BusinessDay 24 Aug 2020 by BusinessDay

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As T-Bills lose shine in Nigeria, there is a new game in town W

NBS data to show GDP declined 6% in Q2 2020

LOLADE AKINMURELE

hris Okonji, 28, invested N2 million in a gold-backed Exchange Traded Fund (ETF) in January 2020. Okonji’s investment The Gold ETF is on a tear

banker friend, the same that asked him to invest in government treasury bills in 2017, had advised him to buy the ETF. “I was sceptical about making the investment as I had other plans for the money, but Tunji was the same one who helped

me make a killing on Treasury Bills in 2017 so I trusted him,” Okonji, a medical doctor, said. “Fast forward eight months and that decision to buy the Gold ETF was a masterstroke,” he said. A strong rally in the gold ETF this year means Okonji’s N2 mil-

lion is now worth N3.8 million, with the price of the ETF climbing 89 percent since the start of the year. That is unrivalled by any other asset class listed on the Nigerian Stock Exchange (NSE) and translates to a real Continues on page 29

hen the National Bureau of Statistics (NBS) releases the much anticipated Nigeria’s second quarter Continues on page A4

Abiru retires as Polaris Bank MD/CEO, thanks staff, CBN for support

anaging director/CEO of Polaris Bank Limited, Tokunbo Abiru, has announced his retirement from the service of the bank effective August 31, 2020, having Continues on page 29

Inside

Source: SEC

Nigeria doubles African Development Bank Rights before key vote P. A3

Monday 24 August 2020

BUSINESS DAY

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Apapa: Concerns remain around tank farms, absence of rail system CHUKA UROKO

mid concerns of multiple and indiscriminate siting of tank farms and absence of working rail system in Apapa and environ, the Federal Government says the completed and ongoing roads infrastructure projects in and around Apapa as well as other measures being put in place constitute the steady progress it is making towards ending the gridlock that has become a feature of the port city. Through the Infrastructure Tax Credit Scheme, also known as Executive Order 7, which provides a platform for private companies to undertake the construction and refurbishment of eligible road infrastructure projects, the Federal Government is giving facelift to the decaying roads infrastructure that have made access to Apapa a nightmare. Apapa is home to the country’s two busiest seaports that account for over 70 percent of the country’s export and import activities. Aliko Dangote, a major player at the ports, estimates the economy of this port city at N20 billion a

day, yet its roads infrastructure are death traps. Recently, the presidency, in a media statement, said some of these roads had been fixed while others were at various stages of completion. The statement was signed by Laolu Akande, the senior special assistant to the President on Media and Publicity in the Office of the Vice President. BusinessDay can confirm, after visiting some of the project sites, in line with Akande’s revelations, that Apapa Wharf Road, reconstructed by Dangote Group, Nigeria Ports Authority (NPA) and Flour Mills of Nigeria, has been completed since 2018 and is already in use. Others are 1.4 kilometres Liverpool Road, which is almost completed but open for public use; 2.9 kilometres Creek Road is also almost completed but open for public use while on the 35-kilometre Apapa-Oshodi Expressway, from Creek Road to Tin Can Port Gate 1 is almost completed. Also on the Apapa-Oshodi Expressway, Tin Can Port Gate 1 to Mile 2 is at an advanced stage of completion while the Tin Can Island Transit Truck Park has been Continues on page 29

Queues at ATM, convenience push customers’ patronage to agency banking HOPE MOSES-ASHIKE

part from convenience, queues at Automated Teller Machines (ATMs) are quite disgusting and have led to increased patronage of agency banking by Nigerians. Particularly, this has given rise to significant increase in the number of banking agents operating in the country. According to Shared Agent Network Expansion Facility (SANEF) and as published by the Central Bank of Nigeria (CBN), banking agents increased by 220 percent from 83,560 in December 2018 to 267,627 as at February 29, 2020. The 2020 roll out plan was expected to bring additional 232,373 agents to close out the year with the 500,000 agents. BusinessDay spoke with some customers who gave reasons for patronising the agents instead of the banks, of which the major driver was convenience and the longer time they spend queuing at banks’ ATMs. “I use the agents regularly. I am going to use them again tomorrow (Saturday). Three of the agents are 10 steps away from my house. They charge me N200 for N10,000, which is better than going to spend

a lot of time at the ATM,” says Ima Obong, who lives in Ikotun-Egbe area of Lagos. One of the customers at Okota area of Lagos says he patronisesthebankagentsbecause of convenience. “They are closer to me than the ATM machines. It is faster than going to the ATM machine that will eventually disappointme.Itisquitecheaper compared to the time I spend at the ATM machines,” he says. At Command area of IyanaIpaja, Lagos, Olusola, a young lady who works in Apapa, says she patronises the banking agents because of the “too much queues at the ATMs. I use it because it is very fast.” Igbokwe lives in Abule-Ado area of Lagos. He spends a minimum of N200 to get to the nearest bank for transactions. “The ATMs are usually crowded. I feel it is much easier for me to go to the banking agent closer to me to withdraw N10,000 and pay the same amount I would have spent to go to the bank,” he says. The CBN, deposit money banks, Mobile Money Operators, and Super Agents on March 27, 2018, unveiled plans to roll-out a 500,000 shared agent network within two years, to deepen financial inclusion in the country. www.businessday.ng

L-R: Muftau Oyegunle, non-executive director, Prestige Assurance plc; Diekola Onaolapo, CEO, Ezcellon Capital; Sarbeswar Sahoo, managing director; Raja Vadlamudi, executive director, technical, during investors/shareholders’ forum of the company on the ongoing rights issue held recently at Radisson Blu Hotel,V/Island, Lagos.

Local authorities taking driver’s seat in electricity supply promises stability, wealth STEPHEN ONYEKWELU

even years after Nigeria set out to reform its electricity supply industry, signs are emerging that regulating and commanding the sector from a single centre could lead to avoidable losses, and experts are calling for decentralisation. Some of the tell-tale signs that Nigeria’s seven year-old power sector privatisation is failing to yield the required benefits to the country’s over 200 million people include the amount spent on generators, the frequent collapse of the

national grid and the Nigerian Electricity Regulatory Commission’s (NERC) inability to steer the sector to profitability. Households with access to on-grid electricity had an average power supply of only 9.2 hours a day in the first half of 2019, according to a survey by the country’s leading polling agency, NOI Polls. Electricity production per capita is less than 15 percent on the average of emerging-market economies and less than 25 percent of the sub-Saharan Africa average, according to the International Monetary Fund (IMF). In one of its country eco-

nomic reports, the Bretton Woods Institution estimated the annual economic loss of lack of access to electricity and unreliable electricity at about $29 billion. In a 2014 World Bank survey, 27 percent of Nigerian firms identified electricity as the main obstacle to doing business. In June 2020, the national grid collapsed again, plunging the whole country into darkness, just as it happened in May and April, which questions the integrity of the infrastructure. The network recorded over 11 failures in 2019. According to Olasupo Shashore, a founding part-

ner of Africa Law Practice NG & Co, a commercial law firm, over-centralisation of authority in Nigeria and the power sector, in particular, has created more poverty than anything else. The localisation of authority, control, regulation is concomitant with wealth and stability. The Transmission Company of Nigeria (TCN), Shashore said, is a clear example of where centralisation is doing more harm than good. “The TCN should be broken up into at least seven or ten TCNs and commercialised but not privatised Continues on page 29

Nigeria’s internet speed crawls behind global average as UK, Japan set world record FRANK ELEANYA

verage Nigerian accesses the internet on a mobile device at an average speed of 15.3-megabits per second (Mbps), which was two times below the worldwide average at 34.7Mbps in July, according to data from Hootsuite. The country’s fixed broadband speed is further down at 11.87Mbps. To put it in context, with mobile internet speeds between 10Mbps and 15Mbps, a user can comfortably stream in high definition on IrokoTv, Netflix, Showmax, Apple TV, Hulu, and basically whatever streaming service the user decides to use. Game lovers would also experience relatively lag-free performance. But sharing among two people would be a problem. It also means downloading heavy

files would not be easy. In fact, a similar report from Cable, a UK-based price comparison website, found that it takes an average of over 7 hours (7.18) to download an HD movie of 5GB in Nigeria. The report placed Nigeria’s internet download speed at 176th of 207 countries measured globally. But at the global average of 34Mbps - South Africa has an average 33.7Mbps - users would be able to stream any video in Ultra HD. However, if there are five people sharing the internet connection and they are simultaneously streaming or using other dataintensive resources, the speed would be awfully slow. While Nigeria’s internet speed crawls behind the global average, engineers in the UK and Japan have developed new ways to modulate light before it is beamed down optical fibres, allowing for

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much wider bandwidths than usual. The engineers set the fastest speed in the world clocking at an eye-popping 178 terabits per second (Tb/s) - fast enough to download the entire Netflix library in under a second. It is 17,800 times faster than the current fastest internet connections available to consumers – 10Gb/s in parts of places like Japan, the US and New Zealand. Even NASA can’t compete, with its 400Gb/s ESnet. “While current state-ofthe-art cloud data-centre interconnections are capable of transporting up to 35 terabits a second, we are working with new technologies that utilise more efficiently the existing infrastructure, making better use of optical fibre bandwidth and enabling a world record transmission rate of 178 terabits a second,” Lidia Galdino, lead researcher @Businessdayng

on the study said. To be fair to Nigeria, at 15.3Mbps, the mobile internet connection speed for the average Nigerian has indeed grown by more than half from what it was in February. The Ookla’s Speedtest Global Index, which also ranked Nigeria at 15.76 in July, showed that the mobile internet download speed for the country in February was 7.53Mbps. The connection speed in mobile networks depends, in particular, on the network technologies available in the area and the features of the user’s terminal device. The network technologies include a 4G network that enables a high-speed connection in suitable circumstances; 3G network used in a wider area but with much lower maximum speed, and the GSM, which has the most extensive network but the data transfer speeds are very limited.

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Resilience – forging ahead

(Second article in six series)

Bashorun J.K Randle

t the appropriate time (perhaps in his memoirs) he will avail us of his candid opinion of his leader and President. Hopefully, he will match Chief Bola Ige’s candour: “I can’t be Chief Awolowo (my leader). Let me just be Bola Ige. When you talk of Awolowo, you are talking of a man who ate only when he was extremely hungry; and who measured the amount of water he drank. A man who cannot be moved by the nakedness of women of easy virtues. Nothing moved him, yet he moved everything in his way! A man who believed that thinking of the greatness of his country is a full-time job. He once told us: “Think inside your dreams, start thinking again when you wake up but if you did not wake up, you are a hero if you died thinking about the greatness of your nation.” My leader was exceptional. He was like nobody else. So, I can’t be like him.” History is on the side of Professor Gambari as virtually all the problems he is contending with have been with us for a while. Some even go back several decades. A case in point is the generation gap which the late Professor Tam DavidWest (an unrepentant Buharist) addressed about thirty years ago: “The generation gap is actually a

fall out from the fissure in our social structure which is under considerable strain from our obsession with millions i.e. ruthless materialism. It is instructive, to stress the point that, the means by which such millions are amassed is never called to question. For instance, it could be by cheating; stealing; by lying; by killing; by bribery and corruption; by manipulation; by contract inflation; by ‘pushing’ (cocaine); by ‘trafficking (in foreign currency), by irregular and illegal crude oil transactions; or similar self-serving smart practices. In a word, it could be dirty or godless millions. In a word it is apparently, totally irrelevant and uninteresting. The end must justify the means. And in Nigeria, the cheer-raisers, the crawlers, the sycophants and the touts are never in short supply, to regularly dose the vanity of our soft millionaires, with the necessary adrenalin. There should be a new culture of reverse snobbery against these soft Nigerian millions. Such a psychological and social re-orientation will eventually cheapen these questionable millions as mega status indices in interpersonal relationships. I am worried because to the best of my knowledge, history has not known of a system that survived, operating the ethic of pockets of tremendous personal affluence living side by side with mass hunger and deprivation.” Perhaps we should refer to the book: “The Duke and the Soul Princess” by J.K. Randle “On the subject of the generation gap, we should acknowledge the incisive observations of Chief Remi FaniKayode, SAN, (ex-King’s College, Lagos; and Cambridge University) the Deputy Premier of the defunct Western Region of Nigeria who recently (at the Annual Dinner of the Oxford and Cambridge Club, at the Metropolitan Club, Victoria Island, Lagos) lambasted the nouveau

riche for not only coming into wealth and power through brazenly dubious means but also exciting the envy of the poor through their ostentatious display of such wealth and thereby compelling many (the deprived) to take to robbery in order to share in the free-spending but unproductive life-style which is the new vogue. According to Chief Fani-Kayode: “This phenomenon was unknown in the 1930’s; 40’s; and early 50’s when integrity, honesty, intellectual achievement, class and style (not money) were the standards of society. The society cracked, the elite was subdued, the old standard was destroyed and a new class of unprincipled characters emerged, which increased from year to year up till today. All the old virtues were discredited; wealth, lies, and cheating became the accepted norms for the struggle to the top. Mediocrity became an asset and the nation’s path to degeneration commenced without reaching the heights of excellence most nations attain before falling.” Chief Remi Fani-Kayode, Q.C., SAN, CON died in October 1995. Professor Gambari is keenly aware of virtually all the grievances and fault lines in our social tapestry, political fabric and economic misalignments as well as financial misadventure combined with sheer folly and recklessness. They have been lingering for far too long. Now, we are hovering at the precipice. The new Chief of Staff has been presented with a unique opportunity to make a significant impact and epic contribution. We must join hands with him in the pursuit of the “Common Good” which simply translates as what is good and common (beneficial) to all of us without prejudice to race (tribe); gender; or religion. It all boils down to: What those with power must render to the

‘

Living is learning and through the process of accepting every challenge as real we may succeed in changing the perspectives of the Chief of Staff and eventually the lens and prism through which the President, with the rank of General in the Army, draws up his battle plans

J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services. Email: jkrandleintuk@gmail.com

Luxury in pandemic

he outbreak of Coronavirus pandemic has left the luxury industry globally gasping for breath. Despite the optimism that greeted the year 2020, the disease has forced the industry to recoil and put a stop to some remarkable growth projected for the year 2020 by analysts. The organisers of many global events planned for the year began to announce cancellation from the end of the first quarter. Some organisers who were still optimistic did not cancel. However, by the start of the second quarter, they realised they had no choice but to cancel their shows. First, the annual world-acclaimed jewellery and watch show, Baselworld, was postponed to January 2020. However, the January date was not to be as the spread of the virus peaked in the first quarter of 2020 globally. Michel Loris-Melikoff, managing director of Baselworld said in a statement that the postponement has become inevitable for health safety reasons following the ban of large-scale public and private events. Many fashion houses also cancelled previously scheduled fashion shows. Giorgio Armani postponed its April cruise show to November. Versace and Gucci each cancelled their US shows planned for May, while Prada has cancelled its May resort show, which was set to take place in Japan. In addition to fashion shows, many fashion weeks were cancelled, including those in Shanghai, Melbourne, Beijing, Seoul, and Tokyo. Luxury retailers especially reported mass store closure and millions in revenue shortfalls as a result of the disruption. Almost $54 billion

powerless. After all, all pain is personal. Indeed, all lives must have a meaning and purpose (even those who are trapped in the grief of survival in the camps meant for IDPs (Internally Displaced Persons). Living is learning and through the process of accepting every challenge as real we may succeed in changing the perspectives of the Chief of Staff and eventually the lens and prism through which the President, with the rank of General in the Army, draws up his battle plans. On the raging issue of structure and restructuring, we are entitled to remind ourselves of the encounter with Chief Ufot Ekaette, who was the Secretary to the Government of the Federation from 29th May 1999 to 28th May 2007 under General Olusegun Obasanjo. Incidentally, Chief Ekaette was in Payne’s House, King’s College, Lagos (same house as Professor Gambari, although they were not contemporaries). The current National Security Adviser to the President, the dapper Major-General Babagana Monguno (Rtd) was also in Payne’s House!! All it took to convince Chief Ekaette (and we do not have any reason to believe it would be any different with Professor Gambari) was to remind him that regardless of whether you were a science or arts student, in the Sixth Form at King’s College, the tutors – A.J. Miners and T. F. Doust (both of them ex-Oxford University) would insist on introducing you to philosophy. They enjoyed the active support of the Principal (Headmaster) P.H. Davies (ex-Oxford University).

LUXE Moment in market value was wiped out for retailers in the MSCI Europe Textiles, Apparel & Luxury Goods Index from when the market closed on January 17 until January 31. From January 17 to March 11, the MSCI Europe Textiles, Apparel & Luxury Goods fell 23%, with $152 billion in market value erased. Capri Holdings, which owns brands such as Versace, Jimmy Choo, and Michael Kors, said on February 5 that it expected “the situation in China” to cut full-year revenue by about $100 million. At the time, Capri had closed 150 of its stores in mainland China, with the remaining 75 operating with reduced hours. However, by the start of the third quarter, the retail situation in China has improved. More than 80 percent of shopping malls and supermarkets have reopened in Beijing, Shanghai, and Guangzhou. Nevertheless, the new concern for luxury was Italy. International retailers depend on Italy for the manufacturing of leather goods, textiles, and accessories. The headquarters of Prada, Gucci, and Armani are all located in Milan. China is an important market for luxury as Chinese customers accounted for about one-third of all luxury-goods purchases in 2018 and led the positive growth trend worldwide, according to a report by the consulting firm Bain & Co. As reported by Business of Fashion, Capri Holdings fell nearly 24 percent, while PhillipsVan Heusen, which owns Calvin Klein and Tommy Hilfiger, was down 22 percent. WWD also reports that in Europe, Salvatore Ferragamo fell 15.8 percent, Kering fell 12.3 percent, Moncler was down 11.4 percent, www.businessday.ng

Burberry Group fell 9.7 percent LVMH fell 8.7 percent and Herms International dropped 5.8 percent. WWD reported on Friday that LVMH CEO Bernard Arnault had a total of $7.7 billion over the previous day. Analysts are not exactly sure what the full impact of the pandemic on the luxury markets will be since the year has not ended. Business Insider reports that multiple consulting firms, including Boston Consulting Group and Bernstein, predicted in February that the luxury sector could lose 30 to 40 billion (up to $45 billion) in sales this year. Burberry said the impact to its bottom line would be worse than that caused by the Hong Kong protests, which cut sales in half in its last fiscal quarter. Kering CEO Francois-Henri Pinault said on an earnings call on February 12 that it was “impossible” to determine what the impact will be or “how fast it will recover.” Salvatore Ferragamo said it was unable to predict what impact COVID-19 will have on its results, as it reported a 4 percent drop in its 2019 core profit. LVMH chief Bernard Arnault and family lost $7.7 billion leaving them with a fortune of $82.5 billion, according to Forbes’ Real-Time Billionaires List. Besides, sales have been low for luxury retailers forcing them to cut staff strength. Selfridges announced 450 job cut after its rival Harrods cut 700 jobs earlier in July. The cuts have been blamed on physical distancing requirements and a lack of tourists’ visit to the United Kingdom. Selfridges online sales doubled during the lockdown and it plans to step

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FUNKE OSAE-BROWN up investment in online retail. The African market is not spared of the negative impact of the pandemic, especially for luxury retail. There has been a drastic cut in consumers’ spending power while producers of African luxury had to cut down on production and manpower. Since the year has not ended, the total loss to the contagion has not been fully computed. However, retailers are navigating through this challenge digitally. Although in time past, the luxury sector never really embraced the internet. The luxury industry has been cautious in its relationship with the World Wide Web since it was launched. One could say the industry was conservative in its approach to the use of the internet. Besides, the industry was fearful it would dilute its brand essence. This was a form of culture shock for the luxury industry that typically thinks long term and rarely acts under pressure. Luxury brands are more concerned about the sustainability of their brand reputation than anything else which has been the staying power behind their pricing. Funke is the publisher of The Luxury Reporter magazine. Funkeadetutu@gmail.com

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Life optimisation: LPV = MPL – MAL (1)

EIZU UWAOMA

or every minute spent in this world, an average of 256 births is recorded globally. On the other hand, an average of 107 deaths is recorded around the same minute. In between these births and deaths, there are so many waste and missed marks. The ultimate sin is to not live fully. I just got to learn that the word Sin is a Greek Word, (ἁμαρτία hamartia), “sin”, the original meaning is the failure, being in error, missing the mark, especially in spear throwing. The real sin of life doesn’t only converge for the purpose of making heaven and hell. The worst sin really is to miss your mark (purpose). Somebody once told me a non-religious definition of hell. He said “On your last day on earth, the person you became will meet the person you could have

become.” This article is about optimising life. It’s about variance, our Lifetime Performance Variance (LPV). It’s about bridging the gap between who you are choosing to be and the best you could have been. It’s about that capacity you can stretch to. Every individual is given a rare and peculiar gift which is simply indispensable; the gift of life. However, there is a need for each of us to fully maximise our lifespan before our final breath. Some do, some make the best of it, while most don’t. There is a popular norm that “life is not fair” and I agree with this. Life will take you to the middle of the river and leave you to decide whether to swim or drown. Our choices and decisions are what determine the theme of our entire life. Personally I feel that these three are the most personally horrible things in life: 1. Seeing your mom cry 2. Seeing the love of your life fall madly in love with someone else. 3. Failing to recognise opportunities right in front of you. In Nigeria, the number 3 happens every day. And it goes on. A legend, a classic story is told of a young man who wished to marry the farmer’s beautiful daughter. He went to the farmer to ask his permission. The farmer looked him over and responded, “Son, go stand out in that field and I’m going to release three bulls, one at a time. If you can catch the tail of any one of

the three bulls, then you can marry my daughter.” The young man stood in the pasture awaiting the first bull. The barn door opened and out ran the biggest, meanest-looking bull he had ever seen. He decided that one of the next bulls had to be a better choice than this one, so he ran over to the side and let the bull pass through the pasture out the back gate. The barn door opened again. Unbelievable! He had never seen anything so big and fierce in his life. It stood pawing the ground, grunting, slinging slobber as it eyed him. Whatever the next bull was like, it had to be a better choice than this one. He ran to the fence and let the bull pass through the pasture out the back gate. The door opened a third time. A smile came across his face. This was the weakest, scrawniest little bull he had ever seen. This one was his bull. As the bull came running by, he positioned himself just right and jumped at just the exact moment. He grabbed...but the bull had no tail! This is the same reason why so many persons are out there unachieved and unfulfilled, looking out for the most comfortable conditions. At times, “our comfort may not be in our comfort zones.” It’s safe to say that opportunities are not called upon but seized! It is not a myth that wealth and fulfilment lies in the mouth of a lion, it really does. Being daring, audacious and proactive is key to seizing op-

‘

Procrastination is a deadly narcotic that ruins opportunities. A man’s strength is not only in thinking fast but also acting fast. As the saying goes, a lifetime opportunity can only be seized within the lifetime of that opportunity. Whoever waits for a perfect time to accomplish a task may just wait to achieve nothing

portunities. Procrastination is a deadly narcotic that ruins opportunities. A man’s strength is not only in thinking fast but also acting fast. As the saying goes, a lifetime opportunity can only be seized within the lifetime of that opportunity. Whoever waits for a perfect time to accomplish a task may just wait to achieve nothing. It is only he that sees the future that can seize the future. While others are complaining about constant rain, someone is capitalising on it and providing umbrellas and rain boots for capital gains. While some are worried about the scorching sun, another person is thinking about providing chilled water and drinks to quench thirst. Life is not about situations, but about creating meanings out of those situations and experiences. When it comes to events in a time series, things like anniversaries and funerals mean nothing, the two most important days of a man’s life is: 1. The day he was born 2. The day he finds out the reason why he was born. Sadly, it is possible to live all through on earth without knowing number 2, most people don’t. In the words of Maya Angelou, “there is no greater agony than bearing an untold story inside you”. Uwaoma is a start-up, corporate restructuring and strategy consultant. contacteizu@gmail.com

The high impact director: Key attributes

t is acknowledged that the office of a Director is a “high calling”. It is oftentimes challenging and requires of the individual certain attributes to achieve effectiveness. Whilst each Board has its own peculiarities, being possessed of these attributes will enable the Director to perform optimally and contribute to Board effectiveness. These include the following: Strong interpersonal and communications skills: These key attributes are relevant in and out of the Boardroom. An effective Director should be able to relate well with his/her peers, be approachable and communicate clearly. Striking an appropriate balance between talking too much and too little at Board meetings is also critical to achieving effectiveness. An effective Director will be able to clearly articulate the key issues and provide critical insight. He/she will speak to the issues before the Board rather than “attack” the persons involved. Furthermore, whilst Executive Directors are required to engage with third parties as part of their day job, Non-Executive Directors will occasionally have to represent the company at meetings and in discussions with third parties including the media. Thus, the ability to clearly articulate the Company’s position even at short notice is desirable. Actively listening which is an integral component of communication is also a skill the high impact Director should have. Independent judgment: Managers are expected to be “team-players” and sometimes get knocked when they criticise a decision made by their peers or superiors. However, the Director’s role (whether as an Executive or NonExecutive) is to take a step back and critically assess the motivation and consequences of a decision, and where necessary, put forward a reasoned view – even if it is unpopular. A Director is expected to apply independent judge-

ment to all matters before the Board. This requires the Director to put the overall interest of the Company at the fore. Directors for the most part, find themselves being swayed by narrow or short-term considerations when faced with certain decisions. An independent mind-set will enable the Director to take a stand when he/she is of the view that the company’s long term future is not being prioritised, no matter the consequences. Many people have said that this virtue is aspirational. Perhaps so, but it is certainly attainable and will set aside the high impact Director from the rest of the pack. Analytical mind-set: Directors are often presented with problems that have a number of potential solutions, and the ability to analyse, sift through data and make sense of it to find the appropriate solution is an invaluable personal trait. A Director should ask the right questions to elicit responses that will help the Board make sense of matters for consideration. Not sweating the small things: Strategic thinking is a key attribute of an effective Director as Directors are not expected to waste time and effort on the small stuff. Sometimes in a bid to demonstrate their competence and area of expertise – or simply show off - they tend to distract the Board’s attention and dwell on less critical issues. The ability to stay focused on those matters strictly within the Board’s purview is a desirable attribute. For NonExecutive Directors, this also means respecting the professional and technical competencies of the Executive Directors and not seeking to micro-manage. Maintaining the right balance between meddling and oversight is essential. Staying power: Companies are bound to face pressure from regulators, short-term focused shareholders, the media and competition, particularly during periods of perceived poor performance, or significant structural changes. www.businessday.ng

Many Directors have had to deal with pressure of more frequent meetings and other Board related activities since the onset of the global pandemic. An effective Director should have the strength of character to stay calm in the face of pressure to provide the much needed stability to the Board and the Company. Respect for alternative viewpoints: There are “many ways to skin a cat” or execute a given strategy. At the height of Board effectiveness is diversity of skill set, experience and perspectives. A Director should recognise that the overall interest of the organisation will be better served if multiple perspectives are considered before arriving at a decision on any issue before the Board. The Director should not attempt to force his/her viewpoint on the Board on the oft wrong assumption that it is the way to go. This also requires appropriate listening skills – a sincere attempt to actually “hear” what another Director has to say as opposed to waiting to counter that position. It is for good reason that the composition of the Board is diverse and the Board should enjoy the benefit of its diversity by ensuring that all views around the table are heard. Integrity: A significant attribute of an effective Director is integrity. Integrity connotes sound ethical values, transparency, accountability, consistency, commitment and courage to set an appropriate “tone at the top”. Transparency and accountability that ensure all actions pass the test of public scrutiny. Enough time and attention committed to making a good job of it and courage to ask the right questions – or to walk away if that becomes necessary. In addition to personal attributes, certain experiential factors also contribute to the effectiveness of a Director. These include: Global exposure: Companies have embraced regional and global expansion which comes

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Bisi Adeyemi with unique challenges. A Director that brings to the Board an international perspective and exposure to global benchmarks is an asset to the Board. An effective Director is one who keeps abreast of global issues that would have direct or remote implications for the business. Industry expertise: The Board is enriched by a Director that can contribute knowledge of the particular industry when evaluating issues and decisions before the Board. This need not be the industry in which the Company is operating as expertise in a sector in which the Company necessarily interfaces with is always desirable. Financial knowledge: Whilst not required to be a financial expert or an Accountant, the ability to interpret financial reports and evaluate the financial implications of an action or decision is definitely an advantage. Directors should not shy away from seeking help in this regard. Bringing it all together, it is important for Directors to always be reminded that the leadership and direction they provide to the enterprise is invaluable and it behoves upon them to continuously self-develop to ensure impactful stewardship. Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng

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From the Soviet Union to China, Buhari is enamoured of statist regimes global Perspectives

OLU FASAN

resident Muhammadu Buhari was once fond of the Soviet Union, as military head of state between 1984 and 1985, he practised the Soviet-style command economy and political authoritarianism. Like Soviet leaders did, he dealt ruthlessly with those he saw as “enemies” of the state, such as economic “saboteurs”, as he termed Fela Kuti, whom he jailed for five years in 1984 for “currency smuggling” The Soviet regime was underpinned by statism, a belief in the absolute power of the state; a belief that only the state can act in the best interests of citizens, and, so, should control economic and political activities “on behalf of the people”. Thus, statist regimes are, typically, not democratic, transparent or accountable. The values of democracy, transparency and accountability were, indeed, anathema to the Soviet Union as they were to General Buhari, a student of Soviet ideology. However something happened years after General Buhari was overthrown in a coup in 1985, the Soviet Union collapse – in 1991. Communism and autocracy, the economic and political systems that underpinned the Soviet regime, were discredited. Buhari said it was this seismic event that triggered his conversion to democracy. As he put it in one interview, “after the collapse of the Soviet Union, I became convinced that democracy was the correct form of government.” But what exactly about the collapse of the Soviet Union turned Buhari into a converted democrat? Was it because autocracy or dictatorship as a form of government failed? Was it because communism or socialism as an economic system failed? What “principles of democracy” did Buhari really embrace? Was it just the principle of

elections? Or do they include the principles of transparency, accountability, rule of law and human rights? Surely, these are also principles of democracy, not just elections. Why am I asking these questions? Well, because, apart from his belief in elections, President Buhari does not seem to share the other core values of democracy: transparency, accountability, respect for the rule of law and regard for human rights. And given his instinctive preference for dirigisme or state intervention, he does not embrace a key element of liberal democracy, namely, open market and free trade, which Adam Smith called a “system of natural liberty”. But perhaps the strongest pointer to Buhari’s ideological orientation is the powerful nations with which he is most closely aligned. As the saying goes, “Show me your friend and I will tell you who you are.” So, which major nations is Buhari most fond of today? Well, they are China and Russia, not Western powers or blocs like the US or the EU. Take Russia first, as Western nations hesitate to sell arms to Nigeria to fight the Boko Haram insurgency because of their concerns about human rights abuses, Buhari has turned to Russia, which would not ask questions about human rights violations. Of course, Russia itself is a major violator of the rule of law and human rights. For instance, in 2014, Russia illegally annexed Crimea, and recently President Putin controversially secured a referendum vote to stay in power until 2036, despite having been in power for two decades. But Buhari, who participated actively in the Russia-Africa summit in Russia last year, said recently that he would “inject fresh energy into Russia-Nigeria relations”. Of course, Buhari is drawn to Russia because, as I said earlier, it could sell lethal weapons to Nigeria without asking questions about the violations of human rights and the rule of law. And, in turn, Nigeria would say nothing about human rights violations in Russia or about Russia’s undermining of the sovereign integrity of its weaker neighbours. So, Russia-Nigeria relations would be devoid of true democratic or liberal values! Which brings us to China. To be sure, it is with China that Ni-

geria has formed the closest strategic relationship, albeit based on debt dependency. In April 2016, Buhari took six state governors, nine ministers and a horde of officials on a week visit to China. They returned with an offer of a $6bn infrastructure loan and a currency swap deal. Truth is, Nigeria’s relations with China, under President Buhari, is underpinned by China’s debt-dependent finance. Nigeria is excessively reliant on China for easy infrastructure loans. Again, the reason is simple. Because the West, including multilateral lenders, such as the World Bank and the IMF, as well as private investors, would not invest in Nigeria’s infrastructures without demanding reforms and good governance, Nigeria has turned to China that would ask no questions about political and economic governance. Of course, China is an utterly statist regime, where virtually every company is state-owned or subject to the overbearing influence of the Communist Party, and where democracy, rule of law, human rights, accountability and transparency are non-existent, as we are seeing with China’s instigated national security law and human rights violations in Hong Kong. Of course, like President Xi Jinping, President Buhari believes that national security should trump the rule of law and human rights. So, Nigeria, under Buhari, is not only China’s client state economically, it is also its political and ideological ally, with shared belief is statism. In May last year, President Buhari lavished praise on China. When the chairman of China Railway Construction Corporation, Fenjian Chen, visited him at the State House, Buhari said: “We are very grateful to China for the genuine efforts and strides to rebuild our infrastructure.” In July this year, while receiving the outgoing Chinese Ambassador to Nigeria, Zhou Pingjian, Buhari praised China again. “Please convey our appreciation to President Xi Jinping”, he said, “for the contribution of China towards reversing the infrastructure deficit we suffer in the areas of rail, roads, airports and power.” But does President Buhari believe that China’s debt-laden “rebuilding” of Nigeria’s infrastructure is driven by altruistic motives? Is China funding infrastructure projects in Nigeria

‘

But perhaps the strongest pointer to Buhari’s ideological orientation is the powerful nations with which he is most closely aligned. As the saying goes, “Show me your friend and I will tell you who you are”

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

How to optimise your salary

n my last article, we discussed the myth mania that drives many of our personal finance decisions today. As promised, I will now show you surefire ways to prepare for salary week with principles that work. There is one questionable principle many of us apply only this when it comes to our hard-earned income - the principle that money is simply for spending. And where does that get us apart from just running pillar to post? I’m going to show you how you can get the best out of your salary every month. It all starts with the 50:30:20 rule. Calculate your essentials for the month - 50 Unless you want to keep being stranded every month, you should first calculate your basic needs like housing (though we don’t typically pay rent monthly, you are advised to save up for it monthly), transport, electricity and feeding. Put aside no more than 50 percent of your total income for these expenses. Your bills won’t stop coming so don’t stop planning

for them. If you have a family that depends on you, it is even more imperative that you sort out this section before anything else. Put something towards your financial future - 20 Aim to put about 20 percent of your income towards savings, investments, education, health and insurance and other future plans. You should do this next, so that you can also grow your money or at the very least protect yourself with it. If you’re new to investing, try something simple such as money market funds or T-bills - they are low risk and short term investments which will earn you good interest over time. If you’re also wondering about health insurance, have a conversation with your employer to see what options they offer. It’s typically a payment you make once a year so if you must, find out about it and start putting money aside monthly towards the next year. And so it goes for other future financial goals that make up 20 percent of your monthly income. www.businessday.ng

without a “catch”? And if there is a catch, what is it? Well, the first point is that Chinese loans only leave recipient countries with unsustainable debts and, often, economically unviable projects. Secondly, the real beneficiary of Chinese loans is China itself. This is because when China gives loans, it ties them to projects that must be executed by Chinese companies, with supply and service contracts that go to Chinese firms and with labour that is predominantly Chinese. Yun Sun, a Chinese academic, said that China’s infrastructure loans are designed to create jobs for Chinese firms and Chinese people abroad. Essentially, it is Chinese loans for Chinese firms, products, services, and workers. In a recent tweet, Kingsley Moghalu made the same point, he argued that “there is no competitive bidding for the projects financed by China ‘loans’”, adding: “We have no independence in how we use such borrowed funds”. His verdict? “This is a rip-off. This is not loan”! Sadly, the Buhari government does not care about the terms of China’s loans and doesn’t want Nigerians to care either. Last week, the House of Representatives queried the transport minister, Rotimi Amaechi, over the terms of a $500bn Chinese infrastructure loan to Nigeria. But Amaechi asked the legislators to stop asking questions about the loan. Why? Well, he said: “If the Chinese government have the feeling that you don’t like the way they lend you money, they may withdraw their loan offers.” It was shocking! Put simply, Amaechi was saying Nigeria must accept the terms of China’s loans willy-nilly. Truth is, Buhari needs arms and infrastructure finance but won’t do the right thing – rule of law, human rights and market reforms – to get them in the right way. So, he turns to Russia and China, two authoritarian states with which he shares a statist worldview. But a strategic relationship based on debt dependency and illiberal beliefs won’t serve Nigeria well.

Money Brain with JR

Enjoy yourself with the rest - 30 If you’ve done right by steps 1 and 2, give yourself permission to enjoy yourself with the rest. The remaining 30 percent of your income can go to discretionary things like entertainment, clothing, small travelling, restaurants, data, personal care and giving. After all, we didn’t come to this life to simply suffer. As our wallets grow fatter, chances are that our tastes grow more expensive. Watch it...make sure it’s not the other way round where you acquire taste for the finer things first, before searching for ways to improve your disposable income, to keep up - A sure recipe for disaster.

Do yourself a favour to make it a part of your financial planning routine and thank me later. You can also write to me if you can’t wait to stories@reach.africa. I’m always happy to help.

Notes on budgeting I believe that anyone can still live a beautiful life no matter their financial circumstances. This belief translates strongly in the app that my team and I built to help people do this mental chore automatically. It’s called REACH. If I had half the information that’s available from the app to us right now when I was starting out, I’d be one lucky millennial.

Kanu holds an MBA from Stanford University, a master’s in Journalism from NYU and a bachelor’s in Engineering from Calvin College. His career has included time at Konga, Amazon, The United Nations, Esquire, CNN, and Black Enterprise magazine. Armed with a strong conviction that you can live a great life no matter how much money you have, JR founded REACH Technologies, www. reach.africa. His company builds software to help young people and companies to manage and grow their money.

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Monday 24 August 2020

BUSINESS DAY

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

TETFund and Nigeria’s paradigm shift in research funding

editor Patrick Atuanya

Research outcomes must demonstrate a path and solution to the country’s problems

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

Bashir Ibrahim Hassan

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

his year, the world is confronted with a pandemic that is causing even more havoc on the global economy. Though novel, the emergence of COVID-19 reinforces some of the very old messages we have known. For instance, global economic progress and productivity is anchored on research, innovation, and finding solutions to problems. It is in this context that we welcome the recent review of the National Research Fund (NRF) domiciled with the Tertiary Education Trust Fund (TETFund) to N7.5 billion for 2020 from an initial N5 billion in 2019. Though may not help immediately, it shows that an agency of the federal government understands the importance of research to solving problems. The amount is the highest so far. In 2011 it was N3 billion, N1 billion in 2015, N5 billion in 2019, and now N7.5 billion in 2020. The federal government also approved the establishment of six medical simulation research and clinical training facilities in six colleges of medicine in each geopolitical zone of the country. This is a bold step to support research and development programmes in Nigeria. The recent increases in research funding also shows that TETFund is finally fulfilling a key mandate for which it was set up. TETfund, established in 2011 to disburse,

manage, and monitor education tax to government-owned tertiary institutions, was formed as a product of the Education Tax Act of 1993. Prior to its establishment, government-owned tertiary institutions were poorly funded. The scheme was therefore designed to improve on the management of funds disbursed to these institutions and encourage research and development. While we welcome the increase in research funding through TETFund, this is not sufficient. Government research funding, now led by TETFund, should be the minimum as we encourage all government Ministries, Departments and Agencies (MDAs) to underpin their search for solutions to myriads of Nigerian problems and across sectors through serious, sustained, and sustainable research approaches. Unlike many countries that spend upwards of 5 – 10 percent of their Gross Domestic Product (GDP) on research and development, Nigeria is estimated to spend less than 0.5 percent, with the federal government allocating 0.02 percent of its annual budget. This is not only one of the lowest in the world, but very embarrassing too, especially following the pledge by President Muhammadu Buhari in 2015 to increase investment in research, science and technology. No country can progress without investment in research and development and human capital all of which are central to economic success. It is in this regard that we align

with the move by TETfund to advocate the establishment by law of a National Research and Development Foundation to ensure a coordinated national framework for the sustenance and implementation of Research and Development and to promote an effective interface between universities, government and the private sector especially the industrial sub-sector of the economy. With the accelerated growth of a new global economy and the urgent focus on socio-economic issues, there is a need for a national re-calibration and re-sensitisation of operations and policies targeted at sustainable innovative research and development operations. Research benefits are enormous. Thanks to cutting-edge research, innovative new treatments are emerging every day especially in the health, science and technology sectors. Due to such breakthroughs; lives are becoming more enjoyable and living conditions are improving. Research also helps to boost a nation’s economy. In recent decades, research initiatives have led to the launch of numerous commercial start-ups ventures that are generating jobs, revenue and stronger communities. Such research sparks a virtuous cycle with considerable momentum, good for our nation’s long-term health and economic wellbeing. Hence, in disbursing the approved N7.5 billion, it is important that research must be conducted in line

with Nigeria’s unique challenges with the purpose of proffering solutions. Also, the FG must be ready to adopt results from these researches to make informed policies. On the flip side is the ugly incidence of fraud and corruption that has been associated with some research funds released to some agencies in the past. There is also the sad tale of some Nigerian professors not being capable of getting grants for research because of poor research proposals. Despite the growing number of Nigerian professors, said to be about 8000, it is worrisome that many of them have low capacity to write quality research proposals or possess the comparative international capacity to undertake quality research towards solving Nigeria’s problems. This perhaps accounts for the non-utilisation of local and international research grants. A situation where greater concentration is placed on publication of research outcomes rather than focusing on addressing myriad challenges starring the country in the face is unacceptable. In conclusion, we encourage TETFund to ensure that the process of awarding the research grants do not follow the typical Nigerian outcome of monies expended without tangible results. Given the funding across science, technology, social science and innovation, the minimum expectation of Nigerians is to see research outcomes that demonstrate a path and solution to the country’s many problems.

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

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

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COMPANIES&MARKETS The Companies and Allied Matters Act 2020: What you need to know UDO UDOMA & BELO-OSAGIE

Part 1 - small companies, single director and single-member companies

he Companies and Allied Matters Act (Chapter C20) Laws of the Federation of Nigeria 2004 (“CAMA 1990”) was initially made law in Nigeria in 1990 as a decree of the military government. For thirty years, there were no significant amendments to the CAMA 1990 and so Nigerian companies had to, essentially, rely on a 30-year old law to govern the way businesses operate in our dynamic and evolving global community. However, this all changed on Friday the 7th of August 2020, when President Muhammadu Buhari gave his assent to the Companies and Allied Matters Act 2020 (“CAMA 2020”). In the course of a 12-part series, Udo Udoma & BeloOsagie will provide a review of the provisions of the CAMA 2020, highlighting changes that have been introduced into the body of Nigerian company law by this groundbreaking legislation. More companies will qualify as small companies and will benefit from additional incentives

Under the CAMA 1990, a small company was regarded as a small company if it: •is a private company limited by shares; •has no foreign shareholders; •its directors hold not less than 51% of its shares; •none of its members is a government, a government agent or nominee; •has a turnover of not more than N 2 million; and •has a net asset value of not more than N 1 million. Under the CAMA 2020, the above criteria is retained with two significant amendments: •the turnover of a small company should not exceed N120 million; and •its net asset value should not exceed N 60 million. What this means is that many companies that previously could not qualify as small companies will qualify under the CAMA 2020, and therefore enjoy the concessions granted to small companies under the Act. Incentives and concessions for small companies Under the CAMA 1990,

one of the benefits of being a small company was that there was a reduced penalty for failure to lay and deliver financial statements as required by the Act. In addition, small companies were entitled to deliver a modified form of financial statements to the Corporate Affairs Commission. That was about it! Under the CAMA 2020, however, small companies continue to enjoy these benefits but are now entitled to several more benefits and concessions that are aimed at easing the administrative burden imposed on micro, small and medium enterprises (MSMEs), and reducing the costs that were associated with complying with their statutory obligations. These additional benefits are: •small companies and single shareholder companies do not have to hold annual general meetings. •small companies can have a single director. •small companies do not have to have a company secretary. •a company seal will be

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optional (this will apply to all Nigerian companies). •small companies do not have to file audited financial statements annually (this will also apply to companies that have not commenced business since incorporation even if they are not small companies). Single-member companies Under the CAMA 2020, it will be possible for oneperson to form a private company. Such companies will be exempt from the provisions of the Act that relate to quorum for meetings and adjournment of meetings. With this innovation, Nigerian company law has, like other jurisdictions such as England, made it possible for entrepreneurs operating as sole proprietors to register a limited liability company for their business rather than being limited to registering a business name, which was the only option available for sole proprietors under the CAMA 1990. Single-director companies Small companies are permitted under the CAMA 2020 to have a single director.

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feature

COVID-19: Protect and save lives, wear a mask today Atinuke Akande-Alegbe and Gabriel Oke

ince the COVID-19 outbreak, the Presidential Task Force on COVID-19 (PTFCOVID-19) instituted several public health measures to slow the spread of the virus in Nigeria. The discussion on the wearing of face masks or face coverings has varied across many countries. The Nigeria Centre for Disease Control (NCDC) was quite swift in recommending the use of face masks in addition to physical, in April while lockdowns were in place. In South Africa, the wearing of masks was made compulsory when their partial lockdown was lifted in May, while countries like the USA and UK have dithered in putting in place mandates for the wearing of face masks. It would have been expected that the initial face mask recommendations in Nigeria would have led to behaviour modifications, embedding the habit of face mask wearing. However, as the federal government eased the lockdown measures, and as the economy gradually reopened, there is has been poor adherence to the wearing of face masks in public, and in situations where physical distancing may be difficult. To date, COVID-19 has claimed nearly a thousand lives in Nigeria and the number of confirmed cases continues to rise. In the absence of a vaccine, it is important that members of the public continue to adhere to the public health advisories, maintaining physical distance, avoiding large gatherings, washing hands frequently and wearing face masks in public to reduce the the spread of the virus. These new habits now have to be part of our new norm. Why should you wear a mask? According to the Digital Health Lab of Meedan, a non-

Chikwe Ihekweazu, Director General of the Nigeria Centre for Disease Control.

profit social technology company, the virus that causes COVID-19 spreads primarily through respiratory droplets released when people speak, cough, sneeze or in some cases, sing. This further emphasisies the importance of face masks especially in settings where people cannot be 6ft or 2 metres apart. This is particularly important as studies have shown that the majority of the people who have COVID-19 will show mild or no symptoms of the virus. These asymptomatic people are still capable of unknowingly spreading the virus to others. They are risking the lives of people who may develop severe complications, especially people in vulnerable groups who are above the age of 60 or have underlying health conditions. These individuals account for the largest share of COVID-19 deaths. It is important for Nigerians to understand that a mask offers the wearer and others protection, as when people are speaking or coughing and not wearing a face mask, they are exposing others nearby to www.businessday.ng

respiratory droplet that could be carrying the virus and if a mask was worn, then exposure would have been reduced. In line with the guidance given, the wearing of face masks alone will not protect against COVID-19, but must be combined with physical distancing, handwashing, respiratory hygiene, cleaning and disinfecting frequently touched surfaces and other advice from the Nigeria Centre for Disease Control (NCDC). In addition, masks with valves or vents are not recommended for use, as they allow for respiratory droplets from the wearer to be expelled from the mask. Should you wear a face shield or mask? The compulsory use of masks to prevent the spread of COVID-19 led to the rise in popularity of face shields, leading to a trend in the use of face shields in place of masks. However, there is currently no evidence on the effectiveness of face shields in preventing COVID-19 when used alone. If you must use a face shield, use it in combination with a face mask, for effective protection.

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You should not completely trust a face shield to protect you from the virus. How should you care for and handle your mask? Cloth masks if made properly, are a convenient and affordable substitute to medical masks because they are reusable. It is however important that cloth masks are properly washed and stored. Before wearing a clean mask, wash your hands with soap and running water or rub an alcohol-based hand sanitiser. After each use, wash the mask immediately with soap and allow to dry completely in the sun. Before re-use, iron the mask. Also, your mask should cover the nose and mouth completely, ensuring it fits with no open gaps. It is wrong to wear your mask below the chin or nose as it may not be serving its purpose in that regard. #WorldMaskWeek The just-concluded World Mask Week (August 7–14), with all its fanfare aimed to inspire a global movement to encourage people across the @Businessdayng

world to wear masks in public to help curb the spread of COVID-19. Nigeria joined the global campaign to sensitise people on the importance of wearing masks to slow down the spread of COVID-19 using #MaskOnNaija. Beyond the week-long movement, Nigerians need to understand that until a COVID-19 vaccine that can stop the spread of the virus is produced, wearing a mask is one of the best lines of defence to protect ourselves and our loved ones from the virus. Despite the advisories, adherence to recommendation for the wearing of face masks remains low. There is a perception that people might not fully appreciate the risk they are exposing themselves and others too. It is easy to understand that seven months into the virus, people want to return back to their previous lives and might not want a constant reminder that a virus is still lurking. While hand washing and physical distancing might not be as hard to put into practice, the wearing of a face mask is more intrusive and so has been met with greater resistance. By wearing a mask, you are taking responsibility and sending a powerful message of solidarity to those around you that, ‘we are all in this together’ just as the Director of the World Health Organization (WHO) said at the beginning of the outbreak,“How soon we can go back to our normal lives, will be determined by how much we wear masks correctly, wash our hands and maintain physical distance”. It is in all our enlightened best interest to each play our part in stopping the spread of COVID-19 by wearing a face mask.

Atinuke Akande-Alegbe is Communications Manager (atinuke@nigeriahealthwatch.com), and Gabriel Oke is the Programme Coordinator (gabriel@nigeriahealthwatch. com), both at Nigeria Health Watch

Monday 24 August 2020

BUSINESS DAY

real sector watch

Bumper season for flour millers as COVID-19 fuels growth Gbemi Faminu

igerian flour millers are enjoying a bumper period in terms of revenue and profit, growing huge margins in three months to June 2020. Their growth is driven by COVID-19 which has spurred patronage for food and flour products such as bread. BusinessDay’s analysis of three major flour millers listed on the Nigerian Stock Exchange (NSE), which are Flour Mills of Nigeria, Honey Well and Northern Nigeria Flour Mills Plc, revealed that the firms recorded a total revenue of N181.9 billion between April and June as against the N153 billion realised in the corresponding period of 2019. There have been huge sales of flour and food, driven by increased consumption and food donations to poor households by governments, NGOs and wealthy individuals. Flour is used in the production of bread, which is a staple food among Nigerians. Flour millers also produce noodles and pasta, which are enjoyed by under-30 Ni-

gerians making up over 70 percent of the population, analysts say. “The lockdown period gave room for essential products which were very necessary at that time, especially the food and healthcare subsectors,” Ambrose Oruche, acting director general, Manufacturers Association of Nigeria (MAN), said. Flour Mills of Nigeria (FMN), which wields the largest market share of 32 percent according to

a KPMG Wheat Sector Report, realised a 15 percent increase in its revenue to N154 billion in April to June 2020, from N134 billion reported in the corresponding period of 2019. The firm also made an increase of 56 percent in its gross profit to N25 billion in 2020, from N16 billion recorded in 2019. FMN also recorded an increase of 17 percent in its profit after tax, earning N4.97 billion in 2020, from N4.23 billion

in the same period of 2019. Similarly, Northern Nigeria Flour Mills recorded a significant revenue increase of 73 percent, earning N1.9 billion in 2020 from N1.1 billion in 2019. Its gross profit grew by 8 percent to N177 million in 2020, from N164 million in 2019. Also, the firm’s profit after tax grew by 580 percent to N68 million in 2020 from N10 million in 2019. Honeywell also grew its revenue by 44 percent to N26 million

in 2020, from the N18 billion reported in the same period of 2019. Its gross profit grew by 21 percent to N4.1 billion in the period under review, from the N3.4 billion realised in 2019. However, its profit after tax declined by 58 percent to N45 billion in 2020 from N108 billion recorded in 2019 According to the financials of FMN, the positive trend is expected to continue to the end of the year. “Similar to the performance over the last few quarters, our business has been able to sustain the strong performance in spite of the increasingly difficult terrain and uncertainties,” the financials say. FMN management remains optimistic that with continued efforts in sales and marketing activities geared towards boosting top-line while keeping costs under control, the company should be able to sustain the good performance for the remaining period. Millers and analysts are hopeful for better results till the end of the year. However, some industries like the brewery are not enjoying the same results, with bars, night clubs and event centres shut down on COVID-19 concerns.

Boosting local manufacturing through improved patronage Gbemi Faminu

eyond the provision of basic amenities in order to support local manufacturing, patronage of locally produced goods and services is key to encouraging local manufacturers who have, overtime, complained of poor sales and unsold investory. In the Manufacturers CEOs Confidence Index (MCCI) conducted by the Manufacturers Association of Nigeria (MAN) in the first quarter of 2020, 43 percent of CEOs of manufacturing companies said the level of unsold manufactured products had not reduced in the previous three months while 31 percent said that the Executive Order 003, which mandates the patronage of locally produced goods by government agencies, had not been fully adhered to. An Aba-based footwear manufacturer turned PPE producer, Johnson Obasi, CEO, Johnsfrank Global Resources Nigeria Limited, in a telephone interview with BusinessDay, said that despite the scarcity of imported PPE, doctors prefer to have foreign PPE than those produced locally.

“One of the major challenges of the PPE business here is that the medical personnel prefer to use the imported/ foreign type of PPE despite its scarcity and high price. Some of them even tell people not to use locally produced face masks, saying it is not in line with the WHO recommendation,” Obasi added.

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Experts say Nigerians manufacturers must produce to global standards in order to be competitive. However, many locally-made products are exported to the United States, China and the European Union. Local manufacturers complain of high production costs which they see as disincentives. The 2019 half-year Executive

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Summary compiled by the manufacturers association of Nigeria (MAN) shows that the level of unsold goods has been on the rise over the past three years. In 2017, unsold manufacturing goods stood at N321.12 billion. This increased in 2018 by 17 percent to N375.12 billion. It further rose by 7 percent to N402.42 billion

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in 2019. In the 2nd half of 2019, the report revealed some factors responsible for poor patronage. “High inventory of unsold finished manufactured goods in the period was ascribed to low consumption, smuggling, and counterfeiting of Nigerian manufactured products,” the report stated. A further breakdown of the unsold locally manufactured items revealed that basic metal, iron and steel suffered losses the most, followed by the chemical and pharmaceutical sector. The least affected were the food, beverage and tobacco sector. Vincent Nwani, investment and business consultant, said to BusinessDay that manufacturers encounter challenges before, during and after production, adding that poor sales volume actually hurt them. “It is difficult to manufacture goods locally. In addition, poor patronage and dependence on imported goods contributes to the inherent problem. There should be an increase in the patronage of local goods especially by the government in order to boost the country’s manufacturing industry,” Nwani said.

Monday 24 August 2020

BUSINESS DAY

interview ‘Demand for second citizenship has increased since onset of COVID-19’ Mohammed Asaria is the founder, managing director and member of the Board of Range Developments, the largest and most successful hospitality developer in Eastern Caribbean engaged in the Citizenship by Investment sphere. In this interview with BusinessDay, Mohammed gives more insight into what it will take investors to have dual citizenship. Excerpt:

or the benefit of readers not familiar with citizenship by investment, how do the programmes work? Citizenship by Investment is increasingly popular with discerning investors from West Africa. The concept is very simple: in return for a real estate investment or a contribution to the government, an investor is afforded the opportunity to apply for citizenship of a country. If successful, they become eligible for many of the benefits that follow, including visa free travel to many worldwide destinations, access to a tax efficient jurisdiction, and much more. Once an investor has obtained their Grenada citizenship, if they wish they may apply for an E2 visa for the US. This allows citizens of Grenada to live in the US. Grenada is the only citizenship by investment jurisdiction in the Caribbean that extends this benefit to its economic citizens. What have been the recent trends for demand for second citizenship, especially from developing countries? Has the pandemic played any role in this? Since the onset of the Covid-19 pandemic, the demand for second citizenship programmes has increased. While the outlook remains uncertain, High Net Worth individuals, many of whom are nervous about capital controls, higher taxation and even social unrest, are embracing the options that a second citizenship gives them. Citizenship seekers are no longer just looking for mobility, but also as a hedge against some of these challenges. This explains why Grenada has become so topical, as it provides an avenue to relocate to the United States quickly – in just six weeks with an E2 visa – by establishing a business in the US. Can you take us through Range Developments track-record and successes you have had in helping immigrant investors secure second citizenship and US residency? Range Developments is the leading developer of luxury hotels under citizenship by investment projects in the Caribbean. Our track record speaks for itself; we work with worldrenowned brands such as Park Hyatt St. Kitts (opened in 2017), the Cabrits Resort & Spa Kempinski Dominica (open in 2019) and, in Grenada, Six Senses La Sagesse. The completion of Six Senses La Sagesse, Grenada is due in Q4 2022. Our hotels have featured widely and won awards in the leading media – including CNN, Bloomberg, New York Times, Caribbean Journal, and Vogue. Our clients come from many different regions, including India, China, Russia, the Middle East, South Africa, and Nigeria among others. We have assisted more than 1,600 investors so far with more than 4,000 passports issued to their families. In conjunction with leading US law firms, we have helped scores of investors to reside in the United States. It is not just the investors who benefit: Range Developments has created more than 2,300 jobs across various islands of the Caribbean, supporting

investors must first invest $220,000 (plus government fees based on the composition of the family) in a government-approved real-estate project, such as Six Senses La Sagesse, Grenada and apply for citizenship of Grenada. The level of government fees depends on the number of family members the main applicant is planning to include into a citizenship application. So, for a family of four, there will be an additional $80,000 of government fees. The investor must hold the investment for five years. Thereafter they can resell the investment to another investor who can also apply for citizenship of Grenada. The original investor keeps their citizenship in perpetuity. In addition, an investor will also receive a profit from the operations of the hotel. The projected yield is from 2% to 4% once the hotel opens.

Mohammed Asaria

local communities and businesses. Why Grenada? How does citizenship of the Caribbean country guarantee US residency? Citizenship of Grenada provides the opportunity to migrate to the United States. Grenadian citizenship also provides investors with the widest visa-free travel benefits among the comparable options, with more than 130 countries including the UK, Germany, France, China and Russia. Moreover, it is also the only Caribbean country whose citizens are eligible for the United States E2 visa. To obtain an E2 visa, an investor is required to make a substantial Investment in the United States by creating their own business. This term is not defined in the relevant regulations but generally an investment in the range of $100,000 to $300,000 is required. This is an investment in the applicant’s own business, and a business plan will need to be submitted as part of the US E2 visa application. The investor must retain the ability to direct and develop the business. Again, this is not a defined term, which means more than a mere board role, however does not require a day-to-day involvement. It does ensure the investor is in control of his own destiny and the profit of the venture is under the control of the investor – this is where an “E2 investment” differs greatly to the EB5 passive investment structure. What are the benefits of the E2 Visa? Free education in US public schools and more affordable, in-state tuition costs at US universities. Spouses can work anywhere in the US. The Grenada E2 visa can be renewed indefinitely, if the E2 business maintains operations. E2 visa holders can spend up to 120 days in the US without being subject to worldwide income taxation. E2 visa holders can sponsor specialized employees from their nation (non-family members) to work in their E2 business. www.businessday.ng

Your third citizenship by investment project Six Senses La Sagesse is underway. Can you share what the project is about and how it is relevant to Nigerians seeking second citizenship and US residency? The Six Senses will be Range Development’s third development in the Caribbean. It will comprise 100 rooms spread over 28 acres. Six Senses has been named as the number one hotel brand globally for the past three years by Travel & Leisure magazine. Its construction is funded in part through Citizenship by investment. Demand for the Grenada offering has been buoyed by the recent changes in US immigration law, especially the exponential price increases to the EB5 Programme. Moreover, due to the recent suspension of L1, H1B visas for all foreigners and a temporary ban of EB5 visas to Nigerians by the US government, one of the only ways to move to the US is through applying for an E2 visa. This is where Grenada is unique. Aside from the main applicant, an E2 applicant’s spouse and children below the age of 21 may also be granted E2 dependent visas. The spouse can obtain authorisation to work anywhere in the US under the E2 dependent visa, however, the main applicant can only work in the E2 approved business. It is possible for two related families to co-own an E2 Business jointly. For example, two brothers could co-own one E2 business. This would be a very cost-effective immigration solution especially given Grenada’s generous definition of dependents. To be eligible for an E2 visa, the applicant should be a citizen of the country that has an E2 treaty with the USA. Nigeria doesn’t have an E2 treaty with the US, which is why Grenada is such a useful stepping stone in this regard. What are the cost implications of second citizenship in Grenada and what are the eligibility criteria? To secure Grenadian citizenship,

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Is citizenship transferable to applicants’ offspring and to what extent are spouses and extended family members covered? The main applicant can include an unlimited number of dependents – applicants’ spouse, parents and children below the age of 30 and unmarried siblings over 18 years old. Citizenship is passed down through generations. What is the minimum holding period for foreign buyers of Grenada properties to enjoy citizenship? There is a five-year holding period. After this period, an investor can resell his investment to any subsequent investor interested in second citizenship. The original investor keeps his passport. Can you give a sense of the minimum required investment in the US by Grenada passport holders in exchange for residency? The recommended capital for an E2 investment is between $100,000 and $300,000. Investors can establish their own business or acquire an existing business, even a franchise. To be and remain eligible for an E2, an investor should own 50% or more of their business, and be able to develop and direct it. Does Range Development apply for the E2 US Visa on behalf of interested clients or is that part of the journey left for immigrant investors to take care of themselves? Range Developments recommends US immigration lawyers who can assist with the E2 application process. Overall, how long does the process from application for second citizenship to residency in US typically take? The application for Grenada citizenship takes up to four months. The subsequent E2 application takes from two to three months. What are the most important non-financial considerations you advise prospective clients to make when seeking secondcitizenship and US residency? Benefits of Grenada citizenship in@Businessdayng

clude: Security for the investor and his/her family in times of social unrest in emerging market economies. A safety net. Visa free travel to more than 140 counties, including the UK, Schengen countries, China, Russian, to name a few. Capital mobility and preservation, as well as, a tax efficient jurisdiction. The benefits of the E2 Visa: Ability to invest and reside in the United State through an investment in one’s own business. Free education in US public schools below the age of 18 and more affordable, in-state tuition costs at US universities. Spouses can work anywhere in the US. The Grenada E2 visa can be renewed indefinitely, if the E2 business maintains operations. E2 visa holders can spend up to 120 days in the US without being subject to worldwide income taxation. E2 visa holders can sponsor specialized employees from their nation (non-family members) to work in their E2 business. In line with the previous question, what are the commonest mistakes applicants make and how can that be avoided? The focus of any investor should be to pick a credible enterprise that has been designed for completion rather than merely to attract citizenship capital. Range Developments is the only developer of citizenship by investment programs in the Caribbean that has kept its promises and completed two luxury 5-star hotels, with a third underway. This is unique in the region. An investor should recognise the differences between citizenship by investment programmes. Ideally, they should consult a credible advisor to conduct a thorough due diligence on their behalf. For instance, Grenada is the only Caribbean CBI country with an E2 treaty with the USA. The US/Grenada Treaty of Trade and Commerce provides for a five-year maximum length, multiple entries with an unlimited number of renewals. This is the most advantageous of any country. By comparison, Montenegro, which also has a CBI programme, only provides its nationals with the opportunity to obtain an E2 visa for one year, which must be renewed every year. Some CBI countries have a different approach to addition of children. In St. Lucia, for example, one is not permitted to add children after five years. How can interested Nigerian applicants reach you? Potential investors can either email info@rangedevelopments.com or phone +971 55 887 4216. What are your thoughts on obtaining second citizenship as an investment decision? Citizenship by investment in Grenada provides an amazing opportunity for investors and their families to secure their future and to migrate and reside in the USA on an E2 visa. The benefits include security, mobility, and the ability to structure wealth and assets due to a favourable tax regime. Applicants are not required to visit or reside in Grenada to obtain citizenship by investment.

Monday 24 August 2020

BUSINESS DAY

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Monday 24 August 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

Covid-19 and education planning child to the most expensive school; it is not necessarily the best for your child. The most suitable choice largely depends on your own unique family circumstances and goals. This will be determined by factors such as your income and savings, your child’s age and ability, how soon you will need the funds, and the amount you wish to save. Here are some options: The yields on short-term money market instruments even though the returns are assured, cannot meet longterm goals. Equities come with greater risk, but have been shown to produce far greater long-term results. Experts suggest that a high level of equity is necessary to counter the high rate of education inflation as well as the effects of any currency devaluation. Be careful and be conscious of your risk tolerance and time horizon. If you have a time horizon of less than five years, you will have to rely primarily on fixed income instruments, even though they are likely to offer a lower rate of return. They offer guaranteed returns and safety of capital. In the short term, these are important factors to consider. Think long term. The stock market is generally regarded as a strong option for long-term investing; stocks have historically outperformed other investments over the long term. In the short-term, they can be volatile. If your plan is to put money away for your child for say, 10 years and more, then it is well worth considering investing di-

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‘

It is important to teach economic responsibility at a young age and such income can supplement whatever you are able to provide for their personal expenses

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he COVID-19 pandemic has created huge challenges for parents, their children, schools and their teachers. There is hardly anyone whose income has not been affected by the current situation with so many suffering a significant drop in income and much uncertainty ahead. The stakeholders each face different challenges that impact all. Many school proprietors worry about the impact of parents being forced to withdraw their children. Many private schools are providing remote teaching and support programmes for their pupils, trying to ensure a quality continuation of their pupils’ education. Many have had to keep their facilities open albeit with skeletal staff to maintain and secure the premises at significant cost. As incomes drop and jobs continue to be challenged, families naturally expect some reduction in fees. On the other hand, schools are keen to retain staff to ensure that the institution remains a well-resourced and thriving community that can continue seamlessly once the crisis is over. But no one knows when things will return to any semblance of normalcy and this essential community has been hit very hard. Schools must thus strike a balance between supporting their parents and securing their own futures. The big question for parents is, how will I fund my child’s education? For the vast majority of parents, this ranks as one of the largest expenses you will ever face with cost increases of between 10 to 15 per cent each year. The key to funding education is to start early so that you can benefit from a key ingredient of investing; time. Time gives your money an opportunity to gain from the power of compounding. Start saving towards your child’s educa-

tion once you plan to have them; even before they are born. Time matters. Paying school fees on an ad-hoc basis without any advance planning will cause huge financial strain, unless you already have significant income and savings. An early start protects you from the shock of a pandemic or other catastrophe. A delayed start not only yields a much weaker result but can also jeopardise other financial goals such as your home ownership or retirement goals. When your child is young, you have the benefit of time to select investments that offer the benefits of compounding and the prospect of higher returns that have the potential to outpace inflation and increases in education costs. If you only start investing for your child’s education in your 40s, you are likely to fall short of the required amount and be forced to dip into retirement savings to fill the gap. This is a precarious situation that comes with huge risk. You are responsible for your own retirement and cannot afford to assume that your children will be willing and able to fund your retirement in the comfort that you expect or indeed deserve. An early start in educational planning and funding will not be enough. How to invest is a critical question. What are your options? Once you have an idea of the type of educational future you would like for your child, do not feel pressured to send your

rectly in a professionally managed portfolio of blue chip stocks or an equity mutual fund. Mutual funds are pooled investments in a wide range of shares. They offer diversification and are easy to liquidate when you need cash. Your fund choice will typically depend on factors such as your child’s age, your risk tolerance, and your ultimate financial goals. As your child gets closer to starting college, two to three years before they are due to start, the less risk you can afford to take because preservation of capital takes precedence over earning a high rate

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of return. If you leave the money in the stock market until just before you need it for school fees, you may be forced to sell stocks at a loss. It makes sense to begin to shift your money into more conservative investments that reduce your exposure to market volatility; lower-risk bonds and money market accounts present a safer option. Carefully considered real estate investing is an outstanding asset class that over time provides three main sources of funding: you can sell the property, earn rental income to pay school fees and other costs, or borrow against a property. If you own property that has appreciated, you may be eligible to borrow a percentage of your equity, which is the difference between the market value of your property and the outstanding mortgage loan. Avoid going into debt to fund your child’s education unless there is no other option, if it is interest free or where you have the capacity to service the loan comfortably. Once your portfolio is in place, review it at least once a year to check whether you are still on target to meet your goals. Remember, it is not just about tuition fees, it is also about living and travel expenses. Periodically, one must check whether your portfolio is on track to meet the goal. You cannot afford to let a downturn in the stock market jeopardise your child’s college education. Do not overlook the possibilities for scholarships and grants as a source of funding particularly if your child is able to attract such opportunities. From their earliest years, you ought to have identified in them, a unique skill or talent in a particular area – technology, music, drama, sports, or they may be exceptionally gifted academically, thereby making them eligible to compete for a scholarship or a grant. Have you considered an educational savings plan? Leading insurance companies in Nigeria offer educational plans that can help parents avoid the sudden and huge expenses that come from inadequate planning. An education protection plan ensures the continuation of a child’s education should @Businessdayng

their sponsor become critically ill, disabled or die. An educational trust is simply a trust established with the sole purpose of providing funding for education. At the appropriate time, distributions or withdrawals can be made from the trust to fund the education of beneficiaries. Some private schools allow you to pre-pay school fees several years in advance. This is tempting, as you lock in costs and do not have to worry about the rising costs in the future. By tying down your capital, you forfeit the opportunity to find more productive outlets for your funds. It is important to teach economic responsibility at a young age and such income can supplement whatever you are able to provide for their personal expenses. Encourage your children to earn and contribute at least a part of their expenses. This will make them gain financial independence. As with any other investment goals, time is of the utmost importance. The sooner you start the better. The key is to start early, contribute regularly, and invest wisely. Education is one of the greatest legacies you can leave your child. Make planning for it a priority. Instagram and Twitter: @ mmwithnimi, Facebook and Google+: ‘Money Matters with Nimi’. www. moneymatterswithnimi. com, or send us an email info@ moneymatterswithnimi. com Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@ moneymatterswithnimi Website: www. moneymatterswithnimi. com Twitter: @MMWITHNIMI Instagram: @ MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 24 August 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Eurozone economic rebound is losing steam, surveys suggest Surprise slowdown in pace of expansion comes after several months of improving sentiment hospitalisations or deaths. European leaders say they are determined to avoid renewed national lockdowns that froze large parts of the economy earlier this year.

Martin Arnold

he eurozone’s economic rebound from the coronavirus pandemic is losing steam after several months of improvement, according to a widely watched survey of business activity. The IHS Markit flash composite purchasing managers’ index for the bloc fell to 51.6 in August, down from 54.9 in July. Although a reading above the 50 mark indicates a majority of businesses reported an expansion in activity, the reading undershot the expectations of most economists, who on average had expected activity to plateau, according to a Reuters poll. The disappointing data hit the euro in early trading on Friday and called into question the strength of Europe’s third-quarter economic recovery. After a historic contraction of more than 15 per cent in the first two quarters of this year, economists had until recently expected the eurozone economy to rebound strongly in the third quarter. However, the recent resurgence of coronavirus infections in many European countries to levels not seen since May has triggered fresh quarantine requirements and localised lockdowns, raising doubts over the sustainability of the recovery. “The recovery was undermined by signs of rising virus cases in various parts of the euro area, with renewed restrictions impacting the service sector in particular,” said Andrew Harker, economics director at IHS Markit, but he noted that “manufacturers contin-

Employees on an automobile assembly line in a factory in Flins, France © Bloomberg

ued to post marked increases in output and new orders”. He said company orders continued to rise in August, but the pace of growth slowed, while “companies in the eurozone continued to reduce their staffing levels” to reflect muted underlying demand and business confidence. Activity in both of Europe’s two largest economies fell below expectations, the sentiment surveys suggested. France’s flash composite PMI fell from 57.3 in July to 51.7 in August, as business activity was hit by an unexpected contraction in the French manufacturing sector.

Meanwhile in Germany, it was the services sector that underwhelmed, offsetting a continued rebound in manufacturing and dragging the German composite index down from 55.3 in July to 53.7 in August. “In France, we are particularly worried about the pace of job cutting having increased again in August,” said Moritz Degler, economist at Oxford Economics. “In Germany, while the rate of job cuts eased, both services and manufacturing employment continued to fall.” The euro fell about 0.4 per cent against the dollar after the news

broke. Stock markets, however, shrugged off the bad news and Europe’s Stoxx 600 index was up 0.5 per cent in midday trading. Christoph Weil, an economist at Commerzbank, said the data “confirm[ed] our assessment that there will be no V-shaped recovery in the euro area”. “Recent restrictions in response to rising infection rates are further delaying the recovery. We do not expect real GDP to return to pre-crisis levels until 2022,” he said. Many of the new infections have been among young people and so far there has not been a big surge in

German chancellor Angela Merkel said on Thursday: “We want to avoid closing borders again at any cost, but that assumes that we act in coordination.” French president Emmanuel Macron said in an interview with Paris Match: “We cannot shut down the country, because the collateral damage of confinement is considerable.” In the French manufacturing sector a declining proportion of businesses said activity had improved compared with the previous month, delivering a PMI reading of 49, a threemonth low and down from 52.4 in July. The PMI index for French services fell 5.4 points to 51.9, while in Germany the PMI for services fell 4.8 points to 50.8. German manufacturing put in a relatively strong performance — its PMI reading was at a 23-month high of 53, up from 51 in July — although IHS Markit said continued cuts to factory employee numbers showed “there is still ground to make up and businesses remain under pressure to cut costs”. “Overall, today’s data suggest that the recovery is already starting to fade, at least outside the German manufacturing sector,” said Jessica Hinds, an economist at Capital Economics. “With no sign that the resurgence in virus cases has been stamped out, there is a clear risk that it stalls or even goes into reverse.”

Biden accepts nomination with pledge to ‘restore soul of America’ Democratic former vice-president attacks Trump’s handling of coronavirus as ‘worst performance of any nation’ Demetri Sevastopulo

oe Biden accepted the Democratic presidential nomination on Thursday night with a pledge to restore the “soul of America” and erase the “darkness” that had descended on the country under Donald Trump’s leadership. Standing in front of a phalanx of American flags in an empty hall in his home state of Delaware, Mr Biden lambasted Mr Trump over his handling of the pandemic, his response to racism and his willingness to embrace dictators abroad while undermining democracy at home. Mr Biden, who at 77 would be the oldest US president in history if elected, closed his party’s convention with a forceful address that undercut the Trump campaign’s characterisation of him as “sleepy Joe” or “slow Joe” — someone too old and doddery to lead the country. “The current president has cloaked America in darkness for much too long. Too much anger. Too much fear. Too much division,” Mr Biden said. “If you entrust me with the presidency, I will draw on

Joe Biden said that while he was a ‘Democratic candidate’ he would govern as an ‘American president’ © REUTERS

the best of us, not the worst. I will be an ally of the light, not of the darkness.” In a bid to broaden his appeal beyond the party and attract Republicans disillusioned with Mr Trump, he said that while he was standing as a “Democratic candidate” he would govern as an “American president”. Mr Biden drew on his own bereavement — his first wife and daughter died in a car crash and his son of cancer — and linked it to the collective suffering of Americans www.businessday.ng

during a pandemic that has claimed more than 170,000 lives. “I know that deep black hole that opens up in your chest. But I’ve learned . . . the best way through pain and loss and grief is to find purpose,” he said. Larry Sabato, a University of Virginia politics professor, said Mr Biden had delivered the “best speech” of his career, although he cautioned that one strong night was no guarantee of success in November.

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“Americans don’t expect to have Cicero as president. But his presentation blew apart the negative attacks on his supposed mental state,” Mr Sabato said. “The speech positioned Biden well for the battle ahead, but a summer speech never cinches a fall election.” We can choose the path of becoming angrier, less hopeful, and more divided. Or we can choose a different path . . . of hope and light Joe Biden Echoing the attacks Democrats have made throughout their convention against Mr Trump’s handling of coronavirus, Mr Biden said the US response to the pandemic been “the worst performance of any nation on earth”. Mr Biden also hit out at Mr Trump’s foreign policy, saying he was too close to dictators in hostile countries and referencing recent reports that the president had failed to act after being briefed on a Russian plot to pay Taliban-linked militants a bounty to kill US troops in Afghanistan. He said: “Under President Biden, America will not turn a blind eye to Russian bounties on the heads of American soldiers. @Businessdayng

Nor will I put up with foreign interference in our most sacred democratic exercise — voting.” The former senator who served as vice-president under Barack Obama for eight years added: “Our current president has failed in his most basic duty to the nation. He’s failed to protect us. He’s failed to protect America, and, my fellow Americans, that is unforgivable.” Mr Biden said he would unleash a national plan to deal with the pandemic and would “take the muzzle off our experts” to ensure that the public received accurate information about the situation. He also pledged to introduce a national mandate to wear a mask. In a tweet following Mr Biden’s speech, Mr Trump said: “In 47 years, Joe did none of the things of which he now speaks. He will never change, just words!” Mr Biden’s speech capped a remarkable rebound that saw him emerge from a big Democratic field to become the challenger to Mr Trump after his campaign was almost derailed following a dismal start in Iowa and New Hampshire.

Monday 24 August 2020

BUSINESS DAY

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Monday 24 August 2020

BUSINESS DAY

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Monday 24 August 2020

BUSINESS DAY

Start-Up Digest

In association with

Barbara Ndugbu: Entrepreneur with passion for creating beautiful cakes Josephine Okojie

pecial occasions and events deserve special treats, especially with personalised cakes. This is where Barbara Ndugbu, founder and chief executive officer of Oven Secret Limited comes to the rescue. Barbara creates beautiful cakes for clients that want to celebrate their birthdays, weddings, and graduations or mark special occasions in their lives. The engineer-turnedentrepreneur was inspired to establish Oven Secret in 2015 owing to her inability to secure a well-paying job that matched her qualifications. Her desire to be financially independent and passion for cake-making also inspired her to set up the business. The young entrepreneur took up training in baking and decoration to enhance her skills. “I have always wanted to be independent, so centering on my love for the art of catering, I decided to attend cake training institute in the

UK,” she says. Barbara says her initial start-up capital was from her savings. “My initial start-up capital was from my savings— my monthly stipend during my master’s degree program,” she says. Since its establishment, Oven Secret has emerged as one of the leading cake and confectionery firms in Lagos metropolitan. “Since the launch of my business in 2015, it has grown tremendously,” Barbara says. “From taking orders from only family and friends, I now service about 45 orders a month, and I have trained over 500 people and motivated some to start their businesses,” the young entrepreneur says. She has leveraged social media platforms to grow her business. “I took advantage of social media platforms such as Instagram, Twitter, and Facebook to gain media presence that boosted followership, engagement, and sales,” she further says. The entrepreneur currently has seven full-time employees. She notes that her busi-

Barbara Ndugbu

ness plans to acquire a larger workspace and train more students in the art of baking and decoration in the short run. Also, the business plans to increase its product line as orders from clients continue to grow. She says the COVID-19 pandemic has affected her

business negatively as it has caused a drop in sales owing to the shut-down of event centers and restrictions on large gatherings. Similarly, the recent surge in the prices of inputs for baking has also affected the business. The business has resorted to virtual training for stu-

dents interested in learning the art of baking and aggressive marketing of its small-sized cakes to survive the difficult moment of the COVID-19 pandemic. “We aggressively advertised and marketed smaller products which were in higher demand and also substituted highly-priced raw materials with less expensive ones while maintaining the quality of products,” she explains. “During the lockdown, we retained only three private delivery personnel to handle all our cake deliveries within Lagos,” she discloses. She says her business has not got any form of palliative from the government despite operating in an industry that has been badly hit by the virus outbreak. In evaluating the catering and confectionary industry, she says that the industry has become very competitive and saturated as six in every 10 entrepreneurs want to delve into the catering business. Speaking on the challenges confronting the business, she says finding the right employees and retain-

ing them remains a big problem in the industry. She adds that inadequate access to finance is also another major challenge. Barbara urges the government to provide adequate access to loans, grants, and support for small businesses in the country. She also calls for the creation of schools for skills acquisition centres across the country, while reducing multiple taxes levied on small businesses. In 2019, Barbara was listed as one of the Forbes Africa 120 game-changers. She is seen as one of the most successful under-30 female entrepreneurs in Nigeria. On her advice to other entrepreneurs, she says, “Have solid business plans, prepare for financial challenges, be frugal, remember you are a start-up and don’t be afraid to ask for help.” “Build a team that shares the same vision as you. The structure is the most important aspect of your business. Challenge yourself, take the risk, have a vision, know your customer, learn from complaints and ask for feedback,” she advises.

local market and capacity to compete at the global level. The COVID-19 pandemic has caused a lot of business distortion in Nigeria especially for SMEs. Osoniyi’s business is not left out as the pandemic has had an impact on his business. “For us that make outfits for people that are supposed to go out to work, different events and occasions, the majority are at home. So the number of outfits we produce monthly has reduced a little.

But we are optimistic that things will fall back in place fully,” Osoniyi said. With the fashion industry becoming more saturated, he hopes that in the next 10years, his business will be on a bigger scale in different aspects. The young entrepreneur advises aspiring and promising entrepreneurs in Nigeria to be focused, innovative and flexible. “Start small, grow big, be focused, flexible, and innovative and enjoy the growth as it comes.”

Osoniyi: Building successful unisex fashion business BUNMI BAILEY

lujide Osoniyi is the creative director of Jidehaute, a Lagos-based fashion line outfit that produces unisex corporate outfits, traditional wear, fancy joggers and footwear for all occasions. Osoniyi, who has a background in graphics design from Yaba College of Technology state, started his business

after graduation in 2013/14. “My inspiration was my high taste of dressing good and classy. Before I started, I would customise round necks with paper stencils and paint brushes, then do pencil sketch cloths and all. From there, I reasoned that I would grow bigger into these ideas and stand out differently out of the normal outfit we saw around,” Osoniyi said. With N80,000, Osoniyi was able to get his business regis-

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Olujide Osoniyi

tered, procure materials, pay for workspace and a photoshoot section to enable him to start his business. “With the increasing number of clients I have built in this business, I have been able to get a studio space with some numbers of machines and the necessary equipment in it. And I also have an in-house designer with three apprentices,” he disclosed. On challenges faced in his business, he cites structural issues, lack of a sustainable

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Monday 24 August 2020

Harvard Business Review

BUSINESS DAY

ManagementDigest

How to plan child care in uncertain times Avni Patel Thompson

WORK VS. LIFE hen the outbreak first began to spread in the United States, the foundation of every working family’s careful balance of school and child care was pulled out from under them. Many people are still wondering how they’re going to manage the challenges of parenting in pandemic times. Some are navigating suboptimal options for schooling, while others are weighing the risks of sending a child back to day care or the costs of hiring a babysitter. As the founder and CEO of a company that builds software to help working parents manage the responsibilities of running a family, I understand how households are planning around the uncertainty and the lack of child care options. I’ve found it’s important that parents build plans that work for their specific needs but that can also be adapted to a range of situations. Here’s how you can do that in three steps: 1. START WITH YOUR PRIORITIES: Make a list of the near-

term priorities in your family’s life. Then pick the three that you want and need to protect most. For instance, a single parent living close to high-risk grandparents may prioritize his extended family’s health, his job, and his family’s social and emotional health. Families with core child care needs will have specific priorities — such as education, socializing and careers, among others — that guide the child care options they’ll explore. 2. IDENTIFY PLAN OP-

TIONS FOR EACH PRIORITY: After you’ve established your family’s top priorities, come up with three sets of plans — plan A, plan B and plan C — for how you’ll approach each priority. Plan A is your first-choice approach, plan B is its backup and plan C is your third-tier choice. For instance, if the health of your extended family is a priority, your options may range from including grandparents within your bubble, choosing remote learning or moving to

be closer to family. 3. PUT YOUR PLAN INTO ACTION: After you’ve identified your plan options, it’s time to enlist the help of others and create actionable weekly items. Communicate the high-level points of your plan to people in your life — like your nanny or helpful neighbors. Use this guide to go over five main areas: — SCHEDULE REVIEW: Identify the meetings and high-priority items that you

must put into the calendar. — CHILD CARE SHIFTS: Decide who handles pickup and drop-offs for school and day care, or who covers remote learning and child care shifts throughout the week. — MEAL PLAN: Jot down a quick list of simple lunches and dinners that you can prepare quickly during the week. — KEY REMINDERS: Talk through anything remaining that you need to set reminders for. — PRIORITY HOUSEHOLD TO-DOS: Pick no more than five chores to assign and add to the schedule. — BACKUP PLANNING: Talk about the trickiest parts of the week and how plan B or plan C will kick in if plan A fails. Remember that each day can and will bring unexpected challenges. The goal, therefore, is not to plan everything perfectly, but to build a foundation that you and your partner feel good about.

Avni Patel Thompson is the founder and CEO of Modern Village. ; (Art note: A photo and an illustration accompany this article.)

6 ways a crisis can help you cultivate a growth mindset Susan J. Ashford, Maxim Sytch and Lindred L. Greer CONNECTING

isruptive experiences like the current pandemic can often bring opportunities for growth. Research has shown that crises can prompt people to voice new ideas and subvert the status quo. For example, when the pandemic forced an insurance company we advise to go fully remote, the challenge of virtual work prompted several teams to explore better ways of tracking sales progress. Field employees proposed using new metrics for tracking customer leads and found new ways to factor the metrics into their analyses. Leadership liked the new system so much that it’s now being scaled nationally. Such a mindset can serve you and your team well during the ongoing crisis. Below, we offer six suggestions for ways managers can nurture a culture of growth: — BE PATIENT: Companies are still learning how to adapt work practices to a remote environment. As a leader, you

should be patient with yourself and your people. Remember to recognize people’s efforts, even if outcomes don’t live up yet to your expectations. Try to focus on the valuable insights you’re learning from the transition to virtual work. — LIVE BY AND TEACH THE GROWTH MINDSET: Microsoft’s CEO Satya Nadella spent his first months on the job teaching people the value of a “learn it all” culture . He also led by example, sharing monthly videos in which he reviewed lessons he recently learned and prompted groups across the company to do the same. Consider doing something similar on a smaller scale. For example, you might dedicate part of a weekly or monthly team meeting to discussion of what team members have learned during the crisis so far. — SEND THE RIGHT SIGNALS: Both what you say and how you act send messages to workers about the importance of developing a growth mindset. You can signal to your team that growth is a priority by informally rewarding progress made, asking about the lessons they’ve learned and celebrating recovery from mistakes as much as star performance. www.businessday.ng

— RESET FEEDBACK EXPECTATIONS AND ESTABLISHED PRACTICES: The shift to remote work provides an excuse to reset your team’s expectations around giving and receiving constructive feedback. If you’re a team leader, modeling openness to feedback will make it easier for your colleagues to accept feedback themselves. Now is also a good time to encourage your team to improve established practices, like how teams coordinate. — GET TO KNOW YOUR

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TEAMMATES BETTER: Working remotely, we’re getting to know our teammates in new ways. We see their workspaces, their children and their pets. Before the pandemic, disruptions like a cat jumping onto a teammate’s laptop during a virtual meeting were typically embarrassing. Now, he said, people just laugh those types of things off. Studies suggest that being less worried about social evaluation and embarrassment stimulates experimentation and creativity, both of which are key to growth. @Businessdayng

While the COVID-19 crisis presents a variety of new challenges, it also creates new opportunities for leaders and their teams to cultivate a more expansive growth mindset. Though it won’t be easy, the right mindset can help teams both weather the crisis and come out of it stronger.

Susan J. Ashford, Maxim Sytch and Lindred L. Greer are professors at the University of Michigan.; (Art note: A photo and an illustration accompany this article.)

Monday 24 August 2020

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

NASCON shares drop by 50 percent in 2 years as efficiency levels deteriorate

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

BALA and IFEANYI JOHN

ASCON Allied Industries has seen its share price collapse by around 50 percent from N20 on August 21 2018 to N10.1 on August 21 2020 as the company’s efficiency levels continue to deteriorate across several financial ratios including terms of its return on assets, return on equity and cost to income ratio. Investors are often criticized for overreacting to short term company outperformance or underperformance but appear to have been “spot on” in terms of investors’ reaction to the slip up in NASCON fundamental performance. In the last two years, NASCON return on average asset has dropped from 15.52 percent in H1 2018 to 8.05 percent in H1 2020, while return on average equity dropped from 44 percent in H1 2018 to almost 24.96 percent in H1 2020 according to EUA-NASCON financial analysis report. Return on average assets (ROAA) and return on average equity (ROAE) are indicators used to assess the profitability of a firm’s assets, and it is most often used by analysts as a means to gauge financial performance. The ratios show how well a firm’s assets and equity are being used to generate profits for shareholders. A significant decline in these ratios make the companies less attractive to investors which triggers a selloff like we have witnessed in the share price in the last two years. The company’s return on tangible assets also fell from as high as 45.26 percent in H1 2018 to 18.14 percent in H1 2020, while its cost to income ratio more than doubled from 30.94 percent in H1 2018 to 65.11 percent in H1 2020 according to EUA-NASCON financial analysis report. Return on tangible assets measures the return on a business’ real assets. For industrial companies who hold a significant portion of their assets in

P.E

tangible state, it is important for the company to generate high returns from these assets through a high utilization rate. The higher the return on tangible assets, the more attractive the company is to investors. The cost to income ratio shows a company’s costs in relation to its income. The higher the cost to income ratio, the less profitable the company will become overtime. Although a company like NASCON has continued to generate higher profit despite the rise in its cost to income ratio, the rate of growth in profitability has slowed down considerably due to rising cost overhead. The cost profile of the company rose significantly this year as distribution cost jumped more than 550 percent from N421.2m in H1 2019 to as high as N2.74b in H1 2020 after the company spent about N2.3b on external haulage and depreciation and impairment of trucks this year which was not recorded in the past year. As the company’s efficiency

level halved in the last two years, so did its stock price performance. Investors will be watching closely in the second half of the year to see if there is any improvement in the efficiency performance of the company to determine which direction the stock will likely move. “Lower efficiency levels only point in one direction for stocks and that is down. If NASCON fails to control cost growth in the near term investors won’t only lose profitability, they may also see their net worth decline considerably as the stock price tanks further,” said Titobi Okunoba, head of equity research at EUA Intelligence Ltd, an investment advisory firm based in Lagos. Investors may swoop on shares on the expectation that the gradual reopening of the business after months of debacle caused by the coronavirus pandemic that forced government to impose lockdowns. With inflation in a double digit region, consumer confidence will continue to be damped, a double whammy for operators in the con-

sumer goods industry. Last week, the National Bureau of Statistics (NBS) released job report that showed unemployment rate spiked to 27.10 percent in the second quarter of 2020, from 23.70 percent in the third quarter of 2018. What this means is that Nigerians are getting poorer and they will be reluctant to open their purse strings. On top of that, analysts have warned that the Covid-19 crisis could tip the already fragile economy into a recession. The International Monetary Fund (IMF) has announced that the Nigerian economy would witness a deeper contraction of 5.4 percent and not the 3.4 percent it projected in April 2020. Nascon Allied and peer rivals are walking on rotten ice as the bleak outlook for the economy, combined with a myriad of challenges bedeviling the industry could trigger further sell off by investors who had been dumping shares..

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run. Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month. Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week. “Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early. According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

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

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

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Monday 24 August 2020

BUSINESS DAY

News Abiru retires as Polaris Bank MD/CEO... Continued from page 1

successfully completed his second two-year tenure at the helm of the bank. In an emotion-laden farewell message to the staff of the bank, Abiru explained that having served meritoriously in the banking industry for nearly three decades, he had resolved to retire to enable him contribute his quota in other areas of the society.

L-R: Oladapo Oshinusi, chairman; Deji Alli, executive director/CEO; Benson Ajayi, executive director; Kola Ashiru-Balogun, executive director, and Ugochukwu Ndubuisi, executive director, all of Mixta Africa, at the 12th annual general meeting of the company in Lagos. Pic by Pius Okeosisi

As T-Bills lose shine in Nigeria, there is... Continued from page 1

return (when you factor in inflation rate of 12.82%) of

76 percent. In the last one year, the socalled “New Gold ETF,” which is managed by the investment arm of South African bank, ABSA Group, and listed in South Africa and Nigeria, has surged 96 percent. Okonjiisoneofseveralinvestors that are awaking to the gold ETF. Data from the Securities Exchange Commission (SEC) show that the net asset value, a gauge of investor appetite, of the New Gold ETF in Nigeria is up 24-fold to N19 billion as at August 14 from only N769 million at the start of the year. The New Gold ETF, which is like investing in gold but electronically, rose 8.1 percent FridaytocloseatN9,980,according to Bloomberg data, having hit a peak of N10,000 on July 28. Investors are piling into the asset class in search of inflation-beating returns and as a way to hedge against the economic uncertainty. Gold ETFs globally are riding high on the COVID19-induced economic decline, lower interest rates and a struggling US dollar that

have sparked a rush to invest in safe haven assets like gold. The outlook for Gold prices would however determine how long the rally in goldbacked ETFs can last and whether now is the best time to invest, according to Wale Okunrinboye, head of investment research at Lagos-based pension fund manager, Sigma Pensions Limited. “The Gold ETF has been on a tear because of the rally in gold prices,” Okunrinboye said. “The outlook for the ETF will depend largely on whether gold still has legs to run and if the US economy can recover quickly,” Okunrinboye, whose firm invested in the gold ETF, said. Gold prices are up more than 30 percent since the start of the year and hit an all-time high of $2,089 per ounce on August 7. It traded lower at $1,939 as at August 21. Optimistic forecasts for the yellow metal range from $3,000 to $5,000, while some bearish estimates suggest the metal is already at its peak. The rapid rise of the gold ETF is synonymous to the rise of treasury bills in 2017, after Nigerians piled into the riskfree asset that was yielding as

Local authorities taking driver’s seat... Continued from page 2

immediately. It should be a graduated process. The TCN desperately needs money,” the senior advocate of Nigeria and former attorney general and commissioner for justice, Lagos State, said. Paragraphs 14 and 15 of Part II of the Constitution of the Federal Republic of Nigeria as amended put electricity generation, transmission and distribution on the concurrent legislative list. This means state governments have no hindrance to the extent they can go in matters of electricity supply. “The concept of energy federalism is worth explor-

ing and implementing. I do not think everyone should be on the grid,” Ayodele Oni, energy partner at Bloomfield Law Practice, said, noting, “In areas where coal may work, and I understand the particular problems with coal, but in areas where it is in abundance, it should be used. Each state should capitalise on cheap, reliable sources of energy in its environment.” Economic activities in Nigeria are unevenly distributed and experts have said depending on the concentration of economic activities, energy infrastructure and supply is www.businessday.ng

much as 21 percent at its peak. Investment in T-bills more than tripled at the time, before a gradual easing of interest rates saw the asset class fall out of favour for Nigerians seeking high return. The yields on one-year treasury bills are now at around 3 percent, about 1000 basis points below inflation rate. The gold ETF is not yet as popular as what Treasury Bills were in their hay-days but there hass been a silent meteoric rise. From accounting for just 14.48 percent of total ETFs in January 2020, the gold ETF now accounts for 83 percent. “The gold ETF carries about the highest return you can get in Nigeria and that is why there has been a surge in demand,” a Lagos-based stockbroker, who says clients are now taking unusual interest in the ETF, said. “Knowledge of the ETF is certainly rising but still above the head of many Nigerians,” the stockbroker said. Nigerians are not the only ones piling into gold-backed assets. Investors and hedge fund managers around the world are queuing up to buy gold in the futures and ETF markets, pushing the price of the precious metal higher. Last week, there were reports of some Turkish nation-

als considering selling even their houses to buy gold in anticipation of a rally. In India, the National Stock Exchange in July cancelled trades in a gold-backed ETF run by Axis Mutual Fund following a freak 6,500 percent spike in price. The negative outlook for the global economy in 2020 due to the COVID-19 pandemic will support gold prices throughout the year, according to analysts. The asset was also recently canvassed by the NSE as a rewarding investment option that helps investors store the value of their money and hedge against economic uncertainties. “We recognise opportunities in the alternative investment asset space for the Nigerian Capital Market and are working assiduously with stakeholders to provide more insight into these instruments,” Jude Chiemeka, head of Trading Business Division at the NSE, said. Michael Mgawaba, head of Exchange Traded Products (ETP) Business, ABSA Regional Operations, said Gold was not only defensive, but it could also be used for risk management and delivers impressive results.

to be designed to meet local requirements. These experts say there is no valid argument that justifies thinking every part Nigeria needs the same amount of infrastructure at the same time. The South East and North-Eastern parts of Nigeria require different degrees of infrastructure based on the level of economic activities and one TCN is not able to do this. “We need to take the monopoly of transmission out of government hands, break it up and commercialise it. The framers of Nigeria’s Constitution envisioned a situation where electricity will be distributed and controlled at many local levels,”

Shashore noted. The implication of paragraphs 14 and 15 cited is that there will be state NERCs and smaller territories of distribution. This will help cover the country faster than waiting for everyone to get to the same level at the same time. National security asset has been used in the past to justify the government’s grip on Nigeria’s electricity transmission network, but power sector operators and policy formulators say this is no longer tenable. If Nigeria’s telephone backbone could be privatised, they say, electricity transmission infrastructure cannot more sensitive.

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Sharing his scorecard while serving as the CEO of the bank, Abiru noted: “It gives me great pleasure to say that, with the support of the Board, Executive Management and all of you, we have delivered on the mandate given to us by the Central Bank of Nigeria upon assumption of office in 2016.” Going down memory lane, he reminded staff of the bank’s poor state before he assumed office in 2016 as the group managing director of the erstwhile Skye Bank. He noted that all prudential ratios were out of compliance with regulatory requirements, capital was negative, and the loan book was mostly delinquent, while liquidity faced deposit attrition. Furthermore, the IT infrastructure was dilapidated and employee morale was low, resulting in erosion of public confidence. He praised the staff for working with him to reverse the trend and bring about an institution that has become a compelling case study in corporate turnaround within Nigeria’s financial services industry. “We have reversed almost all regulatory ratios for good and currently rank among the very best in the industry. There can be no better testament to the much-improved state of the bank than the full year 2019 results in which the bank posted Profit After Tax (PAT) of N27 billion. To buttress the fact that this is sustainable, the bank’s first half 2020 result showed a PAT of over N18 billion, despite the tremendous headwinds brought on by the COVID-19 pandemic,” he said. He went on to say: “We also commenced the refreshment of the bank’s IT infrastructure, which had largely become out dated and dilapidated due to years of under-investment. As a result of the successful completion of the first phase of the IT Refresh Programme, which consisted mainly of upgrade of the infrastructure and digital platforms,

and relocation of the Bank’s Data Centres to Tier III data locations as mandated by CBN regulations and in line with global best practices, the bank’s customers are now experiencing significantly improved service delivery. “In addition, by introducing and committing resources to the Agency Banking model, we have contributed in no small measure to deepening financial inclusion for the unbanked and under-banked throughout the length and breadth of Nigeria.” According to Abiru, today’s Polaris Bank has been successfully positioned as a bank of choice in Nigeria due to the work that has been put in by the various stakeholders including the loyal customers of the bank. On the issue of leadership succession, he said, “During this period leading to my final disengagement, I will work closely with the CBN, the Board ofDirectorsandExecutiveManagement of our bank to ensure a seamless transition and smooth handover to my successor.” Abiru was appointed the group managing director/ CEO of the then Skye Bank in July 2016. Before his appointment, he had served in several capacities in some of the leading banks in Nigeria’s banking industry, including at one time as executive director in First Bank of Nigeria plc. He was at various times appointed as non-executive director in some leading companies, including Econet (now Airtel) Mobile Networks Limited, and FBN Capital Limited (now FBN Merchant Bank Limited). Abiru has also had a brief stint in public service, having served from 2011 to 2013 as commissioner of finance in Lagos State under Governor Babatunde Fashola. Following the establishment of Polaris Bank in September 2018, the CBN affirmed the performance of the bank’s Board of Directors, and reappointed Tokunbo Abiru to lead the new bank; a position he held until opting for voluntary retirement from the bank.

Apapa: Concerns remain around tank... Continued from page 2

completed and now in use. But concerns remain among major stakeholders, especially residents and businesses in the port city for whom the present state of Apapa means so much in terms of declining productivity, loss of income from their investments, loss of @Businessdayng

man-hour, wear and tear on their vehicles and risk to their health and lives. “The problem of Apapa as it pertains to gridlock does not consist in bad roads alone. There are more to it and those in authority know this too well,” a business owner, who did not want to be named, told BusinessDay in a telephone interview.

Monday 24 August 2020

BUSINESS DAY

In Association With

The aliens among us

ASuffering Balkaninbetrayal the Sahel

How viruses shape the world

A coup in Mali is unlikely to make matters better

They don’t just cause pandemics

Western countries cannot solve African crises with military support alone

UMANS THINK of themselves as the world’s apex predators. Hence the silence of sabre-tooth tigers, the absence of moas from New Zealand and the long list of endangered megafauna. But SARS-CoV-2 shows how people can also end up as prey. Viruses have caused a litany of modern pandemics, from covid-19, to HIV/ AIDS to the influenza outbreak in 1918-20, which killed many more people than the first world war. Before that, the colonisation of the Americas by Europeans was abetted—and perhaps made possible— by epidemics of smallpox, measles and influenza brought unwittingly by the invaders, which annihilated many of the original inhabitants. The influence of viruses on life on Earth, though, goes far beyond the past and present tragedies of a single species, however pressing they seem. Though the study of viruses began as an investigation into what appeared to be a strange subset of pathogens, recent research puts them at the heart of an explanation of the strategies of genes, both selfish and otherwise. Viruses are unimaginably varied and ubiquitous. And it is becoming clear just how much they have shaped the evolution of all organisms since the very beginnings of life. In this, they demonstrate the blind, pitiless power of natural selection at its most dramatic. And—for one group of brainy bipedal mammals that viruses helped create—they also present a heady mix of threat and opportunity. As our essay in this week’s issue explains, viruses are best thought of as packages of genetic material that exploit another organism’s metabolism in order to reproduce. They are parasites of the purest kind: they borrow everything from the host except the genetic code that makes them what they are. They strip down life itself to the bare essentials of information and its replication. If the abundance of viruses is anything to go by, that is a very successful strategy indeed.

COUP D’ETAT is almost never good news. In Mali the descent into violence accelerated dramatically in March 2012, when soldiers mutinied and launched attacks on the presidential palace, the state broadcaster and a military barracks in Bamako, the capital. The then president, Amadou Toumani Touré, was forced into exile. Within months, jihadists had taken over much of northern Mali. By the start of 2013 France felt obliged to intervene, sending soldiers and its air force to push the militants out of their strongholds in the cities of Timbuktu and Gao. That seemed to have saved Mali from a terrible fate: the state’s complete collapse into the hands of fanatics. But the experience of 2012 could repeat itself. On August 18th soldiers

The world is teeming with them. One analysis of seawater found 200,000 different viral species, and it was not setting out to be comprehensive. Other research suggests that a single litre of seawater may contain more than 100bn virus particles, and a kilo of dried soil ten times that number. Altogether, according to calculations on the back of a very big envelope, the world might contain 1031 of the things—that is one followed by 31 zeros, far outnumbering all other forms of life on the planet. As far as anyone can tell, viruses—often of many different sorts—have adapted to attack every organism that exists. One reason they are powerhouses of evolution is that they oversee a relentless and prodigious slaughter, mutating as they do so. This is particularly clear in the oceans, where a fifth of single-celled plankton are killed by viruses every day. Ecologically, this promotes diversity by scything down abundant species, thus making room for rarer ones. The more common an organism, the more likely it is that a local plague of viruses specialised to attack it will develop, and so keep it in check. This propensity to cause plagues is also a powerful evolutionary

stimulus for prey to develop defences, and these defences sometimes have wider consequences. For example, one explanation for why a cell may deliberately destroy itself is if its sacrifice lowers the viral load on closely related cells nearby. That way, its genes, copied in neighbouring cells, are more likely to survive. It so happens that such altruistic suicide is a prerequisite for cells to come together and form complex organisms, such as pea plants, mushrooms and human beings. The other reason viruses are engines of evolution is that they are transport mechanisms for genetic information. Some viral genomes end up integrated into the cells of their hosts, where they can be passed down to those organisms’ descendants. Between 8% and 25% of the human genome seems to have such viral origins. But the viruses themselves can in turn be hijacked, and their genes turned to new uses. For example, the ability of mammals to bear live young is a consequence of a viral gene being modified to permit the formation of placentas. And even human brains may owe their development in part to the movement within them of virus-like elements that create ge-

netic differences between neurons within a single organism. Evolution’s most enthralling insight is that breathtaking complexity can emerge from the sustained, implacable and nihilistic competition within and between organisms. The fact that the blind watchmaker has equipped you with the capacity to read and understand these words is in part a response to the actions of swarms of tiny, attacking replicators that have been going on, probably, since life first emerged on Earth around 4bn years ago. It is a startling example of that principle in action—and viruses have not finished yet. Humanity’s unique, virus-chiselled consciousness opens up new avenues to deal with the viral threat and to exploit it. This starts with the miracle of vaccination, which defends against a pathogenic attack before it is launched. Thanks to vaccines, smallpox is no more, having taken some 300m lives in the 20th century. Polio will one day surely follow. New research prompted by the covid-19 pandemic will enhance the power to examine the viral realm and the best responses to it that bodies can muster—taking the defence against viruses to a new level.

in Bamako again left their barracks to overthrow the government. The president, Ibrahim Boubacar Keita, who came to power in elections in 2013, was arrested with his prime minister, and forced to resign (see article). As in 2012 the coup plotters have promised new elections. But, as then, the result may be more violence. Western governments are dismayed by the mutiny, and the UN rightly called for the restoration of constitutional order. In Africa especially, coups beget coups. Mali is a hub for smuggling drugs, arms and people across Africa and to Europe; that problem may now worsen. But the West must shoulder some of the blame. In the years since France intervened, the limits of trying to solve political problems with military force (partly focused on counter-terrorism) have become ever plainer. The number of foreign troops in the southern fringe of the Sahel has grown. As well as hefty French and UN contingents, soldiers from Britain, America, Germany and countries next to Mali have weighed Continues on page 31

Monday 24 August 2020

BUSINESS DAY

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A coup in Mali is unlikely to make The Israel-UAE deal is good news for a troubled region matters better Continued from page 30 Even if tensions remain high elsewhere in the Middle East Into the open

T WAS NOT only Yasser Arafat, leader of the Palestinians, who watched with “grief and fury” as Anwar Sadat went to Israel in 1977. Several of the region’s autocrats severed ties with Egypt’s president over what some called a “treasonous” act. When, two years later, Sadat signed a peace deal with the Jewish state, they erupted in outrage again. Egypt was suspended from the Arab League, which imposed a boycott on the country and left Cairo for Tunis. In 1981 Sadat was murdered by jihadists who cited the peace deal as one of their main grievances. In many ways the region looks the same as it did four decades ago. Autocracy is still in vogue; the Palestinians remain stateless. But relations between Israel and the rest of the Arab world are unrecognisable. When the United Arab Emirates (UAE) agreed to establish diplomatic ties with the Jewish state on August 13th, there was little grief or fury in the region’s capitals. Israel’s first formal relationship with a Gulf state, and its third with any Arab country (Egypt and Jordan being the others), was met with praise from many Arab leaders (see article). Some are calling it a “breakthrough”, others a “turning-point

for peace”. But the deal is not remarkable for how it might transform the region. Rather, it reflects remarkable changes that have already taken place. A part of the world once defined by ArabIsraeli hostilities is no longer so; countries increasingly look towards the future, not the past, when shaping their policies. In a perennially troubled neighbourhood, this decline in tension is worth celebrating, even if other dangerous fault-lines remain. It was no secret that Israel and the Gulf states had grown closer of late. Motivated by a common enemy, Iran, their armies and spy agencies swap intelligence. Recently, Israeli officials began

popping up in Gulf capitals. But the UAE’s decision to take its relationship public will bring more benefits for both sides. Israeli business people are excited about their access to Dubai, the region’s financial hub—which happens to be in dire need of a clean-up (see article). Deals have already been signed between Israeli and Emirati firms. It feels like a much warmer peace than that between Israel and Egypt. Other Arab states are talking about following the UAE’s lead. Give the Trump administration due credit. Seven months ago it unveiled a peace plan that was immediately rejected by the Palestinians and most Arab

states, because it allowed Israel to annex about 30% of the occupied West Bank and gave the Palestinians something less than a state in return. But at the same time America was sponsoring secret talks between Israel and the UAE. Somehow, in a feat of diplomatic alchemy, American officials turned this far-fetched scheme into leverage. The UAE demanded no real concessions from Israel, other than a promise from Binyamin Netanyahu, the Israeli prime minister, that he would not move ahead with annexation at the moment. The deal is a boon for Mr Netanyahu, who has been under fire at home over allegations of corruption and for his poor handling of covid-19. The prime minister claims there is “no change” to his pledge to annex parts of the West Bank. In reality, the deal lets him duck a tricky issue. His nationalist allies have wanted him to absorb Israeli settlements in the occupied territories, even though it would have brought international opprobrium. He has avoided that choice and, nonetheless, thrown the nationalists a bone. They have always rejected the idea of swapping land for peace, long the framework of talks with the Arabs. Peace for peace should suffice, they argued.

The postmaster always rings twice

More mail-in voting doubles the chances of recounts in close states We ran 100,000 simulations to quantify this effect

HE REPUBLICAN PARTY goes into its virtual convention next week in a mess. According to The Economist’s election model, the president is trailing by nine points in the popular vote and is currently expected to end up roughly 70 electoral votes shy of the 270-vote threshold on polling day. But has Donald Trump found a way to stack the deck in his favour? A large number of Americans will cast votes by post between now and November. And the US Postal Service, which has to deliver those votes, is in the midst of a partisan fight. The postal service was created by the Second Continental Congress in 1775, and though it has a public-service mandate—to deliver mail to the whole country—it receives no public funding. In recent years it has consistently lost money, because Americans have been sending less first-class mail, among other things. Louis DeJoy, who ran a large logistics firm, was brought in as the postmastergeneral in May with a mandate to fix its finances by finding savings. Yet Mr DeJoy is also a promi-

nent Republican donor. In 2017 he was one of three national finance chairmen of the Republican National Convention, along with Michael Cohen, the president’s personal lawyer (who is now in jail), and Elliott Broidy, an investor. This alarms Democrats, who spy a scheme by the president to steal an election he would otherwise lose. Mr Trump opposes voting by mail because he thinks it is bad for Republicans. Mr DeJoy’s reorganisation has slowed down mail delivery in a way that therefore seems to accord with the president’s re-

election strategy. Panicked voters have been snapping and posting pictures of the famous blue mailboxes, some of which have been carted off as part of the efficiency drive. The postal service’s board of governors, composed of both Republican and Democratic appointees, proposed a $25bn (0.1% of GDP) public subsidy, which House Democrats have taken up. Mr Trump is not keen. “If we don’t make a deal,” he told Fox News, “that means they don’t get the money. That means they can’t have universal mail-in voting, they

just can’t have it.” The postal service’s capacity has been particularly reduced in cities in swing states such as Pontiac, Michigan; Philadelphia, Pennsylvania; Columbus, Ohio; and even in Houston, Texas. The USPS warned 46 states that mailed-in ballots could arrive too late to be counted. Mr DeJoy then said that changes to the postal service would be postponed to avoid disrupting the election. Is that the end of the saga? Not quite. Even if the USPS is functioning as normal, an increase in voting by mail could still have a significant effect on the result. In New York’s primary in July, staffing shortfalls combined with a surge in postal voting meant thousands of ballots were not sent out on time, and many others were discarded for minor technical errors. According to election officials, one out of every five ballots sent by mail were rejected—more than three times the statewide rejection rate from 2016. In November, election workers could be inundated with ballots that could take weeks to count.

in. But they have done little to tackle the cause of the conflict: a weak, corrupt state with scant regard for its people. At least 4,000 people were killed in the Sahel last year, around 40% of them in Mali. Since 2012 violence has spread from the north to the centre of the country—and across the region. The state has not only failed to stop the killing, it may have been complicit in it. Last year about 160 people, mostly ethnic Fulanis, were massacred by a Dogon militia in Ogossagou, a village in central Mali. Mr Keita promised such atrocities would be stopped. Yet in February this year tribesmen attacked Ogossagou again, killing 35 more. Human Rights Watch, an international monitor, has documented how Mali’s army let it happen, leaving the village just hours before the attack. A state that does not protect its people from massacres is scarcely likely to succeed on other fronts. This coup was preceded by months of civil protests prompted by a decision of the constitutional court to overturn the results in 31 seats of parliamentary elections held in March. The court handed many back to Mr Keita’s party. But the protests were also fuelled by anger towards a government seen as crooked and feeble. It is unclear whether the coup-makers acted in league with the organisers of the protests, but they are likely to be embraced by them. The dismay of foreign governments will not bring back Mr Keita. Mali’s security problems are far from unique in Africa. For over a decade Nigeria has struggled with Boko Haram’s insurgency. Kenya is still afflicted by terrorists in its Somali north-east. An Islamic State affiliate is on the rise in Mozambique. The fighters in such cases are invariably drawn from people with no stake in the state. The West has proffered soldiers, equipment and intelligence, but has done much less to encourage governments to settle grievances. In January President Emmanuel Macron threatened to withdraw French soldiers from the Sahel unless the region’s leaders clearly said they wanted them to stay. When they did, he increased the French contingent. A genuine threat to withdraw would be risky. Yet Western governments should consider whether their military aid can defeat extremists if they do not also tackle hopeless governance.

Monday 24 August 2020

BUSINESS DAY

NEWS

Experts seek improved cyber security to optimise CBN’s cashless policy GBEMI FAMINU

xperts in financial and technological management have urged industry stakeholders to build a well secured channel for online financial transaction in order to encourage and fully optimise the Central Bank of Nigeria’s (CBN) cashless policy. Speaking during the Channels TV Business Morning programme, on Friday, Charles Nwodo, chairman, XL Africa group said the cashless policy was borne out of the central bank’s intention to end the challenges around financial transactions and promote financial inclusion, but, however, observed that cash circulation is still in abundance which negates the principle of the cashless policy. Nwodo added that the easy manipulation of data was also discouraging the growth of the policy “On the digital space and mobile payment platforms, it is easy to manipulate large amounts of value. As a result, the impact of fraud on these platforms is huge and this is why many people still prefer to retain cash.” Destiny Amana, president Nigeria Internet Group said that although banks and Fintechs have made efforts to eliminate the possibility of fraud through a constant update

of software and the use of a two- step verification process to establish a secured transaction, more needs to be done especially on the part of customers and business owners . “For business websites, especially the retailers, it is necessary to have a safe and secured website. When you are creating a site that will request financial or personal information, it is advisable to have a padlock on the website which is the SSL security certificate, moreover, clients are more inclined to trust secured websites requesting financial information” He advised that leveraging traditional control mechanisms is not fair enough therefore businesses need to adopt a more digital platform and also invest in heavily securing websites. Abumere Igboa, chairman, Committee of Chief Information Security Officers (CISO), advised individuals that overtime the trend has changed and sensitive information is now a tool for cybercrimes therefore all forms of sensitive information should be secured. “Data and information is key in online financial transaction and this is what many cyber criminals use to carryout fraudulent activities, therefore, individual need to secure their details in order to avoid being defrauded” Igboa said.

L-R: Candidate of the PDP and Governor of Edo State, Godwin Obaseki; the Onojie of Ujiogba, Solomon Izuware, and the deputy governor and running mate, Philip Shaibu, during a courtesy visit to the traditional ruler, in Ujiogba, Esan West Local Government Area, of Edo State, on Friday.

Beirut explosion heightens calls to decongest Lagos ports, relocate tank farms …abandoned containers, multiple tank farms disaster in waiting – Experts AMAKA ANAGOR-EWUZIE

s Nigeria’s ports in Lagos continue to grapple with persistent traffic congestion caused by high volume of articulated vehicles moving in and out of seaports as well as oil jetties in Apapa, industry experts say the country needs to learn lessons from the recent explosion that took place in Port of Beirut, Lebanon, by decongesting the port city in order to avert such danger. On August 4, multiple explosions occurred at the Port of Beirut after 2,750 tons of ammonium nitrate stored improperly in a warehouse at the port caught fire. The blast killed close to 200 people and injured around 6,000, leaving many homeless. Report has it that the cargo was intercepted in

IRENA calls for tender to boost electricity network among ECOWAS MIKE OCHONMA

call for tenders has been launched by the International Renewable Energy Agency (IRENA) to select consulting firms for the development of a programme to strengthen the electricity network infrastructure of member countries of the Economic Community of West African States (ECOWAS). The objective is to facilitate the integration of renewable energies into national electricity grids. The call for tenders comes a few days after one issued by the ECOWAS Centre for Renewable Energy and Energy Efficiency (CEEREC) for the appointment of a consultant to work on its project for the development of the West African Clean Energy Corridor (WACEC) programme. The call for proposals by IRENA which closes on August 31, 2020 has similar objectives.

Consulting firms selected at the end of the process will work in close collaboration with the various operators and public companies in the electricity sector, as well as the regulators of ECOWAS member countries. Consultants will also work with the CEREEC in the development of a programme to reinforce the infrastructure of the electricity networks of the ECOWAS region. They will also be tasked with identifying solutions to improve the supply of electricity while enabling a significant increase in wind and solar power generation capacity. IRENA and CEEREC want to combine the efforts of these countries to strengthen their national electricity grids with renewable energies. While other wind projects are in the pipeline in the sub-region, solar projects are more in the pipeline, particularly in countries such as Togo, Mali and Ghana.

September 2013, when a Russian-leased cargo vessel loaded with ammonium nitrate heading to Mozambique reportedly made an unscheduled stop in Beirut due to financial and mechanical troubles. Lebanese officials then, citing unpaid fees and safety concerns, prevented the vessel from sailing, leading to it being abandoned by its owner. In Nigeria today, there are over 5,000 twenty-foot equivalent units (TEUs) of overtime and abandoned containers with expired goods that were either intercepted by Nigeria Customs Service (NCS) or trapped for many years in Apapa, Tin-Can and Onne Ports for several reasons. Further checks show that there are over 1,000 vehicles and scraps that have spent between 90 and 4,000 days in the port, creating about 90 percent yard occupancy

rate at the terminal without being evacuated. As a result, Nigerian ports, especially those in Lagos, now lack sufficient space to discharge vessels as ships now spend 30-50 days’ waiting time on the waters. Hassan Bello, executive secretary of the Nigerian Shippers Council (NSC), who confirmed that there is congestion both at the seaside and at the terminal, said there are lots of cargoes that are abandoned at ports, and they ought to be auctioned. “We would suggest to Nigeria Customs to do onthe-spot auctioning without having to spend money to take those goods out of the port. Most of them are expired goods and we have to help the terminal operators to clear the ports so that ships could come in on a better timing rather than 50 days waiting time that shows

inefficiency,” Bello said. Jonathan Nicol, president, Shippers Association of Lagos State, said in confiscating goods for any reason, Nigeria Customs should be aware of some volatile chemicals used in the food industry that should not be exposed to intense heat. He said that exposing such chemicals to intense heat could result to an accident that can erase any port such cargoes are domiciled. He advised Customs to accelerate the release of raw materials, especially for food and drinks industries, to avoid the danger of explosion. Secondly, there are over 60 petroleum tank farms that are located within Apapa which not only contribute to the congestion on the port roads but also create serious threat to lives and property.

Farmers urge FG to establish intervention fund for natural rubber MIKE ABANG, Calabar

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armers and and natural rubber processors have called on the Federal Government to establish an intervention fund for the development of rubber plantations, processing and manufacturing across the country. They made the call in Calabar at the end of their meeting to chart the way forward for the natural resource, which they described as irreplaceable and goldmine that can complement crude oil. National president of National Rubber Producers, Processors and Marketers Association of Nigeria (NARPPMAN), Peter Igbinosun, and the general manager of Royal International Farms and Estates Limited,

Usen Umoh spoke to journalists in Calabar, the capital of Cross River State. Igbinosun said the intervention fund should attract an interest rate of three to five percent annum with a moratorium period of three to four years considering the gestation period of the rubber trees which is six years with good agronomic practices. The president recommended that the repayment period should spread over 10 to 15 years. He called for the selection of a development bank to handle the processing and disbursement of the intervention fund. As a way of easing the challenges faced by natural rubber farmers and processors, he advocated the establishment of an agency

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for bulk purchase of machinery/equipment agency, saying it will facilitate the acquisition of tractors, implements, land development machineries and equipment. He added that the rural development policies of the federal, state and local governments should be integrated into farm plantations in order to create the necessary infrastructures such as roads, bridges, electricity and water. Igbinosun enumerated that the county will benefit greatly if the rubber subsector which has been long neglected, is well positioned although it is a capital and labour-intensive industry. “Rubber is grown in 24 states of Nigeria, including Kaduna, Taraba, Kwara, Adamawa, etc as well as @Businessdayng

South-west and Southsouth states. This has the capacity to create wealth, enhance non-oil sector foreign exchange earnings and can also greatly reduce crime and youth militancy. “There are array of other benefits from natural rubber. Rubber trees generate carbon pits and fit with the Clean Development Mechanism (CDM) of the Kyoto protocol. A 30-year-old rubber plantation mobilises 200 tons of C/Ha. “Rubber is in high demand all over the world, plays a major role as a foreign exchange earner and contributor to the growth of our national economy,” he said, adding that natural rubber is a strategic material as it cannot be replaced in many important applications.

BUSINESS DAY

Monday 24 August 2020

BUSINESS DAY

NEWS

NBS data to show GDP declined 6% in Q2 2020 Continued from page 1 .... (Q2) GDP figures later today, it will show that the economy contracted by about 6 percent year-on-year( y/y). This will be the deepest hit of any quarter in the history of Nigeria’s economic growth trajectory. It is a much steeper contraction than most analysts’ estimates of about 4% to 5%, and will mean a decline of about 8% when compared with the first quarter of this year when the economy recorded a tepid 1.87% growth rate. Though not unexpected given the initial lockdown measures in Lagos, Ogun, and the FCT to contain the spread of Covid-19 in April and May, it will provide a strong indication that the Nigerian economy will enter a recession when the data for Q3 2020 are confirmed in October. The data expected today followed that released for Q1 2020 that reflected the start of the cycle of the emergence of Covid-19 in Nigeria. In Q1, while the impact had surfaced in the form of lower oil prices, with oil prices below the $30 average between March and May, the Q2 data are much anticipated because they are expected to show the full brunt of the impact of Covid-19 on the Nigerian economy. It will show the impact of the near closure of the economy with devastating and direct impact on transport and air travels, hospitality and banking, construction and trade sectors, all reflecting government restrictions during the period. Just as the Q1 and Q2 mirror the trajectory of the measures taken to contain the virus, the expectation is that the third quarter will follow the same.

Since the initial lockdown of March 30, the Federal Government has implemented three different phases of opening up the economy. The first phase of reopening from May 4 to May 30 allowed markets and banks to open three times a week, so people could restock food and essential supplies, but imposed curfews between 8pm and 6am. The second phase of reopening from June 1 to June 30 allowed banks and government offices to open for longer periods of time and imposed a narrow curfew between 10pm – 4am, while ban on interstate remained except for agriculture produce, petroleum products, manufactured goods and essential services. All airports also remained closed to domestic and international flights. The third phase allowed schools to reopen for graduating students and interstate movements were also opened. In essence, while Q2 GDP data will show the full impact of the lockdown measures, the present quarter is beginning

The medium-term outlook for the economy will continue to be shaped by the management of the Covid-19 patients and the spread of the pandemic, both domestically and internationally. Domestically, the data show that the country has gone through the most difficult periods in May and June. The expectation now will be for a quick oil price recovery. This month, average oil prices remains at $44.61, compared with $43.74 in July and $40.27 in June. Though growing, it has not reached the levels of $63 experienced in January. As Nigerians start to chew on the Q2 data, they will be in good company all over the world. The UK recorded a contraction of 20.4% in its GDP growth in Q2, following that of the US of 32.9%. However, Kenya’s data for the same period have not been released but the economy grew 4.9% in the first three months of the year, while analysts’ estimates show an expectation of a 44.5% contraction for South Africa for the same period.

Chukwuemeka Nwajiuba (r), minister for state (Education) in his courtsy visit on Covid-9 compliance to Fatima Secondary School (Technical). With him is Rev. Father Canice Ofoegbu, principal of the school.

Platform Capital awards $50,000 grant to female advocacy group s part of its commitment to women empowerment and political participation, Platform Capital Group- comprising platform capital investment partners, Unicorn Group and Diatom Impact, has an agreement to support ElectHER, a Nigerian female-focused advocacy organisation with an annual grant of $50,000. In Nigeria, about 51 percent of women are involved in voting during elections. Despite these, women are still under-represented in both elective and appointive positions. Available statistics have revealed that the overall political representation of women in government in Nigeria is less than 7 percent. The agreement signed by ElectHER and Platform Capital Group, for an annual disbursement in perpetuity starting July 2020, will enable the implementation of activities aimed at increas-

to show the second wave effects of the economic crisis of Covid-19, and this will be the concern and worries in Abuja. For instance, if, as expected, the Nigerian economy enters recession by another negative growth in Q3, it will mean a second economic recession in a matter of four years, following that of 2016. Indeed, analysts at FSDH project a near 5% decline for the year. The likelihood of a recession and worsening economic conditions is best understood by the scale of the response provided by the government under its Economic Sustainability Plan (ESP). Under the plan, led by the Vice President Yemi Osinbajo, the government planned a N2.3 trillion injection into the economy. However, about N500 billion of that was already in the 2020 budget, while the N1.1 trillion expected from the Central Bank of Nigeria will require collaterals, showing the limited policy and fiscal space for the government to tackle the present economic crisis.

ing women’s political representation and leadership in Nigeria. Immediate activities to be funded include the setting up and launching the ElectHER Academy which will provide access to quality online and offline training for at least 1,000 women interested in politics. The funds will also support the pioneer batch of the ElectHER future lawmakers programme, a 6-month intensive fellowship and incubator programme aimed at identifying young women and equipping them with the tools, network, and resources they need to become future lawmakers in Nigeria. In addition to the above, Platform Capital Group will also support ElectHER in building institutional capacity and brand awareness globally for its strategic long-term goals in driving female participation in policy-making, civic engagement and running for political office.

Lagos deploys COVID-19 safety marshals to ferry jetties

agos State Safety Commission partnering with Office of the Sustainable Development Goals (SDGs) and Lagos State Waterways Authority (LASWA) has trained and deployed 48 Covid-19 volunteers as safety marshals to ferry jetties across the state. The deployment, according to the director-general of the commission, Lanre Mojola, is in line with the state government’s commitment to safety of lives on the Lagos waterways. The DG in a statement on Sunday, disclosed that the training session for the safety marshals was co-facilitated by the special adviser to the state governor on SDGs, Solape Hammond, and Damilola Emmanuel, the general manager of LASWA who took turns to educate on how important it is to jointly combat the Covid-19 pandemic. The explained that the trained safety marshals were saddled with the responsibility of ensuring that commuters wear their personal protective

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equipment (PPE) and provide safety briefings to commuters before trips at various jetties across the state. Mojola noted that at the session held recently in Lagos, that the safety marshals were trained on safety standards and protocols to ensure the safety of citizens seeking to commute through the waterways on basic safety precautionary measures on waterways. The DG emphasised the importance of taking safety as a collective responsibility, adding that everyone has to play their part in order to complement the efforts of the state government in curbing spread of the deadly virus. Mojola urged bars, restaurants, spas, hotels, and other social centres to ensure they register their business on www.lasgsafetyreg.com. He warned that facilities that open without procuring the provisional safety compliance letter and operate above the stipulated number of 50 people in line with the current directives of the state government would be shut down.

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Nigeria’s year-long border closure raises consumer food prices MERCY AYODELE

igeria’s decision to shut land borders with neighbouring countries was supposed to stimulate local production that would in turn drive down inflation, but that does not seem to be yielding much gain as consumer food prices have been on a steady rise a year after. One year may be too short a period to gauge the effectiveness of the border closure, but economists generally hold the view that the policy is counter-productive for a country that relies largely on food imports to meet deficits in local production. A better way to stimulate local production, according to these economists, may be to improve the decrepit infrastructure that makes it expensive to do business in Nigeria, rendering local producers uncompetitive. Consumer prices have jumped to more than a twoyear high of 12.82 percent in July from 11.08 percent a year ago, as food prices surged. Annual inflation was at its lowest in 39 months when borders were shut last year. Data from the National Bureau of Statistics (NBS) show that as of July 2020, the average price of 1kg of tomato increased year-on-year by

49.35 percent, while the average price of 1kg of rice (imported high quality) increased year-on-year by 37.72 percent. Also, the average price of 1kg of garri increased by 47 percent compared to the same period last year. The spike in the inflation rate is mainly driven by rising food costs, which is ironic, as the aim of the border closure was to drive down costs through increased local production. “We are not yet on the path of food sufficiency,’’ says Abudulazeez Kuranga, an economist at Lagos-based Cordros, saying, “If we had enough production in the country to meet demand, then we can close our borders but we do not have enough local production to meet demand.” Kuranga explains that the gap local production cannot cover is passed on to the consumers in the form of high prices. The price of 1kg of local rice in July last year, a month before the closure, was N271 while imported rice was N352 per kg. Last month, the price of 1kg of local rice was N362 and imported rice was N490 per kg, according to data from the NBS. While the ongoing Covid-19 pandemic might have added to food price pressure, the closure of the land borders has been a large trigger, some experts say.

Sanwo-Olu’s aide tasks MDAs on corporate governance JOSHUA BASSEY

pecial adviser to the Lagos State government on parastatals monitoring office (PMO), Afolabi Ayantayo has stressed the need for ministries, departments, agencies and parastatals of government to put in place structure that promotes corporate governance. Ayantayo stated this at a virtual seminar on corporate governance organised for CEOs of Lagos State’s parastatals/agencies, with the theme “digging deep into the T.H.E.M.E.S. agenda.” He noted that corporate governance was key in improving and realising the potential of any organisations and standardise their operation. The special adviser described the concept as a global approach that creates a corporate culture of transparency, accountability, and disclosure which enhances the long-term prosperity of an institution. According to him, governance structure in Lagos State identifies the distribution of rights and responsi@Businessdayng

bilities among different participants in the corporation such as the board of directors, managers, shareholders, auditors, regulators and other stakeholders. “There is, however, the need to improve the knowledge of government officials on the ideals of corporate governance,” he said. The special adviser outlined the relevance of the concept of corporate governance in achieving the T.H.E.M.E.S agenda, submitting that the model promotes transparency which ensures strong and balance economic development. He added that incorporating the principle into daily operational management of government’s institutions would encourage equitable service delivery. “Parastatal organisations and agencies perform key role in delivering specific services to the general public in line with established laws and government policy directives, the mechanism that enhance dynamic performance are entrenched in corporate governance”, he maintained.

Monday 24 August 2020

BUSINESS DAY

NEWS

DStv subscribers to pay more as MultiChoice adjusts prices DANIEL OBI

ultiChoice, operators of DStv pay-TV has raised its monthly premium package price from N16, 200 to N18,400 from September 1, this year. This is N2, 200 increase. Other higher packages were also affected. Compact plus subscribers will now pay N12,400 from N10,925 while Compact bouquet subscribers will pay N7,900 from N6,975. A Short message service, SMS to its subscribers, the pay-TV operator said “Dear Customer, please be advised of a price adjustment on your DStv Premium package from September 1. Your new monthly subscription will be N18,400”. Other lower bouquet packages were not affected in the price increase, perhaps in consideration of the economic situation which industry experts say is affecting the lower people more. Reacting to this increase, Chibuzo Kelechi, an electrical engineer said the increase which is coming at this time will force some subscribers to downgrade to lower packages. Another commentator who does not want his name mentioned agreed that the Covid -19 has affected all businesses but said the DStv price increase at this time of Covid-19 will put more pressures on subscribers

who are managing to sustain themselves. The increase is coming a month after it implemented the Federal Government increase of 2.5 percent in VAT which saw the prices of DStv packages go up by various rates. The VAT implementation from August 1, 2020 which raised dust among subscribers saw premium subscribers on DStv paying N16,200 against N15,800 previously. Compact Plus subscribers paid N10,925 against N10,650. Similarly, Compact bouquet price was adjusted from N6,800 to N6,975. Subscribers on Confam bouquet paid N4,615 against N4,500 while Yanga subscribers paid N2,565 against N2,500. Subscribers on Max on GOtv paid N3,280 from N3,200 while Jolli and Jinja subscribers paid N2,460 and N16,640 respectively. MultiChoice explained then that the increase in fees was in line with the legislation of the Federal Government which increased VAT in January 2020, with implementation effective 1 February 2020. “In order to provide some relief for customers, MultiChoice Nigeria has absorbed the cost of increase in VAT for the past four months, keeping its products and services at the old 5 percent VAT, however, this is no longer possible and the mandated 7.5 percent VAT will be applied accordingly”.

Some Nigerian evacuees check-in during the last evacuation flight from the U.S. aboard Ethiopian Airlines flight ET. 509 from Newark New Jersey, to arrive Abuja by 12:41 hours and Lagos by 14:31 hours, on Friday (21/8/20). The flight manifest includes: 87 Male, 111 female and 10 infants, with a total of 89 passengers for Abuja and 119 for Lagos, this last flight brought the total number of stranded Nigerians evacuated from the U.S. to 2,322 returnees.

Nigeria doubles African Development Bank Rights before key vote

igeria has almost doubled its voting rights in the African Development Bank to 16.8% before the lender’s annual meetings next week, as one of its own seeks re-election at the helm of the lender after being cleared of allegations of wrongdoing. Africa’s most populous nation became the biggest rights holder by far, followed by so called non-regional members Germany with 7.4% and the US with 5.5%, according to a memorandum sent to governors on August 20 that was seen by Bloomberg. Nigeria boosted its vot-

80 Nigerians become millionaires in Dangote Cement promo GBEMI FAMINU

he number of people who have so far won N1 million in the ‘Spell Dangote and Win a Million Naira’ promo has reached 80 as 15 more artisans in Ogun and Kwara States at the weekend joined the millionaires club. This is coming courtesy of the Dangote Cement Bag of Goodies Promo Season 2. As businesses struggle to stage a comeback after the coronavirus pandemicinduced lull, the promo is designed specifically to help Dangote Cement consumers to quickly overcome the effects of the Covid-19 by rewarding them with cash prizes. The N1 million winners, mostly artisans and building material dealers whose businesses have suffered a downturn in the wake of the pandemic, were full of praises to Aliko Dangote, saying the money would go a long

way into resuscitating their businesses. The company had during the launch of the promo last month explained that the N1 million wining prize was a form of palliative in which 1,000 people would benefit as people and businesses strive to stay afloat. The company’s director of marketing, Funmi Sanni, explained that the promo was deliberately designed to cushion the negative effects and impact of Covid-19 on businesses and families. In Ilorin and Abeokuta, the winners took to dancing as they received credit alert shortly after being presented with their symbolic cheques. Sanni expressed appreciation to the winners for their loyalty to the Dangote Cement brand. She stated that more than 80 people have won a million naira and that the management expects many more in the coming weeks across the nation because www.businessday.ng www.businessday.ng

1,000 of them have been earmarked to win a million naira. According to her, the Bag of Goodies Season 2 is the biggest promo ever in the country because at the end of the promo a total sum of N1 billion cash would have been won by the consumers of Dangote Cement across the country. Sanni who was at Ilorin but was represented in Abeokuta during the cheque presentation noted that the promotion was to encourage the customers to continue patronising the product, which according to her, is the best in the country. She said the company had been making efforts to satisfy its teeming customers to the fullest, adding that apart from the premium quality of the product, the firm has also introduced several customer-driven promotional offers in order to keep their relationship intact.

ing power by paying subscriptions it had pledged as part of a general capital before the January deadline. The move may allow Nigeria to help keep Akinwumi Adesina in the presidency for another five-year term when the vote takes place on August 27. Unlike in 2015 when he faced off against Chadian Finance Minister Kordje Bedoumra and Cape Verde’s Agriculture Minister Cristina Duarte, this time he is the sole candidate. The annual meetings will take place virtually between August 25 and 27 after they were postponed in May because of the spread of the coronavirus.

“The format of the meetings has been adapted to consider the physical constraints imposed by the COVID-19 pandemic,” it said on it website. Last month, an independent panel backed an African Development Bank probe that found no evidence of wrongdoing by Adesina, 60, in his bid to seek re-election as head of the continent’s biggest multilateral lender. The decisions was also a rebuff to US Treasury Secretary Steven Mnuchin, whose rejection of the the institution’s ethics committee’s original report led to the review. The probe was initiated

after unidentified whistleblowers accused Adesina of handing contracts to acquaintances and appointing relatives to strategic positions at the Abidjanbased lender. The AfDB is Africa’s biggest multilateral bank. In March, the lender issued a $3 billion social bond to help African countries deal with the fallout from the pandemic. The bank also launched a $10 billion crisis-response facility for African nations. Its shareholders include 54 nations on the African continent and 27 countries in the Americas, Europe, Middle East and Asia.

As motorists groan, PPPRA makes N30.5bn from petrol it does not sell

etroleum Products Pricing Regulatory Agency (PPPRA) will earn a staggering N30 billion annually from the administrative fee it levies on every litre of petrol and diesel sold in Nigeria while marketers who sell the petrol are struggling with their own margin. Until now, the PPPRA charged 30 kobo per litre of petrol sold and 10 kobo for diesel but weeks ago, the regulatory agency quietly raised the levy on petrol and diesel to N1.23 per litre, representing a 310 percent hike for petrol and 1130 percent increase for diesel. The volumes reported daily for products are 56 million for petrol, 14 million for diesel and three million for kerosene. At N1.23 levy per litre, PPPRA will make N23.2 billion from petrol yearly, N5 billion from diesel and almost N2 billion from kerosene sold. The Depot & Petroleum Products Marketers Association (DAPPMAN) is protesting the outrageous fee charged by the regulator and is now asking the government to ensure “an

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urgent and immediate reversal of this increase.” The depot owners and markers said in their August 14 letter to the minister of state for petroleum, Timipre Silva that they continue to incur regular losses in their operations with the PPPRA paying deaf ears to their demand for a more realistic margin. According to them, “marketers who are expected to pay these charges should at least, be allowed to make some profit rather than consistently suffering financially which is their current experience.” BusinessDay learnt that in addition to the N30.5 billion collected annually by PPPRA, the Petroleum Equalisation Fund (PEF) will make another N40 billion each year from administrative fee it charges on every litre of petrol Nigerians buy. An important meeting of the board of PPPRA has been called for Wednesday August 26 and it is expected to be stormy. PPPRA will struggle to manage the grievances of DAPPMAN as well as that of major oil marketers group, @Businessdayng @Businessdayng

MOMAN that have seen the value of their business fall over the last ten years as a result of over regulation by the government. There is also the matter of PPMC which is now struggling to import products as a result of the strict enforcement of the OPEC quota on Nigeria as well as the insistence of state governors that NNPC must fully account for every barrel of crude oil it gets. “We are beginning to see tightness in supply and Nigeria could be on the brink of petroleum products shortage,” one well informed official told BusinessDay. Many may not know it, but petrol subsidy has effectively come back even if it is by the back door. And this is despite pledges by government not to incur any more subsidy on petrol. At the dollar exchange rate of N385, petrol should be selling at N155 but it sells at N145, meaning an effective daily subsidy of N560 million calculated by an assumed under-recovery of N10 for each of the 56 million litres of petrol sold in Nigeria every day.

Monday 24 August 2020

BUSINESS DAY

NEWS Local content: Local companies will be accommodated in Presidential Power Initiative - Siemens OLUSOLA BELLO

iemens has allayed the fears that local companies may lose out it in the proposed Presidential Power Initiatives (PPI). The German company said any Nigerian firmed that has proved itself worthy and capable would be carried along. The company said the concern expressed by local contractors as to whether they would be involved in the project is a valid one, stating, however, that the success of this type of work would depend on collaboration with local contractors. Speaking exclusively to BusinessDay, Oladayo Orolu, head of business and government affairs, Siemens Energy Nigeria, who doubles as coordinator of Presidential Power Initiative (PPI), said even though the President Muhammadu Buhari has given the company the permission to select the EPC contractors, it would want to work with local companies. He said the government has given the company the opportunity to do the selection because it wants to make sure that the project is fully ex-

ecuted. “We do not want a situation whereby Siemens manufacture their equipment, shipped to Nigeria and when it gets to the port it remain stranded, nobody to take it up, nobody to take it to site or receive it at site. We want everything to be done seamlessly”. He said when they worked in Egypt, they involved some EPC companies such as Elsewedy and several other local companies. “You know we are original equipment manufacturer (OEM) company and there are so many things involved in this project that we cannot do on our own. “We have been in Nigeria for 50 years and have worked with several local

engineering companies. We have partners among them. In our oil and gas division we have local partners, in Azura we worked with several Nigerian engineering firms, some are international but based in Nigeria, some are Nigerian owned enterprises that we have worked together depending on their capabilities.” He said that in the company’s projects there are things they don’t do. Things like civil works are not done by Siemens. He explained that what the government has done is to allow Siemens go ahead and choose who to work with; stating that the company is going to support the government to make sure that it gets the right quality and expertise.

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Monday 24 August 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 21 August 2020

Top Gainers/Losers as at Friday 21 August 2020 LOSERS

GAINERS Company

Company

Opening

Closing

Change

N80

N79

-1

Opening

Closing

Change

N35

N36

INTBREW

N3.3

N3.6

0.3

PRESCO

N51.5

N51

-0.5

UACN

N5.85

N5.5

-0.35

OKOMUOIL

N13.75

N13.95

0.2

OANDO

N2.24

N2.35

0.11

GUARANTY

N25.25

N25.1

-0.15

UPL

N1.13

N1.24

0.11

DANGSUGAR

N12.6

N12.5

-0.1

UNILEVER

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

25,221.87 3,194.00 158,620,959.00 1.754

Global market indicators FTSE 100 Index 6,001.89GBP -11.45-0.19%

Nikkei 225 22,920.30JPY +39.68+0.17%

S&P 500 Index 3,382.77USD -2.74-0.08%

Deutsche Boerse AG German Stock Index DAX 12,764.80EUR -65.20-0.51%

Generic 1st ‘DM’ Future 27,726.00USD +57.00+0.21%

13.158

Shanghai Stock Exchange Composite Index 3,380.68CNY +16.78+0.50%

Stock market rises by 0.09 percent Iheanyi Nwachukwu

he Nigerian Stock Exchange (NSE) All-Share Index appreciated by 0.09percent to close the week at 25,221.87 points while the value of listed stocks increased to N13.158 trillion respectively. In the trading week ended August 21, all other indices finished higher with the exception of NSE Oil/Gas, NSE Lotus and NSE Industrial Goods Indices which depreciated by 0.92percent, 0.12percent and 0.41percent while the NSE ASeM Closed flat. Thirty-one (31) equities appreciated in price during the review week, higher than twenty-nine (29) equities in the preceding week. Twenty-seven (27) equities depreciated in price, lower than thirtythree (33) equities in the preceding week, while one

L-R: Dayo Obisan, executive commissioner operations Securities and Exchange Commission; Ibrahim Boyi, executive commissioner Corporate Services, SEC and Lamido Yuguda, director general, SEC during the First Post Capital Market. Committee Webinar Press Briefing in Abuja yesterday

hundred and five (105) equities remained unchanged, higher than one hundred and one (101) eq-

uities recorded in the preceding trading week. The total turnover of 950.414 million shares

Affiliate partner of G20 appoints Lafarge Africa’s executive to represent Nigeria

he World Business Angels Investment Forum (WBAF), an affiliated partner of the G20 Global Partnership for Financial Inclusion (GPFI), that aims to ease access to finance, promote financial inclusion, and create more jobs and social justice has appointed Lafarge Africa Plc’s Director, Communications, Public Affairs & Sustainable Development, Folashade Ambrose-Medebem to serve as a Senator representing Nigeria. WBAF under the leadership of its Chairman, Baybars Altuntas, welcomes the appointment as Folashade AmbroseMedebem will once again distinguish herself in the pursuit of the organization’s commitment to collaborate globally in order to empower the economic

development of the world by fostering innovative financial instruments for startups, scaleups, innovators, entrepreneurs and SMEs and to promote gender equality and women’s participation in all sectors of the world economy. Speaking on her appointment, Folashade Ambrose-Medebem said: “I am extremely delighted at this great opportunity to serve with a great sense of national pride. My focus will be to drive for veritable representation that positively impacts gender equality in the corporate business world and also support local investors access to the global angels market.’’ She noted further that she will contribute her quota to the attainment of WBAF G20 GPFI origins firmly rooted as a rapidresponse, crisis-managewww.businessday.ng

ment group, and an effective contributor to global economic and financial stability. Folashade who now joins as the second Nigerian Senator at the Grand Assembly of the World Business Angels Investment Forum will in her role encourage and initiate collaboration between WBAF and key stakeholders in Nigeria’s entrepreneurship ecosystem, and also help venture capital and companies connect with international companies, Fintechs and other relevant institutions alike. Folashade is a multifaceted international leader with over two decades experience spanning across strategy and performance management, finance, business culture transformation, change, sustainability and corporate affairs.

worth N10.123 billion in 16,647 deals were traded in the review week by investors on the floor of the Ex-

change, in contrast to a total of 1.327 billion shares valued at N13.934 billion that exchanged hands last week

in 19,392 deals. The Financial Services industry (measured by volume) led the activity chart with 624.278 million shares valued at N6.181 billion traded in 8,313 deals; thus contributing 65.68percent and 61.06percent to the total equity turnover volume and value respectively. The Consumer Goods industry followed with 96.320 million shares worth N2.199 billion in 3,148 deals and the Conglomerates industry, with a turnover of 89.376 million shares worth N145.612 million in 757 deals. Trading in the top three equities namely Zenith Bank Plc, Guaranty Trust Bank Plc and Transnational Corporation of Nigeria Plc. (measured by volume) accounted for 298.901 million shares worth N4.761 billion in 3,056 deals, contributing 31.45percent and 47.03percent to the total equity turnover volume and value respectively.

NASD Security Index year-to-date return rises by 1.67percent

ASD OTC Securities Exchange Market closed on a positive note year to date (YTD) as the market recorded an increase in performance. NASD Security Index Year to date return rose by 1.67percent. Total volume traded Year-to-Date stands at 7,822,585,238 units in 1022 deals and total Value traded is N10.714billion. NASD OTC Securities Exchange closed the week with a negative return on NSI. The

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NSI return fell by -0.60% to close the week at 709.17 points against 713.46 points against preceeding Friday, August 14 2020. In addition, the week ended August 21 saw NASD investors lose N3.15 billion in value. NASD OTC Market capitalization closed at N520.93 Billion compared to N524.08 Billion against preceding Friday, resulting from a negative movement of prices. There was a 267.25per-

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cent increase in the total value traded during the week as week 34 saw NASD Investors trade a total of N176,792,234.71 in value compared to N48,138,905.31 in the previous week. Total trade activity for the year is valued at N10.714billlion. In the same pattern, volume traded during the week was 2,195,636.00 units compared to 813,582.00 units in the previous week leading to a 169.87percent increase in trade volume compared to week 33. Total volume traded for the year is 7,822,585,238 units. The week closed with FrieslandCampina Wamco Nigeria Plc ranking top among five most traded securities by volume and Niger Delta Exploration and Production Plc as the fifth most traded stock by volume.

Monday 24 August 2020

BUSINESS DAY

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Monday 24 August 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 21 August 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

PRICES FOR MAIN BOARD SECURITIES (Equities)

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Change

Trades

Volume

Company IN FOCUS

BUSINESS DAY Monday 24 August 2020 www.businessday.ng

Can new leadership raise the stakes at Nestle Nigeria? OLUFIKAYO OWOEYE

ast month, Nestle Nigeria announced changes in its management team. The changes saw the elevation of its current managing director, Mauricio Alacron as the new market head of Nestle Central and West African region. In the new office, Alacron would oversee 25 countries under the region from the headquarters in Ghana with effect from September 1, 2020, bringing to an end his impressive four years as the helmsman of Nigeria’s biggest consumer goods company by market capitalization amid industry headwinds. However, Alacron will remain on the board as a non-executive director as the company continues to draw on his deep well of experience. To assume the new role as managing director is Wassim Elhusseini, who is currently the country manager and sales director of Nestle Middle-East and North Africa (MENA). Elhusseini is a top performer with a Nestle career spanning 18 years. He joined Nestle Kuwait in 2002 as channel category sales development (CCSD) manager for coffee and creamers before he was moved to Nestle CCSD Middle East region in 2015. Elhusseini played a crucial role in the formation of the MENA region comprising 16 countries before his role was expanded to country manager and sales director in 2020. In the last five years, the company’s huge investment in research and development, consistent product branding and innovation has handed it a competitive advantage over its peers, with a strong commitment to developing local capacities through its backward integration program which consists of over 35,000 farmers and 700 local suppliers, aimed at driving its local sourcing which currently stands at 80percent raw materials and packaging. No doubt, the new leadership have their hands full as players in Nigeria’s consumer goods space are currently struggling with “triple whammy impact” of stuttering economy, cash strapped consumers, and lately the novel COVID-19 pandemic. Spending by consumers in the country is yet to recover fully since the 2016 economic recession which lasted until the second quarter in 2017. Consumer spending remained depressed post-recession as real final household expenditure growth slumped to 1.5percent in 2019 after a 4.6percent increase in 2018. Interestingly, players across the consumer goods space are competing heavily for market share. They have deployed differ-

ent strategies to keep their heads up such as the introduction of small size packs to the market targeted at low-budget consumers, ramping up production, doubling down on advertising and branding in a bid to win market share. Double down on local input sourcing When a restriction on provision of foreign exchange for the importation of maize was recently announced by the Central Bank of Nigeria (CBN), many local processors using the commodity saw it as bad news that would put a huge strain on their operations. For Nestle Nigeria Plc, however, this was going to reveal another reward for its deliberate, strategic investments in local sourcing. For at least four years now, the company reports it has sourced 100 percent of the maize used in its cereal brands – Cerelac and Golden Morn – through the Nestlé Cereals Plan. Not only maize, but also sorghum and soybeans used in Milo and Maggi respectively. Nestlé’s commitment to local

sourcing of raw materials for its production has steadily grown over the last eight years, now reaching about 80 percent local sourcing of raw and packaging materials. The company’s commitment to local sourcing of raw materials has not only been sustained but also consolidated to increase local inputs used in the company’s product range. This on one hand has ensured the company has a guaranteed supply system, while at the same time, empowering thousands of local farmers to remain productive. This, according to Alarcon is a result of investments made towards increasing local sourcing since 2011. “We remain committed to sustaining and increasing our local sourcing, and so continue to support the growth of the Agribusiness and food value chain which hold so much potential,” he said. Financials mirror industry challenge Despite the challenging macroeconomic environment, Nestlé grew revenue by 6.7percent to N284.0bn in 2019 on the back of

‘‘

Nestlé’s commitment to local sourcing of raw materials for its production has steadily grown over the last eight years, now reaching about 80 percent local sourcing of raw and packaging materials

a 10percent increase in its beverage segment to N107.9bn from N98.1bn as demand for beverage products came in strong. Profit from the segment advanced 45.1percent to N25.0bn in 2019, supported by zero impairment charge from N3.4bn in the previous year. Given the level of competition in the sub-sector, investment in branding and marketing activities continued to drive OPEX growth as players strive to sustain brand popularity through various promotions and campaigns. Nestle’s pre-tax margin from beverages improved by 5.6ppts to 23.2percent. Nestlé grew revenue at a 5-year CAGR of 13.4percent, significantly higher than the 6.7percent year-on-year growth to N284.0bn in 2019 on the back of weak demand and tougher competition in the industry. Growth was dragged by a slowdown in its food segment, which accounted for 62percent of total sales. In the same period, Nestle held tight to its beverage business which printed a 10percent increase to N107.9bn. In its recently released halfyear results, the makers of Milo drink saw revenue declined slightly by 0.3percent year-onyear in Q2-20 and 0.6percent year-on-year in half-year following a significant decline in the beverages segment by7.1percent year-on-year amidst weak consumption during the lockdown. The decline in beverage sales is the largest since at least 2016 when it began reporting segment revenues. On the other hand, the demand for Nestle’s food products remained resilient, as Food

revenue grew by 4.1percent year-on-year, picking up the drag from the 8.7percent year-onyear decline in Q1. Sequentially, revenue grew 0.5percent quarter-on-quarter, underpinned by improved volume outturn from the food segment. Gross profit margin contracted the most since Q1 2018 by 751 bps year-on-year to 41.3percent in second quarter. This was driven by the surge in Cost of Goods Sold up 14.3percent yearon-year. Nestle’s net finance cost grew 1,087.2percent following a 23.9percent increase in finance costs) and a 64.7percent decline in finance income amidst the lower yield environment compared to the previous year. Gbolahan Ologunro, research analyst at Lagos-based CSL Stockbrokers said Nestle’s enjoys cost efficiency on the back of economies of scale, it enjoys from its brands and local input sourcing. “In terms of cost-efficiency, they enjoy economies of scale from their wide range of products that get to the market, underpinned by their route to market strategy. The company also sources most of its raw materials like sorghum, maize, soya beans, sugar, cocoa, and cassava locally,” he said. Nestle has its main factory in Agbara Industrial Estate, Ogun State. Nestlé services its customers with over 2,300 employees, 3 manufacturing sites, 8 branch offices and a head office located in Lagos, the company produces and markets several iconic brands including Maggi, Milo, Golden Morn, Nescafé, and Nestlé Pure Life.

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