hit 80 percent mark we had set for ourselves. In doing this, it is important to look at how we faired as a country during the period of this crisis relative to some other emerging markets.” The CBN adopted the National Financial Inclusion Strategy (NFIS) in 2012. The Strategy articulated the demand-side, supply-side and regulatory barriers to financial inclusion, identified areas of focus, set targets, determined key performance indicators (KPIs) and established the implementation structure. The NFIS was built on four strategic areas of agency banking, mobile banking/mobile payments, linkage models and client empowerment. Four priority areas were identified for guideline and framework development namely, Tiered Know-your Customer (T-KYC) regulations, agent banking regulations, national financial literacy strategy and consumer protection. According to the regulator, Financial inclusion is achieved when adults have easy access to a broad range of formal financial services that meet their needs and are provided at affordable cost. Financial inclusion implies not only access but usage of a full spectrum of financial services including but not limited to payments, sav-

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Godwin Emefiele. CBN, governor

ings, credit, insurance and pension products. Prior to the recent drive to achieve the 80 percent financial inclusion, many Nigerians, for numerous reasons, are unbanked and lack access to formal financial services. The results of the EFInA Access to Financial Services in Nigeria 2012 survey showed that 34.9 million adults representing 39.7 percent of the adult population were financially excluded. Only 28.6 million adults were banked, representing 32.5 percent of the adult population. Billions of Naira circulate through the informal sector and this has a negative impact on the country’s economic growth and

development. The EFInA Access to Financial Services in Nigeria 2012 survey revealed that 23.0 million adults save at home. If 50.0 percent of these people were to save N1,000 per month with a bank, then up to N138 billion could be incorporated into the formal financial sector every year. Last year, the CBN unveiled the 2018 revised NFIS, which revealed that In 2016, 58.4 percent of Nigeria’s 96.4 million adults were financially included comprising 38.3 percent banked, 10.3 percent served by other formal institutions and 9.8 percent served by informal service providers. In 2020, Nigeria plans to have 70 percent of its adult

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population in the formal financial services sector and 10 percent included in the informal sector. The revised strategy revealed that 46.5 percent of the females, 52.5 percent of those in rural areas and 53.5 percent of youth aged 18 to 25, 70 percent of those from the North West and 62 percent of those from the North East were excluded in 2016. MSMEs were also peculiarly excluded from financial services. Consequently, the CBN said demographics - women, rural areas, youth, Northern geopolitical zones and MSMEs shall be the primary focus of intervention in these revised NFIS. The major goal of the revised Strategy is to reduce the proportion of adult Nigerians that are financially excluded to 20 percent in year 2020 from its baseline figure of 46.3 percent in 2010. Although Nigeria is yet to attain its financial inclusion goals, some recent developments may help drive inclusion over the next year. These include governance arrangement for NFIS implementation, memorandum of Understanding (MoU) on payments systems, regulatory sandbox for fintech, and Shared Agent Network Expansion Facility (SANEF) Initiative. The CBN, in collaboration with Deposit Money Banks (DMBs), Mobile Money Operators (MMOs) and Su-

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per-Agents have designed a programme for aggressive rollout of a network of 500,000 Agents. They will offer basic financial services including cash-in/cashout (CICO), funds transfer, bill payments, airtime sales, Bank Verification Number (BVN) enrolment services and government payments among others. Similarly, several private-sector players have introduced new products and services aimed at the unserved and underserved. These include “no-frills” savings accounts, Unstructured Supplementary Service Data (USSD) for account opening and funds transfer service among others, non-interest banking products and financial instruments, multifunctional ATMs and micro- insurance. Also, other partnerships in the industry are driving uptake in digital financial services (DFS), and programmes have been launched to boost access to finance for excluded groups such as women and MSMEs. At the World Bank/IMF meeting, Ahmed informed Queen Maxima, of the various initiatives put in place to achieve financial inclusion like the National Social Net Program, trader mom’ scheme, among others. “On the fiscal side, I informed her of the on-going work in the area of National Savings Strategy and that we will reach out to the World Bank to help us with this initiative,” he said.

Wednesday 24 April 2019

BUSINESS DAY

BANKING Banks still crowding out private sector in lending despite cut in MPR

he private sector is still being crowded out in lending by banks in spite of the marginal reduction in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria’s (CBN). The CBN’s depository corporations survey, released recently, showed 3.22 percent month-onmonth increase in Broad Money to N34.79 trillion in February 2019, from N33.72 trillion in January 2019. This resulted from an 11.80 percent m-o-m rise in Net Domestic Assets (NDA) to N17.77 trillion accompanied by a decrease of 4.44 percent m-o-m in Net Foreign Assets (NFA) to N17.02 trillion. On domestic asset creation, the increase in NDA resulted from an m-o-m rise of 6.57 percent in Net Domestic Credit (NDC) to N30.52 trillion, but was offset by a 0.04 percent m-o-m rise in Other Liabilities (net) to N12.74 trillion. Further breakdown of the NDC showed an 11.42 percent m-o-m increase in Credit to the Government

to N6.35 trillion and an increase of 5.37 percent in Credit to the Private sector to N24.16 trillion. On the liabilities side, 3.22 percent m-o-m rise in Broad Money Supply was chiefly driven by 18.83 percent m-o-m increase in treasury bills held by money holding sector to

N8.23 trillion but was offset by 0.98 percent m-o-m decrease in Narrow Money to N11.03 trillion (as Demand Deposits which fell by 2.22 percent to N9.19 trillion offset the effect of currency outside banks which rose by 5.70 percent to N1.84 trillion) and a 0.74 percent m-o-m modera-

tion in Quasi Money (near maturing short term financial instruments) to N15.50 trillion. Reserve Money (Base Money) decreased m-o-m by 4.30 percent to N7.17 trillion as Bank reserves declined m-o-m by 8.47 percent to N4.58 trillion despite a 4.75 percent m-o-m rise in currency in

circulation to N4.46 trillion.

culture and history thereby deepening our sense of pride as a people. This is the in line with the vision of our founders and endearing to our customers and stakeholders.” Also commenting, Bolanle-Austen Peters, CEO, TerraKulture, said “we are passionate about creating partnerships and

advancing the Nigerian and African narrative ourselves. There is no stronger brand than Ecobank to project that Pan African image that we all so clearly want to identify with. This is a step in the right direction and we hope through this Ecobank will add more jobs and also improve the quality of life of Nigerians”.

Meanwhile, analysis of the Q1 2019 Credit Conditions Survey released by CBN showed that availability of secured and unsecured credit to households as well as credit to corporate firms increased in Q1 2019 amid lenders’ opti-

mism for better economy which boosted their risk appetite. This is expected to continue in Q2 2019. However, demand for secured households credit decreased in Q1 2019 as lenders tightened the credit scoring criteria. Nevertheless, lenders still reported increased demand for corporate credit from all firm sizes in the quarter under review, which was expected to continue into the next quarter, given the lower default rates printed by corporates in Q1 2019. “We note the 5.37 percent increase in credit to the private sector, which was fairly commendable. However, the higher rate of increase in credit to Government showed that despite the moderation in Monetary Policy Rate (MPR) to 13.50 percent and the declining interest rate environment, the private sector still experienced crowding out effect as Deposit Money Banks continued to play safe despite the recorded improvement in loan performance”, analysts at Cowry Asset Management Limited said.

EcobankPay promotes African culture

cobankPay, the lifestyle digital payment and collections service of Ecobank Nigeria, has entered into a partnership with TerraKulture, Nigeria’s foremost stage play and cultural show promoters with Bolanle-Austen Peters as lead. Through this partnership, Ecobank intends to support the promotion of African arts and culture starting from April 2019. For each festive season, there will be a theatrical production - April coinciding with the Easter celebrations; October season to correspond with the nation’s independence anniversary and December season end of year festivities. Commenting on the partnership, Patrick Akinwuntan, managing direc-

tor, Ecobank Nigeria, said it is one of the several initiatives by the pan-African Bank to boost culture, history and the entertainment industry in Nigeria. He noted that the partnership would create jobs, further re-ignite and engender interest in watching stage plays and derive learning points from history and rich culture that will be showcased through the shows. According to him, “as the Pan-African bank, Ecobank is pleased to partner with a renowned African culture promoter – TerraKulture to achieve our collective vision of promoting indigenous African plays to reinforce knowledge of and also celebrate our history, culture and values. As we continue to leverage Ecobankpay and Ecobank www.businessday.ng

Xpresspoint Agency to bring convenient and easy banking to every household, creating jobs and facilitating trade, we are also proud to be at the forefront of the renaissance of African culture and history. The Queen Moremi musical stage play planned for the Easter season will increase knowledge of our

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This Easter, the TerraKulture show will bring to life the story of Queen Moremi, the 12th-century tale of a brave woman leading the charge to save her people in Ile-Ife. Put together by TerraKulture and Rejuvenee, ‘Queen Moremi: The Musical’ is a stage play that celebrates the legacy of the feminine hero. The stage play has a strong cast of Bimbo Manuel, Femi Branch, Deyemi Okanlawon, Lala Akindoju and others. Moremi resonates with the feminist charge to take lead in a male-dominated society. It is a story that has enough legs that makes it relevant for all generations. The legend of Queen Moremi is a blast from the past that reminds us of who we really are.

Wednesday 24 April 2019

BUSINESS DAY

NEWS Industry, Trade Ministry unveils compendium of achievements SEGUN ADAMS

he Federal Ministry of Industry, Trade and Investment (FMITI) Tuesday released a detailed compendium, an extensive outline that captured the Ministry’s groundbreaking achievements over the past three and a half years under the President Muhammadu Buhari administration. The 44-page extract provides specific insight into reforms, projects, and initiatives implemented under the leadership of the minister, Okey Enelamah. “I am proud of the great work the Ministry has achieved in the last few years,” said Enelamah at the launch event. “We have consistently delivered on our promise to promote economic

growth and generate wealth through policies that attract investment and develop enterprises, and it is essential that we communicate our achievements to Nigerians, even as we continue the work to positively transform the economy.” With a mandate to create an enabling environment to stimulate industrialization and accelerate domestic and foreign investment, the Ministry has successfully championed the development of MSMEs to create jobs and drive inclusive growth while promoting the integration of Nigeria-based businesses into regional and global value chains. The extract compendium will be available from April 29 to stakeholders and in airports, major hotels.

As schools resume, FG, Edo to feed 21,928 pupils in 121 schools

s schools resume for third-term after the Easter holiday, the Federal Government’s National Home-Grown School Feeding Programme (NHGSFP) and Edo State government have concluded plans to feed about 21,928 pupils in two local government areas in Edo State. Focal person of the Social Investment Programme in Edo State, Osayuwamen Aladeshelu, disclosed this in an interview with journalists in Benin City, the state capital. She said the Federal Government and Edo State government would feed pupils from Primary 1-6 in Uhunmwode and Orhionmwon local government areas, in continuation of the school feeding programme in the two areas. “To enable us achieve the target, we have engaged the services of 180 caterers who will provide meals to 21,928 pupils across 121 schools

in Uhunmwode and Orhionmwon LGAs,” she said. According to Aladeshelu, the total number of students that would benefit from the feeding programme was obtained from the records of the Edo State Universal Basic Education Board (SUBEB). Recall that at the commencement of the school feeding programme in Edo, Governor Godwin Obaseki mandated that instead of only pupils in primary 1 to 3 benefiting from the scheme, those in higher classes, from primary 4 to 6, should be included, to ensure that everyone in the schools participating in the programme is provided with food. The state government’s tweaking of the scheme is with aim of ensuring that the pupils are well fed to benefit from the all-round revamp of the basic education sub sector, a process captured under the Edo Basic Education Sector Transformation (Edo-BEST), being implemented by Edo SUBEB.

HARRISON EDEH, Abuja

According to TCN, the Ekim Transmission Substation project is being executed in collaboration with the Akwa Ibom State government. Mba confirms that while TCN provides and installs the transformers, switchgears and gantries using its in-house engineers, the Akwa Ibom government is providing all the civil works associated with the execution of the project. The TCN notes that with the completion of the first phase, it now has available, additional 48MW of bulk power supply for PHEDC to off take, through the three feeders to its customers such as the Akwa Ibom State University, Coconut Oil Refinery, Meter Manufacturing Factory, Syringe Factory, Ikot Abasi, and Onna LGAs, Easter Obolo as well as Mkpat Enin. It is expected that with more supply to PHEDC through the new substation, these customers would experience more hours of stable and sustained power supply. It notes further that the Ekim transmission substation is one of the new transmission substation projects it had successfully executed within the last one year.

Goldman Sachs not expecting oil rally despite removal of Iran sanction DIPO OLADEHINDE

n its latest client note, global investment banking firm, Goldman Sachs, believes United States’ decision to end exemptions from sanctions for countries still buying oil from Iran will have limited impact on crude prices, even though the timing is likely to have caught energy market participants by surprise. “While we acknowledge the near-term upside price risks, we reiterate our fundamentally derived Brent price trading range of $70-75 per barrel for the second quarter of 2019,” the US investment bank said in a research note published Monday. The bank still expects declining prices into 2020 due to better supplied markets next year and high uncertainties around whether

the Organisation of the Petroleum Exporting Countries (OPEC) and fellow producers will continue to abide by their agreement to curb output to support prices after June. Recall, in a statement on Monday, the US says it will not renew exemptions on waivers, adding that the US, Saudi Arabia and the United Arab Emirates will ensure there is enough oil supply in the global market as waivers currently granted to Turkey, South Korea, China, Indian, Japan, Greece, Italy and Taiwan are expected to expire May 2, 2019. International benchmark Brent crude traded at $74.49 Tuesday morning, up around 0.61 percent, while US West Texas Intermediate (WTI) stood at $65.93, almost 0.6 percent higher. The US government has this year repeatedly said it wants to cut Iran’s oil exports below 1 million

barrels per day (bpd) or even to zero, and that new action would be taken by May. Also, Barclays Bank said in a note after the statement that the decision took many market participants by surprise and that the move would “lead to a significant tightening of oil markets.” The British bank noted that Washington’s target to cut Iran oil exports to zero posed a “material upside risk to our current 70 dollars per barrel average price forecast for Brent this year, compared with the year-to-date average of 65 dollars per barrel.” The move to increase pressure on Iran came amid other sanctions US has placed on Venezuela’s oil exports, and also as producer club OPEC has led supply cuts since the start of the year aimed at tightening global oil markets and propping up crude prices.

Ellen Wald, non-resident senior fellow at the Global Energy Centre of the Atlantic Council, said the United States “seem to expect” Saudi Arabia and the United Arab Emirates to replace the Iranian oil, but she added “that this is not necessarily the way Saudi Arabia sees it”. Saudi Arabia is the world’s biggest exporter of crude oil and OPEC’s de-facto leader. The group is set to meet in June to discuss its output policy. Similarly, analysts at Bernstein Energy said on Tuesday that “Saudi can make up for the shortfall” from Iran, although it added that this would push production back to record levels of around 10.5 million bpd, up from 9.8 million bpd currently. Bernstein added that “higher oil prices will incentivise US production” to rise, after already hitting a record of over 12 million bpd this year.

TCN confirms completion Phase 1 of new Ekim substation to expand grid transmission

n line with the expansion of transmission infrastructure, the Transmission Company of Nigeria (TCN) has completed and energised the first phase of the ongoing brand new transmission substation in Ekim, Akwa Ibom State, to increase bulk power supply for the district. TCN confirms that the repairs is in line with its Transmission Rehabilitation and Expansion Programme aimed at growing a robust transmission grid in the country, as a means of addressing shortfall of power transmission. This phase comprises a 60MVA 132/33kV power transformer and three outgoing 33kV feeder bays. The transformer was energised early this month. Ndidi Mbah, general manager, public affairs, TCN, says although the first phase has been completed and energised, the 2x60MVA capacity substation would be completed with the execution of the second phase, which also comprise one 60MVA power transformer and three feeder bays.

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President Muhammadu Buhari welcoming Sheikh Tamim bin Hamad Al Thani, emir of Qatar, to the Presidential Villa in Abuja, yesterday. NAN

Creativity/Innovation Day: Obaseki banks on Edo creative industry with Film, TV village, Innovation Hub

d o S t a t e G ov e r n o r Godwin Obaseki has assured ample opportunity for youths in the creative industry with the Edo film and TV village as well as the Edo Innovation Hub, which are initiatives to boost productivity and meaningfully engage the state’s teeming youth population. The governor said this in commemoration of the World Creativity and Innovation Day marked by the United Nations (UN), every April 21. The governor said the state government was creating structures in the state to exploit the economic benefits of Nigeria’s

booming creative industry and also the deployment of innovation in science and technology to change lives and solve society’s most pressing problems. According to Obaseki, “As we mark the World Creativity and Innovation Day, the state government is assuring of its commitment to the Edo Film and Television Village, an initiative to exploit the creative energies of our youths and give them the opportunity to create wealth through their talent.” He said that the Film and Television village would tap talents in film, television, other audiovisual products in the performing arts, new media and publishing to boost the

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state’s Gross Domestic Products (GDP). He added that provision for the construction of the site for the village has been made and work would soon commence in earnest, noting, “We have a rich cultural heritage in Edo and our Film and TV village will provide opportunity for our youth to tell our stories to the world, helping to preserve our culture and also contributing to our economic diversification plans.” He said the theme of this year’s commemoration, ‘Fashion and Sustainability: Look Good, Feel Good, Do Good’ is in sync with the state’s campaign to engage every sector in contributing to economic development. @Businessdayng

According to the UN, “the creative economy –which includes audiovisual products, design, new media, performing arts, publishing and visual arts– is a highly transformative sector of the world economy in terms of income generation, job creation and export earnings. “Culture is an essential component of sustainable development and represents a source of identity, innovation and creativity for the individual and community. At the same time, creativity and culture have a significant non-monetary value that contributes to inclusive social development, to dialogue and understanding between peoples.”

BUSINESS DAY

Wednesday 24 April 2019

NEWS Confucius Institute UNILAG celebrates Nigerian lenders’ exposure to real estate sector Buhari woos Qatari investors to invest in Nigerian economy remains almost unchanged in percent term Sino-Nigeria relations TELIAT SULE

onfucius Institute and Institute of Nigeria-China Development Studies, both at the University of Lagos, last week celebrated three different milestones in the history of the People’s Republic of China by organising a speech competition across the nation with a view to allowing Nigerians to show their true reflection for China. The speech contest drew contestants from different departments and students who were passionate, vibrant and distinct vividly expressed their feelings about the Chinese history, culture, arts, philosophy and its people. Wang Yongjing, Chinese director of the Confucius Institute, said that the event was an activity designed to strengthen Sino-Nigeria ties and friendship. Deputy Consul General, Guan Zhongqi, who made the welcome remarks, was elated at the planning and organisation of the event. Held at the Afe Babalola Auditorium of the University, the speech competition registered 38 contestants. Twenty contestants made their presentations in English language while the remaining 18 made their presentations in the Chinese language. “This event really showed students’ overwhelming love

for the Great Wall of China, magnificent Chinese architecture, summer palace, terra cotta warriors, among others,” said Femi Saibu, a professor of economics and director of the Institute of Nigeria-China Development Studies at the University of Lagos. Saibu also stated that students’ exposure to Chinese culture and civilisation was a good thing for the Nigerian polity. This is as Adetoro Banwo commended the participants for expressing their genuine desires towards PR China. Mariam Ojikutu, a 400-level student in the Department of English Language at the University of Lagos, was declared winner of the speech competition. Her presentation centred on the Chinese landscape, history, people, culture and language. And with the contestants that won the second and third places, were given mobile phones by BY Techno, the corporate sponsor of the event. “It was a colourful event as students expressed their goodwill to the People’s Republic of China on its 70th celebration of the founding of the PR China, the 48th celebration of Sino-Nigeria relations and the 40th celebration of the opening up reforms in China,” said Chimdi Maduagwu, a professor and Nigerian director at the Confucius Institute.

… dips N60bn in value term in 2018

ISRAEL ODUBOLA

igerian Deposit Money Banks were less aggressive in their lending activities across sectors last year, evidenced by the fact that the combined loan book of 12 lenders contracted some 6 percent, and eight of them slightly lowered their exposure to real estate sector, on the average. The percentage allocation of gross loans and advances extended by eight lenders - Access Bank, United Bank for Africa (UBA), First City Monument Bank (FCMB), Zenith Bank, Fidelity Bank, Guaranty Trust Bank (GTB), Stanbic IBTC and Union Bank - to real estate sector, which has been in recession for 12 consecutive quarters, averaged 6.6 percent in 2018. This therefore indicates a marginal 90 basis points decline compared with 7.5 percent in 2017. In absolute terms, real estate got N623.3 billion out of the combined N9.84 trillion extended by these lenders across sectors in 2018. This represents about N60 billion dip over N683.3 billion dissipated in 2017. “This reflects that developers and real estate investors are not borrowing from the banks as before, in the sense that they are going to external sources to get funds for their projects,” Rotimi Steven, a broker at International Real Estate Partners, says. “Banks are risk-averse knowing that the sector is downturn. They

are not willing to take more risks as before, and their requirements for granting loans is quite outrageous,” Steven states. Individual-bank analysis reveals that tier-1 lenders Access, Zenith, and mid-tier Fidelity elevated their exposure by 2.2 percent, 0.58 percent and 0.02 percent points, respectively, in 2018, while UBA, FCMB, GTBank and Stanbic IBTC reduced lending to the sector. Union Bank’s allocation to real estate activities remained stuck at 6.7 percent. Nigeria’s biggest lender by market capitalisation, GTBank, dissipated N68 billion out of its N1.36 trillion gross loans to real estate in 2018, compared with N106.4 billion in the previous year. In percent terms, loan allocation to the sector dips 200 basis points to 5 percent in 2018. Zenith Bank, Nigeria’s largest lender by total assets, raised its exposure to real estate sector by some 400 basis points to 5.6 percent in 2018. However, in money terms, allocation to the sector dips N3.9 billion, owing to a double-digit decline of 10.2 percent in its loan book to N2.02 trillion. The new entity, Access Bank, which is now Nigeria’s biggest lender by customer base, elevated its exposure to real estate sector both in percent and money terms. Allocation to the sector rose to some 220 basis points in 2018 to 10.1 percent, which indicates N52.4 billion surge to N215.1 billion in the same year.

… says shooting was deliberate Tony Ailemen, Abuja

resident Muhammadu Buhari on Tuesday offered Qatari investors opportunities in the various sectors of the economy including petroleum, power, aviation, agriculture, railways, and many others. These were the high points of discussions with President Muhammadu Buhari when he received the Emir of Qatar, Sheikh Tamim bin Hamad Al-thani, at State House, Abuja. The Emir is leading a delegation of senior government officials and business executives from the Gulf state, on a visit to Nigeria. Qatar, which recently pulled out of the Organisation of Petroleum Exporting Countries (OPEC) to concentrate on gas production, is today the world’s biggest exporter of liquefied natural gas. The President also appealed to the Emir on the need to support the quest to recharge Lake Chad with water from the Congo Basin, so as to grant succour to the more than 30 million people adversely affected by the shrinkage of the lake over the years. “We invite you to invest in our refineries, pipelines, power sector, aviation, agriculture, education, and many others, so that you can have your management here to oversee the investment. We need your ex-

pertise,” President Buhari said. On the receding Lake Chad, he said of the over 30 million people affected, more than half were in Nigeria. He pointed out that this had contributed greatly to illegal migration, as innumerable youths dare the Sahara Desert and the Mediterranean Sea, in order to find safer shores in Europe, with a large number of them dying in the process. “We need help with the recharge of Lake Chad, as it is not a project that the concerned countries can handle alone,” President Buhari said, adding: “Recharging the lake will bring back fishing, farming, animal husbandry, and the youths won’t be attracted by insurgency or illegal migration. We want Qatar to be involved because of the humanitarian nature of the endeavour.” Sheikh Hamad Al-thani said he was honoured and happy to be in Nigeria for the first time, stressing it was a reciprocal visit to the one paid to Qatar in 2016 by President Buhari. “The relationship between our countries is very good. We just have to build on it,” the emir said. “We share a lot of similarities in different areas. We need to enhance bilateral trade and economic cooperation. We are willing to do a lot more with Nigeria, and will continue to work on investment opportunities of mutual benefit,” he said.

Macro-economic impact on real estate to dominate discussion at housing forum CHUKA UROKO

L-R: Bolaji Anifowose, vice president, commercial, Crown Flour Mills; Rohit Chugh, vice president, flour, Olam Grains; Raji Rasheed Omotunde, brand ambassador, Mama Gold Flour, his wife Betty, and John Olaoye, general manager, sales and marketing, Crown Flour Mills, during the unveiling of Omotunde as Mama Gold Flour brand ambassador in Lagos, yesterday. Pic by Olawale Amoo

Arab investor to spur export in Nigeria with logistics hub Endurance Okafor

ulu Group International, a United Arab Emirates-based retailer, plans to set up a sourcing and logistics facility in Nigeria to export local agricultural produce to its various operations across the Gulf Cooperation Council (GCC), India and Far East. The information available on the Nigerian Investment Promotion Commission (NIPC) website revealed that the plan was announced during a meeting between President Muhammedu Bu-

hari and Yusuff Ali, Chairman of Lulu Group at the Annual Investment Summit held recently in Dubai. During the meeting, Buhari was said to have urged Ali to invest in Nigeria, saying: “come to Nigeria and prosper and have handsome returns on your investments, within the shortest possible time.” Ali therefore briefed the Nigerian President about Lulu’s activities and expressed interest to work with Nigerian farmers to promote local produce and to ensure food security. “We are also interested to www.businessday.ng

sign contract farming deals with local farmers and entrepreneurs to help supply fresh vegetables and fruits to our hypermarkets worldwide,” said Ali. A high-level team of Lulu is expected to visit Nigeria soon for further discussion with authorities. “Discussions were held to invest in Nigeria’s retail sector by Lulu Group and more importantly to invest in local agricultural products and help to market them worldwide,” Geoffrey Onyeama, Nigerian foreign minister said. According to the minister,

the initiative will be extremely beneficial for the local farmers. If the Lulu Group is able to successfully go through with the investment in Nigeria, Africa’s most populous nation will join countries like South Africa and Egypt, which already have Lulu’s logistics hub. Founded in 2000, LuLu Group International is an Indian multinational conglomerate company that operates a chain of hypermarkets and retail companies, headquartered in Abu Dhabi, United Arab Emirates.

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mpact of macro-economic and socio-political environment on the Nigerian real estate market will dominate discussions at this year’s edition of the Abuja International Housing Show (AIHS), which will be taking place in the Federal Capital Territory, Abuja. AIHS is an annual gathering of high profile professionals who are founders and business owners, and this year’s edition, 13th in the series, anticipates over 200 CEOs of real estate, mortgage, housing finance, and construction companies and institutions who will be beaming search-light on the challenges of the real estate market. “This event is also a collaborative and supportive environment for leaders in Nigerian real estate industry support services and mortgage banks. Participating in the forum will increase high level business contact,” Festus Adebayo, CEO, Fesadeb Communications, said. Fesadeb Communications, the organiser of the event, is a real estate market-focused organisation that has taken its crusade for the market growth and development to a new high with the Abuja housing show, which brings together both the public and private sector stakeholders to identify market problems and proffer solutions. “The forum provides avenue for meeting counterparts from other parts of the country and beyond; with an ever changing world, such as we have, it is indeed very timely to have all these top leaders converge for the sake of advancement. Various ideas and experiences from several places will greatly enable the participants to forge effective models of operation,” Adebayo noted. @Businessdayng

Apart from conferences and products exhibition, there will also be a CEO Forum on the first day aimed to tackle several challenges, especially the recurrent ones, in the housing sector. It is hoped that the attending CEOs will proactively engage the show with first hand, authentic and relevant information on issues pertaining to the industry. Major highlights of the event, according to the organisers, are the showcasing of innovative developments in the housing industry, paper presentations from experts and leading names in the industry. Renowned experts will be providing housing market forecasts and examining issues such as employment, home prices, production, demand and supply. “There will be break-out sessions led by the CEOs to address emerging issues with some definitive and specialised solutions. This will be of great benefit to the entire industry as such recommendations will be adopted in order to effectively grapple with industry challenges ranging from provision of affordable housing, mortgage, quality control and policy directions,” he said. He hopes that the CEO forum will also be an opportunity for the promotion of new ideas, innovations and products looking for markets, adding that it will also serve as a selection ground for those looking for ideas, businesses and products to invest in. “Clearly, there is no other platform in Nigeria that can bring together as many professionals, not only from housing, real estate and construction sectors, but also from government, investment, and capital markets to share experiences, knowledge and expertise on varied issues related directly or indirectly to the housing sector,” he posited.

Wednesday 24 April 2019

BUSINESS DAY

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Wednesday 24 April 2019

BUSINESS DAY

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Wednesday 24 April 2019

BUSINESS DAY

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Wednesday 24 April 2019

BUSINESS DAY

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Wednesday 24 April 2019

BUSINESS DAY

Government Enterprise & Empowerment Program

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TraderMoni, MarketMoni record over 7,000 new beneficiaries in Benue

MarketMoni Beneficiaries Markudi Modern Market in Joyous Mood

he empowerment of petty and small-scale market traders by the Federal Government through the TraderMoni and MarketMoni initiatives of the Government Enterprise and Empowerment Program (GEEP), continued in Benue state, the food basket of the nation, with a special market activation in two popular markets—Markudi Modern Market and Wurukum Market. This is in furtherance of the commitment of the Buhari-led administration, to growing the economy by providing interest and collateral free loans to petty traders. On April 18, 2019, Benue state experienced the enumerations of more traders and loan disbursements to previously enumerated ones by the Bank of Industry. Tradermoni is targeted at individual petty traders through loans starting at N10,000 while MarketMoni is aimed at traders who access interest-free-loans from N50,000 through their trading associations. Since the commencement of the programmes in 2016, there have been success stories of beneficiaries who are paying back their loans and accessing more loans. Worthy of note are the traders who have used the initial N10,000 loans efficiently, successfully

repaid the loan and subsequently received the second loan of N15,000. Across Nigeria, over 30 Billion Naira has been disbursed to over 2 million traders. In Benue state alone, there have been over 40,000 disbursements for TraderMoni and more than 7,000 direct beneficiaries of MarketMoni. Jennifer Iorfa, a petty trader from Gboko, Benue state makes and sells the local guinea corn milk, kunu and fried yam at a nearby secondary school. When she was enumerated to be a beneficiary, she first received a confirmation text message and subsequently, the TraderMoni cash of N10,000. She started buying ingredients for her business in larger quantities which enabled her sell more. Jennifer has made decent returns to improve the living conditions of her family and repaid her loan of N10,250, inclusive of the N250 administrative charges—from her profits. Immediately after her loan repayment was processed, she received a text message informing her that she has qualified for the next loan stage of N15,000. “With this N15,000 loan, I will be able to make more kunu, sell more and pay back,” she says smiling.

Agbo Mnena Mercy, a MarketMoni beneficiary who sells grains in Wurukum Market, also heard about it the initiative on radio, and got registered. After receiving her loan, she was able to move from buying grains in measured basins, which costs about N3,000 to buying in bags of up to N15,000 per bag. For Mercy, this marks significant change for her business.

Doris Doosur, a registered Eyowo agent for TraderMoni and state manager for MarketMoni has been engaging directly with the beneficiaries of TraderMoni, and MarketMoni in the state. “It has been a wonderful program. These traders have been ignored for too long, and access to loans for them is usually difficult. With access to these government loans, things have significantly improved for them. Most times, when we go to disburse the loans in the markets, you can see their joy.” Christiana Maraa, sells fairly used clothes popularly called Okrika in the market, and is a MarketMoni beneficiary, which is N50,000 for the first loan access. According to her, after registration, she received a text message notification that her loan was ready. She was over-

whelmed with joy and called on more traders to take advantage of the TraderMoni or MarketMoni initiatives to expand their businesses.

Annyon Dooshima, a Marketmoni beneficiary from the nearby High-Level market sells chicken and poultry feeds. With her Marketmoni loan, she increased her

poultry size from 50 birds to over 80 birds, and also got more customers patronizing her. Dooshima says she is refunding gradually by paying N2,000 every week.

TraderMoni Agents processing Cash-outs for Beneficiaries.

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Ali Mustapha, a representative from the Bank of Industry, the principal partner of the Federal Government on the Social Intervention Programs of TraderMoni and MarketMoni, says the response from beneficiaries has been very positive so far, with more people repaying their loans, and getting access to bigger monies. With more traders benefitting, they have access to much needed funds to grow their businesses, improve their lives and be better positioned to contribute to economic development.

Wednesday 24 April 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING PEOPLE & PERSPECTIVES

Selling a private equity portfolio company – Exit planning and structuring considerations for the exit plan OLUBUNMI ABAYOMI-OLUKUNLE

t some point, a Private Equity Fund Manager (Fund Managers) would often find out that, indeed, every aspect of the fund raising and investment cycle is a disciplined process and that the degree of discipline that is brought to bear on each process may be directly proportional to the success of a Fund Manager. Exit Planning is a fundamental discipline for Fund Managers and perhaps, the most understated. In our experience, most times, it’s the quality of the Exit Plan and of the execution of that Plan that makes all the difference in the quest for alpha. Regardless of the investment thesis or legal structure or domicile of a private equity/venture capital funds, Exits are a constant event that must happen because they serve the function of validating your investment thesis, the basis upon which you convinced LPs to commit to your fund. Given the limited exit options available in frontier markets, Exit Planning probably, more than other aspects of the investment cycle, requires the most innovation and originality at this time. It does help, to think about Exit Planning, from two ends of the same spectrum: The legal, on the one hand, and the strategic, on the other. Perhaps, the most important point to note here, is that “Alpha” Exits, if we measure Alpha, strictly, in terms of “multiples”, are an “early-oners” game. And so, the point where a shrewd Fund Manager should start considering a documented Exit Plan is just before entry. The seeds of a great Exit Strategy are sown at entry and preparation for sale, should ideally start from purchase. Fund Managers who miss it at this point may struggle later. An Exit Plan is definitely not something to keep in mind or an abstract. Take for instance a key entry control document – The Term Sheet -. From a structuring point of view, there are a number of control/provisioning that need to go into the Term Sheet and by extension, the Definitive Agreements. Typically, depending on local laws, these may include redemption rights, registration rights, board control/veto right drag or tag-alongs and very likely, the amendment of key constitutional documents.

There are a number of structuring considerations to note here. Firstly, there is no default limit to the number and type of ‘control’ provisioning that is possible as these can be highly, transactionspecific and dependent on the strategic objectives of an Exit Plan. Secondly, it’s not exactly in knowing that such or certain controlling provisions exist and that such provisioning must go into a Term Sheet but, in the extent to which the structure of that provisioning aligns with or serves to deliver the strategic

‘‘

It’s also always important to understand the key valuation metrics and considerations of an ideal buyer, facing a portfolio company and to ensure that the Exit Plan is flexible enough to adapt

objectives of the Exit Plan. In specific regard to the last point, it typically helps for Fund Managers to see, from the beginning, how each ‘control’ provisioning would play out in a practical Exit scenario. Other than alignment with the Exit Plan, the inclusion and/or negotiation of these rights would also serve to communicate with and manage the expectations of one of the most important stakeholders in every Exit Plan – Management -. The Management of the portfolio company can often be critical to the Exit Plan. Alignment on this level, is also therefore key, especially, in terms of ensuring that Management understands the criticality of the Exit Plan, preferred exit routes, preferred exit buyers, and timelines. Having open discussions around these are generally advisable for a Fund Manager. In achieving alignment with Management, it helps to think in terms of the appropriate level of Management incentives necessary to execute the Exit Plan. Equity sweeteners are one ideal way to deliver alignment, especially, in the case of a highly sophisticated management team. It bears noting, that buyer types will often drive the scope and structure of such equity sweeteners. For instance, whilst secondary buyers may place a valuation premium on current management for a portfolio

company that is doing well, a strategic investor may necessary not, to the extent that such buyer would have its own management team. In the latter case, any such employee equity plans should typically vest in a change of control event. The overall objective for the Fund Manager should be to maximize exit price, whilst also keeping a good management in place, especially in the case of a secondary buyer. Generally, it is important for the Fund Manager to (a) have sufficient control over the form and timing of the exit from the outset; (b) ensure that the Exit Plan is flexible enough to recognize all possible exit options (whether these be, trade exits, leveraged recapitalizations, IPOs or secondaries) and detailed enough to articulate the legal, political, regulatory and contractual requirements necessary to deliver on each option seamlessly. For the Fund Manager, understanding the legal, regulatory and political requirements necessary to deliver on an Exit pathway can provide very useful perspective in regard to the type of relationships that a Fund Manager needs to build and invest in, strategically, at the beginning of the holding period. “Strategic” considerations should ideally capture all economic (both micro/macro) variables that are relevant to an Exit Plan. It is always advis-

able to start with an ideal exit Scenario Analysis with details of the – ideal Exit buyer, ideal economic conditions, ideal Exit pathway etc., ranging from a best case scenario to the worst case scenario. It may help to complement this with a Sensitivity Analysis using key economic indicators and trends, that may include, the extent to which an Exit Plan may be affected in a recession or in a growing economy, political/election cycles, where the portfolio’s business is generally in the economic cycle, the portfolio company’s attainment of certain financial and operational benchmarks and how close a fund is to dissolution. Any one of these variables can drive the the timing and/or scale (partial or full) of an exit. For instance, the proximity of a Fund to dissolution can drive an exit decision, even though market conditions may not be very ideal. Also, it may be strategic to sell a portfolio that is doing well in an industry that is experiencing a downturn. Indeed, the number of outcomes are varied and it is always useful for the Fund Manager to have these in its line of sight as much as it is reasonably possible. Staying focused on other key stakeholders (the portfolio company, likely/preferred buyers and key regulators) during the holding period of an investment is also a key strategic component of Exit Planning. An Exit Plan should have an unfailing requirement to closely monitor these stakeholders. For a portfolio company, it is important for its performance to match a Fund Manager’s strategic plan and projections and where not, for the Fund Manager to re-route as appropriate. Facing a preferred/ likely buyer, it is important to key an eye on such buyers’ preferences and needs as this may change over time for strategic reasons, during the holding period of a Fund Manager’s investment. It’s also always important to understand the key valuation metrics and considerations of an ideal buyer, facing a portfolio company and to ensure that the Exit Plan is flexible enough to adapt.

Olubunmi Abayomi-Olukunle Lead Transaction Counsel Private Funds, Finance & Investments, Balogun Harold

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: OGAR DAVID ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesday 24 April 2019

BUSINESS DAY

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Wednesday 24 April 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Theresa May plans new Commons Brexit vote in high-stakes move Vote on withdrawal agreement bill could take place as early as next week GEORGE PARKER AND JIM PICKARD

K prime minister Theresa May is to make a risky new push to unlock the Brex it deadlock by bringing forward flagship exit legislation, setting up a potentially decisive House of Commons vote as early as next week. Downing Street said it was ready to introduce the Withdrawal Agreement bill to implement the exit treaty negotiated by Mrs May, even though that text has been rejected by MPs on three separate occasions. Passage of the legislation is necessary for UK ratification of the deal. The move appeared to be a desperate attempt to put the prime minister on the front foot on Brexit, as she faced a barrage of criticism from Conservatives MPs and grassroots activists after the Easter break. “It’s a piece of legislation that is required,” her spokesman said. “We have been working on the Withdrawal Agreement bill for a significant amount of time.” There is little to suggest, however, that Mrs May will be able to win a majority for the Brexit legislation, given that MPs last month rejected by 58 votes the withdrawal treaty that would be at its heart. Mrs May’s allies say the bill could be introduced next week, meaning that Downing Street would embark on a new legislative track on Brexit even as talks continue with the opposition Labour party to try to find common ground. Talks resumed on Tuesday. David Lidington, Mrs May’s de facto

Theresa May faced a barrage of criticism from Conservative MPs and grassroots activists following the Easter break © Getty

deputy, and Steve Barclay, Brexit secretary, headed the government side while Keir Starmer, shadow Brexit secretary, and John McDonnell, shadow chancellor, led their Labour interlocutors. There is little confidence in Downing Street that the negotiations will yield a breakthrough, given the disinclination of Jeremy Corbyn, Labour leader, to help the prime minister out of her Brexit trap. Some of Mrs May’s aides believe the talks could collapse this week. In those circumstances, the introduction of the Withdrawal Agreement bill could represent her last chance to push through Brexit and avoid holding European

Parliament elections on May 23. The treaty the bill is intended to implement includes provisions such as the UK’s £39bn exit payment to the EU, protection of citizens’ rights, a transition period and the so-called backstop to avoid a hard border on the island of Ireland. If the legislation is rejected, as currently seems likely, the government could not reintroduce it again in this session of parliament. “It would be quite a big thing,” admitted one ally of Mrs May. In those circumstances the bill could only be brought back if the current parliamentary session was ended. Approval for the legislation

would kick off a tortuous passage through parliament during which the bill could be amended. Attempts to add a customs union or a second referendum would be expected. Even if the bill did eventually become law, Downing Street said there would still have to be a separate “meaningful vote” on Mrs May’s deal under the terms of 2018 Brexit legislation. However, that would be expected to be a formality if MPs have already approved the bill to put the draft treaty into effect. Even publishing the Withdrawal Agreement bill will be a risky move for Mrs May because it will remind Eurosceptic Tory MPs of some of

the most contentious elements of the deal struck with Brussels. It has been kept under wraps for months. For example, the legislation would allow the UK to update its statute book to reflect new EU laws that come into force during the transition period and preserve the jurisdiction of the European Court of Justice. The Institute for Government says the most contentious elements of the bill would be provisions for the so-called “divorce bill”, the Irish backstop — which Eurosceptic Conservatives say could “trap” the UK into a customs union with Brussels — and the continuing role

Japan scrambles to recover F-35 fighter Japan scrambles to recover F-35 fighter jet before Russia or China Civilian ship joins search operation that highlights sensitivity of craft’s technology jet before Russia or China Civilian ship joins search operation that highlights sensitivity of craft’s technology ROBIN HARDING

apan has dispatched its most advanced ocean research vessel to join the search for its missing F-35 stealth fighter as it scrambles to recover the ultra-sensitive technology before Russia or China get there first. The Kaimei, a three-year-old survey ship that belongs to Japan’s science ministry, will join the US and Japanese forces hunting for the fuselage of an aircraft that crashed into the ocean off north-eastern Japan on April 9. Japan’s decision to add a civilian vessel to the search highlights the sensitivity of the technology on the fighter as well as the urgent need to understand why a new aircraft suddenly disappeared from radar. “At this time, following a request from the defence ministry and the maritime self-defence forces, the Japan Agency for MarineEarth Science and Technology research vessel Kaimei has joined the search,” said defence minister Takeshi Iwaya.

ROBIN HARDING

The Kaimei is equipped with echo-sounders, magnetometers and an unmanned submarine able to reach depths of 3,000m for seabed surveys. The crashed F35 is thought to lie in deep water at 1,500m: well below the operating depth of a normal submarine. The Pentagon and the Japanese military authorities insist there is no chance of Russia or China getting to the crash site before them but are nonetheless devoting a flotilla to the search. Japan has five military vessels and three coastguard ships in the area, along with a number of patrol aircraft. Mr Iwaya said the US had chartered the Van Gogh, a privately owned vessel for deep diving, with cranes able to work in 3,000m of water. The F-35, made by Lockheed Martin, entered US service in 2015 after a protracted development. Designed to be hard to observe on radar, it is expected to become the mainstay fighter aircraft for the US and its allies in the first half of the century. www.businessday.ng

apan has dispatched its most advanced ocean research vessel to join the search for its missing F-35 stealth fighter as it scrambles to recover the ultrasensitive technology before Russia or China get there first. The Kaimei, a three-year-old survey ship that belongs to Japan’s science ministry, will join the US and Japanese forces hunting for the fuselage of an aircraft that crashed into the ocean off northeastern Japan on April 9. Japan’s decision to add a civilian vessel to the search highlights the sensitivity of the technology on the fighter as well as the urgent need to understand why a new aircraft suddenly disappeared from radar. “At this time, following a request from the defence ministry and the maritime self-defence forces, the Japan Agency for Marine-Earth Science and Technology research vessel Kaimei has

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joined the search,” said defence minister Takeshi Iwaya. The Kaimei is equipped with echo-sounders, magnetometers and an unmanned submarine able to reach depths of 3,000m for seabed surveys. The crashed F35 is thought to lie in deep water at 1,500m: well below the operating depth of a normal submarine. The Pentagon and the Japanese military authorities insist there is no chance of Russia or China getting to the crash site before them but are nonetheless devoting a flotilla to the search. Japan has five military vessels and three coastguard ships in the area, along with a number of patrol aircraft. Mr Iwaya said the US had chartered the Van Gogh, a privately owned vessel for deep diving, with cranes able to work in 3,000m of water. The F-35, made by Lockheed Martin, entered US service in 2015 after a protracted development. Designed to be hard to observe on radar, it is expected to become the mainstay fighter aircraft for the

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US and its allies in the first half of the century. Details of the aircraft’s design, equipment and radar-absorbent coatings are classified and it would be a blow if any part of an F35 fell into the hands of a military rival. There is a history of clandestine salvage operations to recover military technology and code books. In 1974, the US CIA secretly raised part of a Soviet submarine that had sunk to the north-west of Hawaii six years earlier. Air forces operating the F-35 also have an urgent need to understand why it crashed, with the pilot unable to eject or report the problem, so they can make sure the costly aircraft are safe to fly. The land-based F-35A, which was the first of its kind to be assembled in Japan by Mitsubishi Heavy Industries, disappeared 28 minutes after taking off from Misawa Air Base in the north of Japan’s main island of Honshu. Debris has been found on the surface but the aircraft’s pilot and fuselage have not been located.

48 BUSINESS DAY

Wednesday 24 April 2019

NATIONAL NEWS

US attorney-general gets ethics waiver for 1MDB case William Barr’s former firm Kirkland & Ellis represents Goldman Sachs in the case

KADHIM SHUBBER AND ROBERT ARMSTRONG

illiam Barr has received an ethics waiver for the Department of Justice’s investigation of a Malaysian corruption scandal involving Goldman Sachs, signalling that any settlement negotiated by the bank will be decided at the highest levels of the US government. The White House granted the attorney-general a waiver from a pledge he made when he took office to remove himself for two years from any matter involving his former law firm, Kirkland & Ellis. The firm is representing Goldman as it attempts to fend off possible criminal charges concerning billions of dollars allegedly stolen from 1MDB, a Malaysian state investment company for which the bank underwrote several bond issuances. Prosecutors at the justice department have investigated the case for years and in 2018 brought charges against two former Goldman Sachs bankers and Jho Low, the alleged mastermind of the scheme. Mr Low has denied any wrongdoing. Goldman Sachs has been in negotiations with the justice department about a resolution of the parts of the case relating to the bank itself. Mr Barr received the ethics waiver on April 16, according to a copy posted on the Office of Government Ethics website.

A day earlier, on a conference call to discuss its first-quarter financial results, David Solomon, Goldman’s chief executive, told analysts that he was keen to resolve the matter as quickly as possible. “Nobody wants to get to a resolution on this faster than we do,” he said. In the fourth quarter of 2018, Goldman set aside $516m for litigation and regulatory costs, largely to do with 1MDB. A spokeswoman for the justice department did not return requests for comment on Mr Barr’s waiver. The White House had no immediate comment. A Goldman spokesperson declined to comment. The 1MDB case has been investigated by two units inside the criminal division of the justice department in Washington, as well by prosecutors in the US attorney’s office for the eastern district of New York. The typical process for settlements of significant criminal cases involves the approval of the head of the criminal division. That job is currently held by Brian Benczkowski, a political appointee and former Kirkland partner who, as the Financial Times reported earlier this month, also received a waiver to participate in the 1MDB case. Where a final settlement involves a penalty of over $200m, the justice department’s manual for prosecutors requires a notification to the deputy attorney-general, in this case Rod Rosenstein, who is due to leave government soon.

Brent crude hits 2019 high on heightened supply concerns US decision to end sanctions waivers on Iran oil imports buoys markets for second day PHILIP GEORGIADIS AND SIDDARTH SHRIKANTH

rude prices rose to a fivemonth high on Tuesday, as Washington’s decision to end sanctions waivers on Iranian oil imports buoyed markets for a second day and sent shares in some of the world’s biggest energy companies higher. Brent crude, the international oil benchmark, rose as much as 0.8 per cent to $74.64 a barrel, adding to gains on Monday to reach its highest level since early November before falling back slightly to $74.43 by late morning in London. West Texas Intermediate, the US marker, increased 0.7 per cent to $66.02. Oil’s sharp rally boosted European oil majors, with BP rising 2.3 per cent and Royal Dutch Shell 1.9 per cent higher in London after investors returned from Monday’s bank holiday. Overall, the Stoxx 600 index of European oil and gas groups was on course for its best day in nearly four months, up 1.9 per cent. Shares in major airlines, which are particularly sensitive to fluctuating fuel prices, suffered. EasyJet fell 4.2 per cent, while British Airways parent company IAG was down 3.8 per cent. Ryanair slipped 4.6 per cent and was on course for its worst day since December. The moves came after the Trump administration announced the end of waivers from US sanctions granted to India, China, Japan, South Korea and Turkey, some of Iran’s largest customers. The US is now demanding that countries

no longer import any oil from Iran. Oil prices jumped despite the White House insisting that it had worked with Saudi Arabia and the United Arab Emirates to ensure sufficient supply to offset the loss of Iranian exports. UBS said it expects Saudi Arabia and its allies “to cautiously react to customers need rather than preemptively ramp up production,” but noted that there is still plenty of capacity to offset a decline in Iranian exports. Brent crude is now almost 50 per cent above late December’s 17-month low, as the Opec cartel of oil producers have cut production, and sanctions on Iran and Venezuela have tightened supply in global markets. “Amid seasonally higher oil demand into the summer, the oil market is likely to be very sensitive to any further disruptions in Libya, Venezuela or Nigeria,” UBS analysts said in note. Goldman Sachs said the timing of the sanctions tightening was “much more sudden” than expected, but it played down the longer-term impact on the market. “While we acknowledge the near-term upside price risks, we reiterate our fundamentally derived Brent price trading range of $70-75 per barrel for the second quarter of 2019,” Goldman analysts said in a note. The bank highlighted the relatively small move in oil prices given the loss of up to 1.3m barrels a day of Iranian exports. This reflects “a much greater confidence in available spare capacity,” Goldman said. www.businessday.ng

Kamala Harris joins calls for impeachment of Donald Trump California senator is second major presidential contender to demand Congress acts DEMETRI SEVASTOPULO

amala Harris, the California senator, has become the second major Democratic presidential candidate to call for the impeachment of Donald Trump following the report by special counsel Robert Mueller, which outlined efforts by the president to block the probe into links between his campaign and Russia. “We have very good reason to believe that there is an investigation . . . that has produced evidence that tells us that this president and his administration engaged in obstruction of justice,” Ms Harris said in New Hampshire on Monday evening. “I believe Congress should take the steps toward impeachment.” The call from Ms Harris, a former California attorney-general, follows that of senator Elizabeth Warren, who last week became the first presidential contender to call for impeachment. Julian Castro, a former Texas mayor also running for president, last week said it would be “perfectly reasonable” to start impeachment. Ms Harris was speaking at one of five town hall events that CNN hosted with Democratic presidential candidates on Monday. The other participants included three senators — Ms Warren, Bernie Sanders from Vermont and Amy Klobuchar from Minnesota — in

addition to Pete Buttigieg, an Indiana mayor. Ms Klobuchar avoided calling for impeachment. She said Mr Trump “should be held accountable” but stressed that the House of Representatives was responsible for deciding whether to open impeachment proceedings. If the Democratic-led House passed articles of impeachment — which only requires a simple majority — the Senate would hold a trial where a two-thirds majority is required for conviction. “Impeachment proceedings are up to the House. They are going to have to make that decision,” Ms Klobuchar said. “I am in the Senate. And I believe that we are the jury . . . If the House brings the impeachment proceedings before us, we will deal with them.” Mr Buttigieg said it was “pretty clear” that Mr Trump deserved to be impeached but he stressed that he would leave the decision to Congress. “My role in the process is trying to relegate Trumpism to the dustbin of history,” he said. “There’s no more decisive way to do that, especially to get Republicans to abandon this kind of deal with the devil they made, than to have just an absolute thumping at the ballot box for what that represents.” Mr Sanders said Congress should “take a hard look” at the results of the Mueller investigation and call witnesses to testify in order to determine whether Mr Trump

attempted to obstruct justice. But he said he was worried that a preoccupation with impeachment would distract Democrats from talking about the issues that he believes the country should be spending more time discussing ahead of the election. “If . . . all that the Congress is talking about is impeaching Trump and . . . Mueller, Mueller, Mueller, and we’re not talking about healthcare, we’re not talking about raising the minimum wage to a living wage, we’re not talking about combating climate change . . . and all of the issues that concern ordinary Americans, what I worry about is that works to Trump’s advantage,” Mr Sanders said. The split between the presidential contenders illustrates the dilemma facing Democrats. While some members of the party believe that Congress has a constitutional duty to impeach Mr Trump, others argue that the party should focus on core issues, and avoid trying to proceed with impeachment, which would only energise supporters of Mr Trump and have little chance of success in the Republican-led Senate. Nancy Pelosi, the Democratic Speaker of the House, on Monday cautioned House lawmakers about pursuing impeachment, suggesting there were other ways to hold Mr Trump to account. She held a conference call with Democrats on Monday evening to debate how to respond to the report.

Barclays to cut bonuses for investment bankers UK bank bolsters defences against activist investor Bramson with pay crackdown DAVID CROW AND STEPHEN MORRIS

arclays is cracking down on its investment bankers’ pay as the UK bank steps up its defence against activist investor Edward Bramson ahead of next week’s annual meeting. Britain’s last remaining global investment bank is planning to cut bonuses as part of a cost-cutting drive to boost returns at the underperforming investment division, according to several people briefed on the plans. “It’s clear that costs are under pressure. Either you achieve it through pay cuts or you have to do redundancies,” said one of the people. The rate at which bankers accrue annual bonuses is set to be more closely tied to performance, with accrual in the first quarter expected to be down by double digits compared

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with last year. Despite a Barclays-wide policy since 2016 to tie variable pay to performance, Tim Throsby, the former head of the investment bank, had successfully resisted attempts to cut investment bankers’ bonuses even in areas where revenues had declined, they added. The renewed focus on cost control comes as Mr Bramson tries to force his way on to the lender’s board on May 2. He has amassed a 5.5 per cent stake in Barclays via his Sherborne Investors vehicle, making him the bank’s third-largest shareholder, and is calling for the group to scale back its investment bank to improve returns. His demands have put him at odds with Jes Staley, chief executive of Barclays, who is fighting to protect the UK-based lender’s investment @Businessdayng

banking presence. The efficiency drive at Barclays marks a shift of direction for its investment bank following a year of expansion in 2018, when the unit made a string of senior hires and invested heavily in new technology. Two people briefed on the plans said the bank was also planning to adopt a tougher line on promotions, with fewer bankers progressing from director to managing director. Last year, 85 bankers were promoted in Barclays International compared with 74 in 2017. “It will be reflected in a really tough MD promotion round this year,” said one. “It will be only a rare and special person who makes it over the line.” They added that Barclays would also be more disciplined on pay when signing up new recruits.

Wednesday 24 April 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

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Hedge funds warm up to prospects of a pound rally Extension of Brexit deadline prompts investors to take brighter view of UK prospects EVA SZALAY

urrency speculators have turned positive on the pound’s prospects for the first time in nearly a year as the UK economy, dogged by fears over the impact of Brexit, has proved to be more resilient than many expected. Hedge funds started the year with an overwhelmingly negative view on the pound, betting on further declines in the currency — which has been heavily sold since the June 2016 referendum on EU membership — as the threat of a “no deal” Brexit loomed. But last week the ratio of long and short positions established by speculative accounts turned marginally in favour of positive bets for the first time since June 2018, according to data published by the US Commodity Futures Trading Commission. The shifts come after government data showed that Britain’s economy was 0.3 per cent bigger in the three months to February than in the preceding quarter, defying some gloomy forecasts that Brexit would weigh on sentiment. Retail sales in March were also stronger than expectations. “If you shut your eyes and forget about Brexit, the UK economy is actually doing quite well and the pound remains very cheap,” said James Binny, global head of currency at State Street Global Advisors. Silvia Dall’Angelo, a senior econo-

mist at Hermes Investment Management in London, said one factor behind investors’ brighter mood was the higher possibility of an interestrate increase over the summer from the Bank of England. Futures markets are now pricing in a 20 per cent likelihood of an August move upwards from the central bank, rising from 10 per cent last week. “The most recent switch in positioning reflects a short-term, tactical play ahead of the BoE’s meeting next week,” said Miss Dall’Angelo, alluding to the monetary policy committee announcement scheduled for May 2. “The market is watching to see if the central bank is giving away any hawkish signs about a potential rate hike in August.” Hedge funds have been paring their negative bets on sterling since the middle of March, when it became likely that the UK would miss the original Brexit deadline of the end of that month. After EU leaders granted a delay of up to six months, betting on a weaker pound became less attractive for hedge funds as the chances of a big move lower appeared to recede. Despite the solid economic data from the UK, though, few investors are willing to pile into positive bets on the pound as the political fallout from Brexit continues. Expectations for a leadership challenge in the Conservative party and a general election have been rising, keeping many analysts cautious.

UBS and Deutsche Bank asset managers in ‘serious’ merger talks Deal would create a European champion with €1.4tn of assets under management ARASH MASSOUDI, PETER SMITH, OLAF STORBECK AND STEPHEN MORRIS

he asset management arms of Deutsche Bank and UBS are in serious talks to merge, according to people close to the discussions, in a deal that would create a new European champion in the investment industry. The discussions about a deal have been taking place “for a couple of months”, one of the people said. If completed, the merged asset manager would leapfrog France’s Axa and the UK’s Legal & General and create a rival to France’s Amundi, Europe’s largest money manager with just over €1.4tn under management. One structure being considered would see UBS hive off its asset management unit, which oversees €700bn, and fold it into Deutsche’s DWS in exchange for shares in the larger group. DWS, which is 79 per cent-owned by Deutsche, has €662bn of assets under management. The German bank would remain the company’s top shareholder but its interest would be diluted. A DWS and UBS asset management combination would be better able to compete with BlackRock and Vanguard, the US giants of the investment world that have combined assets of $11.7tn. Deal activity in the fund sector is expected to be strong in 2019 as the biggest groups — those with at least

$1tn in assets — win the bulk of new business inflows and leave smaller rivals struggling. UBS was the world’s largest asset manager 12 years ago before a dramatic decline after the financial crisis. A tide of investor outflows during much of the past decade saw the business drop to 16th spot globally last year in a ranking compiled by Willis Towers Watson, the investment consultancy. DWS has attracted other suitors. Allianz, Germany’s largest insurance group, has been looking at a potential bid for the business, according to a person briefed on the matter. Other potential partners include Amundi, which is close to completing the integration of the €3.5bn acquisition of Italy’s Pioneer, and multi-boutiques Natixis Investment Managers and Generali. DWS is listed as “partnership limited by shares”, or KGaA — a structure that gives Deutsche Bank special voting rights as long as it holds a stake of at least 40 per cent. For now, Deutsche can replace DWS’s executive board without consulting other shareholders. All of the people close to the talks cautioned that a deal was not guaranteed and a deal announcement was not imminent. Earlier this month, Bloomberg reported that UBS has considered a number of scenarios for combining its asset management arm with DWS. www.businessday.ng

Masayoshi Son’s investment came around the time of bitcoin’s record high of more than $19,000 in about December 2017

SoftBank’s Masayoshi Son lost $130m in mistimed bitcoin bet Investment blemish for Japanese billionaire who bought into cryptocurrency near its peak ERIC PLATT, KANA INAGAKI AND ARASH MASSOUDI

asayoshi Son, founder of Softbank, lost more than $130m in a personal bet on bitcoin, buying near the cryptocurrency’s record high and selling after it tumbled, according to people with knowledge of the matter. The loss represents a blemish for the Japanese billionaire, who has won the backing of investment funds across the Gulf as well as blue-chip companies such as Apple to seed the largest venture capital fund ever raised. Mr Son’s investment came around the time of bitcoin’s record high of more than $19,000, which it hit in December 2017 as SoftBank was completing its $3.3bn takeover of US asset manager Fortress Investment Group. Fortress executive Peter Briger, a well-known bitcoin enthusiast, was among those to recommend that Mr Son take a look at the asset class, the people said. The SoftBank founder is among many investors to have been hurt by the cryptocurrency’s sharp slide in the months following its

peak. While its decline has slowed, bitcoin was changing hands on Tuesday at $5,571, according to data provider Refinitiv. SoftBank declined to comment on the investment loss, which was first reported by the Wall Street Journal. Mr Son’s personal experience contrasts with that of his company, which inherited millions of dollars worth of bitcoin as part of the takeover of Fortress, which had bought into bitcoin as early as 2013. The asset proved volatile for Fortress, which at one point had to mark down its investment, but it was worth about $200m when SoftBank forced Fortress to liquidate the position at the time of the acquisition, the Financial Times reported last year. Mr Son, ranked by Forbes as Japan’s second-richest man with personal wealth of $21bn, is known for hugely successful investments in companies such as China’s Alibaba and Yahoo Japan. However, his record is not perfect. In the mid-1990s SoftBank went on a US acquisition spree, buying companies including computer magazine publisher Ziff Davis for

$2.1bn and semiconductor maker Kingston Technology for $1.5bn. It sold both groups at a significant loss three years later. Mr Son also drew controversy when he invested in Japan’s Aozora Bank in 2000 after complaining that SoftBank did not own a bank despite its name. The stake was sold three years later to private equity group Cerberus, albeit at a profit. The soured bets, however, have mostly been dwarfed by huge returns on much larger deals. His knack for investments continues to be pivotal for SoftBank’s Saudibacked $100bn Vision Fund, which has delivered large profits on the sale of stakes in Indian ecommerce company Flipkart and US chipmaker Nvidia. Investors are watching closely as several large private companies in which SoftBank and the Vision Fund have invested prepare for their public debuts, including carbooking group Uber. The two are also pivotal investors in WeWork, the shared-office space provider, which this year clinched a $47bn valuation following a new investment from SoftBank.

S&P 500 and Nasdaq Composite eye record closing highs PETER WELLS, MICHAEL HUNTER AND SIDDARTH SHRIKANTH

he S&P 500 and Nasdaq Composite returned to record territory on Tuesday, with both indices eyeing record closes for the first time since late summer last year. The S&P 500 was up 0.9 per cent in lunchtime trade in New York, which took it about 3.5 points above its previous peak close of 2,930.75 on September 20. At its high today of 2,936.31, the index sat 4.6 points shy of its record intraday high. It was a similar story for the Nasdaq, up 1.3 per cent today to a level that took it past its previous peak close from August last year, but slightly short of its intraday record. Healthcare, up 1.8 per cent, consumer discretionary, up 1.2 per cent, and technology, up 1.2

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per cent, were the top-performing sectors on Tuesday, and only telecommunications services and utilities were in the red. Investors welcomed a brisk run of earnings reports today. Shares in Twitter rose by over 15 per cent after its revenue beat forecasts, while Hasbro’s also jumped by more than 15 per cent. CocaCola’s stock also rose, by around 2 per cent, and United Technologies, up 2.6 per cent, after their earnings updates. An announcement from the US that it would end sanction waivers on Iranian oil exports helped drive markets on the other side of the Atlantic. The Stoxx index of European oil and gas groups set course for its best day in six weeks, up 2 per cent. The wider Stoxx 600 was up 0.2 per cent, but saw some weakness in consumer stocks after Dutch retailer Ahold said its operating profit faced pressure. @Businessdayng

Brent crude rose by as much as 0.8 per cent to set a new peak for the year at $74.73 a barrel, a level it last touched in November. That left the international benchmark almost 50 per cent above late December’s 17-month low. The gains came after the US said five nations including India and China would face penalties if they continued to import Iranian oil. West Texas Intermediate, the US contract, also hit a new 2019 high at $66.10, also up 0.8 per cent. London’s FTSE 100 rose 0.9 per cent, with its heavily-weighted energy sector helping it outperform. Shares in oil majors Royal Dutch Shell and BP were up by around 2 per cent apiece. Frankfurt’s Xetra Dax 30 added 0.1 per cent. Mainland China’s CSI 300 slipped 0.2 per cent and Hong Kong’s Hang Seng was flat. The S&P/ASX 200 in Australia rose 1 per cent.

Wednesday 24 April 2019

BUSINESS DAY

ANALYSIS

FT Exchange-traded bond funds crash through $1tn in assets

Rise of passive vehicles reflects desire for low-cost exposure to debt products he amount of assets held in exchange-traded bond funds has pushed past $1tn, capping a near fivefold increase since the financial crisis, and underscoring a radical reshaping of the world’s debt markets. ETFs — passive vehicles that try to mimic the performance of an underlying index — have emerged as fixtures of many investors’ portfolios over the past 30 years, giving them relatively cheap and reliable access to a wide variety of assets, from gold to stocks to bank loans. Equity ETFs continue to dominate the $5.6tn-in-assets industry, but the rapid rise of

indices such as the S&P 500 of US blue-chip stocks. This has drained money from higher-fee “active” portfolios run by traditional stockpickers, sapping fund managers’ profits in the process — a trend that is now spreading in fixed income as well. “The move from active to passive is absolutely a factor” in the rise of fixed-income ETFs, Mr Sachs said. “Bond selection is a tough game.” However, the growth of bond ETFs has also stirred concerns, with critics arguing that they could pose a systemic risk to financial markets. ETFs trade throughout the day, just like a stock, but the underlying bonds they own are sometimes much more thinly traded.

fixed income ETFs highlights how investors have become increasingly comfortable using such vehicles as tools for trading, and to build up broad bond portfolios. Assets in bond ETFs came to $1.03tn at the end of March, according to ETFGI, a research provider. At the end of 2009 the equivalent figure stood at $218bn. Constructing new varieties of fixed-income ETFs has become a priority for many asset managers, who expect the growth rate to remain strong in coming years. At the moment, ETFs account for less than 2 per cent of the $55tn in a broad bond market index tracked by Bloomberg. “The wind is at the back of bond ETFs,” said Steve Sachs, head of ETF capital markets for Goldman Sachs Asset Management. “Now [growth] is really starting to accelerate.” Bond ETFs have absorbed more than $70bn in new money already this year, according to Bloomberg data, after concerns about the health of the global economy sent shockwaves through equity markets and forced the Federal Reserve to shelve plans to raise interest rates. Passive investment funds have gained favour in recent years as investors have sought cheap ways to track common

Carl Icahn used this point to label BlackRock a “a very dangerous company” during a 2015 conference panel with the asset manager’s chief executive, Larry Fink. Mr Icahn’s concerns hinged on a belief that high-yield bond ETFs could face liquidity problems in the event of a market shock, as investors scramble to sell. BlackRock is among a trio of giant asset managers, alongside Vanguard and State Street, that has benefited from the shift towards passive investing. The $6.5tn fund manager’s iShares division controls nearly half the market for fixed-income ETFs. In the first quarter they attracted a record $32bn. The $1tn-plus figure tracked by ETFGI includes assets in exchange-traded notes, which represent about $29bn, according to Bloomberg figures. ETNs are a type of unsecured debt security that track an underlying index of securities and trade on an exchange like a stock. “People are getting more comfortable with fixed-income products in an ETF wrapper,” said Kristen Mierzwa, managing director for exchange traded product strategy and business development at FTSE Russell. “It’s easier to gain access to a basket of bonds than go out and buy them.”

RICHARD HENDERSON

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Germany’s search for a new diplomatic map The core ideas that have sustained foreign policy for decades are under attack from rising nationalism TOBIAS BUCK

azed to the ground by the Wehrmacht in 1944, Warsaw has never been easy terrain for the foreign minister of Germany. As his convoy speeds through the Polish capital, Heiko Maas passes first the Soviet army war cemetery and then the memorial to the victims of the Warsaw uprising — potent reminders of the bloody price that German aggression has inflicted on Europe. At a press conference the next day, the foreign minister is asked about new Polish claims for war reparations. At a public debate an hour later, Mr Maas listens politely as his Polish counterpart lashes out at Berlin’s liberal refugee policy. On both occasions, he decides not to respond. Being in charge of German foreign policy is a tough assignment these days — not just in Warsaw but in countries around the world. Over the past few years, Berlin has watched with growing despair as friends have turned into foes and old certainties have dissolved into doubt. A new breed of nationalist leader holds sway in capitals from Budapest and Warsaw to Rome and Washington, sounding a note of hostility and antagonism towards Berlin. For reasons both economic and political, Germany’s relationships with key powers such as China, Russia and Turkey are marked by growing tensions. At the same time, the dense web of alliances that has characterised German foreign policy for decades — and that underpinned the country’s postwar success — is under strain as never before: Nato has descended into bitter recriminations over burden-sharing, leading many Germans to wonder how much longer the US will remain committed to the defence of Europe. The EU itself, meanwhile, is riven by splits between north and south and east and west, and exhausted from the never-ending struggle over Brexit. The UK no longer counts as a reliable ally, and the relationship with France is going through a phase of barely-concealed irritation. One by one, the fixed stars that have guided German foreign policy for generations have started to dim. Mr Maas admits that the challenges for German foreign policy are both numerous and complex — from Chinese attempts to split the EU and Russian intervention in eastern Europe to the conflicts in Syria, Libya and Yemen. None, however, looms larger than the deepening rift with the US, the guarantor of German security since 1945. “The biggest change I have seen is in the transatlantic relationship,” says

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Mr Maas. “There have always been crises and conflicts between Europe and the US but these were dealt with inside a transatlantic relationship that worked. Now we have to reorder the transatlantic relationship itself.” That task, he believes, will not disappear when Donald Trump leaves the White House. “Things will change after Trump,” says Mr Maas. “But I don’t think the structures will ever be the same as they were. The US is no longer prepared to take on as much of the international responsibility and burden as it used to. That means it expects Europe to do more for its own security than in the past.” Few analysts would disagree with that assessment. Yet many doubt that the implications have truly sunk in with German leaders and voters. “It does feel at times like Germany is trying very hard to protect itself from acknowledging the huge transformational shifts that have taken place,” says Julianne Smith, a former foreign policy adviser to US vice-president Joe Biden and currently a fellow with the Robert Bosch Academy in Berlin. “There is a lot of whistling past the graveyard in this city. People are constantly talking about the parameters of a world that no longer exists.” Critics point to a paradox at the heart of German diplomacy. Since the early days of the federal republic, Berlin has sought to pursue the country’s economic and political interests almost exclusively within multilateral and supranational organisations. For obvious historical reasons, few countries in the west have been more reluctant to go it alone — or to wield the blunt force of power politics. Yet at the precise moment when those organisations are under attack from nationalist politicians, Berlin is doing little to shore up those structures. Indeed, some believe that recent German policies have done more harm than good to bodies such as Nato and the EU. “Germany is committed to a particular political order — built around the EU, Nato and multilateral organisations like the UN — but it is not prepared to pay for the upkeep of this system,” says Jan Techau, senior fellow at the German Marshall Fund of the United States, a think-tank. “The gap between [Germany’s] multilateral aspirations and what we do in reality is huge.” Berlin’s support for the controversial Nord Stream 2 gas pipeline between Russia and Germany — against furious opposition from the EU, the US and eastern European government such as Ukraine and Poland — is a case in point. German @Businessdayng

reluctance to take bold measures to shore up the eurozone, despite intense pleas from Paris and Brussels, is another. Perhaps the clearest example of the gap between rhetoric and reality, however, is found in the increasingly shrill debate between Berlin and the US over defence expenditure. In 2014, all Nato members committed to spending at least 2 per cent of their gross domestic product on the military. In Germany, that figure is currently 1.24 per cent. Nor is it likely to rise to anywhere near 2 per cent in the coming years. Berlin has promised to lift the defence budget to 1.5 per cent of GDP by 2024, yet even that figure may be out of reach judging by the finance ministry’s official mediumterm spending plans. Mr Maas says Germany will deliver in the end, but President Trump is far from alone in viewing the country’s defence budget as risible. Berlin’s reluctance to take on more responsibility in international and military affairs is essentially seen by critics as the result of stinginess. Germany, in their view, refuses to meet the 2 per cent Nato commitment because spending more on defence leaves less money for balanced budgets and the welfare state. The truth, however, may be more complicated. “The Germans are not free-riders. We don’t do all this to save a few euros. This goes much deeper,” says Mr Techau. In his view, the country’s reluctance to lead is grounded above all in history. “The real legacy of the Third Reich is not just guilt. It is the lack of confidence in ourselves. We learnt that on the one occasion when we put all of our effort into a grand national project, the result was the greatest civilisational rupture in history,” he adds. “We don’t have this trust in our own good intentions that other countries have.” That instinct, deeply ingrained in voters as well as its leaders, was reinforced by the experience of West Germany. In the decades after 1945, says Mr Techau, “Germans learnt that foreign policy restraint is a model for success. Germany grew rich, it succeeded in reunifying, and it ended up in a situation where — perhaps for the first time ever — it was surrounded only by allies.” Germany’s postwar success also looms large in a recent essay by Thomas Bagger, a German diplomat who serves as foreign policy adviser to federal president Frank-Walter Steinmeier. It argues that Germany’s historical experience — specifically reunification in 1989 — left the country uniquely ill-equipped for the resurgence of nationalist politics.

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Angola: Crude exports to hit lowest level in 13 years in June Page 52 GAS

Equatorial Guinea: Equatorial Guinea aims to boost Alen unit gas production

Page 53

Market Insight

L- R: Justin Ezeala, 2nd vice president, NGA; Audrey Joe-Ezigbo, president NGA, and Victor Okoronkwo, 1st vice president, NGA, during Nigerian Gas Association Business Forum on Gas Enabler/AGM in Lagos recently.

Debrief

Inevitable choice: Fix new fuel price or full deregulation FRANK UZUEGBUNAM

Oil prices hit November 2018 highs Page 57 OPEC weekly basket price DAY

PRICE

17/4/19

70.81

16/4/19

70.11

15/4/19

70.21

12/4/19

70.44

11/4/19

70.41 Source: OPEC

he Managing Director, International Monetary Fund (IMF), Christine Lagarde, recently advised the Nigerian government to discard spending on fuel subsidy and expend the money on health, education and infrastructural development. “We believe that removing fuel subsidy is the right way to go,” Lagarde said. At $.40 per litre, Nigeria is the 6th cheapest country to buy fuel and Africa’s number 3. According to globalpetrolprices.com, a website that tracks weekly prices of fuel in about 150 countries, the other 5 countries where you buy fuel at a cheaper price than Nigeria as at April 15, 2019 are; Venezuela ($0.01), Sudan ($0.13), Iran ($0.29), Kuwait ($0.34) and Algeria ($0,35). It costs N389 for a litre of fuel in Ghana ($1.08), N292 in Re-

public of Benin ($0.81), N346 in Togo ($0.96) and N382 in Cot d’Ivoire ($1.06). Despite Nigeria being Africa’s number one producer of crude oil, the country imports about 91 percent of its refined petroleum products’ need as the domestic refineries are inoperative The Nigerian Labour Congress (NLC) has cautioned the Federal Government against implementing the recommendation of the IMF on the removal of fuel subsidy. Oil workers under the auspices of Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association (PENGASSAN), also disagreed with the IMF advice to the Federal Government adding that such advice from the bank was an attempt to destabilize the nation. Nigeria’s finance minister, Zainab Ahmed said there is no intention to remove fuel subsidy at this time. “We have to find a formula

that will work for Nigeria. And until we do that, we should not be contemplating removing the subsidy,” she said. Thus, it is not if Nigeria will remove fuel subsidy but when? The landing cost of fuel at N180, is N35 higher than the pump price of N145 per litre, Ibe Kachikwu, minister of state for petroleum resources, said. A research report by BudgIT, a public finance focused nongovernmental organisation, Nigeria has spent nothing less than N10 trillion on petrol import subsidy between 2006 and 2018. “The 10 trillion consumed by the subsidy regime is sufficient to construct 27,000MW of electricity or build about 2,400 units of 1000-bed standard hospitals across 774 local government areas of Nigeria”, the NGO stated in its report. Most parts of Nigeria pay more than official price of N145 per litre of fuel as it is mostly residents of Lagos and Abuja that enjoy the subsidy. This ne-

gates the often peddled argument that fuel subsidy is for the masses. Government has been engaging in price fixing in the past instead downstream deregulation that is why despite several “removal” of fuel subsidies since 1991, it gets caught up in the web of crude oil price volatility and unstable naira. Ayuba Wabba, NLC President, said the continued devaluation of the Nigerian currency created the impression of the existence of subsidy. “As long as the value of the naira was left to market forces, the issue of subsidy would continue in the country”, Wabba said. As the price of crude oil in the international market continues to rise, the first choice is either to keep the subsidies or raise fuel prices. If the government choses to raise fuel prices, the second choice to make is either to fix new prices or fully deregulate the downstream sector. That is the reality. It is time to bite the bullet.

Wednesday 24 April 2019

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Outlook

Brief South Sudan: South Sudan reignites dormant blocks to boost oil

outh Sudan plans to increase oil production by using blocks that were shut-in due to civil war, according to Ezekiel Lol Gatkuoth, the nation’s oil minister. The country aims to reach 200,000 bopd of output this year. Current production is about 168,000 bopd, Gatkuoth said. “Focus number one is to resume production in blocks that have been dormant for the last five years,” he said adding that the second priority is to increase output from those areas, and the third is to encourage exploration. The country’s economy will benefit from an increase in supply and help restore confidence, Dier Tong Ngor, Central Bank Governor said earlier this month. Leaders agreed last year to end five years of violence that left 400,000 people dead and displaced 4 million

Angola: Crude exports to hit lowest level in 13 years in June

ngola’s crude oil exports will fall in June to their lowest level in 13 years due to a shutdown at the Saturno field for maintenance, according to a preliminary loading programme. Knock-on effects of production issues at the Girassol offshore platform in April have also contributed to the smaller programme. Angola’s export programme so far in June is set at 38 cargoes, down from May at 48 cargoes. More cargoes could be added later, including from a new field that came onstream this month. According to Refinitiv Eikon data, the preliminary June programme is the smallest since at least October 2006

when the data set on exports began. Currently, Angola is due to export 1.21 million barrels per day in June, below the first recorded data of 1.37 million bpd in October 2006. Production data from the US Energy Information Administration showed that June exports could be the lowest since July 2005. Back then, total production was 1.21 million bpd and Angola has a small refinery with a capacity of 39,000 bpd. Angola’s production is facing steep declines and needs more mega projects, like Total’s Kaombo block, to mitigate the trend. A period of near-paralysis due to a lack of drilling success, an oil price slump and a deteriorating relationship

between state firm Sonangol and oil majors have put a dampener on new developments. The West African country’s oil ministry has warned that output could fall by 500,000 barrels per day to around 1 million bpd by 2023. Kaombo’s first floating production, storage and offloading (FPSO), called Kaombo Norte, came online last year, adding the Gindungo crude grade. A second FPSO, Kaombo Sul, started up in early April, adding 115,000 bpd and taking the total from Kaombo up to 230,000 bpd. Sul is producing a new grade called Mostarda that is expected to add one cargo each to the May and June programmes.

others. South Sudan is concerned with the standoff in neighboring Sudan where protestors are calling for a swift handover to a civilian government in the wake of the ouster of long-time leader Omar al-Bashir. It is monitoring two pipelines that bring crude through the country to Port Sudan, though so far operations have been normal, Gatkuoth said.

Libya: Libyan output may be behind Trump’s call to Libyan National Army leaders

reventing the loss of roughly 1.2 million b/d of Libyan output from the global market might be behind President Donald Trump phone call to the leader of the Libyan National Army. It is also a signal that the US support of the Government of National Accord may be weakening. In the call, Trump “recognized Field Marshal Haftar’s significant role in fighting terrorism and securing Libya’s oil resources, and the two discussed a shared vision for Libya’s transition to a stable, democratic political system,” the White House said. Haftar’s LNA is attempting to capture the west of the country. However, a stalemate has increased risks of supply outages, not only in the west but in key eastern ports already under LNA control, including eastern oil infrastructure which moves about 700,000 b/d of Libyan oil exports. There are concerns that Ibrahim

mediate threat, adding that “risks of a prolonged fight are high.” While Libyan crude oil production and exports remain unaffected as the LNA and groups linked to the GNA continue to escalate their armed conflicted. Still, the town of Zawiya, which is home to a 300,000 b/d oil export terminal and a 120,000 b/d refinery, along with Sabratha, where the Mellitah gas terminal for the Greenstream pipeline to Italy is located, are key flashpoints.

Jadhran, former Petroleum Facilities Guards leader and Benghazi Defense Brigade militia could attack the oil ports in the Eastern Crescent as Haftar’s LNA moves west. The key oil ports of Libya are Zawiwww.businessday.ng

ya, Mellitah, Bouri and Farwah in the west, along with Marsa el-Hariga, Brega, Zueitina, Ras Lanuf and Es Sider in the east. Platts Analytics said almost 350,000 b/d of oil supply in the west is under im-

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Almost all of Libya’s key oil terminals and infrastructure, except for those in the west, are already controlled by the LNA. Libya produced 1.04 million b/d in March, according to the most recent forecast by the US Energy Information Administration, down from the recent output peak of 1.15 million b/d in November, but up from 250,000 b/d in August 2016.

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Wednesday 24 April 2019

BUSINESS DAY

gas Brief LNG Market: US LNG producers offer alternative pricing to woo buyers

S producers of liquefied natural gas (LNG) are wooing buyers with offers to sell gas priced against benchmarks other than US domestic prices, ahead of an expected flood of supplies on global markets this year. The United States, the world’s fastest growing gas exporter thanks to surging output from shale fields, is set to become the world’s third-largest LNG exporter this year, taking on more established suppliers such as Qatar and Australia. US producers only began exporting LNG in early 2016 and typically price their sales against US domestic benchmarks such as Henry Hub. To stand out, at least two developers of new US terminals have signed binding and non-binding deals using alternative pricing, executives said on the sidelines of the LNG2019 conference in Shanghai. Tellurian Inc and French oil and gas major Total SA signed a deal that includes both companies entering into a binding agreement for 1.5 million tonnes per annum (mtpa) of LNG from

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Equatorial Guinea: Equatorial Guinea aims to boost Alen unit gas production

arathon Oil Corp. reported that it has signed a definitive agreement to process third-party natural gas through existing liquefied petroleum gas (LPG) and liquefied natural gas (LNG) facilities in Punta Europa, Equatorial Guinea. “This agreement is a significant step toward solidifying Punta Europa as a cornerstone component of the Equatorial Guinea Gas Mega Hub for the potential development of local and regional natural gas,” Mitch Little, Marathon Oil executive vice president, said in a statement. Marathon operates the Alba gas/condensate field offshore Equatorial Guinea. Through wholly owned subsidiaries, the company is the majority shareholder and operator of the integrated gas business at Punta Europa. Along with Noble Energy Inc. and Sociedad Nacional de Gas de Guinea Ecuatorial (Sonagas G.E.S.A.), Marathon owns the LPG processor Alba Plant LLC. It also owns the Equatorial Guinea LNG production facility with Sonagas, Mitsui & Co. Ltd. and Marubeni Gas Development UK Limited. The definitive agreement that Marathon and its partners signed with the Equatorial Guinea government and Alen Unit partners facilitates processing of gas from the offshore Alen field through the LPG and LNG facilities.

Noble operates the Alen Unit, which includes the Block O and Block I contractor groups, Marathon stated. Block O members include Noble, Glencore Exploration Limited and Compania Nacional de Petroleos de Guinea Ecuatorial (GEPetrol). Block I members include Noble, Glencore Exploration (EG) Limited, Atlas Petroleum International Limited, Gunvor Resources Limited and GEPetrol. “The project leverages existing capac-

ity of the world-class Alba Gas Plant and Equatorial Guinea LNG facilities, and all parties benefit from exposure to global LNG prices,” stated Little. Marathon noted that it expects first gas sales from the Alen Unit in the first half of 2021, adding that gas sales will use available processing capacity not required by the Alba field. Moreover, the company stated that it will maintain market exposure through a mix of profit-sharing and tolling.

Ghana: GNPC to pay $250m for unused gas

Tellurian, which is developing the Driftwood LNG project in Louisiana. The price was based on Platts Japan Korea Marker (JKM), which is a fastdeveloping Asian benchmark for LNG though mainly for spot cargoes. Most LNG contracts in Asia are still priced off Brent crude. Tellurian and commodities trader Vitol have also signed a memorandum of understanding for long-term LNG supply priced off JKM. Banks are also getting more supportive of JKM-linked pricing for the sale of LNG cargoes, said Tellurian’s chief executive Meg Gentle. NextDecade Corp, which is developing the Rio Grande LNG export project in Brownsville, Texas, said it has signed a 20-year binding sales and purchase agreement (SPA) with Royal Dutch Shell for two million tonnes a year of LNG, which it said was first US long-term contract indexed to Brent. Three quarters of the LNG will be indexed to Brent crude oil prices and the remaining volumes will be indexed to domestic US gas price markers, including Henry Hub, the company said.

he take-or-pay obligations under the various gas purchase agreements has brought financial burden to the Ghana National Petroleum Corporation (GNPC), the Parliamentary Select Committee on Mines and Energy has indicated. Under the agreement, the government is under an obligation to off-take the gas from the various oil producing fields in the country and failure to do so attracts a penalty. As a result of the country’s failure to put in place the appropriate infrastructure to off-take the gas from these fields, the GNPC has been left with no choice than to cough up $250 million to settle the country’s obligations in 2019. This was contained in the committee’s report on the 2019 programmes and activities which was presented to the house on April 10. The committee noted that the monthly commitment from the Sankofa-GyeNyame field alone was about $42 million per month. In a bid to fully utilise the gas from these fields, the GNPC has budgeted an www.businessday.ng

amount of $31.5 million to relocate the Karpowership power barge from Tema to Aboadze in the Western Region to enable it to make use of about 60 MMScf/d of gas from the Sankofa-Gye-Nyame field.

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This is also expected to help ensure the full utilisation of indigenous gas resources, while ensuring the barge reaches its capacity. The committee was also informed that the GNPC’s commitment to maintaining a minimum amount of $205 million in a reserve escrow account to cover four and half months of gas payment under the Offshore Cape Three Points (OCTP) gas supply agreement had been reviewed downwards to $157 million following the recent adjustment in gas prices. While the corporation had made efforts to meet the minimum amount required under the agreement, the committee noted that the off-takers of gas in the downstream had not been able to pay the gas delivered to them, resulting the GNPC having to continuously make annual budgetary allocations to replenish the drawdowns. The committee, therefore, urged the government to step up its efforts in finding lasting solutions to the financing challenges of the energy sector institutions.

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Wednesday 24 April 2019

BUSINESS DAY

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South Africa: Standard Bank restructures its new coal generation model

outh Africa’s financial sector is playing a role in reducing the country’s green-house gases through the implementation of stricter financial models for new generation projects.

Standard Bank announced that it has set up a strict set of parameters that will guide all future financing decisions as they relate to new coal powered stations. These parameters apply to Standard Bank Group and to all its operations

globally, the Bank said in a statement. If a proposed development does not meet these parameters, Standard Bank will not provide finance. This position is broadly in line with the Organisation for Economic Co-operation and Development (OECD) Export Credit Agency Coal-Fired Power Finance Guidelines, which assesses the financing of coal-fired power generation based on a country’s energy poverty, technology and size of plant. “As a responsible corporate citizen, the bank’s decisions and actions are informed by our values and ethics. “We consider long-term impacts alongside shorter-term outcomes, and balance the interests of the Group, stakeholders and societies in which we operate to deliver positive impacts and create sustainable value on the African continent,” Kenny Fihla, the bank’s Chief Executive of Corporate and Investment Banking, said. “Standard Bank is also alive to the benefits and impact that clean energy investment has. As such, 86 percent of all energy funding conducted by Standard Bank since 2012 has been in green energy or renewables totalling over $2 billion,” Fihla added.

West Africa: World Bank provides over $200m to increase access to electricity in Nigeria, others

he Board of the World Bank Group approved on April 17, 2019 the Regional Off-Grid Electrification Project (ROGEP), which includes $150 million in the form of credit and grant from the Internation-

al Development Association (IDA) and $74.7 million contingent recovery grant from the Clean Technology Fund to help the West African Development Bank and ECOWAS’ Center for Renewable Energy and Energy Efficiency expand off-grid

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access to electricity for populations in 19 countries in West Africa and the Sahel region, including Benin, Burkina Faso, Cabo Verde, Cameroon, Central African Republic, Chad, Cote d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone and Togo. The overall objective of ROGEP is to increase electricity access of households, businesses, and public institutions using modern stand-alone solar systems through a harmonized regional approach. The project is expected to benefit about 1.7 million people currently living without electricity connection or with unreliable supply, as well as businesses and public institutions who will use modern stand-alone solar systems to improve their living standards and economic activities. “So far, only 3 percent of households in West Africa and the Sahel are served by stand-alone solar home systems, and 208 million people in the sub-region do not have access to electricity.

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Research underway to increase the life span of solar panels

he largest solar energy research institute in Europe is testing how solar panels age under multiple environmental condi-

tions. The tests being conducted by the Germany-based Fraunhofer Institute for Solar Energy Systems (ISE) in partnership with semiconductor company Du Point Electronics & Imaging, will help improve the development of next generation and resilient crystalline silicon solar panels. The aim is to improve the life span of solar panels. Fraunhofer ISE will validate and accelerate solar panel sequential testing methods developed by DuPont. The tests will include several sequences that combine damp heat, UV and thermal cycling to generate accelerated test conditions aligned with realistic stresses experienced in the field. “The aim of this work is to determine whether the proposed accelerated testing protocols can accurately predict the service life of solar panels made with different types of materials. Our intent is to move from the current IEC standards, which are limited to predicting early stage failure mechanisms, to a longerterm view of panels aging in the field,” Karl-Anders Weiss, the project manager at Fraunhofer ISE, said. As part of this collaboration, the testing protocols will be refined by Fraunhofer ISE to enable a simpler and faster recipe that could help to resolve one of the biggest challenges of the photovoltaic industry.

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Wednesday 24 April 2019

BUSINESS DAY

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The conundrum behind Trump’s oil waiver DIPO OLADEHINDE

he world’s oil producers and their customers entered a new period of uncertainty on as US is ending waivers that allowed some countries buy Iranian crude without running foul of sanctions, threatening to squeeze oil supplies in an already tight market. Having withdrawn from the sevennation deal negotiated under his predecessor to curb Iranian nuclear efforts, President Trump is aiming to pressure Iran to curb its political and military activities across the Middle East. And the administration is betting that its policy will inflict pain on Tehran without causing a spike in oil prices or an aggressive reaction. What do the sanctions do? The buyers of Iranian oil such as China, India, Japan, South Korea, Italy, Greece, Turkey and Taiwan, may now have to find alternatives as Indian state refiners have firmed up oil supplies from other sources for next month as a contingency plan. State-run Indian Oil Corp., the coun-

try’s biggest buyer of Iranian crude, also said it has built in optional volumes in its term contracts with Kuwait, Abu Dhabi, Saudi Arabia and Mexico. The sanctions take aim not only at Iranian oil exports, but also at international shipping companies, banks, insurers and port operators doing business with Iran. United States trade with Iran is already tightly controlled, but the Trump administration is also threatening to exclude international companies from the American financial system if they trade, finance or otherwise serve the interest of Iranian oil exports. What’s the effect on oil market? So far, drivers have been spared major pain. But some experts think that oil supplies could become tighter over time, especially during the driving season next summer, pushing prices higher. While global investment banking giant Goldman Sachs believed United States’ decision to end exemptions from sanctions for countries still buying oil from Iran to have limited impact on crude prices, the timing is likely to have caught energy market participants by surprise. “While we acknowledge the nearwww.businessday.ng

term upside price risks, we reiterate our fundamentally derived Brent price trading range of $70-75 per barrel for the second quarter of 2019,” the US investment bank said in a research note published recently. What are the prospects? Much will depend on how Iran responds to the sanctions, and how successful it is in smuggling oil through Kurdistan and Turkey. If Iran threatens to blockade the Strait of Hormuz, a crucial passage for Persian Gulf oil, prices would probably jump. Any military moves or cyberattacks against Saudi Arabia or Israel could have a similar effect. An escalation of hostilities in Yemen, where Iran backs a militia force in a proxy war with the Saudis, could threaten other oil-shipping choke points. Some oil experts say world supplies are ample enough to keep the sanctions from driving prices higher. “I think there will be no impact on oil prices that can be attributed to the sanctions on Iran,” said Sadad Ibrahim al-Husseini, a former executive vice president at Saudi Aramco, “because of an abundance of new supplies that have been made available from within

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OPEC and Russia as well as incremental offshore Brazil production and shale oil developments that can meet any level of oil demand over the next several years.” Barclay’s analysts expect Brent crude, the global benchmark, to sell next year for an average of $72 a barrel, near the current level. But some Western experts foresee a much higher price. And Badr H. Jafar, president of Crescent Petroleum, a company in the United Arab Emirates, said Saudi Arabia might not be able to sustain its high output. “With continuing production concerns in Nigeria, Venezuela, Angola and Libya, alongside Iranian curtailment, we could well see prices edging up again toward $80,” he said. Implication for OPEC The US decision will make it harder for Organization of Petroleum Exporting Countries (OPEC) and its allies to maintain supply discipline as OPEC ally member Russia has already signaled that the cuts may not need to be extended after they expire in June. Russia’s Economy Ministry sees the nation’s crude and condensate output increasing slightly in 2019, according to its fiveyear outlook.

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Wednesday 24 April 2019

BUSINESS DAY

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Sonangol plans to downsize to focus on core business

Brief

Pinnacle Oil & Gas wins Nigeria’s local content top prize

innacle Oil and Gas Limited has been formally recognized by the Nigerian government for its contribution to local content development in the Nigerian oil and gas industry. At a ceremony graced by the Minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu, Bayelsa State Governor, Seriake Dickson and top oil and gas operators in Nigeria, the Nigerian Content Development and Monitoring Board (NCDMB) second edition of the Nigerian Oil and Gas Opportunity Fair (NOGOF), praised Pinnacle Oil and Gas for championing local content promotion in the oil and gas industry. The award- ‘Downstream operating company with the most impactful local content development initiative’, is easily one in the growing local and international recognitions for Pinnacle oil and gas Limited. Famed for its first mover advantage in pioneering the development and construction of a world class petroleum products handling facility at the Lekki Free trade zone in Lagos, Pinnacle oil and gas was among others recognized by the NOGOF for this facility which would comprise a 600,000 MT tank farm for storage on the shore, connected to Single Point Mooring (SPM)

and Conventional Buoy Mooring (CBM) facilities. The SPM/ CBM which Pinnacle oil and gas has pioneered in Nigeria, are infrastructure for the offshore offloading of large vessels without any need for them to come to shore or use a jetty. The detailed Nigerian content opportunities for which Pinnacle was recognized are, hands on training in the assembly of SPM and CBM; welding and fabrication works’ hands on training; tank farm erection; instrumentation installation; sub contracts, security, insurance and financial services. This year’s NOGOF fair, a biennial affair was themed ‘Maximizing investments in the oil and gas industry for the benefit of the Nigerian people’. It had the objective to bring together major players across the upstream, midstream and downstream sectors as well as the government and industry regulators to showcase opportunities in the Nigerian oil and gas industry and present available in-country opportunity. Commenting on the recognition, Peter Mbah, CEO of Pinnacle Oil and Gas, noted that the award was a confirmation of its confidence and continuous investments in the Nigerian economy. www.businessday.ng

ngola’s state oil company Sonangol plans to divest 52 joint ventures, reduce staff and focus on its core business, part of an ongoing reorganisation and package of reforms designed to lure back investors, Carlos Saturnino, its chairman said. “We are going to sell, close or put out of our group a lot companies,” Saturnino told an oil conference in Paris. “Last year, we identified 52 joint ventures in which we want to sell our equity.” “Instead of investing in Australia, United States etc, Sonangol wants to become an oil company of reference in the African continent. This is major change for us,” he said, adding the objective was to make Sonangol more robust and agile. Oil accounts for 95 percent of exports and around 70 percent of government revenues in Africa’s second-largest producer. Production has been in steep decline due to maturing fields and lack of investments, which Saturnino also attributed to lack of efficiency in decisionmaking by the previous admin-

istration. Angola’s oil production fell to 1.478 million barrels per day (bpd) in 2018 from 1.632 million bpd in 2017. Industry veteran Saturnino was brought back by Angolan President Joao Lourenco in September 2017 to help turn around Sonangol and reform the sector. “Lack of efficiency in approving projects led to a backlog of around $5 billion in projects between 2015 and 2017,” Saturnino said, adding the logjam had been mostly cleared

and the number of projects gaining approval was rising. He said Angola had put in place reforms to relaunch exploration and attract oil majors to invest. Sonangol has carried out analysis on oil blocks with Total and ENI, and has held talks and signed initial agreements with Exxon Mobil. Most recently, it met with Shell to try to lure it back to Angola, Saturnino said. “We have 10 to 12 potential blocks up for exploration in Angola, so the potential is there,” he said.

Aramco to buy Shell’s stake in Saudi refining JV for $631 mln

audi Aramco will acquire Royal Dutch Shell’s 50 percent stake in their Saudi refining joint venture SASREF for $631 million, the two companies said.

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The purchase, which is part of Aramco’s strategy to expand its downstream operations, will be completed later this year, they said in a joint statement. Saudi Aramco Shell Refinery Co (SASREF), based in Jubail

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Industrial City in Saudi Arabia, has a crude oil refining capacity of 305,000 barrels per day (bpd). “Saudi Aramco will take full ownership and integrate the refinery into its growing downstream portfolio. SASREF will continue to be a critical facility in our refining and chemicals business,” Abdulaziz alJudaimi, Aramco’s senior vice president of downstream, said in the statement. Aramco aims to become a global leader in chemicals and the world’s largest integrated energy firm, with plans to expand its refining operations and petrochemical output. For Shell, “the sale is part of an ongoing effort to focus its refining portfolio, integrating with Shell trading hubs and chemicals,” the company said. Shell has sold over $30 billion of assets in recent years as it shifts its focus to lower carbon businesses such as natural gas and petrochemicals.

Wednesday 24 April 2019

BUSINESS DAY

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WEST AFRICA

ENERGY intelligence OPEC Flakes

OPEC, Russia alliance has long-term future

Oil prices hit November 2018 highs

il prices rose by more than 1 percent to levels not seen since November 2018, driven up by a Washington Post opinion column that said the United States is preparing to announce all imports of Iranian oil must end or be subject to sanctions. Brent crude futures rose above $72.90 for the first time since November 2018, hitting a high of $72.93 shortly. US West Texas Intermediate (WTI) crude futures rose above $64.80 per barrel, also to November 2018 highs, hitting $64.86 per barrel, up 1.3 percent from their previous settlement.

The United States is preparing to announce that all buyers of Iranian oil will have to end their imports shortly or be subject to US sanctions, Washington Post foreign policy and national security columnist Josh Rogin wrote. The US re-imposed sanctions in November on exports of Iranian oil after President Donald Trump unilaterally pulled out of a 2015 nuclear accord between Iran and six world powers. Washington, however, granted Iran’s eight main buyers of oil, mostly in Asia, waivers to the sanctions which allowed them limited purchases for half-a-year. The report comes amid an oil

market that is already relatively tight. Secretary of State Mike Pompeo will announce “that, as of May 2, the State Department will no longer grant sanctions waivers to any country that is currently importing Iranian crude or condensate”, the Post’s columnist Josh Rogin said, citing two State Department officials that he did not name. These potential disruption to Iranian supplies add to an already tight market. The Organization of the Petroleum Exporting Countries (OPEC) has led supply cuts since the start of the year aimed at tightening global oil markets and to propping up crude prices.

US exported 2 MMbopd in 2018 to 42 destinations

n 2018, US exports of crude oil rose to 2 MMbpd, nearly double the 1.2 MMbpd rate in 2017. Export volumes by destination changed significantly during the year, as US crude oil exports to China fell and exports to other destinations such as South Korea, Taiwan, and Canada increased. The increase in US crude oil exports was the result of increasing US crude oil production and infrastructure changes. US crude oil production increased 17 percent to 10.9 MMbpd in 2018, with US Gulf Coast states, the departure point for more than 90 percent of US crude oil exports, producing 7.1 MMbpd. The increased production is mostly of light, sweet crude oils, but US Gulf Coast refineries are configured mostly to process heavy, sour crude oils. This increasing production and mismatch between crude oil type and refinery configuration causes more of US crude oil production to be exported. In early 2018, the Louisiana Offshore Oil Port (LOOP) in the Gulf of Mexico was modified to enable the loading of vessels for crude oil exports. LOOP is currently the only US facility capa-

ble of accommodating fully loaded Very Large Crude Carriers (VLCC), vessels capable of carrying approximately 2 MMbbbl of crude oil. In 2018, Asia was the largest regional destination for US crude oil exports, followed by Europe, while, as in previous years, Canada was the largest single desti-

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nation for US crude oil exports. Canada received 378,000 bpd of US crude oil exports, representing 19 percent of total US crude oil exports in 2018. South Korea surpassed China to become the second-largest destination for US crude oil exports in 2018, receiving 236,000 bpd compared with China’s 228,000 bpd.

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he pact between OPEC, Russia and its allies is “here to stay,” Ibrahim al-Muhanna, a longtime adviser at Saudi Arabia’s energy ministry said, playing down concerns that the alliance could end given Russia’s lukewarm comments around the ongoing market management. “Cooperation will continue between Russia and Saudi Arabia,” Ibrahim al-Muhanna said at the International Oil Summit in Paris, stressing that “it is the core of OPEC+ cooperation.” OPEC, Russia and nine other non-OPEC partners are in the midst of a 1.2 million b/d production cut that has helped oil prices recover from a massive slump in the last three months of 2018. The cut agreement is scheduled to run through June, and the coalition is divided on whether it should be extended. Russia has questioned the benefits of the loss of market share in exchange for higher oil prices, where Brent crude has risen from $50/b at the end of 2018 to above $70/b in recent

weeks. A nine-country monitoring committee co-chaired by the coalition’s two largest members, Saudi Arabia, which wants to extend the cuts, and Russia, which is more circumspect, is scheduled to meet May 19 to review market conditions. The full 24-country bloc will meet June 25-26 in Vienna to decide on the agreement’s future. OPEC canceled a meeting in April amid greater comfort over oil prices and with the market still not deemed to be back in balance.

Indian refiners turn to OPEC, Mexico, US to make up Iran oil gap

ndian refiners are increasing their planned purchases from OPEC nations, Mexico and the United States to make up for any loss of Iranian oil if the US enforces sanctions more harshly from next month, sources and company officials said. All four Indian state-owned refiners that buy Iranian oil have not yet placed orders for Iranian oil for May, when the current waiver expires, pending clarity from the United States. India’s Bharat Petroleum Corp (BPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL) have tapped Iraq to make up for Iranian oil, while Indian Oil Corp (IOC) has signed its first annual contract with US suppliers and raised supplies from Mexico. “The supply can come from both OPEC and non-OPEC nations like the US,” said M. K. Surana, chairman of Hindustan Petroleum Corp, which purchased up to 1.5 million tonnes per year of Iranian crude in 2018/19. The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia have gradually tightened supply through 2019 to reduce a global glut. OPEC and its partners may not renew the curbs when they ex@Businessdayng

pire after June because of the risk of over-tightening the market. IOC, India’s top refiner and Iran’s biggest Indian client, will cut Iranian oil imports to 6 million tonnes, or about 120,000 barrels per day, in the 2019/20 period from 9 million in 2018/19, and has raised the optional volumes it can buy from other producers to 2 million tonnes, a company official said. “We have optional contracts with Saudi Arabia, Kuwait and other suppliers,” the official said, adding his firm would also buy more U.S. oil if required. IOC also hopes to buy 1.5 million tonnes of Mexican oil in 2019, compared with 1 million tonnes last year.

Wednesday 24 April 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

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

ecent mega merger and acquisition deals in the Permian Basin, West of Texas is pitting oil majors one against the other in a race to take position in the world’s most prolific oil fields as Nigeria continues to dillydally about reforming its petroleum sector laws. In the week ending April 20, Chevron made public its decision to takeover Anadarko Petroleum for $33 billion, a deal seen as a watershed moment for the Permian Basin and the US shale industry as a whole, Oilprice.com had reported. The deal is believed to be the beginning of a massive round of consolidation in the shale industry. Already, the Permian has rapidly shifted in favour of the largest oil companies, with ExxonMobil, BP and Chevron betting their futures on West Texas and New Mexico. Exxon expects to produce 1 million barrels per day (mb/d) from the Permian by 2024, while Chevron had announced plans to produce 900,000 bpd by the same date. While ExxonMobil might not have immediate plans to depart from Nigeria, it recently joined the league of multinational oil companies selling some of their Nigerian oil assets. ExxonMobil was weighing the possibility of selling its stakes in Oil Mining Leases (OML) 66, 68, 70 and 104 with a total production capacity of 120,000 barrels per day as at 2017, which might provide an opportunity for indigenous companies who have purchased assets worth billions from firms such as Eni, Shell, Chevron and Total in the past five years. However, oil majors are scrambling for positions in the Permian. The acquisition of Anadarko grows Chevron’s position in the Permian, while also adding offshore and liquefied natural gas projects to the oil major’s portfolio. Chevron’s total production will jump almost to parity with Shell and ExxonMobil, rising to 3.6 million barrels per day after incorporating Anadarko. “We have always considered Anadarko as having the best positioned acreage in the sweetest spot of the Permian Delaware basin,” said Per Magnus Nysveen, head of research at consultant Rystad Energy. “Combining these shale assets with Chevron’s strong legacy position in the same area, we will now see Chevron emerging as the clear leader among all Permian players, both in terms of production growth and as a cost leader.” In fact, while Chevron’s prior goal was to produce 900,000 bpd in the Permian within five years, it may now be able

Snapshot

We have always considered Anadarko as having the best positioned acreage in the sweetest spot of the Permian Delaware basin

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to achieve 1.6 mb/d after taking over Anadarko, according to Rystad, pushing it far ahead of Exxon. Nigeria’s President Muhammadu Burhari in 2018 declined assent to the Petroleum Industry Governance Bill (PIGB) designed to reform and lure investors in, who have not seen clarity in the sector. The 8th Senate on April 17 passed the PIGB. “Following the adoption of the recommendations of the Technical Committee on ‘Declined Assents to Bills by Mr. President’, the @ NGRSenate has once again passed the Petroleum Industry Governance Bill (PIGB),” The Senate president said on its Twitter handle. Whether President Buhari would assent to the Bill and let in the much needed foreign direct investment into the sector will be known in the coming days. @Businessdayng

Wednesday 24 April 2019

BUSINESS DAY

POLITICS & POLICY A/Ibom: INEC warns Akpabio against blackmail, misrepresentation ANIEFIOK UDONQUAK, Uyo

he Independent National Electoral Commission (INEC) in Akwa Ibom State has warned Godswill Akpabio, former Senate minority leader to refrain from resorting to blackmail and lies in a bid to mislead the Election Petition Tribunal sitting in Uyo, the state capital. Akpabio, a former governor of Akwa Ibom State lost the Akwa Ibom North West senate seat to Chris Ekpenyong of the People’s Democratic Party (PDP) and has approached the election petition tribunal to overturn Ekpenyong’s victory. Reacting to media reports that Akpabio’s legal team led by Patrick Umoh had been denied access to the election materials for the purpose of inspection, the commission described such reports as baseless and mischievous. In a statement by the commission’s head of public affairs, Don Etukudoh, a copy of which was made available to our reporter, the commission however, noted that

the reports were consistent with the “sustained campaign of calumny against the commission, before, during and after the elections.’’ “We find it distasteful and hard to believe that a legal practitioner can so cheaply and dishonorably lend himself for use in this unholy enterprise against his conscience and the truth. “The truth is that a seven-man legal team of Akpabio has been in the commission and has actually commenced the process of inspecting the election materials. They were led into the Strong Room of the Commission where they sighted and confirmed that there are indeed materials and documents to be inspected. “Since the materials are inevitably stacked in heaps, Akpabio’s team sat with INEC lawyers to work out and mutually agree on the modalities and schedule for the continuation of the inspection after the Easter holiday. “What could they be doing in the Commission’s Strong Room, a restricted area where materials are kept, if they were not on inspection?

enator representing Kaduna Central Senatorial district at the Upper Chamber of the National Assembly, Shehu Sani has blamed northern political leaders for the deteriorating situation and calamity befalling the region as a result of their lukewarm attitude towards addressing the issues. He said one of the problems is sycophancy which is now making the north bleeding in insecurity. “We have no Jonathan or Obasanjo to blame for the insecurity in the north”, Sani said. The Senator made the above observation while addressing delegations of Birnin Gwari, Chikun and Zamfara people living in Kaduna on Tuesday at his Kaduna residence. Sani, who frowned at the level of insecurity in the region, said the residents must rise to question and challenge those in the position of authority to do what is right. “Kidnapping is what we used to hear from far distance in the Niger Delta and South Eastern part of the country in the last fifteen to twenty years. “When people are facing this kind of danger and tragedy, the most ideal thing is to face the situation and question those that we have elected into position of authority.

Iniobong Iwok

“The situation in Birnin Gwari is one that reflects the tragedy and danger that will are facing in the northern part of the country today,” he said. According to him, “Birnin Gwari, Chikun, Kajuru, Zamfara, Katsina, Niger and some parts of Sokoto state are under siege. “Northern Nigeria today is under siege. In the North-West, there are issues of banditry. In the North-Central, there are issues of herdsmen, while in the North-Eastern Nigeria, there are terrorism.” “If the Federal Government is responsive to Zamfara issues, it is because the state government has admitted that the state is under siege of banditry and kidnappers”, Sani lamented. While speaking in empathy, Shehu Sani said the situation has forced people to resorting to buying anti-bullet charm for protection. He said the insecurity in Kaduna is as a result of the governor and government of Kaduna not admitting the security challenges in the state. Earlier, the leader of Coalition of Birnin Gwari Associations, Nasir Khalid in a letter presented to the senator said the several communities are under attack of bandits from the eve of the general elections till date. He said forty drivers were killed in the last three months and several communities were ransacked and sacked. www.businessday.ng

“How can someone who has been availed all legitimate support and was part of the agreement to continue the inspection after the holiday, turn around to complain that they were denied access to the materials?”

The commission stated that the report was part of the sinister habit of dragging the name of the Resident Electoral Commission (REC), Mike Igini in the mud for the purpose of blackmailing him. “We need to state here that the

‘Why Afenifere will not recognise Buhari beyond May 29’

Northern Nigeria under siege, leaders sleeping, says Shehu Sani Abdulwaheed Olayinka Adubi, Kaduna

Godswill Akpabio

REC has been out of the state on official duty and has not even interacted with the external solicitors of the Commission. He had however, left a standing instruction that officers of the Commission must cooperate with the legal teams in the election petitions, especially with regard to obeying every order of the Election Petition Tribunal,” it said. Noting that Igini has, at every forum of election stakeholders and on radio and TV discussions, canvassed the view that it ought to be the responsibility of the Commission to explain all that transpired in elections being the body that midwifed, conducted and managed the election process, it stated that it would be preposterous to suggest that a Commission which is ready to discharge this burden or onus of proof would deny anyone access to materials used in the conduct of elections. It urged the people to disregard the statement by the former minority leader’s legal team and be assured that INEC under the leadership of Mike Igini, would uphold the integrity of the electoral process.

euben Fasoranti, leader of Yoruba Pan-Yoruba socio-political group, Afenifere, has said that the group would not support President Muhammadu Buhari’s administration beyond May 29, because the administration would lack legitimacy. President Buhari’s first tenure ends on May 29, but he was declared winner of the recent Presidential election by the Independent National Electoral Commission (INEC). Following the victory, he is going in for a second term of four years in office. According to the INEC, Buhari polled a total of 15,191,847 (56percent) votes, winning in 19 of the states while Atiku Abuba-

kar, candidate of the People’s Democratic Party (PDP), got 11,262,978 (41percent) of votes and won 17 states and Abuja. However, Atiku, the PDP, and several other groups have disputed the result of the presidential election. Atiku is challenging the election at the tribunal, alleging that he won but that the result was manipulated in favour of Buhari and the ruling All Progressives Congress (APC). Speaking in an interview with BusinessDay, Tuesday, ahead of Buhari’s May 29 inauguration for a second term in office, Fasoranti said that the group was not happy with the manner INEC conducted the February 26th presidential election, stressing that the region would withdraw its support for the President’s administration after his first tenure.

“We would not support him beyond May 29; we would not recognise him, the presidential election was flawed and as you know, that was not an election,” Fasoranti said. On the contention over who become the next Senate president and speaker, House of Representatives, the Afenifere leader, called for an amicable resolution of the Senate leadership tussle between the leadership of the APC, stressing that the interest of the nation must be paramount. “Whoever emerges the Senate President and Speaker in the National Assembly is left for APC leadership to decide; but this current disagreement must not be allowed to degenerate by the party leadership; the nation interest is paramount”, Fasoranti added.

Incessant killings: Don’t allow Nigerians to die innocently because of us, AIG urges policemen MIKE ABANG, Calabar

usa Kimo, the Assistant InspectorGeneral (AIG) of Police in zone 6, has warned men and officers of the force to be professional in dealing with members of the public, saying killing of innocent Nigerians will no longer be tolerated. Kimo, who gave the warning in Calabar while decorating twenty one newly promoted officers of the zone, said they would be held

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responsible for their actions. Kimo said the Inspector General of Police, Mohammed Adamu made the promotion in the belief that the beneficiaries will live up to the tenets and objectives of the Police, saying any infraction by them would be frowned at. “I have known the Inspector General of Police for about thirtythree years and I know that he believes in promoting worthy officers. But the police hierarchy is not happy that the force is in the news always for all the wrong reasons. @Businessdayng

We must change the narrative and not allow Nigerians to die innocently because of us,” the AIG said. “If we behave well, majority of Nigerians will be happy with us. Be professional about your job. It is one thing to be promoted and another to work harder, and ensure that you protect your rank. If you don’t, anything can happen.” He thanked the Inspector General of Police for promoting the worthy officers, and hoped that those promoted will justify the gesture.

BUSINESS DAY

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Opinion

Minimum wage & governors: Pay or resign!

Franklin Ngwu

ith the signing of the minimum wage by President Buhari, the question on every lip is the ability of the government to pay. While it is believed that the federal government can possibly pay even with our liquidity crisis, the main concern is with the states. As many of them are unable to pay the current N18,000 and most of the governors behaving more like prodigal sons than CEOs of their states, there is increasing fear that many states will not be able to pay. If this is the case, labour should then get ready for more industrial actions. But the question is if the states can really pay given the human and natural resources and potentials that each and every state in Nigeria is endowed with. To this question, the answer is a resounding ‘yes’. Every state in Nigeria can pay and can even pay N50, 000 once governed by innovative and strategic leaders. The problem with most of our states and Nigeria in general is that we lack deep and strategic thinking for medium and long term growth. With the easy oil money shared every month as federal allocation, most of our governors are unable

and unwilling to think deeply on how toeffectively galvanize the resources of their respective states for sustainable growth and development. Not only are they unwilling to strategically think and govern their states, a significant amount of what the states receive from Abuja and what is internally generated as revenue is expropriated through unaccountable and opaque reason called security votes by the governors. Imagine the obscene situation where many of our governors seize over N500 million naira every month from their respective states as security votes. N500 million can pay over 16,000 people N30,000 every month. This implies that outside states like Lagos, Kano and Rivers with a high number of civil servants, almost every state can comfortably pay the N30,000 wage if the governors can agree or forced to reduce the unbelievable and outrageous security votes. Moreover, even the much that remains after the monthly confiscation of the security votes is most of the times imprudently expended. I know of a certain governor who, on assumption of office in 2015, purchased 48 brand new Prado jeeps to share with his commissioners and members of the state’s House of Assembly. Interestingly as most of the beneficiaries could not afford a 2002 Toyota Camry before their appointments and elections, some of them covered the jeeps and left them unused for months as they reconciled their new unrealistic and unsustainable status. With such wastefulness which is common across Nigeria, the governor will complain that he will not be able to pay the N30, 000 monthly minimum wage. Given the protracted process and

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Every state in Nigeria can pay and can even pay N50, 000 once governed by innovative and strategic leaders

industrial actions that normally characterize demands for wage increases, I think that it is time to properly and constitutionally agree that wages must increase at agreed periods with an enforceable clause that any leader (president, governor or chairman) unable to abide with the rule must resign. The benefits of this suggestion are many. Not only will it make our leaders think more strategically especially on how to harness the abundant resources we have, it will also make them to be interested in having a more productive civil service. If Kebbi state can generate over N150 billion in 2017 from rice alone while maintaining their leading position in the production of onion and pepper, it suggests that other states in the North West and Nigeria can do so or even better if governed by committed and business oriented governors. With Kebbi’s impressive achievements under Governor Abubakar Bagudu, it means that the state’s annual wage bill of about N20 billion every year for about 20, 000 civil servants in the states can comfortably be paid mainly from rice, onion and pepper. Interestingly, as the results of Kebbi state’s ingenuity and hard work are obvious, in Enugu state equally blessed with favorable lands for the cultivation of rice and pepper, the required commitment and seriousness are yet to be observed. While Denmark a country of about 5.8 million people exported pork meat valued at about N972 billion ($2.7bn) in 2017, the five South-East states with a population of about 20 million people using 2006 census only managed to achieve a total combined internally generated revenue of about N58 billion

in 2018. In the same vein, while Kenya exported cut flowers valued at about N360 billion ($1 billion) selling in over 60 countries in the world, there is no single agricultural produce from Nigeria that generates beyond $50 million in exports in a year or sold in many countries of the world. In 2017, while Netherlands, a country of about 17 million people, exported potatoes worth about N792 billion ($2.2billion), Plateau state with the best comparative advantage to produce potato in Nigeria is struggling. With average global price of about $200 dollars per metric ton, it means that Plateau state can generate over $100 million from potato alone every year if it can produce up to 500,000 metric tons which is achievable. While $100 million is about N36 billion, the total internal generated revenue of all the six North Central states in 2018 was about N53billion. As Plateau state’s total internally generated revenue in 2018 was about N10.8 billion, we can only imagine what they can generate if they get very serious with potato and tomatoes not to mention other products. The above analysis shows two things. First is how unserious we are as a people and how unfocused many of our governors are. Second is that every governor can comfortably pay over N50, 000 minimum wage if they are committed, focused and business inclined. According to Proverbs 29: 2 “When the righteous are in authority, the people rejoice but when the wicked rules, the people groan” Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail: fngwu@lbs.edu.ng

Economic chokepoints or police checkpoints: Official police corruption as a percentage of GDP Bongonomics

Bongo Adi

elcome to S outheast Region: Nigeria’s Headquarters of Official Highway Robbery is the title of a 2018 report by the International Society for Civil Liberties & the Rule of Law (Intersociety), a non-governmental organisation. The research for the report was conducted between 2015 and 2016 in the south eastern states of Abia, Anambra, Ebonyi, Enugu, Imo and some parts of Delta States. It graphically indicted the Nigerian police and other security outfits of collecting about 100 billion naira in bribery and extortion from motorists in the region. This amounts to 12% of the regions’ 2019 budget estimate of 870 billion naira (according to a recent presentation by Ike Chioke of Afrinvest.) Globally, the World Economic Forum estimates that corruption costs the world economy 5% of its combined gross domestic output. This percentage encompasses the various vintages of corruption as categorized in extant research. Of course, if we sum up total institutional corruption in the SE region of Nigeria alone, it would triple this 12% police-specific bribery and extortion in

the region. This piece is however, not about the general culture of corruption for which Nigeria has gained an unenviable notoriety. We are specifically focused on the dehumanizing subjection of a specific group of people to brazen psychological torture, daylight officialized armed robbery and reckless economic extortion that have adverse consequences for economic production, moral rectitude, trust in the state, civility and general human wellbeing. It is about the economic cost and value distorting impact of police terror in the South East of Nigeria. In a 2017 report by Transparency International, the police is perceived to be the most corrupt institution in the world. Not only TI, research after research in different countries identify the police force as the most corrupt public institution. In a recent study by SERAP, police corruption was perceived to be as high as 63% – almost twice the global average of 36%. SERAP reports that “a bribe is paid in 54% of interactions with the police. In fact, there is a 63% probability that an average Nigerian would be asked to pay a bribe each time he or she interacted with the police. That is almost two out of three.” But no one has yet answered the question why police corruption tends to be high in every country. Among the factors that drive general, official corruption including poverty and natural resource rent, the most debilitating is poor institutions of which the police system, as the pillar and enforcer of law and order, counts as the most deleterious. Once the police institution is corrupted,

the system of law and order collapses. This has unfortunately happened in Nigeria. Some would argue that we now live in the post-order society. Extant research proves that corruption generally instill a self-perpetuating or recursive cycle of poverty, economic and social maladjustment and perverse incentives. These contribute to lowering economic growth, reducing investment and productivity, increasing inequity in a self-reinforcing way. Police corruption is rampart in Nigeria but it is especially so in the South East where it has been elevated to the status of a norm. The Intersociety report quoted above may actually have underestimated the cost of official police corruption in the region. During this last Easter holiday, commuters who plied the Lagos-Ore-Benin-Asaba-Onitsha road will attest to the unusually high number of police roadblocks on that expressway. The frequency could be as high as one per kilometer. In the past, the roadblocks would be mounted in bad sections of the road where the poor road condition would force a slow-down in traffic thus allowing the police to flag down motorists. But this time, every kilometer of the expressway was blocked with logs and drums forcing motorists to slow down, elongating commuting time. At other times, motorists are menacingly threatened with AK 47 riffles to force them to comply with police brutality. As one escapes from the long haul from Lagos to Onitsha and into the eastern region, the situation gets even worse. For instance, every road leading into Owerri, the Imo State capital is littered

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… there is a 63% probability that an average Nigerian would be asked to pay a bribe each time he or she interacted with the police

with police roadblocks where motorist must dutifully pay stipulated amounts before they could be granted passage. This has always been the situation in the East that one is forced to question the rationale for this state of siege. What is the justification for this victimization and dehumanization of ordinary citizens? Is the Nigerian state still in a state of war with the south east? There is no gainsaying that the extortion of transporters increases the cost of doing business in the east. Every naira extorted from the taxis and buses is directly passed on to passengers which increases the cost of living. Beyond cost of living adjustments necessitated by this brazen menace of daylight banditry by the police, it needs to be stated that it is this sort of maltreatment that breeds disillusion with the government of the day and the system of governance and can be found at the root of current political dysfunction and social disunity in this country. One of the reasons Nnamdi Kanu and his IPOB flag as the justification for their protest is this victimization of the SE citizens of Nigeria by the nation’s security apparatus. While acknowledging the rising spate of insecurity in Nigeria — not just the south east — that has necessitated increasing police presence, we cannot fail to condemn the increasing militarization of the state and the employment of intimidation as a governance tool. The economic consequences far outweigh any political gains — if there were any. Dr Adi is a Senior Economics faculty at the Lagos Business School

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