BusinessDay 24 Feb 2020

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Buhari risks legacy as poverty pit swallows more Nigerians ome three years to the end of his second term at the helm of affairs in Africa’s largest economy, Nigerian President Muhammadu Buhari doesn’t have the numbers on his side if he hopes to be remembered as either an anti-corruption hero, the one who finally diversified an ailing oil economy, or as an economic messiah who paved the way for the majority of households and businesses.

Under Buhari’s watch, the country dropped two points in the Corruption Perceptions Index, a leading global indicator of public sector corruption, becoming the second most corrupt country in West Africa.

Official data also show that after the oil price shock of 2014, Nigeria has moved at a snail’s pace in weaning the economy

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CBN declares OMO ‘poison’ for banks ... sanctions some over FX breaches ... effective CRR may hit 30-40 percent OLUFIKAYO OWOEYE

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he Central Bank of Nigeria (CBN) has again wielded its big stick on some erring banks in the country just as it sends out a clear indication that it may reduce the savings account deposit rate to 1 percent as yields crash.

Highlights of the Bankers’ Continues on page 42

Inside

Zenith Bank reaffirms market leadership as after-tax profits P. 2 cross N200bn L-R: Mena Ajakpovi, council member, Nigerian Bar Association-Section on Business Law (NBA-SBL); Mohammed Umar, coordinator legal services, Nigerian Content Development and Monitoring Board (NCDMB); Seni Adio, chairman, NBA-SBL; Simbi Wabote, executive secretary, NCDMB; Chinyere Okorocha, treasurer, NBA-SBL, and Ayuli Jamide, vice chairman, NBA-SBL, at a courtesy visit by the NBA-SBL council members to NCDMB to discuss a partnership towards the development of legal services in Nigeria, in Lagos.

Pic by Olawale Amoo

Fish exporters hurting as FG drags on US P. 2 requirements to lift ban

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news Dangote spurs economic activities in S/East with N63bn investment in ANAMMCO MIKE OCHONMA

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angote Group has in the last five years invested over N63bn in the South East with the purchase of over 3,500 units of locally assembled Shacman trucks at the production plant of Anambra Motor Manufacturing Company (ANAMMCO), Enugu.

The order was delivered over a period of five years after Dangote Group signed an agreement with Transit Support Services (TSS), a subsidiary of ABC Transport plc.

The partnership started in 2016 with an initial order of 350 trucks by Dangote and as at today no fewer than 3,500 trucks have been supplied to Dangote from the ANAMMCO plant. Each of the trucks costs over N18 million.

Apart from being the single largest buyer of the locally assembled trucks, the patronage

by Dangote Group has revived the ANAMMCO plant.

Speaking at the weekend after a tour of the expansive ANAMMCO plant which was filled with Dangote trucks undergoing semi knocked down (SKD) production, Frank Nneji, chairman of Transit Support Services (TSS) Limited, said if not for Dangote’s magnanimity and his commitment to empower local manufacturers, the ANAMMCO

plant would have remained perpetually moribund.

ANAMMCO was built and commissioned in 1980 by the Federal Government which at that time was in collaboration with Mercedes-Benz of Germany. But the auto assembly plant was shut down after the Mercedes-Benz/ANAMMCO partnership ended, resulting in massive job losses. Life gradually returned to ANAMMCO when Shacman of China collaborating with TSS Limited entered into an agreement which led to initial skeletal operations that have now grown into a large-scale trucks assembly because of Dangote Group’s positive intervention.

“For more than seven years this plant was shut down. There was no activity here until we made an agreement with Shacman Group and started skeletally. But we were only to start full step production when we offered the logistics solutions to Dangote and the production facility of ANAMMCO way back in 2016. That was the time we signed agreement for the first 500 units of trucks,” Nneji said.

Nneji said that 90 percent of trucksproducedatANAMMCO plant were for Dangote, adding that the patronage has also brought back Onne Port in Rivers State which he disclosed

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Fish exporters hurting as FG drags on US requirements to lift ban JOSEPHINE OKOJIE

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he continued failure of the Federal Government to provide the United States with its Self Reporting Tool (SRT) requirement for smoked catfish (silurifomes) export is hurting fish farmers.

The US had since March 2018 placed a ban on the importation of Nigeria’s catfish because the country had failed to submit the SRT requirement before its due date.

Sin ce it came into force, the ban has shrunk market access for fish farmers, deterred new investments into the industry, and threatened the government’s export drive targets.

“The ban is hurting catfish farmers and we are now finding it difficult to even access the European market because of it,” Oloye Rotimi Olibale, president, Catfish and Allied Fish Farmers Association of Nigeria (CAFFAN), said.

“Many of us took loans from the banks to invest in processing to take up opportunities in export.

We are now unable to

meet our loan obligations because our market size has reduced and this has impacted our income,” Olibale said.

He blamed the government for not taking prompt action in addressing the issue and ensuring that the ban is lifted within the shortest possible time.

The SRT, a prerequisite for trade, is the process of determining whether a country’s food safety inspection system is equivalent to that applied domestically in the US, according to the United States Department for Agriculture (USDA).

“It has been difficult for us catfish farmers since the ban. Our profit has reduced and this is because we generate our revenue mainly from export,” Richard Agetu, cofounder, Richsi Nigeria Limited, makers of Ejazuki smoked fish, told BusinessDay. “Currently, we are just focused on the local market since we can no longer export to the US, Canada, and even Europe,” he said.

Agetu said his business plan to expand production owing to the high demand for smoked catfish by African diaspora in the US and Canada has been affected by the ban.

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

L-R: Albert Folorunsho, managing consultant, Pedabo Consulting; Mercy Aminah, MD, Meristem Trustees; Sulaiman Adedokun, deputy group managing director, Meristem; Damilola Hassan, head, wealth management, Meristem; Slyverius Okoli, chairman, WABECO Company, and Joseph Ariyo, founder, Telnet Group of Schools, at a private breakfast session themed ‘Conversation you do not want to have 2.0’, in Lagos.

Pic by Pius Okeosisi

Zenith Bank reaffirms market leadership as after-tax profits cross N200bn BALA AUGIE

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n a clear show of its resilience and market leadership, Zenith Bank has announced an impressive result for the year ended December 31, 2019, with profit after tax (PAT) of N208.8 billion, becoming the first Nigerian bank to cross the N200 billion mark.

According to the bank’s audited financial results for the 2019 financial year released in Lagos on Friday, profit after tax rose by 8 percent to N208.8 billion from the N193 billion recorded in the previous year.

The Group also recorded a growth in gross earnings of 5 percent rising to N662.3 billion from N630.3 billion reported in the previous year.

This growth was driven by the 29 percent increase in non-interest income from N179.9 billion in 2018 to N231.1 billion in 2019.

Fees on electronic products continued to grow significantly with a 108 percent

year-on-year (YoY) growth from N20.4 billion in 2018 to N42.5 billion in the current year. This is a validation of the bank’s retail transformation strategy which continues to deliver impressive results.

Profit before tax also increased by 5 percent growing from N232 billion to N243 billion in the current year, arising from topline growth and continued focus on cost-optimisation strategies. Cost-toincome ratio moderated from 49.3 percent to 48.8 percent.

The drive for cheaper retail deposits coupled with the low-interest yield environment helped reduce the cost of funding from 3.1 percent to 3.0 percent. However, this also affected net interest margin which reduced from 8.9 percent to 8.2 percent in the current year due to re-pricing of interest-bearing assets.

Although returns on equity and assets held steady YoY at 23.8 percent and 3.4 percent, respectively, the Group still delivered improved Earnings

per Share (EPS) which grew 8 percent from N6.15 to N6.65 in the current year.

The Group increased its share of the market as it secured increased customer deposits across the corporate and retail space as deposits grew by 15 percent to close at N4.26 trillion. Total assets also increased by 7 percent from N5.96 trillion to N6.35 trillion.

The Group created new viable risk assets as gross loans grew by 22 percent from N2.016 trillion to N2.462 trillion. This was executed prudently at a low cost of risk of 1.1 percent and a significant reduction in the nonperforming loan ratio from 4.98 percent to 4.30 percent.

Prudential ratios such as liquidity and capital adequacy ratios also remained above regulatory thresholds at 57.3 percent and 22.0 percent, respectively.

In demonstration of its commitment to its shareholders, the bank has announced a proposed final dividend pay-out of N2.50 per share,

bringing the total dividend to N2.80 per share.

In 2020, the Group remains strategically positioned to capture the opportunities in the corporate and retail segments, while efficiently managing costs and expanding further its retail franchise employing digital assets and innovation.

Consistent with this superlative performance and in recognition of its track record of excellent performance, Zenith Bank was voted as the Best Commercial Bank in Nigeria 2019 by the World Finance and the Most Valuable Banking Brand in Nigeria 2019 by The Banker. The Bank was also recognised as Bank of the Year and Best Bank in Retail Banking at the 2019 BusinessDay Banks and Other Financial Institutions (BOFI) Awards, and was ranked as the Best Digital Bank in Nigeria 2019 by Agusto & Co. Most recently, the Bank emerged as the Bank of the Decade (People’s Choice) at the ThisDay Awards 2020.

MARKETS

Investors not upbeat on consumer goods’ future earnings growth BALA AUGIE

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nvestors do not think earnings of consumer goods firms are going to get better as companies continue to lose money and the impact of coronavirus on global and domestic economy, devaluation risks, and inflationary pressures escalate.

The health of earnings and valuations has been continually and protractedly weak in the past two years while the industry average price-toearnings growth (PEG) ratio is -1.43, which underscores negative earnings and negative earnings growth.

The PEG ratio compares

the forward price-to-earnings ratio, based on the next 12 months of expected profits, to the expected growth rate of those profits, again for the next 12 months.

Generally, a PEG ratio less than one means a stock is cheap and attractive. On the other hand, a ratio higher than one means a stock is expensive and on the tipping point of being a sell-off.

Nigeria Breweries has a PEG ratio of -1.48, Guinness -0.25, Flour Mills -3.37, Dangote Sugar -0.45, Nascon Allied Industries -1.17, and Nestle -1.87.

However, Cadbury Nigeria and Vitafoam bucked the

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trend as they recorded a PEG of 0.25 and 0.8, respectively.

“Consumer goods stocks are not likely to fare better than other sectors under the current economic climate,” said Johnson Chukwu, managing director and CEO, Cowry Asset Management Limited.

“Ordinarily, they are supposed to be doing well in a large population like ours but they are struggling because of low consumer purchasing power, border closure, and hike in excise duties and Value Added Tax (VAT),” said Chukwu.

But Wale Olusi, head of research at United Capital @Businessdayng

Research Limited, said while valuations are not likely to be attractive due to weak sales, firms could underpin bottom-line (profit) if they refinance their debt so as to reduce cost of debt.

Analysts are less sanguine that the industry will surmount the headwinds in due course and deliver the desired return on investment for shareholders in form of a bumper dividend and share appreciation due to a plethora of challenges on the global and domestic fronts.

Inflation in Nigeria rose to 12.13 percent for the month of January, compared to 11.98 percent in December, caused

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news

Lagos to harness agribusiness potentials for food security Sterling Bank creates The Business Hub to support entrepreneurs Joshua Bassey & John Salau

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agos State government has again reiterated its commitment to harness the state’s potentials in agribusiness value-chain towards ensuring food security in Nigeria, with the launch of the Eko-City Farmers’ Market.

The Eko-City Farmers’ Market initiative, which is the maiden edition, is designed as a monthly market to be hosted on the last Sunday of each month.

Babajide Sanwo-Olu, the state governor, states that the main goal of the initiative is to ensure food security for the over 22 million people resident in Lagos.

Sanwo-Olu, who was rep-

resented by the state’s deputy governor, Obafemi Hamzat, says agriculture remains one of the main sectors through which his administration plans to achieve its objective to make Lagos a 21st Century economy.

“Also, we are committed to optimally harnessing our comparative and competitive advantage in agriculture to grow our GDP, support the establishment and growth of small scale industries in the value chain as well as provide employment for our teeming youth and women,” the governor states.

To effectively tap into the large opportunities and potentials in the agricultural sector, he says there is a need for food safety and

traceability that meets international market standards.

Through this initiative, the state will ensure that agricultural produce markets are managed in conformity with best global standards and practices, aimed at providing a platform for farmers both within the state and from the entire southwestern region so as to help curtail post-harvest losses.

However, in the spirit of regional integration, starting from the May edition of the farmers’ market, each of the market days shall be dedicated to a south western state; offering the opportunity to display those produce/products identified with such state.

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terling Bank plc has announced the creation of The Business Hub (TBH) in Lagos as part of its effort to support and promote small scale enterprises (MSMEs) and skills development in Nigeria.

The Business Hub was created in line with the bank’s strategy to create an enabling environment for young people to grow their businesses with each Hub location customised to fit a sector.

The first space located at Adebola House, Ikeja is focused on growing the Fashion Industry and has in the Hub a co-sewing space providing fashion business owners with a sewing machine, ironing table and weaving machine for as low as N2,000. The Hub also

has a meeting room, lounge and a modelling agency in it.

Head, strategy of the bank, Khafil Animashaun, who disclosed this in a statement in Lagos recently, said the bank realized that more needed to be done to support small businesses beyond financial advisory and as such the bank created the Hub as a safe and serene community where young people can ideate, develop and build their businesses.

“We understand that part of our economic development lies on the ingenuity of small-scale enterprises. We believe it is our role to contribute by creating a platform that allows that ingenuity thrive by helping the teeming populace upskill and achieve

2020 Lagos Polo: Sujimoto beats BUA Group to 7 – 5 score line

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ujimoto Lagos team defeated BUA Group Lagos team in one of the favourite games of the tournament at the just concluded 2010 Lagos International Polo Tournament.

The event was an opportunity to determine whether the strength of BUA Cement can withstand luxury finishing, quality and attention to detail of Sujimoto, Nigeria’s leading luxury real estate company. The Sujimoto team did not hesitate to show their mettle when they thrashed BUA Group to a 7 – 5 score line.

The tournament, held at the Ikoyi Polo Club on February 12, saw Sujimoto Construction Limited turn Ikoyi to Sotogrande of some sort when they clashed with Africa’s number one cement giant BUA Group. A game in which Sujimoto weathered the storm and emerged triumphant after BUA Group took a 4 – 2 lead, in what could easily pass for the best come back of the game, to win with a generous score line of 7-5 in favour of Sujimoto.

Speaking after the tournament, Sijibomi Ogundele, managing director, Sujimoto Constructions, said, “To be second is to be last! Everyone remembers Usain Bolt, but nobody remembers the second best runner. If you must win, win big!”

Established after the introduction of the noble game by the British colonial masters in 1904, Lagos Polo Club stands alone as a green gem and a watering hole for the country’s elites in the heart of Ikoyi, one of the upscale neighbourhoods of Nigeria’s commercial hub, Lagos.

Speaking about the 2020 edition of the Lagos International Polo Tournament, Ogundele, whose construction company is sponsoring one of the teams at the international event, recalled with nostalgia his childhood memories of the prestigious Ikoyi Polo Club and how it inspired the entrepreneur in him, “As a little boy, I would come to Ikoyi Polo Club.

Sit on the fence to get a proper view of the game, watching the agility of horses, the swing of players, and the cheers of spectators, I would remember the words of my teacher, that ‘there was no nobility in poverty’. www.businessday.ng

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their business dreams despite the daunting economic situation,” Animashaun said.

TBH has a co-working lounge; which is utilised by food and drink vendors, a meeting room, as well as a banking hall all with free Wi-Fi available to guests.

Animashaun said Sterling would replicate this across the country to ensure that more business owners get this opportunity, saying the Hub would organise free monthly trainings, financial advisory, printing and storage services for its members and she was sure that young business owners would find the environment inspiring, supportive and well- managed.

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Reverse of Discos shares in PHCN could cost FG 200% of initial sum - experts … MDAs debt accounts for 30% of Discos’ debt, non-reflective tariff a concern HARRISON EDEH, Abuja

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espiteheighteningcallsfor a resale of Nigeria’s power distribution assets on the back of poor performance, experts sayanewdilemmaisbeingthrown up, including that the move could lead Federal Government paying Distribution Companies (Discos) as much as 200% initial sum it sold the power assets during the privatisation exercise.

The Nigerian power sector has been hard hit with perennial problems of liquidity and inefficiency that has worsened adequate power supply postprivatisation, with the market governance very weak and poorly enforced.

Apart from worries that privatisation has created inefficient private electricity market with the added crisis of higher costs and low accountability, industry analysts are further worried that government continues to invest in forms of bailout and concessionary loans with no right governance structure to ensure delivery.

Experts, who spoke with BusinessDay, are of the view that should the government attempt to reverse the ownership of the Discos and resell the power assets, it will have to invoke the ‘Put

and Call Option Agreement’ it entered with the PHCN on behalf of the Discos.

The Put and Call Option Agreement requires that the government will have to repay the Discos 100% they acquired the assets, in addition to some 20% of the total sum for 5 consecutive years to take care of the investments and other ancillary services and gains of the Discos for the past five years post-privatisation.

The Discos had paid the Federal Government a total of $1.4 trillion to acquire 60% shares held for them by the Power Holding Company of Nigeria.

Chuks Nwani, an energy lawyer and power sector governance expert, says if the government wants to reverse Discos ownership of the assets, they would resort to the act they gave a ‘transfer order’ for the PHCN to relinquish its assets and shares.

“This was what enabled them to sell 60% of their shares to the Discos and private investors. The sale was underscored by various agreements such as the shareholders agreements between the investors and the distribution companies.

“The performance was signed before the investors, Discos and the Bureau for Public

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Enterprise. Improvement in service delivery, addressing aggregate commercial losses were also factored in agreement as well as how much the government should invest each year within five years of post-privatisation and service level agreements in the sector,” Nwani explains.

Experts say the government now faces a dilemma even if it decides to re-nationalise the assets amid persistent clamour for possible recapitalisation of the Discos.

Vice President Yemi Osinbajo had on several occasions signalled intentions of the government revisiting power sector privatisation over distribution companies’ poor performance.

Already, the Governor Nasir el-Rufai-led committee has commenced review on the ownership of the distribution companies with a view to seek solutions to problem confronting them, albeit the power sector in general.

According to the governor, “The problems in electricity are many; capacity is one of them perhaps.”

But analysts, including the Bureau for Public Enterprises (BPE), say reversing Discos ownership may not be the best option, but what is needed is effective market governance and ensuring a cost-reflective tariff and enforcement of prompt and appropriate payment for cost of power consumed by Nigerians.

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Giving and misgivings Second in the series of an Address delivered at the Rotary Foundation Dinner/Dance at the MUSON Centre, Marina, Lagos On 8th February 2020

Bashorun J.K Randle

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n last New Year’s Day, our former Rotarian announced to his family and friends that his New Year resolution is to return to active participation as a fullyfledged Rotarian – regardless of age and a certain amount of rustiness. His wife who is a medical doctor is not so sure that it is a great idea. She has her misgivings!! Her diagnosis is that her husband is suffering from PTRSD (Post Traumatic Rotarian Stress Disorder) which she describes as the consequences of the chaos and anarchy into which our nation has been plunged – in spite of the spirited interventions of the Rotary Club of Nigeria and Rotary International.

Our nation’s medical record has been exposed by the American author Karl Maier in his book: “THIS HOUSE HAS FALLEN” (published in 2000).

According to Nicolas Okpe: “The book is typical post-colonial prejudice by western journalists. The book x-rays Nigeria’s past and present problems. The major issues missing in the book are kidnapping and Boko Haram, if not one would think the book was written just last week.

No doubt, one may not agree with what the western world is saying about Nigeria and noting that most problems that have affected Nigeria today were created by the colonialists themselves.

It helps if we are to listen to what oth-

ers are saying about us either right or wrong.

Maier was the Africa correspondent for “The Independent” newspaper from 1986 to 1996, and has contributed to the Washington Post and The Economist. In the Preface, Maier declared, “Designed by alien occupiers and abused by army rule for three-quarters of its lifespan, the Nigeria state is like a battered and bruised elephant staggering toward an abyss with the ground crumbling under its feet. Should it fall, the impact will shake the rest of West Africa”.

He then added, “Very little trickles down. In the official arenas of international discourse -----the United Nations, the World Bank, the media ----Nigeria is known as a “developing nation”, a phrase that conjures up images of economic progress of the sort experienced by the West or among the Asian “Tigers”. Nigeria, like so many countries in Africa, is patently not a developing nation. It is under developing. Its people are far worse off now than they were 30 years ago. The government spends up to half of its annual budget on salaries of an estimated two million federal, state and local government workers, in 1914 to serve the British Empire, and the independent state serves as a tool of plunder by the country’s modern rulers. Nigerians spend a good part of their lives trying to get the better of the government for their own benefit or that of their family, their village, or their region.

Rare is the head of state who acts on behalf of the nation. The people are not so much governed as ruled. It is as if they are armed and barricaded themselves inside the company safe.

Nigeria’s leaders, like the colonialists before them, have sucked out billions of dollars and starched them (away) in western banks.

So far, the West has done little to help and has often made matters worse. It is hypocritical of the West to blame Nigeria for corruption, fraud, and drug running and to demand that Nigerians own up to their foreign debt

while at the same time allowing the funds garnered from such nefarious dealings to be deposited in Western banks. “A man who receives stolen goods is called a fence, but what do you call a country that is in the business of collecting stolen goods?” asked Dr. Folarin Gbadebo-Smith, a U.S. educated dentist and businessmen, while in his Lagos office one day.

“They lend Nigeria money, somebody here steals the same amount and gave it back to them, and then they leave these poor Nigerians repaying what they never owed. The role of the Western powers has been totally disgraceful.”

Maier went further to state that “Nigeria could, however, follow another.

Its potential is huge. Its tremendous wealth, if properly channelled, holds out the hope that a stable government could unleash the unquestioned energy and talent that pulsates through the rich ethnic mosaic. The human capital is there. Thousands of Nigerian professionals are well-educated and skilled to drive the country forward.

Anyone who has visited Nigeria’s markets and witnessed its people endure the constraints of bad government and the sinking economy can testify to the country’s resilience.”

As confirmation that Rotary is not alone in agonising over Nigeria and the formidable challenges of: “Satisfying Your Social Conscience Through Impactful Giving” “Daily Trust” newspaper of January 19, 2020 devoted its front-page headline to: “Nigeria wasted N60 trillion in seventeen years – MacArthur Foundation” “The John D and Catherine T. MacArthur Foundation has said Nigerian politicians wasted over N60 trillion budgeted for the country’s development from 1999 till 2018, making corruption to remain the single biggest deficit in the country.

The Foundation’s Country Director, Dr. Kole Shettima said this on Thursday in Abuja while delivering his goodwill message at the public

‘

They lend Nigeria money, somebody here steals the same amount and gave it back to them, and then they leave these poor Nigerians repaying what they never owed

Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

How NOT FOR SALE is changing narratives on seeking greener pastures abroad

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t is in human nature to believe that the grass is greener on the other side. This belief is what has fuelled the mad rush by some uninformed young men and women to look for any means to leave the country in the hope that they can find a better life elsewhere. The quick growth of the population and economic issues in recent years has produced stubbornly high youth unemployment in many places, leaving many youths doubting that they could ever have a decent life within the country.

As a result, a category of Nigerians believe it could be better abroad.

Reports of harrowing experiences of people who go through tortuous journeys in the desert, crossing the Mediterranean in overcrowded boats and ending up in European cities as slaves or asylum seekers, including those who never make it to their destination, reflect the desperation of many of the country’s youths, seeking the proverbial greener pastures abroad. You hear stories of Nigerians who fall off overloaded trucks and become food for wild animals in the desert or end up in slave camps in Libya, a location which has become the typical first point of call after leaving the country. Some are among those that regularly get drowned in the Mediterranean, all in search of the means of livelihood they could not find in their country. Experience shows that in most cases, they end up not find-

ing the greener pastures they seek outside the shores of the country. That is because the grass is not always greener on the other side. This essentially is the narrative that the National Agency for the Prohibition of Trafficking in Persons (NAPTIP) is trying to promote in the country, especially to young girls who leave the country with high hopes of a better life but end up in forced labour or sex slavery. Some of these girls are attracted by the fairy tales they hear about their compatriots who are succeeding abroad but arrive in Europe to find a completely different picture from what had been painted to them. They end up working for prostitution rings without pay, become domestic slaves or find themselves in forced marriages.

NAPTIP is trying to enlighten young girls who are often the most vulnerable in what is globally acknowledged as modern slavery that they can make their pastures green wherever they are in the country. Last year, NAPTIP launched the Not for Sale campaign to make many young Nigerian girls understand that what they are going to Sokoto to look for is right inside their Sokoto. In other words, they don’t need to risk their lives to travel abroad, especially under the traumatic conditions some of them go through, to find success. They have at their fingertips and within the country, the means to attain great success. What could www.businessday.ng

be considered the pilot phase of Not For Sale is targeted at girls from Edo and Delta states because statistics show that they form the bulk of victims of human trafficking in Nigeria, a problem which is evidently not peculiar to just those two states, but a national problem. The campaign involves sensitisation exercises in every segment of society to drive the message that girls are Not for Sale.

Young girls are made to understand that they can achieve their dreams without having to sell their bodies and that they should not allow themselves to be influenced by those who have chosen the wrong path to success. Parents who encourage their daughters to travel abroad for prostitution in order to become family breadwinners are persuaded to guide their innocent daughters into more dignifying vocations that would earn for the girls and the families, the respect of society. NAPTIP is using this campaign to pass across the message to families and relevant community actors that life is not a competition in which any means for winning is acceptable. Instead, young girls should be encouraged to seek success through legitimate and dignifying paths.

The Not for Sale campaign is not just about discouraging young girls from taking to prostitution or other indecent and degrading vocations for survival. It is also about helping

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presentation of the 258-page book, “Nigeria, Corruption and Opacity in Governance” written by Mr. Jide Ojo, a public affairs analyst.

Shettima, represented by the Deputy Country Director, Dr. Olaide Oladayo, said, “Between 1999 and 2018, Nigeria budgeted more than N60trn, the managers are politicians and not development partners. And we have asked what has happened to the N60trn budgeted for the Nigerian public and this is just the federal level.”

Shettima lamented that it is risky fighting corruption in Nigeria because those targeted will mobilise resources to obstruct it.

According to him, as things stand right now many people find it difficult to condemn them or even come out in the fight against corruption.

“A significant percentage of Nigerians has shown interest in the fight against corruption, and what that seems to suggest is that a lot of Nigerians when it is their turn to benefit, they don’t talk,” he said.

The author of the book, Jide Ojo, said the rationale behind the country’s inability to match the rest of the world can be found in lack of accountability.

According to him, the panacea to the country’s underdevelopment can be found in its ability to tackle corruption. “No matter the blame game we do it’s not going to solve the problem.

Even if our budget increased ten folds and we don’t solve the problem of corruption. It will be like pouring water in a basket.”

The Director General Technical Aid Corps, Pius Osunyikanmi blamed the country’s corruption challenges on neo-colonialism.

“President Buhari has taken anticorruption to a level that he is trying to make it one of the economic policies to be able to see that indeed we are able to recover as much as we could recover to be able to emancipate the people,” he said.

Niyi Ogundipe

them identify different forms of empowerment opportunities available within the country to enable them to have decent means of livelihood.

There is something each state of the federation can emulate from the Not for Sale campaign.

The economic situation in the country has rendered many young girls vulnerable and exposed to all manner of temptations, especially if those temptations offer a means of escape from the biting hardship that is being felt virtually everywhere.

As such, State and local governments do not have to wait for girls to become victims of trafficking before they think of rehabilitation programmes to give them better means of survival. There is virtually no human being that does not have any idea of how to turn one naira into two, all they need is some encouragement on whatever ideas they have and supported with the initial one naira. The growing trend among youths today is entrepreneurship. Governments can stem the tide of human trafficking by introducing skills acquisition programmes for young girls and providing means of take-off to help them find their feet.

Ogundipe, a businessman, lives in Lagos

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Monday 24 February 2020

BUSINESS DAY

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Markets should take note of Zenith Bank’s stellar results

Patrick Atuanya

Z

enith Bank Plc has traded in a range between N16 per share and N26.2 per share in the past year.

Its one year stock return stands at -11.4 percent, even as after-tax profits rose by 8 percent according to its 2019 results released on Friday.

The stock still trades at a discount to book value with priceto-book (P/B) ratio of 0.71, all the while sporting a juicy dividend yield of 15.4 percent as at Friday.

Zenith Banks P/B ratio compares to Guaranty Trust Bank (GTB) which trades at 1.31 and Stanbic IBTC at 1.36.

P/B ratios are often used to compare banks, because most assets and liabilities of banks are constantly valued at market values.

So is the market mispricing

Zenith Bank stock and why if so?

Some Banks in the Nigerian banking industr y have higher valuations due to either a history of efficiency or sometimes being a domestic subsidiary of a foreign firm with solid balance sheet.

If Zenith were not to be undervalued by the markets and traded at a conservative valuation of 1 times book value, then it would be a N28 stock.

The markets are clearly missing something here, because in a clear show of its resilience and market leadership, Zenith Bank on Friday announced impressive results for the year ended December 31, 2019, with profit after tax (PAT) surging past the N200bn mark to N208.8 billion, becoming the first Nigerian Bank to do so.

According to the banks audited financial results profit after tax rose by 8 percent from the N193 billion recorded in the previous year.

The Group also recorded a growth in gross earnings of 5 percent rising to N662.3 billion from N630.3 billion reported in the previous year.

This growth was driven by the 29 percent increase in non-interest income from N179.9 billion in 2018 to N231.1 billion in 2019.

In a positive sign for the future growth of the bank, fees on electronic products continues to grow significantly with a 108 percent Year on Year (YoY) growth to N42.5 billion in the current year from N20.4 billion in 2018.

This is a validation of the bank’s retail transformation strategy

which continues to deliver impressive results.

Profit before tax also increased by 5 percent growing to N243 billion in the current year from N232 billion, arising from top line growth and continued focus on cost optimisation strategies.

Impressively the cost-to-income ratio moderated to 48.8 percent from 49.3 percent.

An important ratio for determining the profitability of a bank, the cost-to-income ratio is calculated by dividing the operating expenses by the operating income generated. With this results Zenith Bank now has one of the lowest Cost to income ratios in the industry.

The drive for cheaper retail deposits coupled with the low interest yield environment helped reduce the cost of funding to 3 percent from 3.1 percent.

While returns on equity and assets held steady year-on-year at 23.8 percent and 3.4 percent respectively, the Group still delivered an improved Earnings per Share (EPS) which grew 8 percent to N6.65 from N6.15 in the current year.

Zenith Bank currently trades at a low price-to-earnings ratio of 2.98. Assuming the market gives it an earnings multiple equivalent to EPS or profit growth (8), then it should be a stock trading at N53 per share.

Zenith Bank also increased its share of the market as it secured increased customer deposits across the corporate and retail space as deposits grew by 15 percent to

‘

If Zenith were not to be undervalued by the markets and traded at a conservative valuation of 1 times book value, then it would be a N28 stock

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

Fences and restrictions

M

y column today is on fences.

Maybe not only the physical fences that you build around your house but restrictions in general that attempt to stop or limit the movement of something. My thoughts on this were brought to the fore by something I read with regards to the United States “problem” with migration from Mexico. I put problem in quotes because I still do not understand what the problem is. But lets table that for now.

In the late 1970s the idea of a Mexican illegal immigration problem became a hot political topic in the United States.

All these Mexicans were coming to the United States and taking American jobs or changing the culture of America or any of the typical stories that goes with the migration of people. The then president decided to appoint a former military general to take over the department responsible for manning the border and dealing with illegal immigration. This general happened to have been in charge of defending and manning the border between North and South Vietnam during the Vietnam war. He did what most good military generals do and implemented a relatively efficient system of border controls and patrols essentially making

ECONOMIST

it much more difficult from anyone to illegally cross the US-Mexico border. Prior to the general’s appointment crossing the border was close to a casual stroll. So, why was this a problem?

A couple of years prior to this new border protection move a couple of sociologists had started studying the lives of Mexican migrants. They undertook the Mexican migration project which today is still one of the largest and longest running immigration studies in the United States. They found that most Mexican migrants who came to the United States to work, mostly in seasonal jobs, went back home afterwards. According to their research, just as many Mexicans were leaving as were coming in. At least before the increased border control measures.

After the increased border control measures the story changed. People still tried to come. Coming in became more difficult of course but the incentive of higher pay in the United States was still there, and so people took the risks.

However, people stopped going home.

The difficulty in crossing the border applied to both those who were coming and those who were leaving. Those who wanted to come still came because of the income benefits, but those who would www.businessday.ng

close at N4.26 trillion from N3.69 trillion in 2018.

Total assets also increased by 7 percent to N6.35 trillion from N5.96 trillion in the previous period.

In a sign that the Bank is responding favourably to the CBNs push for increased lending, it created new viable risk assets as gross loans grew by 22 percent to N2.462 trillion from N2.016 trillion.

This was executed prudently at a low cost of risk of 1.1 percent and a significant reduction in the non-performing loan ratio to 4.30 percent from 4.98 percent.

Prudential ratios such as liquidity and capital adequacy ratios also remained above regulatory thresholds at 57.3 percent and 22 percent respectively.

Of utmost importance to the Nigerian markets which often trades as a dividends play, in demonstration of its commitment to its shareholders, the bank announced a proposed final dividend pay-out of N2.50 per share, bringing the total dividend to N2.80 per share for 2019 or a yield of 15.46 percent.

What that means is that if an investor buys N10 million worth of Zenith Bank stock or 500,000 shares, they would be paid a dividend of N1.56 million.

With yields on fixed income securities plummeting, that seems like a good deal.

Zenith Bank shares traded up 2.32 percent on Friday to close at N19.85 per share.

have previously left did not leave because the costs of leaving became significant. In essence, by the time the border control measures were implemented the net migration to the United States actually increased because people no longer returned home. They just stayed put.

They fence that they used to try to keep people from coming in also kept people from going home.

This story of fences is relevant to Nigeria not just in the context of our border issues but in other contexts as well.

Fences and similar restrictions tend to work both ways. On the current border closure issue, we have made it all about stopping “illegal” imports, but exports also pass through those same borders.

The very same exports we are trying to promote have fallen victim to the border restrictions. What will the net impact be?

The same can also be said of the “fence” erected by the central bank to limit the outflow of foreign exchange. Over the last six years all sorts of policies from direct bans to onerous documentation processes have been implemented to supposedly limit the outflow of foreign exchange. But do those same restrictions also serve to limit the inflow of foreign exchange too? Probably. Imagine an in-

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NONSO OBIKILI

vestor from Kenya who wanted to invest in a yoghurt factory but hears that the yoghurt factory will not be able to import milk concentrate unless they key into some plan crafted by people who have never tendered to or milked a cow in their entire lives? You can guess what that Kenyan investors decision will be. As has been demonstrated time and again, almost every economic activity requires some inputs from the rest of the world.

Restricting that access also restricts economic activity.

As we erect all these policy fences that we seem to be fond of erecting let us not forget that fences work both ways.

The same fences that keep things in also keeps things out.

Dr. Obikili is the chief economist at BusinessDay

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16

BUSINESS DAY

Monday 24 February 2020

EDITORIAL Frank Aigbogun

When courts count ballots

editor Patrick Atuanya

Election disputes are undermining Nigeria’s democracy

Publisher/Editor-in-chief

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

Bashir Ibrahim Hassan

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

B

y law, disputed elections are meant to be decided by the courts and in the case of governorship elections, the Supreme Court is the final arbiter. But in a democracy where at least a quarter of the governorship elections including the presidential elections were ultimately decided by the Supreme Court signals that our democracy is in danger this Electoral Commission is derelict in its duties.

To be clear, we commend the political actors for their willingness to allow the courts decide outcomes of disputed elections rather than recourse to self-help, but the Independent Electoral Commission (INEC) deserves the severest kind of reprimand for conducting some of Nigeria’s worst elections since 2007.

Since return to democracy in 1999, Nigeria’s elections have always been dodgy characterized by bare-faced rigging, buying of votes and intimidation of opponents.

Party politics have also followed the same trajectory and even some opponents have died in strange circumstances before or shortly after winning tickets to run for office on the platform of one of the major

political parties.

However, elections conducted by Maurice Iwu in 2007 will continue to live in infamy as the worst elections conducted during the fourth republic. But give Mahmood Yakubu time, at the rate he is going, he may just acquire the singular honour of conducting the worst elections in Nigeria. Sadly, presidents who make appointment of INEC chair, have allowed parochial interests cloud their judgement and appoint persons clearly unfit for office. The concept of honour is alien in our clime, otherwise Yakubu would have long resigned with an apology for the charade he pretends is an election.

Since the 2019 elections, 736 elections petitions have been filed at the Appeal Court. This more than the 611 petitions filed in 2015 and lower than the 1,290 petitions filed in 2007.

This data shows that Yakubu has conducted the second worst elections since 1999 and has destroyed what little progress made by his predecessor since 2011. This speaks to the incompetence of the electoral umpire even as it highlights desperation of politicians.

However, politicians do not get into office in Nigeria for the good of the greater majority despite their pretentions to integrity. For many it is

an opportunity to loot the public till, pander to special interests and push regional, ethnic and religious agenda.

Our amoral politicians, left to their own devices cannot be trusted with peaceful elections, an electoral umpire worth its salt will device creative solutions around daunting obstacles.

Mahmood Yakubu’s INEC failed at this. Despite collecting the biggest funds for any general elections in the country, voting materials arrived in many polling booths so late, elections had to be moved to the next day. Shoddy arrangements were made for adhoc staff with some sleeping in ramshackle houses and on the streets.

To complicate matters, Yakubu’s INEC inflicted on Nigerians nightmarish pain by postponing the elections. Already elections are trying times for Nigerians. On the eve of a general election, Nigerians stock up on food and fuel as their movements are restricted. The government shuts land borders, seaports and airports and patrol roads with soldiers.

People are compelled to shut their businesses adding to economic ruin.

The postponement of the Presidential and National Assembly elections on February 16, 2019 cost the economy over $1.16 billion, using a back of the envelope estimate that divides Nigeria’s $427 billion gross domestic

product in 2018 by 365 days in a year and calculating for one wasted day.

Yet this costly, shambolic and failed elections has seen the Supreme Court decide governorship votes in 10 out of the 29 state elections since February 2019. The Justices also called the presidential elections. The Supreme Court nullified or upheld elections in governorship elections in Imo, Sokoto, Oyo, Osun, Bayelsa, Kano, Zamfara, Plateau, Bauchi and Adamawa states It begs the question, why did Nigeria burn N242 billion on elections that still require Justices of the Supreme Court to finally decide the outcomes? And why did Nigeria go through a harrowing experience to vote in elections that no longer matter?

We call on the INEC to begin rethinking the conduct of elections in Nigeria. It must leave the stone-age and join the rest of the world in employing technology to make elections more transparent and less chaotic. We call on the government to amend the electoral act and make it in tune with current realities. Clogging the courts with election petitions slows the business of the judiciary and denies justice to those who have to wait until the Supreme Courts decide election petitions.

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

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BUSINESS DAY

Monday 24 February 2020

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Judicialisation of elections erodes democratic legitimacy in Nigeria global Perspectives

OLU FASAN

J

udicial activism in electoral matters is now prevalent in Nigeria. Abraham Lincoln famously defined democracy as “the government of the people, by the people, for the people”. But instead of “government by the people”, we are seeing “government by judges”, with the growing phenomenon of judge-made governors. The recent Supreme Court rulings overturning the results of the Imo State and Bayelsa State governorship elections are latest instances of such judicial overreach.

In the case of Imo State, the Supreme Court, on 14 January 2020, controversially removed Emeka Ihedioha, of the People’s Democratic Party (PDP), as governor and replaced him with Hope Uzodinma, the All Progressives Congress (APC) candidate, who, according to the Independent National Electoral Commission (INEC), came fourth in the March 9 2019 governorship election. And in the case of Bayelsa State, the Supreme Court, in another controversial judgment, on 13 February 2020, stopped the APC candidate David Lyon, who had been declared winner of the state’s gubernatorial election of November 2019, from being sworn in, and installed Douye Diri, the PDP candidate, as governor instead.

Of course, no one should shed tears for Nigerian politicians. Hardly any of them comes to equity with clean hands.

Elections in Nigeria are akin to a gametheoretic Prisoners’ Dilemma. Everyone cheats in the fear that their opponents would cheat, but, in end, everyone risks being a loser. It’s always a question of who can outsmart the other. So, this is not a sympathetic piece for either Ihedioha or Diri; it is about the danger that judicial activism poses to representative democracy in Nigeria.

Judicial activism occurs when judges are too willing to overturn decisions of a political or democratic nature. In a more negative sense, it’s defined as when judges overturn such decisions based on subjective judgements. Of course, courts are a necessary part of the checks and balances in any democratic constitution.

But the law must not be the continuation of politics by other means.

In his BBC Reith lectures last year, Lord Sumption, a retired Judge of the UK Supreme Court, argued that the principles of consent and legitimacy that underpin representative democracy should not be eroded by judicial processes. Judicial restraint should be exercised in political matters, he cautioned. He went on to acknowledge, however, that it’s “the decline of politics” that leads to “the rise of law to fill the void”, adding that “as politics has lost its prestige, judges have been ready to fill the gap.” Lady Hale, the outgoing president of the UK Supreme Court, made the same point in a separate lecture, arguing that law inevitably rises where politics fails!

Of course, it’s precisely because of the utter failure of politics that judges are installing governors and legislators in Nigeria. This is a country where elections are too often blatantly rigged or marred by significant irregularities. Where would someone turn to if he or she feels cheated politically? As Lady Hale said, “the premise of all constitutionally entrenched human rights is that ultimately the courts have to be the arbiters”.

But that puts a huge responsibility on judges. The judicial processes should not become a tool for perverting the will of the people. Judicial activism or overreach can be an enemy of democratic legitimacy. Judges have enormous discretionary powers, but they should exercise them carefully within the ambit of liberal democratic values. Given their subtlety of mind and learning, judges can justify any decision as being based on sound legal principles. But judges only derive their superior authority from their dispassionate evaluation of evidence and argument in reaching decisions. Yet, the Supreme Court’s rulings in the Imo State and Bayelsa State governorship cases seemed to defy such objectivity evaluation.

Let’s start with Imo State. The main

argument in the case was that INEC excluded the results from 388 polling units from the total votes. Uzodinma argued that he secured 213,695 votes from the polling units and that if that votes had been added to the 96,458 that INEC originally assigned to him, his total score would have been 310,153, compared to Ihedioha’s 273,404, and he would have won the election. Uzodinma submitted that Ihedioha secured only 1,903 votes from the 388 polling units, which seems strange, given that PDP was also strong in the state and that APC went into the election a deeply divided party, with Uche Nwosu, son-in-law of the former governor, Rochas Okorocha, contesting under another party, which would have split APC’s votes – divided parties rarely win elections!

Ihedioha and INEC rejected Uzodinma’s claims, and both the Election Tribunal and the lower court dismissed his petition. But the Supreme thought differently. The court’s reasoning was two-fold. First, it said that Ihedioha didn’t produce facts and figures to disprove Uzodinma’s claim that he secured 213,695 votes from the 388 polling units.

Second, the court argued that INEC didn’t tender the actual results for the polling units. And on the basis of the two arguments, the Supreme Court awarded the 213,695 votes to Uzodinma and declared him winner of the election.

But did the Supreme Court dispassionately evaluate the evidence – the votes – to convince itself of their probative value? The Tribunal and the lower court apparently did – and rejected Uzodinma’s case. But the Supreme Court didn’t; rather, it seemed determined to punish Ihedioha and INEC for failing to produce their own results of the 388 polling units. But that didn’t make Uzodinma’s results valid. Two wrongs can’t make a right. The will of the people and democratic legitimacy are too important for election cases should not be won on technicalities.

Interestingly, after the Supreme Court added the 213,695 votes to Uzodinma’s score, the total valid votes rose to 950,952, exceeding the 823,743 total accredited voters by 127, 209. Did it not matter to the Supreme Court that, after it awarded the 213, 695 votes to Uzodinma, the total valid votes exceeded the total number of accredited voters by 127,000?

‘

Of course, no one should shed tears for Nigerian politicians.

Hardly any of them comes to equity with clean hands.

Elections in Nigeria are akin to a game-theoretic Prisoners’ Dilemma

There were essentially more votes than voters!

The British playwright Tom Stoppard once said that “It’s not the voting that makes a democracy, it’s the counting”.

The counting in the Imo State governorship poll was clear dubious. How could Uzodinma secure 213,695 votes and Ihedioha 1,903 in the 388 polling units?

The Supreme Court should simply have ordered another election in the polling units. It’s always helpful, from a democratic legitimacy point of view, for courts to err on the side of caution, of judicial restraint, in such matters. But clearly, the Supreme Court didn’t!

Well, the court also didn’t err on the side of caution in the Bayelsa State case.

The Supreme Court’s reasoning for nullifying the election of David Lyon, of the APC, and making Douye Diri, of the PDP, governor was that Lyon’s deputy, Biobarakuma Degi-Eremienyo, presented forged certificates to INEC. Indeed, it seems that Degi-Eremienyo had a way with name mutations, using different names on different documents.

But the Supreme Court had discretion and it exercised it harshly. It could have ordered the replacement of DegiEremienyo as deputy governor or, if that was impossible given the joint-ticket, it could have ordered another election. Again, I come back to the issue of democratic consent. The people of Bayelsa State didn’t vote for Diri and his running-mate, Lawrence Ewrujakpor.

To make them governor and deputygovernor of the state, as the court did, amounted to overturning the will of the people.

A democracy is not truly representative if it doesn’t guarantee direct electoral links between the voters and their elected representatives; if it doesn’t ensure that governments only emerge through the explicit consent of the governed expressed by votes in elections.

Sadly, the judicialisation elections, with the growing phenomenon of judgemade governors, is eroding the basis of representative democracy in Nigeria. It should stop!

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

The imperative of succession planning to business sustainability

M

any businesses take out insurance to mitigate potential risk exposures and uncertainties – such as flood, hurricane, fire, burglary, etc. They install security systems to safeguard against theft and other threats, and back up data to protect proprietary information. There is a tendency to get too busy with the day-to-day operations to the detriment of making succession planning a priority.

Succession planning is at the core of business sustainability and aims to meet the present needs of the business without compromising the ability of the business in the future to meet its needs. Succession planning is a sure way of ensuring that the future capacity of the business to drive growth is not jeopardised by the exit of a key player. Dr. William Rothwell defines succession planning as the “deliberate and systematic effort by an organisation to ensure leadership continuity in key positions, retain and develop intellectual and knowledge capital for the future and encourage individual employees.”

Succession planning is about the development and management of talent across all cadres and not only at the executive management level. It involves the strategic, systematic and deliberate effort to develop competencies in potential leaders.

Whilst the Human Resource function plays a key role in succession planning and talent management, the Board of Directors should

have a clear sight of capacities within the senior and executive management cadres. Article 1.5 of the Nigerian Code of Corporate Governance provides that “the Board helps in ensuring the establishment and implementation of a succession plan, appointment process, training mechanism and remuneration structure for both the Board and senior management of the Company”.

Succession planning should be designed for the adaptability of the business in the face of changing market demand and the evolving needs of the business. It is important that the plan does not stop at identifying potential successors to key roles. To be effective, all functions that are currently and potentially strategic to the business should be identified and included in the plan – regardless of cadre. In preparing its Succession Planning Policy, an organisation should give careful consideration to existing talent. To enable the Board undertake an assessment of middle management capacity, this cadre of staff should have periodic interaction with the Board – reporting responsibilities at Board and Committee meetings. The responsible Board Committee should periodically review internal capacity and plans to bridge identified gaps. Adequate training, coaching and mentoring programmes should be put in place and carefully executed.

Where the requisite capacity is lacking, the Board should not shy away from looking outside www.businessday.ng

the organisation to fill specific roles in the event of unanticipated exit. Whatever option is expedient, an organisation’s policy on succession planning must be clearly defined, transparent and properly managed to avoid disgruntled employees sabotaging the process.

As organisations are typically established to subsist in perpetuity, the process for implementing the succession planning is continuous and not time bound. A good Succession Planning process gives assurance to the organisation’s stakeholders that their interests will not be negatively impacted in the event of sudden exits and that the going concern status of the organisation will not be derailed.

Whether at the Board or at Management level, the talent development and management process is incomplete without opportunities for evaluation. Retaining non-performers in the system will ultimately prove detrimental to an organisation’s health. A proactive organisation will therefore structure its performance evaluation system around the attainment of set goals and objectives and ensure that periodic performance evaluation is undertaken to enable Management and the Board identify areas of improvement and note the star performers within the organisation both for reward and to optimise the execution of the organisation’s strategy.

Ownership of the succession planning process by the Board has been proven to enhance

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Bisi Adeyemi both organisational process and outcomes.

Increased awareness at the Board level about the significance of succession to organisational sustainability will encourage Board members to focus on their own individual and collective professional development to be positioned to identify potential successors to key roles more easily which will foster smoother transition to leadership roles.

According to Donald Lowry, the importance of succession planning to business continuity and sustainability lies in fact that the “governance skills, processes and structures that got today’s companies where they are now will not be the same as those required to sustain high business performance in the future”.

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

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18

Monday 24 February 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

BANKING

Takeaways from Zenith Bank’s full-year 2019 result

T

he Interest income of the tier1 bank declined 5.6percent year-on-year to N491.27 billion, on the back of a weaker income from loans to customers which was down -14.7percent year-on-year to N232.95 billion.

However, in the light of the new minimum LDR limit of 65percent, there was a surge in interest income from loans and advances quarter-to-quarter of 29.1percent, reflecting the significant expansion in loans and advances which was up 26.5percent yearon-year and up 12.9percent quarter-to-quarter to N2.31 trillion.

Notwithstanding the growth in loans, our assessment suggests that loans to deposit ratio, at 56.3%, was shy of the CBN’s guideline of 65.0% as at December 2019.

The bank recorded a strong growth in the noni nte re st i n c o m e w h i c h settled 29percent higher year-on-year at N232.12 billion, buoyed by expansions in fees and commis-

L-R: Jeffrey Williams-Edem, group head, merchant acquiring, Interswitch; Akeem Lawal, divisional CEO, payment processing, Interswitch; Enyioma Anaba, group head, corporate segments, corporate marketing, Interswitch, and Bashir Bello, director finance, Sheraton, at the American Express and Interswitch Merchant Acceptance launch held at Twin Waters, Lagos

sions income which grew 22.4percent year-on-year to N100.11 billion and gains on investment securities up 46.9percent year-on-year to N117.80 billion. The bank recorded a 47.1per-

cent growth in bonds and T-bills trading gains that likely resulted from the fall in yields during the latter part of 2019.

The brilliant performance in the Non interest

AVIATION BANKING

income helped reduced the impact of a decline in net interest income at 9.7percent year-on-year to N267.03 billion, and led to an expansion in operating income of 3.9percent year-

on-year-to N353.12 billion.

In full year 2019, profitability was stronger, with profit-before-tax settling 5.0percent higher year-onyear, while profit-after-tax settled 8.0percent, on ac-

count of a 10.0percent drop in income tax expense.

O p e ra t i n g e x p e n s e s grew marginally by 2.8perc e n t y e a r- o n - y e a r t o N231.83 billion, with biggest increase recorded in personnel expenses which grew 13.6percent year-onyear to N77.86 billion. The personnel expenses constituted 33percent of operating expenses The bank’s interest expense grew by 2.8percent year-on-year to N148.53 billion, reflecting the higher cost of deposits from customers up 12.0percent to N80.58 billion. There was also a significant growth in interest expense quarteron-quarter by 7.9percent.

Return On Equity and Return On Asset was flat at 23.8percent and 3.4percent respectively. In addition, both liquidity at 57.3percent and capital adequacy at 22percent ratios remained above regulatory thresholds in the review period.

The bank also proposed a final dividend of N2.50 per share which translates to a dividend yield of 12.59percent based on last close price on Friday.

CONSUMER GOODS BANKING

Global passenger traffic, revenue Heineken unveils consumer-facing campaigns to drop over coronavirus outbreak to deepen Nigerian market reach IFEOMA OKEKE

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he International Air Transport Association (IATA) has announced that its initial assessment of the impact of the Novel Coronavirus 2019 outbreak (COVID-19) shows a potential 13 percent full-year loss of passenger demand for carriers in the Asia-Pacific region.

Considering that growth for the region’s airlines was forecast to be 4.8 percent, the net impact will be an 8.2 percent full-year contraction compared to 2019 demand levels.

In this scenario, that would translate into a $27.8 billion revenue loss in 2020 for carriers in the Asia-Pacific region— the bulk of which would be borne by carriers registered in China, with $12.8 billion lost in the China domestic market alone.

In the same scenario, carriers outside Asia-Pacific are forecast to bear a revenue

loss of $1.5 billion, assuming the loss of demand is limited to markets linked to China.

This would bring total global lost revenue to $29.3 billion (5 percent lower passenger revenues compared to what IATA forecast in December) and represent a 4.7 percent hit to global demand.

In December, IATA forecast global RPK growth of 4.1 percent, so this loss would more than eliminate expected growth this year, resulting in a 0.6 percent global contraction in passenger demand for 2020.

These estimates are based on a scenario where COVID-19 has a similar V-shaped impact on demand as was experienced during SARS. That was characterized by a six-month period with a sharp decline followed by an equally quick recovery. In 2003, SARS was responsible for the 5.1 percent fall in the RPKs carried

by Asia-Pacific airlines.

The estimated impact of the COVID-19 outbreak also assumes that the center of www.businessday.ng

the public health emergency remains in China. If it spreads more widely to Asia-Pacific markets then impacts on airlines from other regions would be larger.

It is premature to estimate what this revenue loss will mean for global profitability.

We don’t yet know exactly how the outbreak will develop and whether it will follow the same profile as SARS or not.

Governments will use fiscal and monetary policy to try to offset the adverse economic impacts. Some relief may be seen in lower fuel prices for some airlines, depending on how fuel costs have been hedged.

“These are challenging times for the global air transport industry. Stopping the spread of the virus is the top priority. Airlines are following the guidance of the World Health Organization (WHO) and other public health authorities to keep passengers safe, the world connected, and the virus contained.

SEGUN ADAMS

I

nternational beer brand and owners of Nigerian Breweries, Heineken has launched the first of its campaigns that aims to endear the brand to more Nigerian consumers through sports, fashion and movie.

Heineken which launched its “Better Together” campaign for the 2020 UEFA Champions League competition will bring Euro 2020, Formula 1 and James Bond “No Time To Die” Movie premiere to Nigerian consumers as well as sponsor local fashion shows, the beer maker said.

“Every year, Heineken sets the bar for unique, unforgettable consumer-facing campaigns. This year, we have no plans to rest on our laurels,” said Sarah Agha, Portfolio Manager, International Premium Brands, Nigerian Breweries at a media briefing in Lagos last week.

Heineken’s move to expand its brand footprint

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across more platforms comes amid intensifying beer war in Nigeria on the back of economic and industry-specific challenges affecting big beer makers in the country.

He i n e ke n ’s Ni g e r i a n Breweries pared profit in 2019 but one of its peers saw loss worsen by over 100 percent, underscoring harsh operating environment, stiff competition and consumers switch to cheaper brands.

However, Nigeria remains one of Heineken’s best markets last year.

In 2019, the Heineken brand volume grew by 8.3 percent, the best performance in over a decade on the back of double-digit growth in over 40 markets including Brazil, Mexico, South Africa, Nigeria, the UK, Romania and Germany.

“Today 12 markets sell more than one million hectolitres of Heineken annually, now including the UK and Nigeria,” the global beer company said in its 2019 annual report. @Businessdayng

Fo r 2 0 2 0 , He i n e ke n would kick off with its traditional sponsorship of the UEFA Champions League and expand its football coverage.

“For the first time Heineken has built on its successful association with UEFA by signing a further sponsorship agreement to become the Official Beer Partner of UEFA EURO 2020,” said Agha.

The company said it would work with the British High Commissioner to bring James Bond actor Daniel Craig to Nigeria for the “No time to die” premier.

Heineken would also be sponsoring the Lagos Fashion Week in April to help local talents get recognition, as well as our sponsor the Design Fashion Africa which is also set to make a huge come back.

Heineken, for the first time ever, will dial-up its sponsorship of Formula 1 in Nigeria with the Formula 1 Sundays to be hosted at its Heineken House in Lagos.

Monday 24 February 2020

BUSINESS DAY

19

COMPANIES&MARKETS Amazon Energy, NCDMB, NAOC develop local competence in gas flaredown technology DIPO OLADEHINDE

…Amazon hires 48% of trainees

n a bid to develop local capability, Amazon Energy Limited has completed a training programme for 25 engineers as part of the local content requirements for the Kwale gas flaredown project contracted to it by the Nigeria Agip Oil Company.

The training is in accordance with the NOGICD Act (2010) and the Nigerian Content Development and Monitoring Board (NCDMB)Human Capital Development Implementation Guidelines (2014). The training which allowed the beneficiaries secured on-the-job learning was done on during the NAOC Kwale Gas Flaredown Project which lasted 30 months.

“We are proud that Amazon Energy has grown from an Engineering Company to a leading and diversified company that it is today. We are pleased to have achieved this level of success over a period of time,” Group, Chief Executive Officer, Amazon Energy, Olayinka Oluwatimehin said.

At the Close Out ceremony, 25 trainees graduated from the NAOC Kwale Gas Flaredown Project. Of the 25 trained youths, Amazon Energy employed 12 which is 48% of the total trained with requisite skills across sectors such as Civil/Structural Engineer-

ing; Process Engineering; Mechanical and Piping Engineering; Instrumentation Engineering and Electrical Engineering.

“All the trainees worked with Amazon Energy across different departments and we have retained 12 of them. We remain committed to develop our people and create an environment where people can thrive and excel at what they do,” Oluwatimehin said.

The CEO of Amazon Energy said the occasion is a landmark event as it underscores the firm commitment to Nigerian content, growth and development “as company and we are excited about the opportunity to contribute to the development of the Nigerian oil and gas industry in general.”

The CEO noted that Amazon Energy designed and have installed 4 compressors (two-LP compressors and two atmospheric compressors) and other facilities to achieve flaredown.

“Amazon Energy will be 20 years in July 2020 and we started out doing just engineering but today, we are a full construction and turnkey company. The next level for us beyond what we are doing is to engage in development projects where we take risks as a project developer to develop projects that create value in

I

the industry,” Oluwatimehin said.

General Manager, Nigerian Content at Nigerian Agip Oil Company (NAOC), Tajudeen Adigun said AGIP is committed to providing support to Amazon Energy and other Nigerian businesses to drive growth and promote job creation.

“We are happy to be celebrating the Close Out ceremony of the Kwale Gas Flaredown project and graduation of trainees as a result of the project. We are proud of this and would continue to do more towards building local competence to drive growth in the oil and gas space,” Adigun said.

Tunde Adelana, Director, Monitoring & Evaluation at NCDMB sincerely appreciate Amazon Energy for meeting the approved training manhours within the 30 months duration of the Kwale Gas Flaredown project.

“We believe the spirit of dedication and commitment to the growth of local competence will continue after the training,” Adelana said.

Ama Ikuru, General Manager, Capacity Building at NCDMB said the number of trainees employed by Amazon Energy from the total trained number is impressive and deserves commendation.

L-R: Gabriel Aduda, permanent secretary, ministry of youth and sport; Wale Olaoye, CEO/GMD, Halogen Group; Odunayo Adekuoroye, World No 1 Ranking female wrestling title holder; Sunday Dare, minister of youth and sports, displaying Nigerian Sports Kits, at the singing of MoU between Halogen Group and the Ministry of Sports on the adoption of the female athlete towards preparation for 2020 Olympic, in Abuja.

L-R: Olufemi Oyewole, 2nd vice president, National Institute of Marketing of Nigeria (NIMN); Seni Adetu, guest speaker; Tony Agenmonmen, president/chairman of council, NIMN, and Amaechi Okobi, fellows of the Institute, at the National Institute of Marketing of Nigeria Fellows’ dinner and awards night in Lagos.

OIL&GAS

Powergas Nigeria Group commits to strengthening ESG global best practices KELECHI EWUZIE

C

ompressed Natural Gas producer and distributor, Powergas Nigeria group, says it is committed to strengthen current global best practices and the contemporary marketplace while delivering the desired financial bottom-line in business.

Powergas Nigeria group stated that it acknowledges that it has broader responsibilities to identify and manage environmental and social risks and impacts of their companies and projects.

Deepak Khilnani, Chairman of the group, comprising of Powergas Nigeria, Cummins Power Generation (Nigeria) Limited, Soventix Hybrid Nigeria and Gentec Nigeria said the group have taken the campaign for Corporate Sustainability within its businesses to a new

level, whilst also continuing to focus on the communities within its environments, its employees and the various people who contribute in one way or the other to driving the success of their business.

Khilnani while speaking as the chairman at the maiden Environmental, Social and Governance (ESG) Leadership Commitment Summit recently said the group has been on a 20 year journey to build a business in Nigeria that can deliver value to all employees, communities and the nation.

According to Khilnani, “Our focus on the use of domestic natural gas as a viable replacement for imported and polluted fuels has been central to that mission. I am pleased to be able to say that we have achieved our objectives in an ethical and sustainable way by ensuring that our ESG commitment is at the core of our

business”.

The summit which involved the leaders of the business from across the group featured a paper presentation by Nosike Agokei CFIS, a Sustainability Expert. His presentation underscored the importance of leadership commitment to ESG as a phenomenon in the contemporary society.

Agokei in his presentation says the adoption of ESG sustainability and investment in this course of action must not be because the government dictates so or to fulfil the terms of government subsidies or funding, adding that it should be because this is what the management team chooses to do in their own enlightened self-interest – to create a firm that would be a profitable agent of change in cleaning up one of the most archaic and under progressed segments of the energy industry.” www.businessday.ng

L-R: Abiodun Osoba, founder/CEO, Agile Advisor Africa/chairman, Agile Practitioners Association of Nigeria; Tunde Giwa, head, enterprise, Agile Transformation, The Agile Advisor Africa/director, Agile Practitioners Association of Nigeria, and Itohan Iyalla, Lead Product Consultant, Renmoney/Agile Practitioner, at a press conference on the 2020 Annual Agile Nigeria Conference in Lagos.

L-R: Yemi Ojo, development manager, BIC Nigeria; Hassan Jamiu, 5th winner; Guillamaume Groues, area development manager, BIC West Africa; Oscar Ukonu, 6th winner, and Patrick Bello, trade marketing manager, BIC Nigeria, at the unveiling of the winners of BIC Art Master Africa Competition in Lagos.

Pic by Pius Okeosisi

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20

Monday 24 February 2020

BUSINESS DAY

In Association With

Big tech

How to make sense of the latest tech surge The big tech firms’ shares have been on a tear

Business and the next recession When economies change, so do recessions. What will the next one look like?

I

N 2018 A new word entered Silicon Valley’s lexicon: the “techlash”, or the risk of a consumer and regulatory revolt against big tech. Today that threat seems empty. Even as regulators discuss new rules and activists fret about the right to privacy, the shares of the five biggest American tech firms have been on a jawdropping bull run over the past 12 months, rising by 52%. The increase in the firms’ combined value, of almost $2trn, is hard to get your head round: it is roughly equivalent to Germany’s entire stockmarket.

Four of the five—Alphabet, Amazon, Apple and Microsoft—are each now worth over $1trn. (Facebook is worth a mere $620bn.) For all the talk of a techlash, fund managers in Boston, London and Singapore have shrugged and moved on. Their calculus is that nothing can stop these firms, which are destined to earn untold riches.

This surge in tech giants’ share prices raises two worries. One is whether investors have stoked a speculative bubble. The five firms, worth $5.6trn, make up almost a fifth of the value of the S&P 500 index of American shares. The last time the market was so concentrated was 20 years ago, before a crash that triggered a widespread downturn.

The other, opposite concern is that investors may be right. The big tech firms’ supersized valuations suggest their profits will double or so in the next decade, causing far greater economic tremors in rich countries and an alarming concentration of economic and political power.

The question of a bubble is a reasonable one. Tech cycles are an integral part of the modern economy. The 1980s saw a semiconductor boom. Then, in the 1990s, came PCs and the internet. Each cycle fades or ends in a bust.

Today’s upswing got going in 2007 with the launch of the iPhone.

By 2018 it, too, seemed to be showing its age. Sales of smartphones were stagnating. Data scandals at Facebook crystallised anger about the tech giants’ flippant approach to privacy. Global antitrust regulators were on the alert. And the loss-making antics of flaky tech “unicorns”,

A Balkan betrayal Downturn, disrupted

C such as Uber and WeWork, evoked the kind of speculative froth often seen at the tail end of a long boom.

In fact, at least for the biggest tech giants, today’s valuations are built on more solid foundations. Together, the five biggest firms have cranked out $178bn of cashflow after investment in the past 12 months (see Buttonwood). Their size has yet to slow their expansion: their median sales growth, of 17% in the latest quarter, is still as impressive as it was five years ago.

Consumers say they care about privacy but act as if they care much more about getting stuff, and preferably without having to pay for it in cash. Since the end of 2018 the number of people using Facebook’s services (including Instagram, Messenger and WhatsApp) has risen by 11%, to 2.3bn. Regulators have punished tech firms for tax, privacy and competition misconduct, but so far their efforts have been like bringing a pea-shooter to a gun fight: the fines and penalties they have imposed amount to less than 1% of the big five’s market value, a tolerable cost of doing business. And the agonies of some of the unicorns, and their biggest backer, SoftBank, have only demonstrated how hard it is to replicate the scale and network effects of the big five.

Meanwhile, the size of the opportunity is vast. As our special report in this issue explains, many parts of

the economy have yet to digitise.

In the West only a tenth of retail sales are online, and perhaps a fifth of computing workloads sit in the cloud with the likes of Amazon and Microsoft. Big tech operates globally, giving it more space to expand, especially in emerging economies where spending on digital technology is still relatively low.

The trouble is that if you think that tech firms will get much bigger and diversify into more industries, from health care to agriculture, it is logical to assume that the backlash against them will not fade away but, eventually, get bigger.

As big tech’s scope expands, more non-tech firms will find their profits dented and more workers will see their livelihoods disrupted, creating angry constituencies. One crude measure of scale is to look at global profits relative to American GDP. By this yardstick, Apple, which is expanding into services, is already roughly as big as Standard Oil and US Steel were in 1910, at the height of their powers. Alphabet, Amazon and Microsoft are set to reach the threshold within the next ten years.

When recession strikes it will fuel new resentments. Big tech could face a storm that few have yet paid much attention to (see article). The big five firms employ 1.2m people and are now by far the biggest investors in corporate America, spending almost

$200bn a year. Their decisions about whether to squeeze suppliers, slash investment or attack weaker rivals will prove as controversial as those of carmakers when Detroit still ruled in the 1970s, or even of Wall Street in 2007-08. Big tech’s role in politics is already toxic; social media and videos influence elections from Minnesota to Myanmar.

All this means that, far from having peaked, anger may be in the foothills. Executives hope that slick lobbying will protect them. But even today, the picture outside America is not of inaction but a tumult of regulatory experiments. China keeps its internet giants under tacit state control and wants to rely less on Silicon Valley, including Apple, which is already dealing with the covid-19 virus and other headwinds there. At least 27 countries have or are considering digital taxes. India has cracked down on e-commerce and online speech. The European Union (EU) wants individuals to own and control their own data, an approach this newspaper favours, although it may take years of innovation to create a system that is easy for consumers to use and profit from. This week the EU proposed curbs on artificial intelligence. Even in America, trustbusters may limit big tech’s ability to gobble up startups, a strategy which has been instrumental to the success of Alphabet and Facebook in particular.

AST YOUR mind back to 2007. Flashy types were showing off their first-generation iPhones. Netflix sent DVDs through the post for people who did not have the time to drop into a branch of Blockbuster. The biggest firms in the world were old-economy stalwarts such as General Electric and Royal Dutch Shell. Myspace ruled online. That seemingly distant era was when America, followed by Europe and most of the rich world, last fell into recession. Since then the way people buy products, entertain themselves, move around and borrow money has altered and in some cases been revolutionised by a mighty band of global technology titans.

“The composition of the economy has changed since 2007, and hence so will the nature of recessions,” says Douglas Elliott of Oliver Wyman, a consultancy. Working out the impact of the next recession is important because one is on the way, sooner or later. Past recessions have been costly. The Economist calculates that in the most recent downturn 11m people lost their jobs in rich economies and profits of big listed firms in Europe and America dropped by 51% and 30%, respectively. Stockmarkets always take a battering when the economy turns (see chart 1). Recessions matter to governments and central banks, which must work out how to respond, and to firms and investors, because downturns sort the wheat from the chaff. In the past three recessions the shares of American firms in the top quartile of each of ten sectors rose by 6% on average, while those in the bottom quartile Continues on page 21

Monday 24 February 2020

BUSINESS DAY

21

In Association With

A strategy on autopilot

How America deals with Africa, despite Donald Trump The president is not interested. American diplomats must do their best

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WASHINGTON, DC HESE DAYS it is notable when both Republicans and Democrats oppose a foreign policy of Donald Trump’s in strident unison. When it was reported that Mark Esper, the secretary of defence, was set to remove American forces from the Sahel, where jihadists have been wreaking havoc across a vast swathe of Africa, members of Congress reacted angrily together, arguing vigorously against such a course.

A few weeks later Mike Pompeo, the secretary of state, sounding ambivalent on the matter, set off on the first tour of subSaharan Africa by any member of Mr Trump’s cabinet for a year and a half. The carefully chosen countries were Senegal, Angola and Ethiopia. Mr Pompeo made friendly noises in all three. The Senegalese urged America not to withdraw from the Sahel. In oilrich Angola Mr Pompeo encouraged trading with America rather than China and warned against corruption. In Ethiopia he praised the Nobel-prize-winning prime minister for making peace and privatising bits of the economy.

But few Africa hands reckon the recent visit will mark a change of policy in the White House.

Donald Trump has made no bones about his lack of interest in Africa. The continent is full of what he has described as “shithole countries”, one of them apparently called “Nambia”. Mr Trump took a year and a half to appoint an assistant secretary of state for African affairs and even longer to find an ambassador to South Africa, one of the top diplomatic posts south of the Sahara. That appointee is known mockingly, even among Republicans, as “the handbag lady”, since her expertise is in fashion, not diplomacy (she has a country-club friendship with Mr Trump). In three years he has received only two of his African counterparts in the White House (Nigeria’s Muhammadu Buhari and Kenya’s Uhuru Kenyatta).

Recently he has sharply restricted immigration from Nigeria and started talks about a free-trade deal with Kenya. Little wonder that no one seems to know what American policy towards Africa actually is.

The last time one took shape was two years into the presidential term, when John Bolton, then the national security adviser, spelt out a strategy. Its main shift from Barack Obama’s was to stress a virulently hostile attitude to China in Africa and

a scarcely less bellicose one to Russia. “China uses bribes, opaque agreements, and the strategic use of debt to hold states in Africa captive to Beijing’s wishes and demands,” he said, deploring China’s “ultimate goal of advancing Chinese global dominance”. He also articulated a more transactional approach to Africa, in keeping with Mr Trump’s worldview. “All US aid on the continent will advance US interests,” he stated baldly.

Democracy and human rights were barely mentioned.

Since Mr Bolton’s abrupt removal from office last year, this policy—in the absence of any other grand statements—is presumed to persist. But no one is sure. Mr Pompeo was careful, on his tour, not to express any change of heart within the administration. The only senior appointee who has made waves in Africa is Mark Green, the head of the US Agency for International Development (USAID), who has won plaudits across the political spectrum. “He’s a star,” says a senior Democrat involved in Africa.

The assistant secretary for Africa, Tibor Nagy, a 70-year-old career diplomat brought back from academia, has had to get on with promoting American interests as he sees best, so long as he does not clash with the perceived views of Mr Trump or Mr Pompeo. (It was apt that Rex Tillerson, Mr Pompeo’s predecessor, was sacked while in Kenya, on his only tour of Africa.)

In the past year the cautious but canny Mr Nagy has made some moves. Ahead of the more sceptical west Europeans, he has embraced Félix Tshisekedi as the Democratic Republic of Congo’s president, despite the blatantly rigged election that brought him

to power. America’s desire to stop Congo falling into China’s lap trumped any worries about democracy.

By contrast Mr Nagy went out of his way to condemn President Paul Biya for his harsh treatment of Anglophones in Cameroon, suspending it from the African Growth and Opportunity Act, which gives certain African countries easier access to US markets.

That was more of a finger-wag than a slap; Cameroon’s trade with America is tiny.

More recently he has entered the Sudanese imbroglio, hosting the new government’s promising prime minister, Abdalla Hamdok, in Washington, dangling the prospect of Sudan’s removal from America’s list of countries that sponsor terrorism. America has also sought to mediate tensions over Ethiopia’s Grand Renaissance Dam, which enrages Egypt and worries Sudan since it will alter the downstream flow of the Nile.

But it is Mr Esper’s threat to withdraw American troops from the Sahel that has put a new spotlight on American policy in Africa—or lack of it. In fact, America’s footprint in the Sahel (chiefly in Chad, Mali and Niger) has been light, concerned mainly with intelligence, logistics and drones, alongside small units of special forces. Several hundred American special-operations forces have already been withdrawn from the area. About 500 are still fighting jihadists in Somalia.

Mr Trump’s lack of interest in Africa may unwittingly have given professional Africanists more scope, argues Jeffrey Smith of Vanguard Africa, a pro-democracy outfit in Washington. The congressional subcommittee for Africa, which has remained firmly bipartisan, has refused for instance to accept the swingeing cuts in spending on State

Department or UN programmes for Africa that the White House has demanded. Some of America’s ambassadors on the ground—for instance, in Zimbabwe, Zambia and Uganda—have proved their mettle, robustly criticising their host governments for violations of democracy or human rights. “Ambassadors are doing largely what they were doing before, but less comfortably, because they are not sure of getting backup if they need it,” says a veteran Africanist.

“You always need [political] air cover” if you are to make a difference, says Chester Crocker, the longest-serving assistant secretary for Africa (1981-89). So far Mr Nagy’s quiet diplomacy has kept the White House off his back. But Washington’s Africa lobby is glum.

“The Africa Bureau has been eviscerated, morale is low, senior officers have walked away,” laments Johnnie Carson, Mr Obama’s first assistant secretary for Africa. “When [the administration] isn’t paying attention, things roll backwards.”

There is no sense that Africa matters to America, except as a place where China and Russia must be confronted.

But how? Americans point to the enduring success of aid schemes such as George W. Bush’s big spending on AIDS treatment and prevention. Mr Trump’s Prosper Africa initiative, intended to provide $60bn to encourage private investment, has yet to make strides. American complaints about China only irritate African governments that accept Chinese largesse and retort that America seems unwilling or unable to offer viable alternatives. Mr Pompeo’s tour is unlikely to herald a change of mood or policy. Africans will continue to bemoan the American president’s indifference.

Business and the next recession Continued from page 21

fell by 44%.

In some important ways the corporate world looks similar to the picture in 2007. American firms are big earners, with corporate profits steady at 8.5% of GDP, and many industries are relatively highly concentrated. In Europe profitability and concentration remain lower.

As in 2007, Western firms remain highly globalised despite the trade war. Big listed firms in America make 31% of their sales outside their home market, while for large European companies the figure is 53%.

Much has also changed. First, the digital world is more dominant.

An economic bounceback has fuelled the rise of global tech giants that have disrupted incumbents in retail, taxis, hotels and many other businesses. The example of tech upstarts has seeped through to nontech firms, which are now more asset-light. Managers have shifted IT spending from buying servers to renting them through the cloud, for example. The second change is that bosses may have less room to cut costs. Third, some firms have heaped on debt and engaged in accounting puffery, increasing what John Kenneth Galbraith, an economist, called “the bezzle”: money no one is aware has gone missing.

Boom times paper over cracks, for instance by allowing firms to delay writing down the value of misfiring acquisitions.

Start with the first change, the rise of digital technology. The most visible difference is in the nature of the largest firms: seven of the ten most valuable firms in the world are now tech outfits, up from two in 2010 (see chart 2). In America the top five —Alphabet, Apple, Amazon, Facebook and Microsoft—account for 13% of the profits of S&P 500 firms. This is forecast to rise to about 20% in five years’ time. At less than 5%, their share of S&P 500 employment is small but they have become America’s largest investors, ploughing $189bn into the economy last year (including research and development), equivalent to 17% of investment by big publicly listed companies.

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BUSINESS DAY

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Monday 24 February 2020

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Experts peep into 2020, seek opportunities for insurers in economy

policy holders; low contributions to GDP; low level of insurance penetration that stood at 1.6 percent in 2019; A large number of operations (58) many of whom are fringe players; weak capital base of many of the players, relative to the risk they underwrite; Inadequate skills in some critical areas for instance actuaries; relatively poor showing of the sector in the capital market; as well as the fast

– approaching deadline for re-capitalization in the sector (Dec. 2020).

On Fiscal Policy, Alo identified challenges for insurance to include that VAT increase might impact the disposable income of the people negatively; Cost of goods and services might go up; failure of government to meet its revenue expectation might further worsen the other economic variables; as well as considerable focus of attention on issues of capital raising mergers and acquisitions.

But on opportunities for the insurers, he said there will be improvement in the results of insurance companies on account of the tax reforms in the Finance Act.; Government investment in major infrastructure projects could mean more business for some insurance companies; Improved performance of the sector might make the sector more attractive to new investors; Improved fortune of MSMES might mean more business for the sector;’ Fewer and stronger firms might emerge; an further consolidation of the sector could lead to better performance for some players.

On debt profile, Alo observed that while this could a major constraint on government expenditure and ability carry out projects, if well executed could boost insurance growth.

Heritage Homes & Orphanage Reuben Amara, assistant general manager, expressed delight at the goodwill of the insurers. “We cannot thank the Board and Management of FBNInsurance and FBN General Insurance enough for their commitment by continually supporting the

Home,” he said.

In her contribution. Elizabeth Agugoh, head, Marketing & Corporate Communications, FBNInsurance, reassured the Home of the insurers’ continued commitment to support the cause of the organisation in making the society a better place.

Modestus Anaesoronye

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xperts have taken a critical look into the macroeconomic environment in 2020, x-raying the challenges and opportunities, as well as how insurers can key in to grow their business.

According to the experts, whether for individual or businesses, 2020 present its own challenges and this could be looked at from different trends and themes.

Sunday Thomas, acting commissioner for Insurance/ CEO, National Insurance Commission (NAICOM) speaking earlier at the 2020 Business Outlook Seminar organized by the Chartered Insurance Institute of Insurance (CIIN) held in Lagos said the seminar has been a veritable platform for the insurance industry to review, analyze and project the potential of the economy and the impact of the federal government budget on insurance business.

Thomas noted that choice of this year’s main theme ‘Economic Policies of the Government in 2020: Issues, Challenges & Prospects’, and it’s discuss is expected to open the areas of opportunities where the industry can play to deepen its market.

According to him, he

L-R: Ayokunle Olubunmi, head, Banking and Insurance dept., Augusto & Co Ltd; Muftau Oyegunle, deputy president, Chartered Insurance Institute of Nigeria (CIIN); Sunday Thomas, acting commissioner for Insurance (third left); Eddie Efekoha, president/chairman of Council, CIIN; Richard Borokini, director general, CIIN, and Oladimeji Alo, managing director/CEO, Excel Professional Services Ltd, during the CIIN business outlook on ‘the Nigerian economy 2020’ in Lagos

Commission is committed to sustainable growth in order to enhance the stability of the Insurance Industry in Nigeria. “We therefore invite the insurance sector to maximize the opportunities inherent in the 2020 Federal Government budget of sustainable growth and job creation whilst also ensuring seamless transition to the new capital regime of the Industry.”

Oladimeji Alo, managing

director/CEO, Excel Professional Services Ltd, presenting the lead paper, and quoting GTBank 2020 Economic Outlook document, identified five major themes and trends to watch out for in 2020.

Among the themes according to the him includeFiscal policy of government as reflected in the 2020 FGN Budget; Nigerian’s Debt Profile; Interest Rate and Inflation; Exchange Rate Policy,

External Resources and Capital Flows; and Oil Prices, Production And Security Oladimeji Alo noted that while insurers will battle to get their own fair share of the economic wealth, it has its internal challenges that would not be taken for granted.

Among the issues he listed include - cultural beliefs and practices that do not support insurance; Poor claim management experience of many

FBNInsurance donates to Homes and Hospices Modestus Anaesoronye

I

n line with their Corporate Responsibility and Sustainability initiatives, sister insurers, FBNInsurance and FBN General Insurance, recently donated various items to homes and

hospices across three geographical regions: Lagos, Abuja and Port Harcourt.

The companies visited children at the Heritage Homes & Orphanage (Lagos), The Poorest of The Poor Orphanage (Abuja) and Rhema Orphanage Home (Port Harcourt). The com-

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pany donated items such as food, beverages, toiletries and electrical appliances to the Homes. Also recently, both companies made similar donations to the Down Syndrome Foundation Nigeria, Lagos. Most of the items donated were largely raised through the companies’ an-

nual Staff Gift Drive, an inhouse scheme that encourages members of staff of both companies to donate various items for a common cause.

The FBNI Staff Gift Drive which incepted in 2015 is in its 5th year.

Speaking at the presentation ceremony in Lagos, the

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Monday 24 February 2020

BUSINESS DAY

insurance today

25

In association with

E-mail: insurancetoday@businessdayonline.com

How InsurTech can help insurance gain deeper penetration, consumer access Modestus Anaesoronye

E

xperts have observed that InsurTech can address some big challenges that currently confront the insurance business, including lack of consumer knowledge, lack of access to consumers, differing consumer needs, low trust, inexperienced customers and high-cost structures.

They however noted that InsurTechs tend to focus mainly on increasing access and lowering costs, and many are still stuck at the digitisation stage.

The first expert Forum of 2020, moderated by Katharine Pulvermacher, Micro Insurance Network (MiN) executive director examined the hype around InsurTech and how it can help scale up inclusive insurance in emerging mar-

kets.

Pieter Janse van Vuuren, research analyst at Cenfri in South Africa, pointed to recent data from Willis Tower Watson suggesting that InsurTech is attracting billions of dollars in investment more than $2 billion in Q4 of 2019 alone.

The Cenfri InsurTech database tracks 292 InsurTech companies in 85 countries, with Africa leading the way. But, said Pieter, they tend to focus on existing, easy-to-reach markets rather than new customers.

What are the biggest challenges faced by microinsurance that tech can solve?

Sarfraz Shah, project manager of Micro and Agriculture Insurance at APA Insurance in Kenya believes that outreach, trust and awareness as well as understanding of insur-

L-R: John Iwuajoku, group executive director, Operations, Royal Exchange Plc; Benjamin Agili, managing director, Royal Exchange General Insurance Company Limited; Wale Banmore, group managing director, Royal Exchange Plc; Nelson Akerele, executive director; Wilson Okoh-Esene, head, Corporate Communications during a media parley at the Company’s office in Lagos.

ance can all be solved by technology.

InsurTechs can help insurance companies think beyond the big cities, help

them think about that person who lives in a remote area and has never even heard of insurance.

He recognised that

Royal Exchange General Insurance Company exploring opportunities in the agric space Modestus Anaesoronye

R

oyal Exchange General Insurance Company (REGIC) Limited said as part of deepening its foothold in the agribusiness space, it is poised to underwrite a minimum of 40,000 farmers in 2020.

Benjamin Agili, managing directo, disclosed this at a press conference in Lagos, stressing that the firm has already achieved 20 per cent of the one million set target for first five years.

“Having gone through the past year and entertaining a great of learning, we are evermore committed and determined to deepening our foothold in the agribusiness space in 2020 as we target underwriting a minimum of 40,000 farmers within the current calendar year.

“A lot of energies would be devoted in bundling, distributing and selling of

our packaged hybrid index insurance products in the market. Important to us would be our ability to possible layer an additional micro-health insurance cover for farmers as part of unique selling proposition this year and in collaboration with our sister HMO company – Royal Exchange Healthcare Insurance . We are excited at the opportunities this partnership would bring to the table,” he said.

On how to achieve the set target for this year, he said there would be marketing communication agenda and several trainings on use of index based insurance to tackle climate change to bridge the knowledge gap and understanding amongst small holder farmers, farmer cooperatives, aggregators and other key players. “Actors would equally be trained on the adoption and use of our agritech tools as a business enabler to their businesses www.businessday.ng

in managing their farm portfolio remotely and improving data collation for underwriting of their risks and remote monitoring of their portfolio,” he added.

According him, the firm intends to go beyond its offerings of index based crop insurance solutions to farmers to introduction of new index-based and indemnity livestock insurance products for both smallholder pastoralists and commercial livestock

Benjamin Agili

breeders.

This move, he said is poised to broaden opportunities for the firm in the livestock market. He added that it is going to be a very busy year for the firm on all fronts, adding that asides agriculture, the company would be pushing its mobile insurance initiative and footprint to address issues of access to retail insurance services by the public.

Agili maintained that the company’s efforts have started paying off as REGIC was able to launch two variants of her agricultural index insurance products in 2019 under her “SMART AGRIC” stable; namely the Hybrid Index Insurance (HII) for smallholder farmers and our enhanced Multi-Peril Crop Insurance cover (MPCI) embedded with Weather Index Insurance (WII)) for medium scale producers and crowd-funding agribusinesses.

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when one looks at policy documents, insurance has been packaged so it isvery difficult to understand.

“Technology can help

by making access and distribution easier,” said Sarfraz. “In Kenya, for example, Pula enabled a partnership with MNO Safaricom which has 33 million customers, 15 million of whom are farmers, who now have access to agriculture insurance. That’s a big hope for me - in coming years we’ll see more and more of that kind of thing.”

Brandon Mathews, CEO at Stonestep in Switzerland, said that without tech, serving mass populations is a pain.

“Making collections of less than five cents a day, tracking whether they paid the correct premium - you need an army of people to do that,” he said. “When we started in Brazil in 1999 our claims adjusters were doing about four claims a day each, by the time I left in 2007 it was 120 a day. The best is yet to come, building trust through technology.”

Insurer plays hosts to Headfort Foundation

F

oremost life insurer, African Alliance Insurance, recently hosted a team of legal practitioners from Headfort Foundation, a Lagos-based not-for-profit Legal Aid and Advocacy initiative, at its head office.

Addressing the Headfort team during the visit, Funmi Omo, MD/CEO, African Alliance, expressed her delight at the strides young Nigerians especially women are taking in today’s world.

“We believe the society would be better if we had more sincere, private sector initiatives like these to support government efforts.

As a business, we believe every man can only fulfil potentials when given a fair chance. Seeing a team of young Nigerians like these think up and execute such a noble initiative is heartwarming and in our little way, we would see how we can support Headfort Foundation in its quest to ensure indigent inmates get access @Businessdayng

Funmi Omo

to quality legal representation and a new chance at making the most of their lives,” she said.

Yemi Orija, the convener, Headfort Foundation, while thanking the MD/CEO for her time and kind words, traced her decision to set up the Foundation to her first-hand encounters with various indigent people who end up in custody because they could not afford legal representation.

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Monday 24 February 2020

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Monday 24 February 2020

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real sector watch Guinness invests billions in capacity expansion, impacts 30,000 sorghum farmers ...but taxes, tariffs hurt industry ODINAKA ANUDU

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fter pumping N52 billion in c a p a c i t y e xpansion about 10 years ago, Guinness Nigeria has recently invested N2 billion to expand its non-alcohol brands and offer value for 68,000 shareholders.

Speaking at a media parley in Lagos last Tuesday, Jacquelyne Yawa, head of agribusiness at Guinness, said the N52 billion signified the single largest investment of Diageo in any single market.

In her presentation, she said the brewer paid N14 billion in taxes to the government in 2019, which showed that it was a responsible organisation.

She disclosed the company sourced raw materials from local sorghum farmers, impacting the lives of over 30,000 of them in the process.

She further disclosed that more than 70 percent of Guinness’ raw materials were sourced locally, stressing that the company had created and supported over 180,000 jobs in the value chain.

“We are very proud to inform everyone that Guinness Nigeria is a trail blazer when it comes to corporate governance,” she said.

Guinness Nigeria, a subsidiary of Diageo, one of the world’s largest brewers, started ‘Grow with Nigeria’ initiative in 2019 to illustrate economic impact generated from local sourcing of inputs. It has benefitted 5,000 farmers directly in eight states, the

company said in its newly launched ‘Sustainability Report 2018/19’.

The brewery industry is challenged by low spending power as unemployment and poverty weigh on consumer wallets. Many manufacturers are struggling as multiplicity of taxes, poor infrastructure and low access to cheap and long-term credit, among others, hurt them. Inflation has risen for the fifth straight month, hit-

ting 12.13 percent in January 2020 from 11.98 percent in December 2019, according to data released by the National Bureau of Statistics last Tuesday. Food inflation accelerated to 14.85 percent from 14.67 percent.

“I do not think there is a competitive issue in the industry,” Stanley Njoroge, finance director, Guinness Nigeria, said.

“You have an environment that is inflationary, but

L-R Jean Bakole, United Nations Industrial Development Organization(UNIDO) representative to ECOWAS & regional director, Nigeria Regional Office Hub, presenting the UNIDO- Nigeria Country Programme (2018-2022) document to Abubakar Atiku Bagudu, executive governor of Kebbi State, during Bakole’s meeting with the governor in Birnin Kebbi last Thursday.

government is increasing taxes. We agree that it is the responsibility of the government to raise revenue to provide for the people. The taxes are necessary, but it is about the quantum with which they are coming,” he said.

He stressed the need to push up the Nigerian economy to raise consumer spending and support local firms.

Colman Hanna, supply chain director, said inefficiencies at Lagos seaports was hurting the company and many other manufacturers.

He said it was easier to import containers from Europe to Nigeria than to move container from Ogba, Ikeja, to Apapa ports or vice versa.

This, he said, raised production costs.

He cited a case where a 40-foot container, which cost the company N550,000 few weeks ago, now cost N730,000,pointing out the situation was hurting firms’ margins.

In 2018, the federal government raised excise duties for alcoholic beverages and tobacco.

In the new regime, beer and stout attracted N0.30k per centiliter (Cl) in 2018,

N0.35k per Cl each in 2019 and 2020. Wines attracted N1.25k per Cl in 2018 and N1.50k per Cl each in 2019 and 2020, while N1.50k per Cl was approved for Spirits in 2018, N1.75k per Cl in 2019 and N2.00k per Cl in 2020.

Baker Magunda, managing director/CEO, Guinness Nigeria, said social instability in agricultural communities had been rife, stressing the need to reduce taxes and tariffs to support the company and, by extension, the brewery industry.

“Any time you punish the industry and it stops growing, it impacts a lot of people—those who work in the farms, suppliers, marketers and many others in the value chain,” he said.

“When taxes get to a point that it becomes punitive to the industry, and it stops growing, it impacts a lot of people,” he stressed.

He said the brewer was focusing more on spirit brands because they were the fastest growing segments in Africa.

He said the company’s strategy was to grow spirits faster, but stressed that the beer segment would not be neglected.

AfCFTA offers opportunity for Nigeria but manufacturing sector to bear the brunt — MAN Gbemi Faminu

T

he Manufacturers Association of Nigeria (MAN) has said the African Continental Free Trade Area (AfCFTA) offers enormous opportunities for Nigeria, but the association admitted the country’s manufacturing sector will be hard hit owing to the poor competitiveness of many firms.

Speaking at the zonal sensitisation workshop on AfCFTA organised by MAN for local manufacturers, Mansur Ahmed, MAN president, described the trade treaty as a symbol of commitment of African Union to free trade on the continent through progressive elimination of tariffs on imports covering 90 percent of tariff lines in Trade in-Goods and Services.

“MAN recognises the imperativeness of creating a beneficial Free Trade Area

for export of the products of members and has strongly worked assiduously to promote the articulation of evidence-based positions on AfCFTA,” Mansur said Mansur, who was represented by Isaac Ade Agoye, national treasurer of the association, said every trade agreement came with economic gains and pains.

“Nigeria has signed the AfCFTA Agreement with great expectation that the country would gain from the free trade arrangement and not suffer too many losses,” he said.

“This, notwithstanding, we are aware that the results of the country-specific studies commissioned by MAN and the Government presented compelling evidence that the AfCFTA would have some backlashes on the Nigerian economy, especially the manufacturing sector.”

Mansur said.

As a result, MAN had www.businessday.ng

thoroughly and extensively validated its position through internal consultative processes and also engaged in advocacy, high level multilevel discussions especially with policy makers, he said, stressing that it had equally done extensive research in a bid to sensitise manufacturers on pros and cons of the trade agreement.

He further called for improved value addition among its members in order to fully enjoy the opportunities inherent in the AfCFTA

Oluwasegun Osidipe, director, economics & statistics department, MAN, said AfCFTA was a major milestone in Africa offering a market of 1.2 billion people, growth in intra-African trade, GDP worth $2.5 trillion, among other opportunities. He, however, said the trade agreement could only achieve its objectives if the traded goods and services were produced within Africa.

He said Nigeria was not in position to benefit from the various opportunities due

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to poor trade infrastructure; hostile trade environment, especially among Nigeria’s neighbouring countries; high level of trade malpractices; and limited trade capacity fuelled by supply constraints, among other things.

“The high cost operating environment, the dearth of basic infrastructure and uncompetitive nature of manufactured products may constrain Nigeria from securing maximum trade benefits” Osidipe said.

The AfCFTA is a continental trade agreement that is targeted at eliminating barriers to trade among African countries.

In his presentation titled, ‘AfCFTA Trade in Goods Protocol: Manufacturers’ Readiness’, Osidipe said the private sector was not ready for implementation of AfCFTA due to the uncompetitive state of Nigeria’s production environment in recent times, adding that capacity utilisation in @Businessdayng

manufacturing had hovered between 50 and 57 percent in the last five years.

He admonished manufacturers to incorporate high level of value addition, stressing that research had shown that taste of consumers were changing rapidly.

He urged Nigerian manufacturers to capitalise on the opportunities of the trade agreement, saying that it was necessary for the private sector to strategically position itself to ensure that other laws that would enhance gainful participation were enacted.

He further urged them to advocate for the resolution of challenges such as trade malpractices, insecurity, poor trade facilitation and infrastructure, porous borders, among others, while engaging the leadership of the National Assembly with necessary information that could facilitate beneficial regional and continental parliamentary engagements.

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Monday 24 February 2020

BUSINESS DAY

real sector watch

Wemy Industries eyes policy to raise capacity of new adult diaper line ...emerges first manufacturer of adult diapers in West Africa ODINAKA ANUDU

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emy Industries wants the federal government to initiate a diaper policy to boost the growth of the industry and raise the capacity of its new adult line.

Speaking with select journalists in Lagos, Paul Odunaiya, managing director and CEO of Wemy Industries, said the diaper policy must be targeted at reducing tariffs for raw materials used by local manufacturers and controlling influx of substandard diapers.

“There are raw materials that we pay high duty on. For instance, we pay 20 percent duty on non-woven, which is a raw material,” he said.

“This should not be the case. We should pay zero or five percent because this is a way to encourage industrialisation and low prices for the lowincome consumers,” he said.

He disclosed that finished diapers still came into the country at 20 percent duty, prompting Wemy’s competitors to continue importing while masquerading as manufacturers.

“Some of our competitors are importing into the country, which is very unfair to us.

It leaves a bit of bitter taste,” he said.

He explained that with the diaper policy in place, Wemy Industries would expand more and attract new investors.

“I have an investor who

New adult diaper line

says, ’If you have a diaper policy, I will invest $20 million into this country.’ There is so much policy summersault in the country, and they cannot risk their investments without a diaper policy in place,” he further said.

He stated that diapers were health products and Nigeria should not continue to allow substandard products to flood the local market.

He said an absence of a diaper policy, which he had been championing for some time, could mean that government officials were preventing investments into the country by not moving fast.

BusinessDay recent calculations show the diapers market is worth over N280 billion.

The market was once dominated by Procter & Gamble, Hayat Kimya, and Kimberly Clark, among other smaller

brands like Rainbow Fame. But foreign importers are taking a huge chunk of the market as they compete better in terms of prices, though their products are sometimes substandard.

Wemy has emerged the first manufacturer of adult diapers in West Africa, strengthening its foothold on the local and regional market.

The company, which makes Nightingale and Dr Brown’s hygienic brands, recently brought in the adult diaper machine to solve a problem of scarcity and help conserve foreign exchange for the economy.

“I can tell you that ever since we started the adult diaper line, the products have gained traction. They are like hot bread,” he said.

“Locals can now buy locally, rather than import. We also solve the problem of jobs and technical skills,” Odunaiya said.

He said the company had sent some of its staff members to China to learn the nitty-gritty of the operations of the adult diaper machine to ensure efficiency and returns on investment. He said the company now produced cheapest adult diapers in the West African market.

“Our strategy as a business is localisation of our products so that we manufacture all of them locally, rather than trade them,” he explained.

“The adult diaper is a massively big machine because you are making the products for adults. And it is very difficult to ascertain statistics on the users of the adult diapers in Nigeria and West Africa because it is a silent and private condition,” he further said.

He pointed out that based on international averages, that adult diaper market was

usually one-thirds of the baby diaper market.

He stated that the diapers were for mothers that had given birth to a high number of children, old women and women affected by Vesicovirginal fistula (VVF)—a hole that develops between the vagina and the bladder.

“We have a problem in northern Nigeria and West Africa, which is the problem of VVF. We have one of the highest cases of leakages in the world because of old customs and practices of marrying young ladies at young age. There is also the elderly who suffer from the same conditions. A lot of them are mothers who have had a lot of babies. The adult diaper is here to alleviate some of these problems,” he said.

“The problem with the adult diaper in our market is that they are usually scarce and there are poor quality adult diapers in the market, most especially because they are expensive. So, quality and quantity are usually inadequate. It is really a challenge for pharmacists and doctors to find the right products,” he stated.

He, however, admitted that importation of adult adapters was an unsustainable business as a 40-foot container would only give about 500 bundles, which might only cater for 500 people.

He disclosed that apart from lack of policy, there was shortage of skills in the adult diapers market.

Wemy, which has been in

existence for 40 years, manufacturers baby diapers, baby wipes, sanitary pads, adult diapers and other types of pads. According to Odunaiya, the company had 100 percent capacity utilisation in three out of five of its lines, but he pointed out that full capacity was a function of availability of adequate capital and skills as well as a diaper policy.

He said of all the lines, the adult diaper lent itself for exportation easily.

“If you go to West Africa, a lot of Chinese firms dump cheap diapers into the market because of weak policies and regimes,” he stated.

‘But that happens in the baby diapers category, but it is less so in the adult diapers category. The price points we can manufacture is so strong that even if there is dumping, we are still competitive,’ he assured.

He confirmed that Wemy had been working on backward integration, though the majority of its raw materials were still largely imported because of absence of a standard petrochemical industry in Nigeria.

“The constraint is inadequate working capital. If I have working capital and I get government policy to help protect my investments, I can quickly reach my capacity. I have full capacity in three out of my five lines because I am happy to price sharply and produce high volumes. I want proper government protection so that I can price properly,” he said.

to neighbouring countries has reduced. The directive paid off for the Nigerian Customs Service as revenue generated by the agency increased to N1.34 trillion in 2019 from N1.2 trillion in 2018,” she further said.

On the flip side, it has triggered inflationary pressure, led to unplanned losses for manufacturers especially those who export their products to neighbouring countries by road, Mabogunje, represented

by Gabriel Idahosa, said.

She said cross trade had also been stifled as traders from neighbouring countries could no longer access Nigerian market by road while it also paralyzed commercial activities in larger communities. As a result, the trade sector fell into recession in Q3 2019,she said.

However, Hameed Ibrahim Ali, comptroller general of Customs, represented by KC Ekekezie, assistant comptrol-

ler general, zonal coordinator zone A, Lagos, said the federal government was forced to close the borders because Nigeria’s neighbouring countries were not willing to comply with the ECOWAS protocol on transit of goods and persons which required that when a transit container berthed at a seaport, the receiving country should escort it to the border of the destination country and hand it over to the customs officials of that country.

“The recurrent breach of this protocol mandated security and regulatory agencies to carry out a joint border security exercise tagged ‘Ex-swift Response’ aimed at securing the borders and addressing other trans-border security issues.”

Ali said while the Customs was able to block every visible opening, the smugglers easily found a way to create another opening.

How border closure affects manufacturers, farmers GBEMI FAMINU

T

he closure of Nigeria-Benin border has advantages and disadvantages. While some key economic players are enjoying higher patronage, others are hard hit by the policy.

Rice farmers have reported increased production, but prices of poultry feed have risen by 15 to 20 percent since August 2019 when the border was first shut, according to BusinessDay findings. Also, exporters can no longer ship their products to West and Central Africa through land borders as their goods take seven to eight weeks to arrive through the sea.

“It is not a sustainable policy,” Segun Ajayi- Kadir, director-general, Manufacturers Association of Nigeria (MAN),

said last Tuesday at the Lagos Chamber of Commerce and Industry (LCCI)-organised Stakeholders’ Forum on Border Closure.

“While it has curtailed smuggling, it is not sustainable because many local manufacturers that export products to neighbouring countries now spend eight weeks as against eight days before because they have to take it through a longer route with great cost implications,” Ajayi-Kadir, represented by Ambrose Oruche, director of public affairs at MAN, said.

He said exporters spent between eight weeks to ship out their goods to the African market now as against seven or eight days before the closure.

He further said this would make local manufacturers less competitive as the exercise would stifle trade which was necessary for economic growth www.businessday.ng

and development.

Inflation has risen for the fifth straight month, hitting 12.13 percent in January 2020 from 11.98 percent in December 2019, according to data released by the National Bureau of Statistics on Tuesday. Food inflation accelerated to 14.85 percent from 14.67 percent.

Trade accounts for 18 to 20 percent of Nigeria’s GDP, but it has been subdued by border closure, putting many outward-looking manufacturers in peril.

Margins of Nigerian Breweries, International Breweries, PZ, Unilever, Okomu, Presco ,among many others, have been hit as consumer spending power shrinks on high poverty rate and unemployment.

Mustapha Bashiru, representing Poultry Association of Nigeria (PAN), said that regulatory and financial agencies should communicate prop-

erly before establishing and implementing policies, rather than dictate them in a rigid form that will immediately be implemented without prior preparation.

BusinessDay learnt that a 25kg of poultry feed has risen from N3,700 before August 2019 to N3,900 to N4,200 as of last Thursday in some locations across the country.

Toki Mabogunje, president of the Lagos Chamber of Commerce and Industry (LCCI), said the policy was a mixed bag.

“This policy action has had positive and negative implications for the economy,” she said at the event held by LCCI in conjunction with the Center for International Private Enterprise (CIPE).

“On positives, we have seen appreciable increase in domestic rice and poultry product production. Fuel smuggling

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Monday 24 February 2020

BUSINESS DAY

Start-Up Digest

29

In association with

Adewumi and Onwuka: Entrepreneurs using tech to create disruptions

banking job to start Fabrics.

NG, a tech start-up focused on making quality fabric sourcing easier and accessible for businesses and creative individuals.

Chy was inspired to establish her business owing to the constant frustration experienced when shopping for fabrics.

She was prompted to set up a tech market platform where people can source and shop for fabrics and get them delivered to their choice locations.

“As a young female professional, the idea came after being constantly frustrated whenever I had to shop for fabrics or the popular ‘asoebi’,” she says.

“It was unbelievable that for a fashion-conscious nation such as Nigeria, there is no organised infrastructure for fabric sourcing and distribution.

America alone has hundreds of structured online fabric stores,” she further says.

She explains that the markets for shopping fabrics in the country are disorganised with quality inconsistency and pricing issues stressful.

To change the narrative, she established Fabrics.NG in 2017 to design a structured online fabric marketplace where all types of fabrics are being sold.

“Basically, Fabrics.NG is an ‘Amazon’ for fabrics. The idea is that within five minutes, you can find and order the fabric you need,” she discloses.

“We have 1000+ fabrics and up to 100 new fabric designs uploaded weekly. Fabric sourcing is now truly efficient and delivery is available worldwide,” she states.

The banker-turned-entrepreneur started her business small from her personal savings, from family and friends.

The business has expanded since starting and has continued to grow its return consistently.

Onwuka tells Start-Up-Digest that Fabrics.NG emerged winner of the 2019 African Women in Technology Pitch and is also a recipient of the 2018 She Leads Africa Accelerator programme.

The business currently has over four full-time employees.

The young entrepreneur says that she has a network of wholesale textile suppliers where she sources her raw materials from, both locally and internationally.

On the challenges limiting the business, the young entrepreneur says that huge infrastructural gaps have remained the major challenge facing the business.

She calls on the Federal Government to provide the needed infrastructure for businesses to thrive.

On her advice to other entrepreneurs, she says, “Build for the market. That disruptive idea might not be the solution your customers need at the moment. Listen and understand your customers’ needs.”

“We live in a tough economy in Nigeria and it is easy not to have clients save up to N1 million rent and service charge yearly. We have had the same clients for over four years. These special people keep us in business and we decided to launch the #EMRLoveDay every February 14th to thank and appreciate them for sticking by us throughout the years,” she said.

She said it was fulfilling to see the smiles on their faces.

She noted that at Emrspaces, delivering excellent services had been the company’s

mantra.

“EMR Spaces has proved itself to be effective, efficient and reliable,” she further said.

EMR Group has other subsidiaries such as the digital and integrated marketing company, EMR Marketing Ltd; talent management and booking agency company, Force Management Ltd; interior and exterior decoration company, Style My Space; gold and luxury accessories company, Emah Luxury; short stay apartments, The So Place Lekki, and the construction company, Theos Luxury Limited.

Josephine Okojie

D

espite the difficult business environment in Nigeria, some start-ups are leveraging technology to grow their businesses and cause disruptions in the sector they operate.

Among them are Adeshina Adewumi, who is using artificial intelligence (AI) to disrupt Nigeria’s ecommerce space and Chy Onwuka that is causing disruption in the fashion industry with technology.

Adeshina Adewumi In the last decade, the ecommerce industry has been the main thing in the Nigerian entrepreneurship ecosystem, with entrepreneurs launching online stores and pumping millions of naira into the industry.

The ecommerce industry has raked in over $1 billion in the last decade, but entrepreneurs’ attention is gradually shifting away from it as big players such as Konga and Jumia struggle to survive, with many exiting the sector.

To address the high cost of logistics— one of the major challenges limiting the growth of the ecommerce industry in the country— Adeshina Adewumi established One Kiosk Africa to provide solutions using GPS and AI. Adeshina says the untapped potential in the ecommerce space inspired him to establish One Kiosk Africa in 2019 to change the status quo.

He notes that the industry has the potential to create about a million jobs within five years and has been projected to account for 10 percent of Africa’s GDP by 2025.

“One Kiosk Africa was

Adeshina Adewumi

launched out of the need to address three main issues.

First are the challenges facing e-commerce business models ranging from high cost of logistics and poor turnaround time for delivery that have led to sudden deaths of many e-commerce businesses,” he says.

“Second is the non-existence of sound distribution network for micro, small and medium enterprises (MSMEs) in Africa, which is one of the major reasons why most small businesses close up. Last is the need to solve unemployment challenges in Africa,” the young entrepreneur adds.

The accountant- turnedentrepreneur built a model that connects customers with merchants using GPS and AI to provide a secure, credible and cost- effective platforms for MSMEs to distribute their offerings to a wider pool of customers within their neighbourhood or area of operations.

The model is also used to create employment opportunities within the value chains.

Adeshina’s initial capital was quite small. He boot-

Chy Onwuka

strapped the business with personal savings until Sterling Bank committed $3, 000 to the business through the Pitch Nigeria Programme.

Since then, the business has attracted local and international investors. The young entrepreneur is committed to growing the business further by developing its solutions before utilising external investors’ funds that have been obtained, he says.

The business, which was birthed 2018 and commenced operations in 2019, already has over 15,000 subscribers, users and merchants as well as six fulltime employees.

He notes that the ecommerce industry gave birth to most innovations the country currently has in the fintech industry.

He identifies infrastructural gaps as the main challenge facing his business as it continues to shoot up production cost.

He says that Andela and Proville are already addressing the technical skills gap in the industry while calling on the government to encourage them to do more. He also

urges the government to start bridging the country’s huge infrastructure gaps.

He says the company plans to increase its subscriber base to a million within the next 12 months.

“For our merchants, we intend to have introduced workable offerings to increase their capacity to efficiently take charge of the delivery systems either by absorbing our One Pro-delivery members or building their own system.

“In four years’, that’s by 2024, we expect to have grown to over 3.5 million users in Nigeria, Kenya, Ghana, South Africa and Egypt and created over 1 million direct and indirect jobs through our platform value chain.”

On advice to other young entrepreneurs, he says, “Consistency and patience. We live in a world where everyone wants to shine without paying the price required to shine.

Consistency always pays off at the end of the day and patience is a rare virtue.”

Meet Onwuka In 2017, Chy Onwuka quit her

How Fowowe rewarded clients on Valentine Day Odinaka Anudu

O

n the 14th of February, Omonike Fowowe, chairman of EMR Group, appreciated old and new clients of EMR Spaces with personalised gifts and surprise instrumentals via a gifting company, ThegiftboxNg. Fowowe, also chief executive of Emrspaces Limited, expressed delight at the loyalty shown by clients, assuring them of greater things ahead.

The clients expressed surprise at Fowowe’s gesture, expressing delight at EMR Spaces, which manages their residential and commercial spaces.

Emrspaces Limited was birthed in December 2015.

The company currently has the largest number of residential and commercial spaces in the heart of Lekki Phase 1, Fowowe said.

EMR Spaces is a real estate company which currently manages over 60 commercial and residential spaces in Lekki Phase 1 with a target market of SME businesses www.businessday.ng

and young working class individuals.

“Our track record has not

been beaten by any other company in Nigeria in the last five years,” Fowowe said.

Omonike Fowowe (left) and a client https://www.facebook.com/businessdayng

@Businessdayng

30

Monday 24 February 2020

BUSINESS DAY

Start-Up Digest

Start-ups eat banks’ lunch in push for financial inclusion Gbemi Faminu

N

igerian startups are taking a chunk of deposit money banks’ market share in push for financial inclusion.

These start-ups ensure that the unbanked have access to quick credit at affordable rates.

With a population of 200 million people, a 2018 report

by Enhancing Financial Innovation & Access (EFInA), a financial sector development organization, showed that 60 percent of Nigerians neither had mobile money nor banking account. The report further showed that 36.6 million adults, representing 36.8 percent of the adult population, were financially excluded.

However, with the advent of start-ups and digitalisation, the number of financially excluded Nigerians is beginning to drop as financial technology (fintech) companies continue on the rise.

Cowrywise was founded in 2017 by Edward Popoola and Razaq Ahmed and aims to encourage saving among Nigerians. It enables Nigerians to build their wealth

Olugbenga Agboola

within five minutes.

In 2018, Cowrywise was accepted into the YCombinator summer program, a California-based start-up accelerator programme which offers mentorship and financing. The firm successfully got $120,000. This was some weeks after it secured a $15 thousand seed investment from Microtraction, a funding investor.

Paystack was founded in 2015 and has grown to become one of the top financial service providers in Nigeria.

It was the first tech company in Nigeria to be accepted into

Razaq Ahmed

Silicon Valley’s Y Combinator program and is also one of the three Nigerian companies listed on the world’s top 250 FinTech companies.

Paystack aids online transactions with debit and credit cards which enable a seamless online transaction for sellers and buyers. Since its establishment, Paystack has raised millions of dollars from both foreign and local investors in addition to the revenue it gets from the services it provides According to Crunchbase, the company has raised up to $9.5 million in funding

Don challenges entrepreneurs, Nigerians to tap natural resources to create wealth SIKIRAT SHEHU, Ilorin

I

saac Kayode Adegun, a professor of Mechanical Engineering, University of Ilorin, has admonished Nigerian entrepreneurs to tap natural resources adequately to grow the economy and create wealth.

He said judicious utilisation of natural resources by Nigerians would support development of the nation.

Adegun, who stated this while presenting the 193rd inaugural lecture of the university, titled ‘God The Creator, Man The Manipulator: The Journey So Far In Engineering Manipulation Of Fluids And Geometries For Human Life’, lamented that resources were being manipulated negatively in the country.

According to him, Nigeria was blessed with abundant resources which could be used to construct, produce and generate adequate needs for improving human standard of living without going outside the country to import them.

“God has really helped

Nigeria. Crude oil, which gives about 90percent our foreign exchange, is fluid; it should therefore be judiciously manipulated for the development of our nation,” he said.

The inaugural lecturer, who has locally invented biogas, spooter, Tyre pyrolytic oil, gas chromatography, guinea corn-rice separation machine, Refacon machine, among others, explained that Biogas had a lot of applications ranging from domestic to industrial use, part of which included cooking, generation of electricity and fuel for vehicular use.

Adegun pointed out that for the country should develop in engineering and technology, Federal Government must identify some engineering products being produced locally and place a ban on their importation.

Adding that since there was no gain without pain, the Federal Government should employ the same step it took in stopping rice importation to engineering products made locally by declaring a state of emergency on engineering research and www.businessday.ng

development, tasking some faculties of Engineering/ Technology with some specific products over a given period of time.

He said it was shameful that Nigeria still imported products like tiles, upholsteries and even some vehicular component parts which could be made locally, saying, “We must be compelled to patronise the local engineering products”.

“The air we breathe is a fluid, the water for bathing and drinking is a fluid; fart (flatulence, spoiling gas), that is, a waste from humanbeings is also a fluid. All fluids are directly or indirectly created by God for human use. The way we use the air around us can make or mar our lives. Do not pollute the air around you,” he admonished.

He, however, charged Nigeria to take a cue from developed nations utilising their resources to generate wealth, as he revealed that he was planning to develop a biomass-based steam turbine engine for Nigerian use and he would continue to research until he was fulfilled.

through five rounds. Since its launch and in 2018, it raised $8 million in a Series A funding round led by US payments company, Stripe.

The company founded

by Shola Akinlade, and Ezra Olubi, has successfully expanded its operations beyond Nigeria, and presently has over 17,000 customers which include Domino, Mtn, IrokoTV, Taxify among others Flutterwave is another fintech company making waves in the financial industry. Founded in 2016 by Olugbenga Agboola and Iyinoluwa Aboyeji, Flutterwave

helps in sending and receiving money, paying bills and subscriptions.

The company has been able to partner with over 50 banks in Africa, processed transactions worth over $1.5 billion. Although it has its headquarters in San Francisco, it has branches in various parts of Africa including Nigeria, Nairobi, Accra, and Johannesburg.

Paga is one of the early set of fintech companies in Nigeria. It was established in 2009 by Tayo Oviosu, and the company has grown to become one of the largest

with numerous outlets across the country.

Next is Branch, which enables loan seekers to access up to N200,000.

“Unlike other lenders, we don’t make you jump through hoops or fill out paperwork. Simply apply through the Branch app and get approved in under 24 hours,” the firm says on its website Paylater, founded by Chijioke Dozie, enables the financially underserved to have access to credit,. It rates customers and assigns scores to determine their eligibility.

“Many banks are fretting already,” Charles Umoh, a technology analyst, said.

“What they cannot do, fintechs can. I would be worried if I were a bank,” he further said.

Kuda believes in removing customers and borrowers from the shackles of what it calls ‘ridiculous charges’ by Nigerian banks and helps them to spend smartly. It got an operating license from the Central Bank of Nigeria (CBN) last year—which puts in pole position to tap into the retail banking space.

“Kuda is the first digitalonly bank in Nigeria,” said founder Babs Ogundeyi in 2019, saying that the firm was neither a mobile wallet nor a mobile app piggy bank.

Kaodili brings annual spelling competition to PH, Lagos and Abuja

T

he Kaodili Cares Foundation, a non-governmental organisation, has opened registration for this year’s edition of the GardenCity Spelling Bee competition for primary schools.

The Port Harcourt Edition of the competition, now in its 7th year, is billed to hold between 10th and 12th March for the preliminary while the final comes up on 13th.

According to a statement by Ifeoma Egbuonu, chief executive officer of the foundation, the idea behind the competition wa s t o c o nt r i bu t e h e r quota to the educational development of Nigeria as well as give the participating pupils the opportunity to develop their self-confidence and learn the public speaking skill at the primary school level.

Egbuonu said the competition, done in collaboration with Garden-City Amusement Park, had hosted over 400 pupils in the past, disclosing that it was now open for sponsorship

https://www.facebook.com/businessdayng

by corporate organisations and philanthropists. She said the foundation could not do it all alone, having sown seed for seven years running.

“I believe that we are all stakeholders in developing our nation’s educational sector and as such giving academic scholarship as well as other forms of support to the underprivileged through our foundation’s annual event will be highly @Businessdayng

encouraging,” she said.

According to the host, registration is opened to schools and individual pupils interested in participating and that cash prizes, trophies as well as medals would be carted away by winners.

She said the foundation would bring the same Garden-City Spelling competition to Lagos and Abuja subsequently sometime in the year.

Monday 24 February 2020

BUSINESS DAY

31

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

Top Gainers/Losers as at Friday 21 February 20202020 LOSERS

GAINERS Company

Opening

Closing

Change

NESTLE

N1242

N1130

-112

NB

N51.5

N48.45

-3.05

UACN

N9

N8.4

-0.6

VOLUME (Numbers)

0.4

ACCESS

N9.7

N9.4

-0.3

VALUE (N billion)

0.2

SKYAVN

N2.91

N2.62

-0.29

Opening

Closing

Change

N22.5

N24

1.5

N7.1

N7.6

0.5

ZENITHBANK

N19.4

N19.85

0.45

BUACEMENT

N36.05

N36.45

CUSTODIAN

N5.45

N5.65

BERGER UBN

Company

ASI (Points) DEALS (Numbers)

MARKET CAP (N Trn)

27,388.62 4,423.00 421,275,510.00 5.552 14.268

Global market indicators FTSE 100 Index 7,392.75GBP -43.89-0.59%

Nikkei 225 23,386.74JPY -92.41-0.39%

S&P 500 Index 3,342.55USD -30.68-0.91%

Deutsche Boerse AG German Stock Index DAX 13,539.33EUR -124.67-0.91%

Generic 1st ‘DM’ Future 28,949.00USD -222.00-0.76%

Shanghai Stock Exchange Composite Index 3,039.67CNY +9.52+0.31%

Nigeria’s fixed income, currency markets turnover hits new high of N16.45trn Stories by Iheanyi Nwachukwu

T

urnover in Nigeria’s fixed income and currency (FIC) markets for the month ended January 31, 2020 reached a new high of N23.19trillion.

This record FIC markets turnover represents monthon-month (MoM) increase of 40.97percent (N6.74trillion) from the turnover recorded in December 2019 (N16.45trillion), FMDQ Securities Exchange report shows.

On a year-on-year (YoY) basis it increased by 53.78percent (N8.11trillion) from the turnover recorded in January 2019 (N15.08trillion). Foreign Exchange (FX) and OMO bills remained the most actively traded products, jointly accounting for 67.02percent of the total FIC market turnover recorded in January 2020.

Total FX market turnover in January 2020 was $24.35billion (N8.85trillion), representing a 31.71percent ($5.86billion) MoM increase from the turnover recorded in December 2019.

Analysis of FX market turnover by trade type indicated MoM increases across all categories, with Member-Client trades recording the highest MoM increase at 36.15percent ($3.87bn).

Additionally, analysis by product type indicated that the MoM increase in FX turnover was driven more by the 40.47percent ($3.42billion) increase in FX Derivatives turnover, which accounted for 58.35percent of the MoM increase in total FX market turnover compared to the 24.33percent ($2.44billion) increase in FX Spot turnover.

In the OTC FX Futures Market, the near month OTC FX Futures contract (NGUS JAN 29 2020) with a total open contract value of $1.57billion matured and was settled, and a new far month contract, NGUS FEB 24 2021 was introduced at an initial contract rate of $/N365.71.

The total value of open OTC FX Futures contracts as at January 31, 2020 stood at circa $9.77billion representing a 10bps (circa $0.01billion) increase on the value of open contracts as at Decem-

Zenith Bank stocks rally as investors position for N2.50kobo final dividend … PBT increases to N243.294bn

T

he shares of Nigeria’s tier-1 lender, Zenith Bank Plc rallied in early trading on Friday February 21 as investors rush to take equity position in the bank which proposes N2.50kobo final dividend for the financial year ended December 31, 2019.

As at close of trading on Friday February 21, Zenith Bank followed the topmost gainers on the Bourse after its shares increased from N19.4 to N19.85, after adding 45kobo or 2.32percent.

The Board of Directors, pursuant to the powers vested in it by the provisions of section 379 of the Companies and Allied Matters Act (CAMA) of Nigeria, proposed a final dividend of N2.50 per share.

Zenith Bank outstanding shares are 31,396,493,786 units. The proposed final dividend translates to

N78.5billion final dividend payout. The register of the company will close on March 10, 2020 while the qualification date is on March 9, 2020.

The final dividend which in addition to the 30kobo per share paid as interim dividend amounts to N2.80 per share (2018: Interim dividend of N0.30 per share and final of N2.50 per share) from the retained earnings account as at December 31, 2019. This will be presented for ratification by the shareholders at the next Annual General Meeting.

Zenith Bank is one of the tier-1 banks which analysts expect their financial scorecards, if stronger than expected, will spur buy sentiment at the local bourse.

The financial result released at the Nigerian Stock Exchange (NSE) shows gross earnings of Zenith Bank group increased by 5.1perwww.businessday.ng

cent while profit before tax increased by 5percent.

Gross earnings increased to N662.251billion in 2019 from N630.344billion in 2018.

Profit before tax (PBT) increased to N243.294billion in 2019 from N231.685billion in 2018. Profit after tax also rose to N208.843billion from N193.424billion in 2018.

The principal activity of the bank is the provision of banking and other financial services to corporate and in-

dividual customers.

Such services include obtaining deposits from the public, granting of loans and advances, corporate finance and money market activities.

The Bank has six subsidiary companies namely, Zenith Bank (Ghana) Limited, Zenith Pensions Custodian Limited, Zenith Bank (UK) Limited, Zenith Bank (Sierra Leone) Limited, Zenith Bank (The Gambia) Limited and Zenith Nominees Limited.

During the year, the Bank opened thirteen new branches and no branch was closed.

As at December 31, 2019 the Group had 430 branches, 178 cash centers; 2,093 ATM terminals; 50,427 POS terminals and 7,745,176 cards issued to its customers. (December 31, 2018: 417 branches, 256 cash centers, 1,891 ATM terminals, 34,006 POS terminals and 5,732,820 cards issued).

https://www.facebook.com/businessdayng

ber 31, 2019 (circa $9.67billion), while the total value of contracts settled since inception to date stands at circa $25.53billion.

The CBN Official Spot US$/N exchange rate closed at $/N307 in January 2020, while, the Nigerian Naira appreciated against the US Dollar in the parallel market by $/N2 to close at $/N360 (December 31, 2019 - $/N362).

Similarly, the Naira appreciated against the US Dollar at the Investors’ and Exporters’ (I&E) FX Window by $/N0.54 ($/N364.51 as at December 31, 2019) to close at $/N363.97 in January 2020 Fixed Income Market (T.bills, OMO bills and FGN Bonds).

At the end of January 2020, the outstanding value of T.bills increased MoM by 2.71percent (N0.07trillion) to N2.65trillion, similarly, the outstanding value of FGN Bonds increased MoM by 4.35percent

(N0.41trillion) to N9.84trillion.

However, the outstanding value of OMObills decreased by 6.23percent (N0.81trillion) MoM to close at N12.20trillion in January 2020.

Trading intensity for T.bills decreased further to 0.17 in January 2020 from 0.19 recorded in December 2019, while the trading intensity for OMO bills increased to 0.53 from 0.27over the same period.

The increase in the trading intensity of OMO bills was driven jointly by the 78.40percent (N2.94trillion) MoM increase in OMO bills turnover in January 2020, as well as the decrease in OMO bills outstanding.

However, the trading intensity for FGN Bonds increased marginally to 0.31 in January 2020 from 0.30 recorded in December 2019 due to the 5.43percent (N0.15trillion) MoM increase in FGN Bonds turnover.

Anyaoku urges FG to utilise capital market, commends CIS

W

orried by the spate of infrastructure deficits in Nigeria, the former Secretary General of Commonwealth, Emeka Anyaoku has urged the federal government to utilise the Nigeria’s capital market to develop the economy.

Besides, Anyaoku applauded the recent move by the Central Bank of Nigeria (CBN) in collaboration with the Bankers Committee to leverage Public Private Partnership (PPP) approach to bridge infrastructure gaps. Specifically, the partnership is expected to commence with construction of four roads, details of which are still hazy.

Addressing the Principal Officers of the Chartered Institute of Stockbrokers (CIS) during courtesy call to him in Lagos, Anyaoku who commended the board and management of the Institute for taking it to greater height explained that governments in developed economies utilise the capital market to fund infrastructure projects. He stated that all tiers of government should take advantage of long @Businessdayng

term investment opportunities in the market to raise long term fund for development projects.

Anyaoku, whose courtesy visit was led by the CIS’ President and Chairman of Council, Adedapo Adekoje noted that there was a growing need for the federal government to mobilize private capital through the market to raise long term fund for infrastructure development.

“The capital market has important roles to play in the national economy. The managers of the capital market and the operators play pivotal roles. Developed countries did not just develop on the basis of government funding alone, but participation of the private sectors. I am happy that the Central Bank of Nigeria (CBN) is collaborating with Bankers Committee on how to fund the huge infrastructure gap in Nigeria through Public Private Partnership (PPP) “Many big companies in Nigeria are performing below average because of lack of resources. The resources provided by the government are inadequate.

32

Monday 24 February 2020

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: February 21 – February 28, 2020

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.28

Q3 2019 — higher by 0.17% compared to 2.12% in Q2 2019

Broad Money Supply (N’ trillion)

36.48

Increased by 2.9% in Nov’ 2019 from N35.45 trillion in Oct’ 2019

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

26.41 2.20

Increased by 2.18% in Nov’ 2019 from N25.85 trillion in Oct’ 2019 Increased by 7.17% in Nov’ 2019 from N2.06 trillion in Oct’ 2019

Inflation rate (%) (y-o-y)

12.13

Increased to 12.13% in January 2020 from 11.98% in December 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 13.5 (+2/-5)

Adjusted to 13.5% in March 2019 from 14% Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

36.70 60.41 1.77

February 20, 2020 figure — a decrease of 3.12% from February start February 20, 2020 figure— an increase of 5.7% from the previous wk January 2020, figure — an increase of 1.42% from December 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

Friday

Change(%)

21/2/20

14/2/20

NSE ASI Market Cap(N’tr)

27,388.62 14.27

27,755.87 14.46

(1.32) (1.30)

Volume (bn)

0.42

0.13

217.65

Value (N’bn)

5.55

1.28

333.89

NIBOR Friday Rate

Friday Rate

Change

(%)

(Basis Point)

(%) 21/2/20

14/2/20

OBB

3.8300

2.5000

33

O/N CALL 30 Days

3.0000 4.0000 8.8717

3.2500 3.1000 8.3443

(25) 90 53

90 Days

8.9817

8.2887

69

FOREIGN EXCHANGE MARKET Market

Friday (N/$)

21/2/20

Friday

1 Month

(N/$)

Rate (N/$)

21/2/20

14/2/20

21/1/20

Official (N) Inter-Bank (N) BDC (N)

307.00 364.80 0.00

306.95 364.47 0.00

306.95 362.22 0.00

Parallel (N)

360.00

360.00

362.00

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.)

Cotton ($/lb.)

Sugar ($/lb.)

Wheat ($/bu.)

Metals Gold ($/t oz.)

Silver ($/t oz.)

Copper ($/lb.)

Tenor

3-Year 5-Year 7-Year 10-Year 20-Year 30-Year

5.70 2.75

(6.28) (38.81)

2862.00 106.00 69.20 14.95 560.25

(0.87) (0.52) 0.96 0.54 2.38

47.83 (18.59) (10.71) (2.48) 29.24

1635.28 18.52 259.25

3.73 4.63 (0.27)

24.11 7.74 (20.91)

Friday

(%)

Friday

Change

(%)

(%)

(Basis Point)

0.00 7.45 8.69 9.55 10.79 12.08

14/2/20 0.00 7.96 9.73 9.83 10.95 12.32

0 (51) (103) (28) (17) (24)

Disclaimer This report is based on information obtained from various sources believed to be reliable and no representation is made that it is accurate or complete. Reasonable care has been taken in preparing this document. Access Bank Plc shall not take responsibility or liability for errors or fact or for any opinion expressed herein .This document is for information purposes and private circulation only and may not be reproduced, distributed or published by any recipient for any purpose without prior express consent of Access Bank Plc.

Change

(%)

(Basis Point)

21/2/20

14/2/20

1 Mnth 3 Mnths

2.85 3.39

3.14 3.26

(30) 14

6 Mnths 9 Mnths 12 Mnths

3.69 4.57 5.23

3.83 5.06 5.96

(15) (49) (73)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

Friday

Friday

Change

(%)

(%)

(Basis Point)

21/2/20 Friday

(%)

60.41 1.87

Friday

AVERAGE YIELDS

21/2/20

YTD Change

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

BOND MARKET Tenor

1-week Change (%)

MONEY MARKET Tenor

Indicators

14/2/20

Index

3,836.95

3,799.15

1.00

Mkt Cap Gross (N'tr) Mkt Cap Net (N'tr) YTD return (%) YTD return (%)(US $)

11.99 8.18 56.20 -0.36

11.87 8.08 54.66 -1.15

0.99 1.25 1.54 0.79

TREASURY BILLS (MATURITIES) Amount (N' million)

Rate(%)

91 Day

4,384.18

3.5

12-Feb-2020

182 Day

10,000.00

4.5

12-Feb-2020

Tenor

364 Day

140,000.00

Sources: CBN, Financial Market Dealers Association of Nigeria, NSE and Access Bank Economic Intelligence Group computation.

6.5

Date

12-Feb-2020

Global Economy In the Eurozone, inflation printed at 1.4% yearon-year in January 2020, the highest since April last year, boosted by prices of energy (1.9% vs 0.2% in December) and unprocessed food (2.3% vs 2.1%). According to European Statistical Office costs rose at a softer pace for both services (1.5% vs 1.8%) and non-energy industrial goods (0.3% vs 0.5%). The annual core inflation rate, which excludes energy, food, alcohol & tobacco prices and at which the ECB looks at when deciding monetary policy, was also confirmed at 1.1%, below December's 1.3%. Elsewhere, Brazil current account deficit advanced to $11.88 billion in January 2020 from $9.05 billion in the same month of the prior year according to the Central Bank of Brazil. It was the largest current account gap since January 2015, as the goods account shifted to a $2.56 billion shortfall from $1.06 billion a year earlier. In a separate development, the Reserve Bank of India recorded its 21st straight week of increase in its reserves leading to an all-time high of $476.09 billion in the week ended February 14th, 2020. Foreign currency assets went up to $441.95 billion from $439.19 billion in the previous week while gold reserves increased to $29.12 billion from $28.78 billion Domestic Economy The National Bureau of Statistics revealed that inflation rate for January 2020 was 12.13% year-on-year from 11.98% in December 2019.

Prices rose majorly for food inflation. Food inflation jumped 14.85% in January from 14.67% in the prior month. Highest increases were recorded in prices of fish, oil and fats, meat, bread and cereals and potatoes, yam and other tubers. Food inflation on a year-on-year basis was highest in Sokoto state (19.08%) and lowest in Benue state (11.33%). Core inflation rose 9.35% in January, up by 0.02% when compared with 9.33% recorded in December.

Highest increases were recorded in prices of hospital services, vehicle spare parts, cleaning, repair and hire of clothing, shoes and other footwear, glassware, tableware and household utensil, hairdressing saloons and personal grooming establishments, repair and hire of footwear, garments and passenger transport by air. In a separate development, the World Bank has approved $2.185 billion to fund six projects in Nigeria as part of its support for the country's development priorities. The World Bank's Country Director for Nigeria, said in a statement last week that the World Bank was ramping up its support to Nigeria in its efforts to lift 100 million Nigerians out of poverty. The fund will be used to finance projects focused on improving immunisation, providing an enabling business environment for the private sector and expanding the digital economy to promote job creation as well as increasing capacity of public and private sector on governance, social and environmental safeguards. The six approved programmes in the 2020 fiscal year include: Immunisation Plus and Malaria Progress by Accelerating Coverage and Transforming Services (IMPACT); Nigeria Rural Access and Agricultural Marketing Project; Nigeria Digital Identification for Development Project; Ogun State Economic Transformation Project; Innovation Development and Effectiveness in the Acquisition of Skills Project and the Sustainable Procurement, Environmental and Social Standards Enhancement Project (SPESSE).

27,388.62 points from 27,755.87 points the prior week. Similarly, market capitalization dipped by 1.32% to N14.27 trillion from N14.46 trillion the prior week. This week, we expect that market sentiment will improve in the hope of major earnings report.

Money Market Rates at the money market slightly increased but remained at single digit as market liquidity was sustained. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates settled higher at 3.83% and 3% from 2.5% and 3.25% previous week. The slightly longer dated instruments such as 30-day and 90-day Nigeria Interbank Offered Rate (NIBOR) closed at 8.87% and 8.98% from 8.34% and 8.29% the prior week. This week, rates are expected to remain significantly low despite the weekly FX auction.

Foreign Exchange Market Last week, the naira depreciated across most market except at the parallel market where it remained unchanged week -on-week. The official window saw a marginal decline as it ended N307/$, a 5 kobo loss from the prior week, while at the Nigerian Autonomous Foreign Exchange (NAFEX) segment the local currency depreciated by 33kobo to close at N364.80/US$ from N364.47/US$ the previous week. The parallel market rate closed at N360/US$ same as previous week. This week, rates are expected to remain around current levels with the apex bank's continuous interventions.

Bond Market The bond market sustained its bullish sentiment during today's trading session given the robust system liquidity.

Accordingly, we recorded market rally for most maturities across the curve particularly for the 2024 and 2029 maturities. Yields on the five-, ten- twenty- and thirty-year debt papers finished at 7.45%, 8.69%, 9.55%, 10.79% and 12.08% from 7.96%, 9.73%, 9.83%,10.95% and 12.08%. The Access Bank Bond index increased by 37.80 points to close at 3,836.95 points from 3,799.15 points the prior week. We expect activity in the coming week to remain bullish following the expected gradual decline in yields.

Commodities Oil prices maintained their bullish trend as investors weighed the U.S. sanctions imposed on a subsidiary of Russian-oil giant Rosneft. China also launched new measures to support local businesses that are struggling because of the coronavirus outbreak which supported oil prices. Bonny light, Nigeria's benchmark crude jumped 5.7% or $3.26 cents to close the week at $60.41 per barrel. Precious metal prices rose to seven-year highs as coronavirus concerns increased safe-haven appeal. Consequently, gold gained 3.73% to $1,635.28 per ounce while silver climbed 4.63% to $18.52 per ounce. This week oil prices might remain bearish as American Petroleum Institute (API) predict a rise in crude oil inventories.

Precious metal prices might be pressured as a recovery in the global economy is expected to weigh on demand for safe haven.

MONTHLY MACRO ECONOMIC FORECASTS

Stock Market Nigerian stock exchange witnessed further losses as players eagerly awaited more earnings reports and dividend news, especially from the large companies for a reversal of the lingering downtrend. Consequently, the All Share Index (ASI) declined 1.32% to end at

Variables

Feb’20

Mar’20

363

362

Inflation Rate (%)

12.20

12.25

12.7

Crude Oil Price (US$/Barrel)

59

60

60

For enquiries, contact: Rotimi Peters (Team Lead, Economic Intelligence) (01) 2712123 rotimi.peters@accessbankplc.com

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Apr ’20

Exchange Rate (NAFEX) (N/$)

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362

Monday 24 February 2020

BUSINESS DAY

MARKETS INTELLIGENCE

33

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Investors to receive boost from Zenith Bank’s robust dividends …analysts place buy ratings on stock …most attractive valuation among peers Zenith Bank announced on Friday on the website of the Nigerian Stock Exchange (NSE) that it has declared a total dividend (interim and final) of N87.05 billion or N2.80 a share.

From 2012 to 2019, the lender has returned cash to shareholders to a tune of N540.78 billion, and it recorded a net income of N208.84 billion to end 2019 financial year.

The growth in earnings was largely driven by strong growth in non-interest income as it continues to make an inroad into the online banking space.

Zenith Bank has one of the most attractive valuation among peer rivals as it has a price to earnings ratio of 2.98 times, which compares to GTBank, (4.24 times); and FBN Holdings, (3.99 times).

The largest lender by profit in Africa’s largest economy has a price to earnings growth of 0.27, which means its shares are trading at a discount to its growth rate.

The price/earnings to growth ratio (PEG ratio) are a stock’s priceto-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period.

PEG ratios higher than 1 are generally considered unfavorable, suggesting a stock is overvalued.

Conversely, ratios lower than 1 are considered better, indicating a stock is undervalued.

Zenith’s stellar performance comes amid regulatory uncertainty in the banking sector.

Analysts are of the view the stringent rules put in place by the central bank to spur lending to the real sector of the economy could crimp earnings of Nigerian banks, casting a pall to industry future payout.

The hike in CRR to 27.50 percent from 22.50 percent means more deposit will go from lenders to the CBN and return zero which means their interest income, which is a major components earnings, will reduce.

The central bank had mandated Deposit Money Banks (DMBs) to maintain minimum Loans to Deposit (LDR) ratio of 65 percent, but analysts say forcing banks to lend to risky sectors will result in huge write-offs and rising Non Performing Loans (NPLs).

“These are regulatory headwinds they have to contend with. They have to deal with the recent slashing of bank charges,” said Johnson

BALA AUGIE

I

nvestors will receive much in dividend income from Zenith Bank Nigeria Plc’s stock than its peer rivals as the lender’s net income crosses the N200 billion mark.

“This means investors will get double digit yields compared to Treasury bill (TB) yield. This is the best time to Buy Zenith,” said Wale Okunrinboye, analyst at Sigma Pensions Limited.

Investors reacted positively to the fourth quarter results of the lender as dividend yields spiked to 15.43 percent as at Friday while the share price, which has been rising since the start of the year, appreciated by 2.82 percent to close at N19.85 as of 2:00 pm in Lagos.

The 15.43 percent dividend yields compares with Guaranty Trust Bank (GTB)’s (9.82 percent); Access Bank, (5.26 percent); United Bank for Africa (UBA), 11.49 percent, and First Bank Holdings, (4.52 percent).

What this means is that an investor will get N150,000 in dividend for every N1 million he or she invest in Zenith Bank’s stocks.

The dividend yield is the ratio of a company’s annual dividend compared to its share price.

At the moment, several bank stocks have gross dividend yields well in excess of the T-bill yield, and comparable if not higher than FGN bonds.

P.E

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

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

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

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

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

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

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

Continues on Page 34

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 February 2020

BUSINESS DAY

MARKETS INTELLIGENCE

Why investors shouldn’t lose hope on a dividend rally this year IFEANYI JOHN

H

opes for a dividend rally this year is gradually fading away after the Nigerian Stock Exchange All Share Index closed on Friday at about 2,300 points less than its year high achieved in January about a month ago.

Since reaching about 29,702 points on January 20, 2020, the stock market has now declined by around 8 percent pushing many analysts to rethink their dividend induced stock rally forecast in the first quarter of 2020.

After getting off to a blistering start this year, rising about 10.6 percent within the first 20 days of the year, the stock market has now

declined about 7.8 percent, bringing year to date performance for the ASI to just 2.04

Nigerian billionaire Chart

F

orbes recently released its annual exclusive billionaires ranking with only 4 Nigerians, Aliko Dangote, Mike Adenuga, Abdul Samad Rabiu and Folorunsho Alakija making the highly coveted list.

A breakdown of the index shows Aliko Dangote, president of Dangote Group maintaining the top spot as his net worth now stands at $10.10 billion.

The wealth of Africa’s man will be magnified after the completion of the multi billion naira refineries that has a capacity to refine 650,000 barrel per day of crude.

His cement business, which spans across the continent, is expected to benefit from the country’s huge infrastructure deficit and government commit-

ment to bridging it.

Second on the list is Otunba Mike Adenuga, who has a net worth of $7.70 billion. The billionaire’s telecommunication outfit (a cash cow) has been a money spinner, thanks to aggressive data penetration. His downstream oil and gas business is another profit box.

Third on the list is: Abdul Samad Rabiu of BUA Group, with a fortune of $3.13 bn.

Abdul Samad in January merged his Obu Cement Company with the publicly listed Cement Company of Northern Nigeria (CCNN) where he had controlling shares. The new entity listed as BUA Cement Plc on the Nigeria Stock Exchange became the third largest entity on the exchange with N1.18 trillion market capitalization.

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percent.

However, analysis of historical performance of the

stock market during the first half of the year shows that average stock performance in

the first 3 months of the year has been about 0.2 percent in the last 10 years since 2009.

In fact, the stock market declined 6 times in the last 10 years in Q1 as investors patiently anticipate corporate financial results for the preceding year.

According to data compiled from CBN Statistical Bulletin and Bloomberg, st o ck p e r f o r ma n c e b e tween March and May tell a completely different story from the first 3 months of the year as stocks tend to rally on average about 11 percent in the 2 months between March and May where a lot of companies pay dividends to their investors.

Loses made in stocks in the first 3 months are almost

always completely wiped off when investors hold till May according to the data.

Stock performance between January and May averaged 10 percent in the 10-year period between 2009 and 2019, showing that the dividend rally strategy has been a winning strategy in the stock market for at least the last 10 years.

While past performance is never a mirror of future performance, history may likely be repeating itself this year as stocks continue to a poor showing in the first quarter of the year as it usually has. The all share index ASI closed on Friday at about 0.65 percent lower, as stock pickers wait on the side-lines to see earnings trend before diving back into the market.

Investors to receive boost from Zenith Bank’s ...

Continued from Page 33

Chukwu, managing director and CEO of Cowry Asset Management.

“It will affect dividend declaration. No bank will start paying dividend from reserves as they will want to settle from current profit.

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There is cap on such payment by the regulator,” Chukwu said.

Analysts say at United Capital Ltd say additional 5

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percent CRR is equivalent to N1.2 trillion quarantined by the CBN and that Open Buy Backs (OBB) and overnight (O/N) rates will likely to spike in the short term.

“It is negative for banks’ profitability and revenue as rates on fixed deposit will likely increase,” said analysts at United Capital Ltd. The cumulative interest income of the largest Nigerian banks increased by 8.0 percent to N2.06 trillion as at September 2019, the lowest in five years, according to data gathered by BusinessDay. Following CBN’s announcement barring nonbanking corporates as well as individuals from accessing the OMO market, increased liquidity in the secondary debt market as well as auctions has since sent yields crashing.

There has been a sharp decline in Nigerian Treasury Bills rate at the primary market auction over a threemonth period from 12.94 percent before the announcement was made to 5.1 percent at the last auction.

“We believe key institutional investors with trillions of debt assets maturing in 2020 will be searching for alternative investment opportunities given negative real returns on debt and money market instruments.

Thus, we expect some of these funds to filter into the equities market,” said analysts at CSL Stock Brokers Limited.

Monday 24 February 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

35

• Utilities • Managing your Tax

Kobe Bryant and estate planning

T

he news of Kobe Bryant’s tragic death in a horrific helicopter crash in January along with his 13-year old daughter and seven other people, sent shock waves across the world; his celebrity transcended basketball. With his passing, Kobe Bryant left behind his wife Vanessa and three young children; one of them, a little baby girl of just nine months.

Sadly, it takes a shock like this to bring to the fore the pressing need, to prepare carefully for the welfare of our families after our lifetime. Kobe Bryant’s estate plan has not yet been revealed, but I would like to think that his family will be well taken care of, and without controversy or acrimony.

One would assume that someone so accomplished, with considerable wealth, and who most likely had access to a team of financial, legal and tax advisors, would have formalized his wishes for his personal fortune and his business empire. The laws of intestacy if he died intestate; that is, without a will, leave the courts to determine the distribution of his estate. Under Californian Law, which experts say will be applicable to his estate, assets will be distributed to the decedents spouse and children.

Sometimes it takes a shock like this to remind us of the pressing need to prepare carefully for the welfare of our families long after death. Estate plans are not just for the rich and famous, but their celebrity does highlight powerful estate planning lessons that can apply to each one of us.

Do you have an estate plan? The vast majority of Nigerians do not. There is a reluctance to discuss this certainty, with a fear of death causing many to procrastinate over an essential part of a financial

1. Not having an estate plan.

There are several estate planning tools so it is inexcusable to do nothing. You have loved ones, people you care about. Why would you put them through so much stress in addition to the grief of losing you; it leaves them in a shroud of uncertainty and confusion.

Without specific instructions from the deceased, an estate may be subject to long drawn-out court battles as family members fight over the spoils. With our native law and customs and an extensive extended family, estate planning is more important than ever.

A will is the simplest estate-planning tool. It is simply a letter of instruction, appointing someone to be in charge of your estate and specifying how you want your estate to be distributed or divided.

2. Don’t die intestate If you die intestate, that is, without a will, the expensive probate process kicks in; your estate will be distributed according to the laws of intestacy. This process can be fraught with long drawn-out delays. This could be devastating to your spouse and children with bills to pay.

3. Procrastination There is a fear of dwelling on our mortality that makes people postpone this important task. If you are young and single, and

have no dependents, it might seem absurd to even consider the prospect of dying. The truth is that many young singles are building extraordinary businesses that do need a succession and an estate plan. Anyone with significant assets, and a family to protect; children or a spouse, should at least have a will even as early as in their 30s.

4. Not planning for minors and young adults It is important to select a guardian for your minor children otherwise the courts will also decide who will raise them; this may not be the person that you would have preferred.

Do you want your children to inherit money early? Young adults may get unfettered access and control of their inheritance from the “tender” age of 18.

Most 18-year olds are not equipped to make the right financial decisions particularly for large sums of money. In addition, inheriting too early has its challenges and makes it difficult for some children to be independent, motivated or driven to success.

A trust is an outstanding estate-planning tool; managed by a reputable trustee company, it enables the seamless transfer of wealth to loved ones, controlling the long-term distribution of your assets.

With all wishes clearly spelt out, beneficiaries inherit directly and expenses are minimised. An important advantage is that designa-

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‘

Individuals often fail to be specific about personal property in their estate planning, which can lead to fights over precious family heirlooms, artwork, jewellery, a grand piano and other items of sentimental value, from a tablecloth to a rug or tea set

‘

plan. Here are some estateplanning mistakes to avoid:

tions of your assets are private. By relying primarily on a will, bequests are public as wills are filed with the courts as a public record.

5. Leaving untidy records Where are your bank statements, brokerage statements, insurance policies, title documents, etc?

You can imagine a family in grief having to go through the stress of trying to find a will or other evidence of estate planning. A will is only useful if someone knows where it is. If it cannot be found, the courts might assume that there is no will and then the long probate process will begin. Keep your documents organised and secure; many families have lost property and other assets as their loved one never disclosed it and there was no documentation to prove ownership.

6. Failure to update an estate plan As life evolves, estate planning documents and

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beneficiaries should be updated as your financial and personal situation changes.

Failing to periodically update an estate plan or make changes to beneficiaries after a marriage, birth, divorce, remarriage, death or other life changes can cause problems; this could include disinheriting heirs.

Buying and selling property or a business require an update of your plan.

A successful young man forgot to change the designation on his insurance policies; he had put his father as sole beneficiary.

His wife and three children inherited nothing.

Beneficiary designations on retirement accounts or insurance policies should be reviewed to be sure they are actually in accordance with your wishes.

7. Not putting your wishes in writing You might wish to make some special bequests to “trusted” servants, friends or members of the extended family that might not otherwise be considered.

It is important to put all bequests in writing if you want them to happen. Alleged promises that only come to the fore after your demise can lead to a lawsuit being filed against an estate and unnecessary acrimony.

8. Not planning for estate taxes Poor estate planning will force your heirs to have to sell valuable property or precious items because they just don’t have the available liquidity to pay those statutory taxes. With careful estate planning during your life time, acquiring assets in the most appropriate vehicles, taxes can be minimised whilst ensuring that legal obligations are met. @Businessdayng

9. Failing to be clear about keepsakes and heirlooms Individuals often fail to be specific about personal property in their estate planning, which can lead to fights over precious family heirlooms, artwork, jewellery, a grand piano and other items of sentimental value, from a tablecloth to a rug or tea set! Who should get what? Don’t assume that your lovely children will just share all your personal effects equally without a squabble. Be as specific as you can, particularly for keepsakes.

10. Not leaving instructions for your funeral What sort of funeral would you like? If you wish to be buried like royalty, do set aside funds specifically designated for that purpose so that you can have the “befitting funeral” that you deserve. Your descendants have enough to deal with emotionally and financially without having to go into debt over outrageous funeral expenses.

Intestacy often leads to ugly public rancour. Do the right thing. Tidy up your affairs. Death is a certainty for one hundred percent of us.

Don’t leave your life’s work to chance. Plan instead to leave a lasting legacy and not a family feud.

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

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

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Monday 24 February 2020

BUSINESS DAY Harvard Business Review

MONDAYMORNING

In association with

Present your data like a Pro JOEL SCHWARTZBERG

W

ith so many ways to spin and distort information these days, a presentation needs to do more than simply share great ideas — it needs to support those ideas with credible data. That’s true whether you’re an executive pitching new business clients, a vendor selling her services or a CEO making a case for change. How you present data can double — or decimate — its impact, so take note of these ways to ensure that your data is doing its job: — MAKE SURE YOUR DATA CAN BE SEEN: What is readable on your laptop may be far less so when projected on a screen. Your audience won’t learn what it can’t see.

— FOCUS ON THE POINTS YOUR DATA ILLUSTRATES: Don’t leave the burden of decoding your data to your audience. It’s your job to explain how the data supports your major points.

— SHARE ONLY ONE MAJOR POINT FROM EACH CHART: The quickest way to confuse your audience is by sharing too many details at once. The only data points you should share are those that significantly support your point —

ideally, one point per chart.

— LABEL COMPONENTS CLEARLY: While you’ve been working with the same chart for weeks or months, your audience will be exposed to it for mere seconds.

— VISUALLY HIGHLIGHT “AHA!” ZONES: The best presenters visually highlight the

“Aha!” zone itself with a circle or shading to reach the differentiated (aural, verbal, visual) learners in their audience, as well as to triple-reinforce the most important data takeaways.

— WRITE A TITLE THAT REINFORCES THE DATA’S POINT: Even when the titles are specific, like “Millennial Pref-

erences” or “Campaign Awareness,” they can still be elevated with more point-specific titles like “Millennials Prefer Mobile” or “Campaign Awareness Is Increasing.”

— PRESENT TO YOUR AUDIENCE: Many presenters look at their slides while they share data, as if the PowerPoint is

their audience. But only your audience is your audience, and, as fellow humans, they receive your points best when you look them in the eye.

(Joel Schwartzberg oversees executive communications for a major nonprofit and is a professional presentation coach.)

To be more data driven, look for the right business partner MARIO HARIK

D

ata-driven insights are essential for companies that want to optimize their operations or introduce a new product or service, like a tailored customer experience.

However, some companies lack the tools to analyze their data, even though a rich supply is available. Other companies have the resources for analysis but lack the abundance of data needed for quality insights.

Even when both the data and the analytics exist, it can be smart to pool resources.

— IDENTIFY THE RIGHT PARTNER AND GOAL: A legacy organization partnering with a startup is one obvious configuration, but the types of businesses that can benefit from an alliance are nearly endless.

As with any relationship, it’s important that the two organizations share a similar culture and values, as well as a common goal. The goal itself should be laser-focused on solutions that will benefit the end user.

— THINK BIG BY THINKING SMALL: A partner doesn’t have to be a large enterprise with a huge pool of resources.

Highly specialized partnerships have great potential to improve efficiency. The ideal time to get involved with a small tech company is in its embryonic stage.

— DON’T BE AFRAID TO BE FIRST: Some partner opportunities will be obvious, while others may come from unexpected places. One reason partnerships are so attractive is because they can offer the flexibility to walk away. The decades-old “fail-fast” mentality is still valid in the digital era and applies to business relationships as much as to new projects. I encourage business leaders to hunt for data-driven partnerships that fall outside their universe. Be willing to walk away from a partnership that isn’t delivering the anticipated results, but be the first to give a non-obvious alliance a chance.

(Mario Harik is chief information officer of XPO Logistics.)

Monday 24 February 2020

BUSINESS DAY

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Monday 24 February 2020

BUSINESS DAY

FEATURE

Pioneering technology innovations in Africa takes SystemSpecs’ focus With a population of over 1.3 billion growing at the rate of 2.5 percent per annum, and 65 percent of its people younger than 35, the continent’s potential as a growth market and human resource contributor is on a rapid rise. Even better, a rising number of people on the continent are solving problems by creating new and innovative products and services that are catching the world’s attention, writes SEGUN ADAMS.

A

frica is the next frontier for growth, innovation and social progress, South African President, Cyril Ramaphosa told European leaders in February 2018.

Today, the world’s poorest continent and its most untapped are undergoing a revolution.

Business experts have already identified key areas that present the greatest opportunities on the continent now including agriculture, healthcare, education, and Information and Communication Technology (ICT). One of the entities that represent the phenomenal growth of these opportunities in Africa’s technology market is SystemSpecs, a pioneering Nigerian firm creating landmark solutions and services ranging from Financial Technology to Human Capital Management and Data Services.

It is easy to associate fancy words like ‘creativity’, ‘innovation’ and ‘technology’, especially in third world countries, with start-up companies.

Yet, SystemSpecs is not in any way ‘just starting’. It is a 28-year-old company that has silently dominated Nigeria’s software market for about three decades.

Long before the unravelling of the internet-based workspace environment and the arrival of smartphones which are currently stimulating the Fintech revolution in Africa, SystemSpecs had created smart solutions to help businesses operate more efficiently in Africa’s largest economy.

“We have grown gradually but consistently while maintaining focus on software development even at a time when software was largely unknown in this part of the world,” John Obaro, exbanker, computer scientist/managing director, SystemSpecs, said about the company’s phenomenal commitment to development of qualitative software solutions.

Founded in 1992 at a time personal computers were just appearing on the scene in Nigeria, SystemSpecs has for long been recognised as a leader in Nigeria’s software market. Nerdy, meticulous, and self-effacing, Obaro led the company from very humble beginnings as a 5-man start-up and has successfully championed the firm’s emergence as an African technology giant.

One of the earliest products associated with SystemSpecs is HumanManager, a really robust Human Capital Management solution that incorporates several innovative features critical to managing people in public and private organisations covering the management of payroll, pensions, tax computation, employee performance, recruitment, training, expense claims & reimbursements, time-sheet & overtime, medical,

L-R: Ernest Ndukwe, member, Board of Directors, SystemSpecs; John Obaro, managing director, SystemSpecs; Achenyo Idachaba-Obaro, CEO, MitiMeth; Sam Aboyeji, general overseer, Foursquare Gospel Church in Nigeria; wife, Olabisi; Yomi Oyinloye, national secretary, Foursquare Gospel Church in Nigeria, and Emmanuel Ocholi, member, Board of Directors, SystemSpecs, at the unveiling of the SystemSpecs’ new brand identity and launch of Paylink by Remita in Lagos, recently.

alumni relations and e-payment.

In the early 2000s, HumanManager became Africa’s—and arguably the world’s—first self-service human resources management platform.

In 2006, SystemSpecs made a major foray into the public financial management sector with its immaculate delivery of the World Bank-funded Integrated Personnel and Payroll Information System (IPPIS), a programme of the Federal Government of Nigeria geared at providing a database of accurate records of federal civil servants in order to eliminate ghost workers and streamline personnel management.

The Nigerian government announced in July 2019 that IPPIS had saved it about $796 million by eliminating thousands of ghost workers on its payroll.

Also, in 2006, SystemSpecs launched Remita, a financial technology solution that has now become a household name in Nigeria. The multi-bank application was initially meant to facilitate pension computation and payments for retired government employees. However, due to its robust features, it became evident that Remita would manage much more than pensions.

In its journey towards improved public finance management, the Nigerian government would later adopt the Treasury Single Account (TSA), a World Bank recommended initiative that prescribes the consolidation of government’s cash flow across all its operations into one account to provide full oversight and comprehensive management of its cash assets.

SystemSpecs again appeared on the scene to provide the much-needed technology solution to drive the national initiative. Its Remita was the preferred solution adopted by government ahead of other local and foreign software solutions that were considwww.businessday.ng

ered based on the completeness of its offering and design that perfectly reflected local nuances without the need for any additional customisation or development costs.

The successes recorded by the Federal Government on its Remita-powered TSA have been nothing short of phenomenal. In July 2019, an official of the Office of the Accountant-General of the Federation (OAGF) announced that the government had collected almost $28 billion through the TSA from 1,674 Ministries, Department and Agencies (MDAs). The Accountant General of the Federation, Ahmed Idris, also pointed at the efficiency of the policy, maintaining that FG has been able to save over $125 million monthly in interest through TSA. As a result, the brazen financial impropriety that characterised Government operations before the introduction of TSA have been curtailed to a large extent.

Well before and even beyond its role in TSA success stories at the federal and state government levels, the otherwise quiet SystemSpecs has continued to provide innovative solutions to an array of customers in the private and public sectors. The technological expertise and experience of the brand has led to the adoption of its products and services across the continent. The firm has ensured that it constantly reinvents the wheel with its technological acumen, successfully restating its leadership by charting new paths for other industry players.

With a stoical reputation and amazing forward-thinking culture, SystemSpecs has constantly supplied the market with epoch-defining solutions and services, often in an unassuming manner which has become its characteristic trademark. The company has not had an outdoor board announcing its name or identity in 28 years. The firm has been at the head of quite a number of technology innova-

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tions without inordinately seeking the spotlight. However, with the proclamation of a new era in the history of the brand, one aimed at accentuating its presence across the African and global markets, the firm might have to operate a little differently.

“Throughout the course of our existence, our growth has been organic, without the involvement of external investors. However, now is probably the time to change that model in order to fully capitalise on the assets and intellectual property built over the years. We have a history of firsts across the globe in terms of some of our innovations and are in prime position to take on the world,” Obaro said in a recent interview.

In this new phase of its business, SystemSpecs is being deliberate in projecting its innovations and intellectual assets to the world to show that great technology solutions do indeed come out of Nigeria.

To affirm its new strategic direction, deepen its business in Nigeria and reinforce its emerging influence outside the country, the firm recently restructured its operations for enhanced global competitiveness.

SystemSpecs’ repositioning drive includes an identity revamp, a new corporate logo, new products launch, re-structuring of the company into strategic business units and relocation to a new expansive office.

For those outside Africa, there are cogent reasons to pay attention to SystemSpecs’ expansion. Tech companies globally often gain competitive advantage by causing market disruption through their ability to understand and act on technology trends. Through its corporate restructuring drive, SystemSpecs is already positioning itself to be at the vanguard of technology trends driving economic development in Africa.

The extent of the company’s influ@Businessdayng

ence in Nigeria hints at its full-scale capability when provided with an enabling environment. Some of the brand’s recent innovations include products to process local and foreign payments, automated direct debit, retail and SME lending support services and payroll services for MSMEs.. A much recent introduction is PayLink, a pretty smart way for individuals, social media and offline merchants, NGOs, and businesses to easily get paid or receive funds through a secured personalised web link.

Despite its seeming proclivity for providing solutions for corporate organisations, the firm in fact develops solutions for SMEs and individuals. Its flagship product and leading fintech solution, Remita, has the unprecedented capacity to help small or big businesses as well as individual users manage their finances on a single screen despite maintaining accounts in different banks. This feat, which was introduced into the market with little or no fanfare, was widely-celebrated by one of the world’s largest banks, HSBC, riding on UK’s Open Banking dispensation which allows its account holders to view account balances from different banks together on a single screen. A feature that had been created and available on Remita for more than a decade based on sheer innovation and without the backing of any open-banking drive or law. .

In the final analysis, with significant national-level support, favourable environment of business, continued focus on innovation and deeper strategic continental and global ecosystem linkages, SystemSpecs has the potential of measuring up to, and even outperforming, some of the world’s biggest software application and Fintech companies and to become another unicorn from Africa and a technology reference point for the rest of the world.

The resurgence of economic PanAfricanism has led to the birth of initiatives such as the African Continental Free Trade Agreement (AfCFTA) aimed at facilitating free trade across the continent and creates more opportunities for continental and global technology companies to emerge from Africa. SystemSpecs is a sure candidate to leverage AfCFTA judging by its antecedents and current outlook for the next phase of its growth.

Modern success stories are often hinged on the ability of organisations to provide innovative ways of executing quotidian tasks or proffering solutions to longstanding problems.

In Nigeria, many champions are emerging and redefining the technology landscape on the continent and across the world. And as more unicorns emerge from among us, SystemSpecs has the potentials to deliver even greater possibilities for Africa.

Monday 24 February 2020

BUSINESS DAY

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Monday 24 February 2020

BUSINESS DAY

cityfile 66-year-old contractor remanded over alleged N31m fraud SIKIRAT SHEHU, Ilorin

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L-R: May Agbamuche-Mbu, national commissioner (INEC); Mahmood Yakubu, chairman, INEC, and Festus Okoye, national commissioner, INEC, at a meeting of the Resident Electoral Commissioners with the INEC Chairman in Abuja. Pic by Tunde Adeniyi

Insecurity: Oyo to build database of commercial motorcycle operators ... action motivated by ‘ban’ of motorcycles in Lagos REMI FEYISIPO, Ibadan

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s part of measures to check the wave of crimes such as kidnappings, killings, arm robbery, Oyo State government has resolved to introduce identification cards for commercial motorcycle operators and leverage this to build their database.

The government believed that the move would also check the influx of commercial motorcycle operators with criminal tendencies.

Meanwhile, the state governor, Seyi Makinde, has ordered reduction in the daily levy on commercial motorcycle operators in the state from N200 to N100.

Commissioner for public works, infrastructure and transportation, Raphael Afonja said at the weekend in Ibadan that the government decided to reduce the levy so as to reduce the burden of payment on the operators.

According to the commissioner, in order to check crimes associated with motorcycles, the government would, in due course, issue ‘rider’s card’ to all registered commercial motorcyclists in the state.

This, he said, would enable the government differentiate between registered motorcyclists and criminal elements operating with motorcycles.

“Due to what happened in Lagos State, which has led to an influx of people from Lagos into Oyo State,

there is a need to have motorcycle riders’ card to identify people coming into the state.

“So, in collaboration with the revenue collector for the state and the Federal Road Safety Corps (FRSC) and the unions, we will start this to gather information on those who are engaging in commercial or private cycling businesses in the state. This is possible through profiling.

The security agencies are in need of these pieces of information.”

Afonja, a professor explained that the riders’ cards would afford the government the opportunity to have a database of the riders across the state, saying, “this registration of motorcyclists through the riders’ card will be a database for

us to know who is who; who owns what; who they are, where they live and the rest.

We will also add their BVN to know who they really are.

He said the decision was also informed by recent cases of bike snatching and robberies using motorcycles.

“That is why we are trying to make sure that all motorcycles in Oyo State are properly registered. We will ensure they do what is needful and obey the law,” he added.

The commissioner said that the reduction in the daily levy would also be extended to other artisans and the people in the markets “In addition to that, we have met with those in the quarries to include the union people and they are excited.”

2019 flood: Edo communities receive food, building materials IDRIS UMAR MOMOH, Benin

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ommunities in Akoko-Edo local government area of Edo State ravaged by flood in 2019 have received food stuffs and building materials from the National Emergency Management Agency (NEMA).

The items which are part of the agency’s relief materials distributed to

the communities include 347 bags of rice, 347 bags of beans, 347 bags of maize, 886 bundles of zinc, 866 bags of cement, 886 pieces of ceiling boards.

Others include 695 pieces of mattress, 695 piece of blanket,695 pieces of nylon mat, 250 cantons of detergent, 232 packets of zinc nail, 116 bags of nail, 35 kegs of vegetable oil and 18 bags of salt.

Joseph Afpofabi, information officer, NEMA, www.businessday.ng

Edo operating office said in Benin, the state capital that the distribution was done after an impact assessment of the flood was conducted and the relief materials approved by the management of the agency.

According to him, the intervention was to identify with the suffering of the affected people. He added that during the distribution, the head of operation, Dahiru Yusuf

told the communities that the relief materials by the agency were to cushion the effect of the flood on them.

He urged the beneficiaries to make proper use of the items so as to ameliorate the negative impact of the disasters.

Responding on behalf of the communities, J.O. Longe, commended the Federal Government and NEMA for the relief materials.

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he Economic and Financial Crimes Commission (EFCC), Ilorin zonal office on has arraigned a 66-year-old contractor, Joseph Oluwole Komolafe before a Kwara High Court presided over by Justice Mahmood Abdulgafar.

According to Tony Orilade, head of media and publicity unit of the EFCC, Komolafe was arraigned on a one count charge bordering obtaining money under false pretence to the tune of about 31 million naira.

The EFCC alleged that the defendant diverted the said money from the fund meant to supply laboratory equipment to the University of Ilorin.

The charge against Komolafe reads “That you, Oluwole Kamolafe being the alter ego of Destiny Work Limited, sometime in July, 2015, in Ilorin within the jurisdiction of this court did cheat Femimat Concepet Limited the sum of N31, 500,000.00 when you intentionally induced Femimat Concept Limited to supply laboratory equipment in respect of a contract worth N128,199,968.00 to University of Ilorin in your stead, which he would not supply but for your inducement, you thereby committed an offence contrary to section 320 of the Penal Code and punishable under section 322 of the same Penal Code” The accused person pleaded not guilty when the charge was read to him.

Synagogue collapsed building: Court fixes April 24 for final written addresses

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Lagos High Court sitting in Igbosere, on Friday, fixed April 24 for the adoption of final written addresses in the Synagogue Church of All Nations (SCOAN) collapsed building trial.

The Lagos State government had sued SCOAN over the collapsed building which killed 116 worshipers of the church on September 12, 2014.

The defendants in the case are two engineers, Oladele Ogundeji and Akinbela Fatiregun and their companies Hardrock Construction and Engineering Company and Jandy Trust Ltd. They are facing trial on 110-count charge of involuntary manslaughter, while the registered trustees of SCOAN was charged with building without approval.

The Lagos State Directorate of Public Prosecutions (DPP) accused the defendants of violating Section 75 of the

Urban and Regional Planning Law of Lagos State, 2010.

The directorate also said the defendants violated Section 222 of the Criminal Law of Lagos State, 2011. They were arraigned on April 19, 2016, but they pleaded not guilty.

At the resumed hearing last Friday, the Lagos State prosecutor, Jide Martins, told the court that the business of the day was to pick a date for adoption of the final written addresses.

The judge, Lateef LawalAkapo, however, ordered that the defence counsel should file and adopt their final written addresses within 14 days.

Lawal-Akapo also ordered the prosecution to file their written addresses within 21 days.

He said that the defence should file their reply within seven days after the prosecution had filed theirs.

Lawal-Akapo adjourned the case until April 24 for adoption of the final written addresses.

Lagos shop owners lament demolition in spite notification

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ome shop owners at the Ikotun market have lamented the demolition of their shops, saying it would impact their livelihood negatively.

Parts of the market were demolished in order to reconstruct the roundabout and expand the road for easy vehicular movement.

Folashade Aje, who sells condiments, at the weekend, lamented that the notice was given late in 2019 but they assumed the demolition exercise would come much later in the year.

“It’s very sad, you know it’s just the beginning of the year, there are lots of expenses now. I don’t even have where @Businessdayng

to trade, it’s painful,” she said.

Chibuzor James, a dealer in second-hand appliances, said that he wished the demolition had happened last year or later this year.

“I knew it will happen, if it was last year by now one would have gotten used to the changes, but the year is still new and we have this to deal with alongside other personal issues.

“I know it’s for the best but still it’s painful, but we can’t challenge the government, we just pray that we are compensated,’’ he said.

A passerby, Simisola Isola, said that going inside the market was something she found repulsive; she said with the demolition she has to change.

Monday 24 February 2020

BUSINESS DAY

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Monday 24 February 2020

BUSINESS DAY

news CBN declares OMO ‘poison’ for...

Continued from page 1

Committee Feedback seen

L-R: Sonny Aragba-Akpore, assistant director, media management unit, public affairs department, Nigerian Communications Commission (NCC); Truddy Tony-Awusaku, principal manager, media, public affairs, NCC; Abraham Oshadami, head, information technology, NCC, and Johnson Anorh, convener, Gage Awards, during the maiden edition of Gage Award, in Lagos.

Pic by Pius Okeosisi

Buhari risks legacy as poverty pit swallows...

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off oil, analysts say.

These analysts make

their case with data on crude oil exports as a percentage of total exports. In the first nine months of 2019, crude oil exports as a percentage of exports came to 76 percent, according to the National Bureau of Statistics.

The economy hasn’t fared better as well, with GDP per capita declining every year since 2016, a sign that the economy is unable to provide sufficient opportunities for a rapidly growing population.

Unemployment levels have also shot up to a six-year high of 23 percent and poverty is growing, with Nigeria the new poverty capital of the world, according to a Brookings Institution report.

Buhari’s promise to lift 100 million people out of poverty in the next 10 years will require lifting 10 million each year and that looks untenable in a country where economic growth is weak and the private sector is struggling.

About 108 million Nigerians lived in extreme poverty in 2019, 16 million more than in 2015 when Buhari was elected president for the first time and 37 million more than in 2003.

On the country’s current trajectory, close to 130 million Nigerians are expected to live

in extreme poverty in the next decade, according to the International Futures system (IFs), an integrated modelling platform housed at the University of Denver. This is 22 million more than today and implies that Nigeria is not on track to meet Goal 1 of the SDGs by 2030.

Countries that have achieved a drastic reduction in poverty have done so in periods of robust economic growth whether it’s China or India.

But Nigeria has been stuck in a low growth cycle of around 2 percent for the most of the last five years and things could stay that way for a longer period.

Ahead of the fourth quarter GDP report to be published by the NBS today, the expectation is that 2019 was yet another year of negative per capita GDP growth where economic growth was too slow to match population growth.

Nigeria probably expanded 2.1 percent in 2019, according to consensus analysts’ estimate.

Of the top five largest economies in Africa, only the second largest economy, South Africa, was tipped to grow slower than that, with third place Egypt expected to grow 5.8 percent.

For 2020, the IMF recently cut its growth forecast for Nigeria to 2 percent from 2.5 percent, citing lower oil prices and fragile fiscal buffers.

“The economy is at one of

Dangote spurs economic activities in S/East...

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has handled over 3,000 containers since ANAMMCO was resuscitated.

The coming of the automotive policy also played a key role in the revival of ANAMMCO. “This is one of the benefits.

And the second thing is the benefit of Dangote’s patronage in identifying a plant that has capacity in the South-East, in Enugu, to give us the opportunity to produce trucks locally instead of importing them,” Nneji said.

“What this initial capacity surge did was to ensure that all the staff of ANAMMCO who had been at home had to come back to work. Some local suppliers, lubricants, electrolytes

and the rest of them also had to come back to doing business.

And it goes even further than that,” he said.

He said this shows how to spur capacity by utilising local capacity that is available.

“This is courtesy of Dangote and the patronage and each time we had approached Dangote, we said, ‘Look, if you are going to do this number of trucks, it is important that the Shacman apart from its quality, we are also representing a firm that has production capacity in the South East in the stake of ANAMMCO.’ That is how Dangote is keeping the South East automobile sector working,” Nneji said.

He said according to the National Automotive Poliwww.businessday.ng

its lowest points when you examine major economic indicators,” said a senior business leader who did not want to be quoted criticising Buhari.

“He risks having a dented legacy, one of bad economic data all round. We hope the thought of that forces him to change something,” the person said.

Buhari needs to change many things fast if he is to redeem himself and reverse the fortunes of a flailing economy.

Buhari has about 38 months before his second four-year term at the helm ends.

That timeframe may be too short, some analysts say, but sources close to the government say the president has some reforms lined up to save the economy and perhaps forge himself a legacy.

The fragile state of the economy hasn’t given the 76-year-old much of a choice, said Egie Akpata, a director at Lagos-based Union Capital Markets plc.

“Most economic indicators are worse off today, yet we are borrowing with nothing to show for it,” Akpata said.

“The government needs to show more commitment to infrastructural projects with multiplier effects.”

For Nigerians, the cost of a flailing economy is pinching harder.

Inflation, which had started to cool, is on its way up on

the back of higher food prices in a country where average incomes can’t stop shrinking.

The Central Bank has thrown a raft of monetary policies at the economy to revive it. The most recent of such policies is a lending-todeposit ratio policy that sought to boost loans to the private sector. But the economy has remained bogged by the absence of fiscal policies, according to Wale Okunrinboye, head of investment at pension fund manager, Sigma Pensions Ltd. “There are problems only fiscal reforms can solve that are still hanging and that will undermine whatever efforts the CBN makes,” Okunrinboye added.

The IMF, at the conclusion of its Article IV consultation in Nigeria, said the pace of economic recovery remains slow, as declining real incomes and weak investment continue to weigh on economic activity.

“External vulnerabilities are increasing, reflecting a higher current account deficit and declining reserves that remain highly vulnerable to capital flow reversals,” said Amine Mati, senior resident representative and mission chief for Nigeria at the IMF. The Washington-based Fund expects inflation to pick up, while deteriorating terms of trade and capital outflows will weaken the country’s external position.

cy, Enugu and Nnewi have been designated as the automotive centre for the South East because of the stay of ANAMMCO over a period.

“They have acquired a lot of technical capacity. There is also a training school that produces technicians, training young school leavers here. So this is what we are doing here.

This place is busy producing quality trucks with Dangote as the largest single patron. 90 percent of the trucks produced here are for Dangote,” he said.

“Totally here we have done 3,500 units for Dangote. Additionally, the trucks used at the refinery are also Shacman trucks. Because of the quality of Shacman trucks Dangote also patronises that for the refinery,” he said.

Sunday Esan, general man-

ager, media, Dangote Group, said the Group is satisfied with the Shacman trucks churned out from Onne Ports, adding that the partnership would last for a long time as the group continues to expand across its various business segments.

He added that as the Dangote refinery comes on stream, the Group would require more trucks hence the sustained relationshipwithTSS/ANAMMCO. The massive investment in the South-East is contrary to the assumption that Aliko Dangote is not patronising local manufacturers.

“This is why he agreed we should come and see how ANAMMCO plant has come alive, the impact he has made in the country and the employment this patronage has generated,” Esan said.

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by BusinessDay show that six banks may have been sanctioned for breaching FX rules on using wired funds to finance banned/prohibited items.

The committee also announced another set of 14 banks that violated FX rules.

The Bankers’ Committee is the umbrella body of CBN officials and managing directors of deposit money banks in the country.

The apex bank warned that banks should guard their operations seriously and tread cautiously in FX market.

“Any bank that allows customers to do third party transactions without clear purpose/rationale constitutes contravention with penalties,” CBN warned.

On the issue of cash reserve ratio (CRR), the share of a bank’s total deposit that is kept with the CBN, which was recently raised by 500bps to 27.5 percent from 22.5 percent, the committee noted that CRR would continue at discretionary application and could be as high as 30-40 percent if the apex bank detects that the banks bid for Open Market Operations (OMO).

“OMO has now become poison as against honey that it used to be. Banks are enjoined to remove their eyes from OMO and play responsibly,” CBN said.

OMO is basically designed to be a short-term market instrument that the CBN uses to control the supply of money in the economy. Whenever the CBN believes the inflation

rate is high due to increased money supply, it sells OMO bills at high-interest rates mopping up liquidity from the economy. On the flip side, if it believes there is a liquidity squeeze due to high-interest rates, it buys back OMO bills flooding the financial market with cash.

In a bid to boost lending to the real sector, the apex bank in October last year restricted private individuals and local non-banking firms from participating in its high-yield OMO market at both primary and secondary segments.

It has also in recent weeks restricted the participation of banks in the primary OMO market declaring itself a liquidity provider.

The committee also warned banks to desist from taking advantage of cheap liquidity to make illicit profit.

The apex bank said it would defend the naira proactively, just as it warned that proponents of devaluation would wait in vain.

It also announced new CRR for merchant banks from 2 percent to 27.5 percent.

“Any merchant bank that can’t cope should surrender its licence and opt for commercial banking licence,” CBN warned.

As at November 2019, merchant banks’ lending to the private sector was about N298 billion while their deposits were around N344.3 billion.

The Bankers’ Committee noted that the loan-deposit ratio adjustments would now be done to remove all shorttenured facilities granted for 90/180 days, urging banks to lend long term.

Investors not upbeat on consumer goods...

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by spiralling price of staples as border closure continues to bite.

Inflation rate, which has hit 21-month high, has dire consequences for companies as consumer purchasing power will be further eroded in a country where over 50 percent of its population lives on less than $1.98 a day.

The International Monetary Fund (IMF) has cut the estimate for Nigeria’s economic growth to 2 percent from 2.5 percent, citing plunging oil prices stemming from the coronavirus outbreak. The fund said the country needs a policy overhaul to reduce vulnerability including current accounts deficits and budget deficit.

The spread of the coronavirus has curbed demand in China, driving oil prices down 13 percent this year, below the $57 a barrel benchmark for Nigeria’s 2020 budget.

The consumer goods firms are not producing enough net profit for common shareholders as they have been underperforming the broad NSE All Share Index.

The average cumulative earnings per share of the largest entities fell to N6.21 in 2019, from N7.10 the previ@Businessdayng

ous year.

Industry price-to-earnings ratio stood at 14.71 times, which is higher than the average price, multiplies of NSE ASI of 7.28 times.

While the local bourse returned negative 14.98 percent in 2019, it began this year on a sound footing as it has a yearto-date return of 2.02 percent.

Another downside risk to the consumer goods industry is a possible devaluation of the currency by the Central Bank of Nigeria (CBN).

Corporates’ balance sheets are susceptible to foreign exchange devaluation risk as the CBN is expected to devalue the currency to $400 by 2021, according to Bloomberg estimates.

What this means is that corporates that have huge debts in their balance sheets will incur additional increase in liability that has to be written off immediately.

“If oil price continues to fall till the second half of the year, the central bank’s power to defend the naira will be weakened, then we can expect devaluation,” said Abimbola Gbemisola, equity research analyst at Chapel Hill Denham Limited.

Monday 24 February 2020

BUSINESS DAY

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abujacitybusiness Comprehensive coverage of Nation’s capital

Aliyu urges Religious Leaders to curb vices among youths James Kwen, Abuja

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L-R: Law Mefor, book reviewer; Ismail Bello, representing chairman of the occasion; Abdwahab Shina Omoniyi, author of the book, and Amina Omoniyi, wife of the author, during the presentation of the book title ‘The Boundary’ in Abuja.

Pic by Tunde Adeniyi

FCT Minister charges Muslim women to fight cultism, drug abuse James Kwen, Abuja

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he Minister of the Federal Capital Territory (FCT), Muhammad Bello has charged members of the Federation of Muslim Women Associations in Nigeria (FOMWAN) to restore family values in the society by working hard to eliminate the vices of cultism and drug abuse especially amongst children and women.

The Minister gave this charge during a courtesy visit by a delegation of the

FCT branch of the Association led by Bola Usman, Amirah of the FCT branch.

He called on FOMWAN to use its vantage position and the fact that it has been in existence for 35 years to focus on matters concerning children as well as women, especially as it relates to drug abuse and cultism.

“One of the main areas of concern to us is the issue of drug abuse and cultism in our schools. He continued, “We used to know of cults in the 70s at the university level. Now you have cults in primary

schools and we wonder how do they even get to go there?”, Bello said.

Also speaking, the FCT Minister of State, Ramatu Aliyu commended FOMWAN for its activities over the years but also reminded them to re-inculcate the family value system which, she said, is being eroded in society.

Aliyu said there was an obvious challenge of proper parenting as parents had lost control of their children and called on FOMWAN to work together and inculcate in children the values under which they were brought up.

She also decried the rising cost of marriage in Northern Nigeria which she said had the potentials of leaving many young girls without husbands, a situation she described as “scary”. She, therefore, called for community action by FOMWAN to tackle these vices.

Speaking earlier, the Amirah of FCT FOMWAN, Usman disclosed that the 35th anniversary of FOMWAN is scheduled hold in August in Abuja and called for the support of the FCT Administration for the success of the event.

Afritex to convene over 500 stakeholders at 2020 Education Technology Trade Summit Godsgift Onyedinefu, Abuja

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fritex in partnership with the federal government is set to host over 500 stakeholders and decision makers at the 2020 EdTech summit, an annual trade event in educational resource, training and technology based solutions for all levels and sectors in the Nigerian education and training industry.

The Ministers of Education and Communication will be guest speakers and stakeholders will brainstorm at the summit which has the theme “Educational Technology and it’s Practical Application.”

The event which is set to hold on the 3-4 of March at the International Confer-

ence Centre (ICC) Abuja, will have over 2000 visitors, composing of potential buyers, partners and educators making it a destination to connect with customers.

The summit will explore foward-looking theme with a motive to educate attendees on the Nigeria and global educational technology landscape.

AFRITEX in a statement also announced that part of the summit will include the launch of All-Star Innovation Awards in partnership with BusinessDay to celebrate schools from across Nigeria using Education Technology to support teaching and learning.

“Every day, government, schools and businesses work hard to develop learnwww.businessday.ng

ing that leads in innovation and engagement. The EdTech All Stars Innovation Awards aims to recognize thought leaders and how they use technology in education, whether a supplier or creator of the technology itself, or a teacher that drives its usages that children and studenu with their delivery.

According to the statement, the Innovation Awards which has 25 categories will showcase bestin-class examples that others can learn from and follow in a bid to help advance education as a whole.

“The EdTech All-Star Innovation Awards winners will be chosen from a mixture of public nominations and the insight of the judging panel. The awards is us

ed to celebrate a wonderful sector, whilst recognizing the benefits of education technology and acknowledging the economic advantages of the growing EdTech sector to the whole Nigeria economy” Oyeola Oworu CEO/ President AFRiTEX said.

“Schools to be listed in the EdTech All. Star Innovation Awards are those waving the flag in best practice and use of technology for teaching not just from a learning perspective but from an operational perspective too”, he added.

Oworu noted that technology is actively helping schools to expand the curriculum and strengthen the educational offerings to its students using a ‘learn through plan’ approach.

https://www.facebook.com/businessdayng

he Minister of State, Federal Capital Territory, Ramatu Aliyu has tasked religious leaders in the country to use their God given positions to curb social vices bedevilling the youths.

Aliyu gave the charge when a delegation of National Leader of the Arewa Pastors Non-Denominational Initiative for Peace led by its National chairman, John Richard, paid her a courtesy call in Abuja.

The Minister also charged clergymen in the country to pray against insurgency and other vices, stressing that the peace and stability of Nigeria is not negotiable.

According to her, “it is easy for anybody or group to blame government for the insecurity challenges facing us as a nation, but I must tell you that as religious leaders, you have a greater role to play to curb the social vices among our youths that could lead to a full blown terrorism.

“I say this with all sense of responsibilitybecausetheperpetrators of this heinous crime are members of one religious group ortheother.Infact,theyareeither ChristiansorMuslims.Therefore, if you use your God given position to propagate the teachings of the Holy Books, it will go along way in curbing the social vices among our youths. By so doing we have solved 50 percent of our security challenges”.

Aliyu affirmed that recent cases of young marriages fail-

ing and killings among young couples could be traced to lack of good parenting and moral upbringing in the society.

Earlier, National Leader of the Arewa Pastors NonDenominational Initiative for Peace, Richard commended the FCT Minister of State for what he described as “impactful transformation” embarked upon by her in less than a year of her appointment as minister.

Richard told the Minister that the group came from various parts of the country to identity with her remarkable successes in the Federal Capital Territory, just as he assured the minister of the group’s continuous prayers for more successes, peace and development in the nation’s capital under her leadership.

He also commended the Minister for her motherly heart in carrying both Muslims and Christians along in the appointment of her political aides without any form of religious discrimination, while appealing to the authority to give appointments and employments to their members into the Christian Pilgrim Board considering the group support to President Muhammadu Buhari’s administration.

“We assure you of the continuous mobilization of the strength of our membership to prayforPresidentMuhammadu Buhari, yourself, the senior minister and support the APC government to transform Abuja to rank among the best 10 cities in the world and have the Nigeria of our dreams,” he stated.

NBC will implement Buhari’s approved reforms, but won’t gag citizens freedom – DG Godsgift Onyedinefu, Abuja

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he Acting Director General of the National Broadcasting Commission (NBC), Armstrong Idachaba has stated that the Commission is committed to implementation of the broadcast reforms approved by President Muhammadu Buhari, assuring that it will not gag citizens freedom of expression.

The President had approved the recommendations of the Reform Implementation Committe to enable the Commission regulate the broadcast space.

Idachaba however, clarified that the regulations are intended to mandate owners of distribution platforms to ensure through self-regulation, and the statutory provisions, that contents that will emerge on their platforms are not harmful content and not to gag press freedom.

The NBC Boss noted that regulating Monopolistic tendencies by Rights owners is another key area in the reforms, according to him, “This @Businessdayng

has been worrisome, often many Nigerian entrepreneurs who want to involve themselves in broadcast content delivery often find themselves suffocated or impeded by certain monopolistic tendencies.”

He informed that the Commission shall in the next two weeks publish the details of the thrust of the reforms implementation for industry and public input which will be aggregated and developed for further regulatory intervention.

On Digital Switch Over, the DG acknowledged that the process is been slow, but assured that by May 2021, the signal distribution infrastructure across the country may be concluded. He said 600,000 Set-Top boxes are already available by the local STB providers.

The Director, Engineering and Technology at the Commission, Friday Ukwela said the Digital Switch Over has been slow because of funding, even as work is ongoing to get the necessary funding which will soon be available.

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news

Nigeria set to record higher growth for Q4’19 as NBS releases GDP data MICHAEL ANI & DIPO OLADEHINDE

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igeria’s economy probably grew at a faster pace in the fourth quarter (Q4) of 2019, more than the real growth of 2.28 percent recorded in Q3, BusinessDay analysis of data shows.

The growth forecast is ahead of an official release of Q4 GDP figure by the Abuja-based National Bureau of Statistics (NBS), scheduled for early hours of Monday.

The increase in growth in Gross Domestic Product (GDP) in the quarter would be fuelled by an increased level in the volume of oil production as well as an expansion in the purchasing managers index (PMI), which serves as a forward indicator of economic activities.

Oil production, including condensates and natural gas

liquids in the Q4 2019, stood at an average of 1.92mbd, according to central bank’s data.

This was 0.5 percent higher, when compared with the 1.91mbd produced in the quarter, driven by reduced incidences of pipeline vandalism and restiveness in the oil producing areas.

Developments in the oil sector have been a major determinant of the direction of economic activities in Africa’s largest economy, which depends largely on the sector to rake in about 70 percent of its revenue and 85 percent of its foreign exchange earnings.

When oil production fell to as low as 1.2 million barrel in 2016 due to intense agitation in the Niger Delta region, economic activities in African giant state was almost brought to a halt.

The culminated effect of the low oil production level followed

with a 5-quarter of negative growth (lengthy recession).

And it was not until Nigeria began to witness some relapse in the oil producing region that growth began to pick up, signposting the positive correlation between oil production and growth of economic activities.

Even though movements in commodity prices are not factored in the calculation of economic activities since the GDP is deflated using a base year period (2010 prices), higher crude oil prices to a large extent, have a way of indirectly triggering the activities of various sectors including manufacturing, transportation and telecommunication, which are some of the major sectors of the economy.

CBN data show that average spot price of Nigeria’s reference crude oil, the Bonny light, was higher at $64.87 barrel in the fourth quarter of 2019,

compared to $64.25 barrel in the previous quarter, driven by optimism of a phase one trade agreement between the US and China, as well as the improved outlook for global oil demand amid better-than-expected economic performance of some major economies in the review period.

Similarly, the PMI, which is based on survey responses showing changes in the level of business activities from purchasing and supply executives of manufacturing and nonmanufacturing organisations in all 36 states in Nigeria and the Federal Capital Territory (FCT), expanded in the quarter.

The expansion in the PMI, which stood at an average of 59.78 points was much faster when compared to the 58.11 points scored in Q3 hence, indicating an increase in the level of business activities.

Catholic bishops urge Christians to wear black on Ash Wednesday to protest insecurity

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atholics in Nigeria have been asked to wear black outfits on Ash Wednesday, February 26, to protest rising insecurity in the country.

Ash Wednesday marks the beginning of the Lenten season in Christendom.

The directive was communicated in a statement by Catholics Bishops’ Conference of Nigeria.

“As a mark of mourning all our brothers and sisters who have been victims of the most recent wave of violence against Christians, we are all dressed in black today and offer our prayers and penance for their repose,” said the statement signed by Augustine Akubeze

Mastercard Foundation expands Young Africa Works to Nigeria BUNMI BAILEY he Mastercard Foundation now has a presence in Lagos-Nigeria, expanding its Young Africa Works strategy on the continent. The Young Africa Works strategy is focused on enabling 30 million young people in Africa, especially young women, to access dignified and fulfilling work by 2030. It aims to create a pathway out of poverty for millions of young Africans and their families.

To date, the Canadian Foundation has established offices in Rwanda, Kenya, Ghana, Senegal, Ethiopia, and Uganda, building a broader presence of the Foundation’s work in Africa. Over the last 10 years, the Mastercard Foundation has worked in 30 African countries and its work has impacted more than 44 million young people.

In Nigeria, the Foundation is adopting an approach strategically aligned to the country’s poverty reduction strategies, which sees the government driving to diversify the economy, creating jobs, empowering young people, and bringing about technological growth. Building on this momentum, the Foundation will co-create initiatives with the private sector, young people, policymakers, and educators that are evidencebased, transformative, impactful, and scalable.

Young Africa Works in Nigeria will focus on increasing young people’s work in agriculture, in the digital sector, and creative industries.

Underpinning the growth of these sectors are financial inclusion and education programmes targeting the existing challenges and providing a catalytic effect.

The Foundation will continue collaborating with its existing partners while identifying new partners to reach its overall goal of 10 million Nigerian young people, especially young women, in work opportunities by the year 2030.

Jobberman, Nigeria’s largest recruitment platform with over 2.2 million candidates and approximately 60,000

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Sarki Auwalu (r), director, Department of Petroleum Resources, and Charles Odita, group managing director/CEO, Midwestern Oil & Gas Company Limited, during a stakeholder meeting at the DPR headquarters, Abuja.

SECCIMA president donates N100m lab to NAUTH GBEMI FAMINU

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s part of activities marking the investiture of the newly installed president of South East Chamber of Commerce, Industry, Mines and Agriculture (SECCIMA), Humphrey Anthony Ngonadi, has donated an ultramodern laboratory worth over N100 million to Nnamdi Azikiwe University Teaching Hospital (NAUTH).

Speaking at the occasion, the industrialist said the need for the donation arose as a result of appeal made to him by the management of NAUTH, adding that himself and his family contributed to making the project a reality within one year.

Ngonadi called on other wealthy individuals in the region to come to the aid of the less privileged in the society, stressing that the government alone cannot provide all the needs of the people in view of dwindling resources.

He promised more donations to the hospital in the days

ahead to meet the medical needs of the community.

Speaking also, the philanthropist son, Obinna Ngonadi, noted that himself and the siblings pulled resources together to support their father fulfil his dream of providing medical facilities to the community.

Commissioning the manor facilities, the national president of Nigeria Association of Chambers Commerce, Industry Mines Agricultural, Saratu Iya Aliyu, commended the philanthropist and urged other wealthy Nigerians to emulate him.

She pointed out that the government had many responsibilities on its shoulder, saying wealthy Nigerians should emulate foreign philanthropists who generously give out their hard earned resources to the society.

“I appeal to the rich NACCIMA wealthy members and the society at large to lend a helping hand to the less privileged in our society,” she said.

NAMA commissions CAT3 ILS at Lagos, Abuja airports IFEOMA OKEKE

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iger ian A irspace Management Agency (NAMA) has successfully commissioned its newly installed Category 3 Instrument Landing System (ILS) at Runway 18 Right, Murtala Mohammed International Airport, Lagos, as well as Runway 22 at the Nnamdi Azikiwe International Airport, Abuja.

NAMA stated that in the same vein, a flight commissioning of the newly installe d DV OR (D oppler Very High Frequency Omni-Directional Radio Range) in Lagos had successfully been carried out just as routine flight calibration had also been carried out on Runway 18 Left in Lagos.

Making this disclosure in a statement on Sunday, Fola Akinkuotu, managing director of NAMA, said a

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NOTAM (Notice to Airmen) to this effect had been disseminated accordingly while calibration of navigational aids in other locations across the country was in progress to ensure all navigational aids in Nigeria that were due for calibration were covered.

According to Akinkuotu, “In spite of initial hitches, it is gratifying to note that Runway 18R in Lagos has been certified for CAT 3 just as Runway 22 in Abuja with the newly acquired calibration aircraft by the Aviation Ministry. Both facilities are now fully operational.”

While pledging a timely calibration of navigational facilities going forward, Akinkuotu said the availability of the flight calibration aircraft would ensure that NAMA was able to carry out calibration as and when due.

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and Camillus Umoh, president and secretary of CBCN, respectively.

“We invite the universal church and all Christians to join us in prayers for our dead brothers and sisters and for peace and security in Nigeria. We equally appeal to the international community to come to the aid of the Nigerian government in the fight against terrorists, who want to destabilise our country,” the statement said.

It said “the repeated barbaric executions of Christians

by Boko Haram insurgents and incessant cases of kidnapping for ransom linked to the same group and other terrorists have traumatised many citizens”.

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employers, is another partner the Foundation is working with to train and link young people to work opportunities.

Additionally, LEAP Africa is a partner that has inspired and equipped young people, business owners, and social entrepreneurs to be ethical leaders while implementing initiatives that transform their communities and organisations, sustain livelihoods, and contribute to national development.

Cellulant, a pan-African FinTech company that provides an agritech solution known as Agrikore for Africa’s agricultural sector, is another Young Africa Works partner.

Cellulant powers a food processing marketplace to source quality raw materials from local farmers and provides them to food and beverage processors. Approximately 46,724 jobs have been created and $50 million worth of raw produce has been traded annually on the digital marketplace by huge processors. This Young Africa Works partnership intervention is expected to scale the marketplace operations to between $500 million to $1 billion per annum by the year 2025, thereby creating (directly and indirectly) more than 600,0000 jobs and entrepreneurship opportunities within the agri-food sector.

“There is no question that technology is changing the nature of work in Africa and around the world,” said Reeta Roy, president and CEO, Mastercard Foundation. “The continent is in the early stages of a technology revolution, and in some cases, Africa is leading with innovative business models through the widespread use of mobile technology and smartphones, which will create growth and work opportunities for millions of young people.”

As Africa is quickly becoming home to the world’s largest workforce, with a projected 375 million young people entering the job market by 2030, deliberate investment in young women and young men is the most transformative investment any society can make.

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Monday 24 February 2020

BUSINESS DAY

news

Uzodinma names Ihitte Uboma College of Education after late Senator Uwajumogu

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he Imo State Governor, Senator Hope Uzodimma has described late Senator Benjamin Uwajumogu as a humane, but action-packed legislator whose contributions to the political development of his area, Imo and Nigeria would remain indelible.

Late Senator Uwajumogu passed on last year on December 18, 2019 in Abuja few months after being declared winner of the Okigwe North Senatorial seat for a second term.

Governor Uzodimma spoke at the burial of the Senator at his country home, Ihitte Uboma on Friday, February 21.

He said Senator Uwajumogu’s life and times are testimonies of what he represented, noting that even in the face of difficulties, “Ben survived political turmoils to return to the red chambers the second term but death did not allow him accomplish this desire to provide for his people effective representation”.

Governor Uzodimma used the occasion to immortalize the late Senator by

renaming the state-owned College of Education, Ihitte Uboma to Benjamin Uwajumogu College of Education.

The late Senator’s burial ceremony was attended by Nigerians from all walks of life with President Muhammadu Buhari represented by the Minister of State for Education, Emeka Nwajuba, the Senate President, Ahmed Lawal, his Deputy, Senator Ovie Omo-Agege and about 20 serving and former Senators of the Federal Republic.

Others who graced the occasion were former Imo State Governors, Ikedi Ohakim and Senator Rochas Okorocha and former Deputy Governor, Dogulas Acholonu.

The Deputy Governor of Abia State, Ude Oko Chukwu represented Governor Ikpeazu. Members of the House of Representatives, the Speaker of Imo State House of Assembly, Rt. Hon. Chiji Collins and members of House of Assemblies of South East States and several notable politicians from across the country also attended.

The roll call of dignitaries includes Chris Ngige (Minister of Labour and

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Employment), Ogbonnaya Onu (Minister of Science and Technology), Raymond Dokpesi, Emmanuel Iwuanyanwu, Alex Otti, Maurice Iwu, Anthony Anwuka and Uche Ogah (Minister of State for Mines).

The All Progressives Congress (APC) was well represented at the burial both from the National Headquarters and the state.

Those in attendance from the APC include Emma Eneukwu, George Moghalu, Malcom Nlemigbo, Onyebuchi EJK, Uzoma Obiyor, Longers Anyanwu, Regis Uwakwe, Emma Ibediro, among others.

The serving and former senators who attended include Enyinnaya Abaribe, Andy Uba, Uche Ekwunife, Mao Ohuabunwa, Sylvester Anyanwu, Ezenwa Onyewuchi, Victor Umeh, Rochas Okorocha, Ike Ekweremadu, Osita Izunaso, etc.

Deputy Governor of Imo State, Placid Njoku, the Secretary to State Government, Maurice Iwu and Chief of Staff to the Governor, Nnamdi Anyaehie were also present.

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Monday 24 February 2020

BUSINESS DAY

news ANALYSIS

Brazil’s expanding production shows growth prospects in oil sector DIPO OLADEHINDE

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razil’s oil production has increased by 20 percent in the past year and the country plans to expand its footprint in the global market without joining the oil cartel.

Just like Nigeria, Brazil has disappointed in the past, with output growth coming far below expectations because of maintenance issues, declines in mature fields, and delays installing new vessels for oil production and storage. The Tartaruga Verde field, which should have come on stream back in late 2017, didn’t start until June 2018.

Brazil’s national agency for petroleum, Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP), said the country’s oil production jumped by 20.4 percent to set a new production record of 3.168 million barrels per day (bpd) in January 2020, thanks to the prolific pre-salt basin.

Data seen by BusinessDay show Brazil’s production in the pre-salt area totalled 2.682 million boed in January 2020, accounting for 66.37 percent of all oil and natural gas production. Oil output in the pre-salt area hit 2.150 million bpd last month, the regulator said. The pre-salt oilfield Lula was the single biggest oil producer in the country, pumping on average 1.052 million bpd.

Since June 2019, Brazil’s crude oil production had surged by 550,000 bpd within six months, thanks to the Lula, Buzios, Sapinhoá, Jubarte, and Sul De Lula fields, which boosted production from the pre-salt horizon in the deepwater Santos Basin to average 1.74 million bpd in 2019, Organisation of Petroleum Exporting Countries (OPEC) said in its latest report earlier this month.

According to OPEC, Brazil would be the third-largest growth driver of non-OPEC supply in 2020 after the US and Norway with non-OPEC supply growing by 2.25 million bpd, thanks to Brazil’s production rising by 310,000 bpd this year.

OPEC’s monthly report in February said Brazil’s pre-salt area is expected to further boost the country’s oil production this year.

“Oil production could rise

substantially in 2019” if the delayed floating storage and production vessels and other scheduled facilities start this year, OPEC said about Brazil in its latest monthly report. The cartel forecast Brazilian growth of 360,000bpd.

The country is also rapidly becoming less dependent on its state-controlled oil company Petrobras, which generated a massive 93 percent of Brazil’s total production in 2010.

Last month, Brazil’s total oil and natural gas production also set a new production record, exceeding 4 million barrels of oil equivalent per day (boe/d) for the first time ever, the regulator said, noting that combined oil and gas production stood at 4.041 million boe/d.

Brazil’s state-run oil firm Petrobras reported a record net profit for 2019 courtesy of asset sales under its strategy to divest non-core operations and focus on the deepwater region offshore Brazil.

The company, which is the world’s most indebted oil firm, reduced its gross debt by $24 billion last year. At the end of 2019, gross debt was $87 billion, down from $111 billion at the end of 2018.

Brazil which once boasted of the same level of crude oil production with Nigeria is aiming to be among the top five energy-exporting countries by 2030, and is tapping private investment to boost output, according to energy and mines minister Bento Albuquerque.

It’s also working on making rules more favourable for investors in upcoming auctions for oil and natural gas licences.

Oil remains the heartbeat and chief source of income for Africa’s biggest economy, accounting for a whopping 85 percent of export revenue.

In the last 12 years, however, Nigeria’s oil reserves and daily production had remained almost stagnant hovering in the region of 37 billion barrels and 2 million bpd, respectively, OPEC data show.

A 10-year target set by the Federal Government to boost crude oil reserves to 40 billion barrels and daily production to 4 million barrels by 2020 is becoming unrealistic as analysts say corruption and government shenanigans have decreased growth in the sector.

CBN clarifies on operation of domiciliary accounts Hope Moses-Ashike

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entral Bank of Nigeria (CBN) has formally clarified the uncertainties surrounding the operations of domiciliary accounts in Nigeria.

Making the clarification in a statement sent to the press, director, corporate communications, Isaac Okoroafor, stated, “The bank has not prohibited the acceptance of foreign currency cash deposits

by Deposit Money Banks.”

He explained, “Only electronic fund transfers into Domiciliary accounts can be also be transferred from such accounts while cash deposits into such accounts can only be withdrawn in cash also.”

Okoroafor therefore urged stakeholders and other interested parties to always endeavour to seek clarification on issues and avoid speculative tendencies, which were detrimental to the financial system. www.businessday.ng

51

Why FG should prioritise private sector partnership to address infrastructural deficit JAMES KWEN & GODSGIFT ONYEDINEFU

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he current infrastructural deficit in Nigeria will remain unless the Federal Government prioritises Public Private Partnership (PPP), stakeholders in the public and private sector have said.

The stakeholders, who spoke at an infrastructure dialogue in Abuja, noted that Nigeria’s worsening infrastructure deficit is a result of the absence of a friendly environment for the private sector to operate.

Chidi Izuwah, director-general, Infrastructure Concession Regulatory Commission (ICRC), said government lacks the resources to address the many infrastructural problems in the

country, which means private sector is key and their participation should be accelerated to deliver desired goals.

“The key takeaway form this dialogue is that Public Private Partnership in line with ICRC Act and national policies on PPPs is the way to go to be able to drive infrastructure, which is the biggest challenge our country is facing,” Izuwah said.

“Infrastructure can be catalytic, transformational in the life of people. If we are to solve this problem, there will be jobs, there will be industrialisation. If we have a functional rail system, it will boost business and ease the movement of goods and services,” he said.

The railway is an economic infrastructure that requires huge

capital that must be private sector-driven for it to work, Onuoha Nnachi, MD/CEO, TTL Group, said at the dialogue themed ‘Rail Infrastructure Rebirth: Catalyst for Nigeria’s Economic Potential’.

Nnachi said investors can put in their investment to enable government focus its resources on social infrastructure such as hospitals, schools, among others.

He said every railway in the world is a community of its own and a sustainable means of transportation, adding that there are also a lot of business opportunities in the sector government must begin to think of, especially in the face of growing population.

For PPP to work, however, Nnachi said government must show commitment and create

a friendly economic environment for private sector to come in, which boils down to the right regulatory framework.

He said the recommendations from the dialogue would be used to develop a policy document that would be sent to the Secretary to the Government of the Federation.

Mohammed Babakobi, director, Rail Transportation Services, said the Ministry of Transportation has sought the passage of the new Railway Bill by the National Assembly to provide the legal framework to facilitate participation of the private sector.

He said the new law would sustain the rehabilitation and modernisation of operations of railway network in the country.

L-R: Ayo Ogunsakin; Obitunde Obiyemi, registrar/CEO ISMN; Peju Babafemi, head of service, Ekiti State; Tunji Sule, Ekiti chapter chairman, ISMN; Bayo Opeyemi, permanent secretary, establishments and service matters, and Dare Ajayi, permanent secretary, capacity development and reforms, at a Congratulatory/Courtesy visit of Institute of Strategic Management, Nigeria (ISMN) to the head of service, Ekiti State.

Why real estate practitioners must register with government - Lagos official Joshua Bassey

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pecial adviser to Lagos State governor on Housing, AdetokeBenson-Awoyinka, says it is in the interest of the public and real estate practitioners to register with the state government.

Benson-Awoyinka spoke, weekend, at a forum with real estate practitioners and other stakeholders in the built sector on how to improve the in the 21st Century, held in Ikeja.

According to Benson-Awoyinka, the registration will protect accommodation seekers from falling prey to fraudulent practitioners, and will also increase public confidence in genuine practitioners.

She also declared as illegal practicing real estate business in Lagos without a valid Lagos State Real Estate Regulatory Authority (LASRERA) licence.

The special adviser further noted that beyond the aforementioned reasons, the need to protect the lives and property of all residents of Lagos was a constitutional responsibility that the government cannot abdicate.

This, she explained, has made it mandatory for the government to coordinate, regulate and register genuine practitioners in the

real estate business.

“Let me emphasise that engaging in real estate transactions without registering with the state government or obtaining necessary approval is a punishable offence under the law,” she said.

The special adviser, who pointed to several media reports about people who had fell victims of fraudulent real estate transactions, said the state government can no longer allow fraudulent practices to thrive.

“Just recently, a physically challenged couple were duped in Mushin by a real estate agent while they were seeking for accommodation. This development which is becoming a daily occurrence in Lagos property market must be corrected and may not have happened at all if all parties involved are registered with the government,” she said.

The forum, she said, became imperative to allow the government and all stakeholders in the sector interact and brainstorm on how best to protect accommodation seekers from scammers.

“We must all join hands with this administration so that the unregistered practitioners and those with ulterior intentions would be identified and eliminated from the real estate business in Lagos,” she said.

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Leadership Project hosts Barns, others for business leaders, entrepreneurs

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n March 4, 2020, an array of business owners, entrepreneurs and corporate executives will congregate in Lagos for the maiden edition of the West African Business Leaders’ Summit (WABLS), a business conference aimed at equipping entrepreneurs and business professionals with imperative skills required for competitive positioning and growth in the ever-changing 21st Century marketplace.

With a focus on leadership, innovation and profitability, the event will feature both international and Nigerian industry experts slated to share practical knowledge and insights to enable business owners make balanced and informed decisions in their respective roles.

Scheduled speakers for the event include ex-CEO of Nielsen Holdings and a threetime World Economic Forum speaker/panellist, Mitch Barns; multi-award winning business leader and group CEO of Emerging Africa Capital Group, Toyin Sanni; managing director and senior client advisor at Morgan Stanley, Carla Harris, and co-founder of The RitzCarlton Hotel Company, Horst @Businessdayng

Schulze.

According to Godman Akinlabi, convener of The Leadership Project, the conglomerate was established to foster the emergence of well-rounded leaders in Africa capable of effectuating far-reaching socioeconomic development.

“The Leadership Project is all about bridging the leadership gap in Africa, especially from the perspective of the private sector by vouchsafing stakeholders with the requisite tools for first-rate growth. We have, therefore, conceptualised a sustainable non-profit organisation that will among many other things organise such conferences and other suitable activities to attain the overarching objective,” Akinlabi said.

According to a client service manager at Zenera Consulting, a frontline branding and PR firm and partner for the conference, Idongesit Edet, believes that one of the essential skills needed for the success of future businesses is the efficient understanding and analysis of data, hence the reason behind the inclusion of an internationally acclaimed data and analytics expert on the speaking roster.

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Monday 24 February 2020

BUSINESS DAY

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

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 334,125.12 9.40 -3.09 92 4,548,913 UNITED BANK FOR AFRICA PLC 253,075.72 7.40 -3.27 340 34,840,741 ZENITH BANK PLC 623,220.40 19.85 2.32 1,044 112,476,440 1,476 151,866,094 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 206,397.93 5.75 -1.74 181 10,014,540 181 10,014,540 1,657 161,880,634 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,361,123.51 116.00 - 65 282,017 65 282,017 65 282,017 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 - 136 845,316 LAFARGE AFRICA PLC. 249,670.83 15.50 -1.27 70 3,350,247 206 4,195,563 206 4,195,563 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 356,008.96 605.00 - 1 200 1 200 1 200 1,929 166,358,414 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,539.00 76.95 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 9,205.53 3.45 - 10 292,867 10 292,867 10 292,867 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 10 292,867 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 64,865.88 68.00 - 7 4,507 OKOMU OIL PALM PLC. PRESCO PLC 49,850.00 49.85 - 6 51,446 13 55,953 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,010.00 0.67 8.06 15 553,680 15 553,680 28 609,633 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 4 2,449 1,903.99 2.93 - 0 0 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 37,802.63 0.93 -2.11 83 17,671,899 U A C N PLC. 24,202.89 8.40 -6.67 36 859,795 123 18,534,143 123 18,534,143

BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 31,680.00 24.00 6.67 40 795,086 ROADS NIG PLC. 165.00 6.60 - 0 0 40 795,086 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,572.41 0.99 - 4 6,552 4 6,552 44 801,638 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 6,889.96 0.88 - 4 16,510 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 55,197.65 25.20 - 32 306,850 INTERNATIONAL BREWERIES PLC. 189,377.58 7.05 - 15 13,603 NIGERIAN BREW. PLC. 387,449.90 48.45 -5.92 78 1,346,705 129 1,683,668 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 145,200.00 12.10 - 82 427,416 FLOUR MILLS NIG. PLC. 94,308.73 23.00 - 49 50,078,001 HONEYWELL FLOUR MILL PLC 8,009.50 1.01 -1.94 12 482,059 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 - 10 7,680 UNION DICON SALT PLC. 2,993.06 10.95 - 1 20 154 50,995,176 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 17,091.64 9.10 - 25 82,931 NESTLE NIGERIA PLC. 895,701.56 1,130.00 -9.02 26 612,117 51 695,048 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 1 10 VITAFOAM NIG PLC. 5,628.80 4.50 -1.10 44 1,258,788 45 1,258,798 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 19,852.39 5.00 - 17 107,755 UNILEVER NIGERIA PLC. 86,175.08 15.00 - 29 119,199 46 226,954 425 54,859,644 BANKING ECOBANK TRANSNATIONAL INCORPORATED 117,437.13 6.40 - 59 711,378 FIDELITY BANK PLC 62,006.07 2.14 0.47 66 3,875,073 GUARANTY TRUST BANK PLC. 822,601.46 27.95 -0.18 242 9,110,052 20,330.33 0.69 9.52 17 523,859 JAIZ BANK PLC STERLING BANK PLC. 42,034.01 1.46 -2.67 38 2,487,206 UNION BANK NIG.PLC. 221,317.72 7.60 7.04 30 817,708 6,896.71 0.59 -8.47 13 641,411 UNITY BANK PLC WEMA BANK PLC. 25,073.40 0.65 -1.52 16 482,794 481 18,649,481 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 11,443.51 1.01 2.02 79 10,081,759 AXAMANSARD INSURANCE PLC 18,900.00 1.80 - 3 2,600 CONSOLIDATED HALLMARK INSURANCE PLC 2,601.60 0.32 - 2 100,010 CORNERSTONE INSURANCE PLC 8,248.52 0.56 - 5 127,500 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,904.09 0.26 - 10 160,700 LAW UNION AND ROCK INS. PLC. 3,136.32 0.73 -9.88 11 1,461,165 LINKAGE ASSURANCE PLC 3,440.00 0.43 - 1 37,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 2 100,100 NEM INSURANCE PLC 10,983.45 2.08 - 16 271,475 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,960.40 0.55 -9.84 16 1,657,526 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 51,000 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 1 1,500,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 2 8,000 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 100 WAPIC INSURANCE PLC 4,550.13 0.34 - 19 876,144 169 16,435,079 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,835.43 1.24 - 3 1,818 3 1,818

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 1 28,000 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,796.93 1.39 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 28,000 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 10,400.00 5.20 -0.95 98 6,403,326 CUSTODIAN INVESTMENT PLC 33,232.53 5.65 3.67 4 100,790 DEAP CAPITAL MANAGEMENT & TRUST PLC 540.00 0.36 - 0 0 FCMB GROUP PLC. 38,615.29 1.95 2.63 117 59,748,555 ROYAL EXCHANGE PLC. 1,286.34 0.25 8.70 5 472,717 404,441.24 38.50 - 15 30,212 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 20,700.00 3.45 -2.54 483 64,835,942 722 131,591,542 1,376 166,705,920 HEALTHCARE PROVIDERS EKOCORP PLC. 2,592.72 5.20 - 2 740 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 2 11,010 4 11,750 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,299.36 2.54 - 4 22,030 GLAXO SMITHKLINE CONSUMER NIG. PLC. 5,979.38 5.00 - 15 42,874 3,139.93 1.82 -9.90 12 181,091 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 854.62 0.45 -6.25 11 1,430,033 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 0 0 PHARMA-DEKO PLC. 42 1,676,028 46 1,687,778 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 -4.55 7 1,668,018 7 1,668,018 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,206.13 0.41 - 1 100 1 100 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 291.60 2.70 - 2 260 287.07 0.58 - 0 0 TRIPPLE GEE AND COMPANY PLC. 2 260 PROCESSING SYSTEMS CHAMS PLC 1,314.90 0.28 -6.67 5 931,368 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 1 10 6 931,378 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 8 50,006 8 50,006 24 2,649,762 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 7 13,303 BUA CEMENT PLC 1,234,355.71 36.45 1.11 57 954,168 17,220.00 24.60 - 16 215,521 CAP PLC MEYER PLC. 244.37 0.46 - 1 100 1,769.32 2.23 - 1 3,333 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 82 1,186,425 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 2,465.85 1.40 - 9 27,700 CUTIX PLC. 9 27,700 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 4 22 GREIF NIGERIA PLC 388.02 9.10 - 0 0 4 22 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 1 10 1 10 96 1,214,157 CHEMICALS B.O.C. GASES PLC. 1,873.10 4.50 - 2 2,508 2 2,508 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 2 2,508 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 12 2,456,104 12 2,456,104 INTEGRATED OIL AND GAS SERVICES OANDO PLC 41,023.66 3.30 1.23 67 1,641,343 67 1,641,343 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 48,031.29 133.20 - 15 27,212 CONOIL PLC 12,491.14 18.00 - 27 323,120 ETERNA PLC. 2,869.12 2.20 2.33 12 328,930 FORTE OIL PLC. 21,751.43 16.70 - 56 122,431 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 2 700 TOTAL NIGERIA PLC. 36,328.84 107.00 - 13 6,659 125 809,052 204 4,906,499 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 3 41,030 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 - 0 0 3 41,030 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,515.34 1.21 - 11 63,280 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,781.64 4.05 - 1 500 12 63,780 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 956.60 1.24 - 5 6,040 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 1 61 UNIVERSITY PRESS PLC. 539.26 1.25 - 9 210,030 15 216,131 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 580.20 0.35 - 6 116,681 6 116,681 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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53

FT

Monday 24 February 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Sanders scores decisive win in Nevada caucuses

Democratic frontrunner broadens his support and extends lead over moderate rivals DAVE LEE AND COURTNEY WEAVER

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ernie Sanders has won the Nevada caucuses by a large margin, making him the clear frontrunner to become the Democratic nominee to take on Donald Trump at November’s US presidential election.

After strong performances in Iowa and New Hampshire, Mr Sanders extended his support in Nevada by winning over Hispanic voters, first-time caucus-goers, moderates as well as liberals, men and women, and those with and without college degrees.

By midday Sunday, with about 40 per cent of the precincts yet to report, Mr Sanders had won 46 per cent of awarded delegates.

Former vice-president Joe Biden was a distant second, but posted the strongest performance of his campaign so far, winning over 19 per cent of delegates. Pete Buttigieg, the former mayor of South Bend, Indiana, had 15 per cent, having built on strong support in rural areas of the state.

“Our multiracial, multigenerational movement is not only going to win in Nevada. It is going to sweep this country,” Mr Sanders tweeted on Saturday night.

The Nevada Democratic party blamed the slow reporting on an abundance of caution in verifying results, rather than the kind of technology-related mishap experienced in Iowa earlier this month.

For the first time, Nevadans were given the option to vote early, complicating the tallying process,

Bernie Sanders lifts his fist at a campaign rally in San Antonio, Texas, on Saturday © Reuters

officials said.

Victory in Nevada adds significant momentum to the selfdeclared democratic socialist, who is leading in national opinion polls following his victory in the New Hampshire primary and a razor-thin loss to Mr Buttigieg in the Iowa caucuses.

Mr Sanders’ win provoked an attack from Mr Buttigieg, who warned that Democrats should take a “sober look at the consequences” of a Sanders nomination.

“Senator Sanders’ revolution has the tenor of combat, division and polarisation, a vision where whoever wins the day, nothing will change the toxic tone of our politics,” Mr Buttigieg told supporters.

The tight race between Mr

Biden and Mr Buttigieg will frustrate those who had hoped the more so-called “moderate” Democrats would coalesce around an alternative to Mr Sanders. Massachusetts senator Elizabeth Warren, who had stepped up campaigning in the state after a strong debate performance on Wednesday, is expected to finish fourth with about 10 per cent of the vote. “Thank you for keeping me in the fight,” she told supporters. Amy Klobuchar followed on 4.8 per cent.

Mr Biden tried to frame his performance as a comeback after his disappointment in New Hampshire and Iowa. On Twitter, his campaign manager Greg Schultz cited enduring support among African-Americans and those

over 65. But with his campaign in a weaker position than most had forecast at the start of the race, Mr Biden needs to win South Carolina’s primary in seven days’ time if his campaign has any realistic chance of slowing Mr Sanders’ momentum.

“I’m going to go all the way through this thing,” Mr Biden told CBS on Sunday morning.

On Sunday, none of Mr Sanders’ more moderate opponents were suggesting they were ready to exit the race, regardless of diminishing funds and an increasingly narrow path to the nomination.

“The other candidates hardly have bus fare to get to South Carolina,” said Charlie Cook, editor of the non-partisan Cook Political Re-

port.

That does not apply to Mike Bloomberg, the billionaire former New York mayor, who did not compete in the contest and will only be on the ballot for the first time on Super Tuesday, March 3.

President Donald Trump gleefully played up Democratic divisions with a tweet on Saturday night.

“Looks like Crazy Bernie is doing well in the Great State of Nevada,” he wrote. “Biden & the rest look weak, & no way Mini Mike [Bloomberg] can restart his campaign after the worst debate performance in the history of Presidential Debates. Congratulations Bernie, & don’t let them take it away from you!”

Speaking to reporters on the White House lawn on Sunday morning, Mr Trump repeated his conviction that the Democratic party had tilted its primaries in favour of other candidates. “I hope they treat him fairly,” he said of Mr Sanders.

Pollsters had forecast a significant Sanders win in Nevada, the first vote in the 2020 election cycle to take place in the Western US. An entrance poll, conducted by NBC News, suggested Mr Sanders was the candidate of choice for two-thirds of those aged 17 to 29.

About half of Latino Democrats voted for the Vermont senator, the poll suggested.

Nevada Democrats — 10,000 of which registered this week — turned out for Mr Sanders despite warnings, from the influential Culinary Workers Union and others, that his flagship “Medicare for All” policy would jeopardise members’ healthcare.

Coronavirus piles pressure on China’s exotic animal trade Lucrative industry to come under government review following fears it was key factor in outbreak SUN YU AND XINNING LIU

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ang Zhilin used to eke out a living from rice farming in the central province of Jiangxi. Then she switched to a more lucrative trade — feeding China’s voracious appetite for exotic animals, the consumption of which many believe is at the root of the coronavirus outbreak.

“Raising wild animals is more profitable than growing crops,” said Ms Wang. She farms civet cats, a raccoon-like animal, and made a profit of Rmb50,000 ($7,140) last year by selling 33 full-grown animals — more than twice what she would have made from growing rice.

Parts of China have a tradition of consuming exotic wild animals as food or medicine, despite the implication of some species such as civet cats in the Sars epidemic 17 years ago. Now the animal trade’s sus-

pected role in the deadly coronavirus outbreak has put the practice in the sights of China’s senior leadership.

The executive body of the country’s parliament, is expected to review measures to curb the business on Monday.

Live wild animal markets, such as the huge wet markets in China . . . are ideal places for zoonotic virus emergence to occur Andrew Cunningham, Zoological Society of London “We must resolutely close and crack down on illegal wild animal market and trade,” President Xi Jinping said this month. “The bad habit of eating wildlife without limits must be abandoned.”

The outbreak is thought to have started in a wet market in the city of Wuhan where animals are slaughtered and traded. Scientists believe the virus that has killed more than 2,200 people came from an animal host. Beijing has reacted by issuing www.businessday.ng

a temporary ban on the trade in all live animals.

However, experts question how much any permanent regulatory tightening will be able to achieve. Despite the lack of scientific evidence, there is a widespread belief in China that consuming wild animals or animal parts, including tiger bones and rhino horns, can help strengthen the body and cure diseases. Adherents of traditional Chinese medicine believe eating civet cats, for instance, can help strengthen the body and improve a man’s sexual function.

Growing disposable incomes over the past few decades have also resulted in increased demand for wild animals, which are seen as expensive delicacies.

In response to international concerns over endangered species as well as health concerns, Beijing has restricted their trade and in some cases banned hunting them. But it

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has also encouraged the wildlife farm industry, which has become a growth engine in the countryside.

Wildlife farms generated Rmb56bn in economic output in 2017, according to the China Forestry Yearbook, a fivefold jump from Rmb9.6bn 10 years earlier.

Yet critics say many farms have exploited a lack of official scrutiny to flout laws and increased their stock of restricted animals by capturing them in the wild. “There is no way for wildlife farming to grow so fast in an organic manner,” said a Beijingbased scholar and policy adviser who declined to be named.

On paper, China allows the farming and trading of 54 wild animals including kangaroos and bamboo rats. In reality, local governments have expanded the list to many other species.

Zhou Jinfeng, secretary-general of the China Biodiversity Conservation @Businessdayng

and Green Development Foundation, a non-profit organisation, said several hundred wild species — including many rare ones — were up for sale. “There is a general lack of regulation on wildlife farming and trade,” said Mr Zhou.

The policy inertia could stem from potential conflicts of interest.

Public records show dozens of retired forestry officials responsible for issuing wild animal farming licences also chair local wildlife conservation associations funded in part by farms.

“How do you expect the forestry authority to strictly enforce animal protection rules when it is financed by the business it regulates?” said Mr Zhou.

While it remains unclear which animal is to blame for the coronavirus outbreak, scientists believe the lack of oversight of China’s wildlife industry has helped trigger the epidemic.

Monday 24 February 2020

BUSINESS DAY

54

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Will economic data heighten fears of a recession in Japan?

Market Questions is the FT’s guide to the week ahead FT REPORTERS

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ill economic data heighten fears of a recession in Japan?

The received wisdom on the state of the Japanese economy — that it was in weak, but not disastrous, shape before the coronavirus hit tourism and industrial supply chains — suffered a big blow last week when growth numbers for the final quarter of 2019 showed the economy shrank at an annualised rate of 6.3 per cent. The key question this week is whether that pounding will continue as a wave of economic data, mostly covering January, floods the market on Thursday.

The gross domestic product figures were so far below economists’ forecasts of a 3.7 per cent decline that they have had to accept they underestimated the impact on consumer spending of October’s VAT rise. Japan is now on the brink of a technical recession, defined as a contraction in GDP over two consecutive quarters. Several economists have already cut their forecasts for the first quarter of 2020; the glut of data on Thursday, which includes retail trade and industrial production figures for January, will offer some guidance on whether that was the right call.

The January numbers will be nuanced, though, since during that month vague fears triggered by the coronavirus in China began to crystallise into a broader economic shock for the region.

In January, for example, Chinese travellers were still heading in large numbers to Japan and

The Japanese economy faces another test this week with the release of a glut of economic data, while the US dollar could continue its rise if GDP figures impress. Italian bonds are also set to continue their rally. © FT montage; Unsplash

spending at a pace that has helped support the country’s retailers for the past five years. By February, those numbers had plunged. January sales figures for large retailers are expected to show a low singledigit decline for the month.

For equity markets, the question is how far these economic shocks are going to hurt stocks.

Tokyo’s Topix is down 2.8 per cent this year but traders say its performance would be worse were it not for the Bank of Japan’s stockbuying programme and the effects of companies’ share buybacks.

This week may test whether those mechanisms can continue to offer support through worsening newsflow. Leo Lewis Can the US dollar continue its strong run?

At the start of the year strategists said the US dollar would weaken. But just two months into 2020, the greenback is defying those expectations, gaining around 4 per cent against the euro.

Analysts are now wondering how much longer the dollar can continue its run, with US growth figures for the final quarter of 2019 due this Thursday.

Global growth fears caused by the coronavirus are a key reason for the dollar’s surge this year. The greenback has gained more than 2 per cent against the two ultimate haven currencies, the Swiss franc and the Japanese yen, owing to the solidity of the US economy.

Analysts expect Thursday’s US GDP figures to show growth of 2.1 per cent in the final three

months of last year and say that unless signs of a slowing economy emerge, the greenback’s rise can continue.

The other side of the strong dollar is a weak euro. Poor economic data in the eurozone, coupled with coronavirus effects, have driven the currency to its weakest level in more than two and a half years.

The Dollar index, which measures the greenback against a basket of peers including the euro, has gained 1.9 per cent over the past month alone.

“So long as the global backdrop remains weak and the US economy’s prospects look brighter than those of its peers, we think that the dollar will remain strong,” said Jonas Goltermann, a senior markets economist at Capital Economics.

Eva Szalay Will the rush for Italian bonds continue?

Investors cannot seem to get enough Italian bonds this year. The market has rallied over the past month since a regional election failed to produce a breakthrough for the populist Lega party, pushing the 10-year yield close to its record low at 0.89 per cent.

An auction of up to €9bn of five-year and 10-year bonds on Thursday will provide the latest test of investors’ appetite. Demand has been particularly strong in the primary market, where investors can pick up big allocations of new bonds. Syndications in January and February successively broke the record for Italy’s biggest ever order book.

Barring the return of political risk to markets, the rush is likely to continue, according to Rabobank strategist Lyn Graham-Taylor. He points out that Italy accounts for roughly half of all the eurozone’s positive-yielding government debt, so avoiding it can leave fund managers lagging behind their benchmarks. At the same time, the European Central Bank’s bond buying is supporting markets.

“If you think the central bank is going to buy everything, it makes sense to be long,” Mr GrahamTaylor said.

Enthusiasm for Italy’s bond has been mirrored in other eurozone markets offering an extra spread above Germany’s deeply negativeyielding debt. Junk-rated Greece, the only eurozone country with higher yields than Italy, has also had a strong run this year, with 10-year borrowing costs dropping below 1 per cent for the first time.

Buffett stands by strategy of pouring cash into stocks

Annual letter to shareholders says chances of finding quality companies still ‘rare’ ERIC PLATT

B

erkshire Hathaway’s Warren Buffett on Saturday stood by his decision to plough ever greater sums of the company’s cash pile into stocks as he struggled to find multibillion-dollar acquisition targets, after a year in which the sprawling conglomerate suffered its worst performance against the broader market in a decade.

The so-called Oracle of Omaha told Berkshire stockholders in his annual letter that his ability to find quality companies to buy outright at the right price was “rare”. Instead the company’s

equity portfolio, which counts shares in blue-chip groups such as Apple and American Express, has continued to grow.

“Far more often, a fickle stock market serves up opportunities for us to buy large, but noncontrolling, positions in publicly traded companies that meet our standards,” he said.

He defended the move, noting that Berkshire’s share of retained earnings generated by its largest stock investments was more than $8bn. That figure does not flow into the company’s net profits.

“At almost all major companies other than Berkshire, investors would not find what we’ll call this ‘non-recognition

of earnings’ important,” he wrote.

“For us, however, it is a standout omission.”

The annual letter is long awaited by Berkshire shareholders and the general investing public, who have often found wisdom in the words of the 89-year-old chief executive. But this year he was light on missives about the state of the economy and did not dive into his views on political affairs in the US ahead of the election this November.

Instead, Mr Buffett repeated several of his previous maxims: that changes to tax policy had skewed Berkshire’s results, the importance of compounding interest, and how the company

was prepared for his eventual departure.

Berkshire in 2018 named two new vice-chairman as part of a succession plan on which investors had long sought insights.

Investors will this year have the opportunity to ask the two men, Greg Abel and Ajit Jain, questions at Berkshire’s annual meeting in May, Mr Buffett said. He also noted that he had directed the executors of his will not to sell Berkshire shares on his death.

“Charlie and I long ago entered the urgent zone,” he wrote, referring to 96-year-old Berkshire vice-chairman Charlie Munger. “ That’s not exactly great news for us. But Berkshire

shareholders need not worry: your company is 100 per cent prepared for our departure.”

Berkshire reported a profit of $81.4bn last year, up from $4bn the year before. Earnings figures at the company, which owns the BNSF railroad and private jet operator NetJets, have swung significantly since changes to the tax code required the company to begin marking gains and losses on its stock holdings.

Excluding the $53.7bn rise in the value of those holdings, Berkshire reported a 3.3 per cent decline in operating profits for the full year. Its mammoth cash pile was little changed from the end of September at $128bn.

Monday 24 February 2020

FT

BUSINESS DAY

55

ANALYSIS

Philippines: Rodrigo Duterte takes aim at the oligarchs The president has turned his populist fire on big business, but is he attacking corporate greed or political opponents?

JOHN REED

A

t a cabinet meeting on December 2 in Manila’s Malacañang Palace, Rodrigo Duterte flew into a rage on hearing some bad news.

The president was informed that Manila Water, owned by Ayala Corp, the Philippines’ oldest and biggest conglomerate, had won a 7.4bn Philippine pesos ($145m) arbitration award in Singapore stemming from a dispute over water rates, brought by the companies when his predecessor, Benigno Aquino III, was in power.

It was the Singapore tribunal’s second such ruling against the government: the conglomerate First Pacific, which runs Manila’s other water company, had already won 3.4bn pesos in a similar dispute in 2018.

After taps ran dry in thousands of Manila households during 2019’s hot season, water became a sensitive issue for a leader who styles himself as a champion of the people. Mr Duterte has, in turn, made it one for the rich men who control the Philippines’ biggest companies — “oligarchs”, as he has begun labelling them, such as Ayala’s chief executive Jaime Augusto Zobel de Ayala and Manuel Pangilinan, his counterpart at First Pacific.

“If Ayala and Pangilinan are your friends, kindly tell them . . . if we see each other, no matter how many bodyguards you have, I can ruin your face, you son of a bitch,” the president declared in a speech that turned into a tirade the day after the Singapore court decision.

He accused Ayala Corp of evading taxes, and demanded a renegotiation of the two companies’ water contracts. Both are now under renegotiation, and Manila Water and First Pacific’s Maynilad Water Services have renounced their arbitration awards.

This was one of the most sharply targeted verbal attacks Mr Duterte has unleashed since taking power in 2016 — part of a populist wave across the world — and indicates that he wants to move on from taking on drug dealers to confronting some of the country’s most powerful people in the final two years of his presidency. Some Manila businesspeople see it as a defining power play by a leader seeking to hone his legacy.

Mr Duterte, 74, has since stepped up his verbal attacks on “oligarchs”, delighting his tens of millions of supporters but sending a chill through big business. On February 10, in a move Filipinos saw as an assault on both media and big business by a president who distrusts both, Jose Calida, the solicitor general, filed a supreme court petition calling

for the licence of ABS-CBN, the Philippines’ biggest broadcaster, to be revoked.

Businesses and analysts say the attacks bode ill for a country that was until recently one of the region’s fastest-growing economies.

“Institutional investors are starting to wonder who is going to be next, after the Ayala and Pangilinan companies,” says Romeo Bernardo, a former under-secretary of finance in the Corazon Aquino and Fidel Ramos presidencies who also sits on several company boards.

Many of those interviewed by the Financial Times say the attacks on the family-controlled companies are ill-judged and that the scrapping of the water agreements and push to strip ABS-CBN of its licence could hurt investor confidence.

Economic growth and foreign investment are already slowing, and Mr Duterte’s signature “Build Build Build” infrastructure programme is running well behind schedule.

“I think there is a short-term shake in investor confidence,” says James Su, an infrastructure analyst with Fitch Solutions in Singapore.

“This incident showed they have the ability to use their regulatory power to overrule contracts.”

Ayala’s Manila Water has lost more than a third of its market value since Mr Duterte’s attack on it. Shares of its parent group and real estate, telecoms and other units have also fallen. First Pacific’s shares are down more than 16 per cent over the same period.

This month Ayala announced that it had agreed to sell control of its water business to Enrique Razon, a ports tycoon in better standing with Mr Duterte.

Many Filipinos believe the water affair, and the government’s move to shut down ABS-CBN, controlled by the powerful Lopez family, have a political dimension.

All three families have in the past supported the Liberal camp of Ms Aquino, associated with the colour yellow, which Mr Duterte swept aside after he took power in 2016.

“The Ayalas and the Pangilinans are known as businessmen who are not aligned with the president — supposed ‘yellow’ oligarchs who support liberal initiatives,” says Richard Javad Heydarian, a political analyst. “They have . . . openly criticised him.”

Mr Duterte’s own broadsides against the oligarchs have boosted his popularity. Since his December 3 speech, a man who was already the most popular president in modern Philippine history has seen his approval rating climb by seven to nine points, according to the country’s two most closely watched polls.

Ayala and First Pacific both declined to comment. Mr Duterte’s office referred an interview request to Menardo Guevarra, justice secretary, who says the renegotiation of the water contracts was about upholding Philippine law, asserting that some provisions of the contracts were illegal or unconstitutional and ensuring the public have a fair deal.

“The president got mad not because the owners were the Ayalas or the Pangilinans, but because of the provisions in the contracts which he found to be onerous,” Mr Guevarra says. “That’s where his anger began; it had nothing to do with the owners.”

Mr Duterte’s criticism of oligarchs has been part of his outsider appeal since his days as a politician in the southern city of Davao, though he himself grew up in a well-to-do political family and trained as a lawyer.

In the Philippines, people sometimes speak of the “10 families” who are said to control the economy and politics, and the Ayalas and the Lopezes typically make the list. Many Filipinos — even those who are critical of the president — believe the conglomerates have grown rich by engaging in rent-seeking behaviour or outright state capture.

At the same time Philippine family companies, from conglomerates such as SM Investments and JG Summit to the emerging fastfood multinational Jollibee Foods,

have been an engine of growth in a country with a chronically inefficient state sector.

Ayala’s own history dates back to Spanish colonial rule in 1834, and its holdings range from telecoms company Globe to the lender BPI and Palawan island’s upscale El Nido resorts.

While inner Manila, including the area around the Malacañang palace, is blighted with slums, Ayala’s land division was the leading developer in the Makati business district, where a park and an avenue bear the family name, and Bonifacio Global City, a high-rise neighbourhood that is home to many international outsourcing and call centres.

The water contracts that provoked Mr Duterte’s wrath were drawn up under the Ramos presidency in 1997, an era when privatisation and “public private partnerships” were popular in the Philippines and globally.

With advice from the International Finance Corp, the World Bank’s private sector arm, the government put out tenders for water concessions in Manila to address the state’s failure to provide the capital with an adequate service.

But crucially the development of water resources remained under state control. More than two decades later, greater Manila still depends on a single dam at Angat, north of the city, to supply water for more than 15m people.

After foot-dragging by several governments, work is progressing on a second dam project at Kaliwa, which the Duterte government plans to finance with Chinese loans.

When drought hit the Philippines in 2019, the water companies had to ration supplies, and Mr Duterte, say analysts, found an easy target in the companies.

“Duterte doesn’t see the Ayalas and the Pangilinans as national champions, he sees them as big businesses squeezing the poor,” says Eduardo Araral, an associate professor at the Lee Kuan Yew School of Public Policy, National University of Singapore. “He is a

lawyer, and saw some justification for taking them down, especially after the Singapore arbitration awards.”

Mr Duterte’s feud with ABSCBN goes back even further. In May 2016, on the eve of his landslide victory, the station failed to air one of his campaign ads. It has declined to say why. But since then Mr Duterte has repeatedly railed against the network, threatening to make sure it loses its franchise when it comes up for renewal on March 30.

The station has also reported critically on extrajudicial killings during his “war on drugs”, his trademark policy that has resulted in more than 5,500 deaths, according to official figures.

In what appeared to be a thinly veiled threat, Mr Duterte in December said of the Lopez family’s stake in ABS-CBN: “If I were you, I’d sell it.” The comments were seen in Manila as an invitation for more sympathetic owners of the broadcaster to step forward.

Mr Heydarian believes the president is seeking to promote a new class of rich men who support him, whom he dubs the “Dutertegarchs” — analogous to the “Boligarchs” who grew rich under Venezuela’s late president Hugo Chávez.

Despite his stated hatred of oligarchs Mr Duterte has courted alliances with some, including Dennis Uy. A contributor to the president’s 2016 campaign, Mr Uy led the Mislatel consortium that in 2019 won the licence to run the Philippines’ third telecoms network, since renamed Dito Telecommunity. Little known outside Davao before Mr Duterte’s rise to power, Mr Uy appeared for the first time on Forbes’ list of the richest Filipinos in 2019, with a net worth of $660m.

In November he bought a 45 per cent stake in Malampaya, the country’s largest gasfield, from Chevron for an undisclosed sum.

As Mr Duterte’s attacks on the

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Monday 24 February 2020

BUSINESS DAY

NATIONAL NEWS FT Italy quarantines a dozen towns in coronavirus outbreak The countries affected, confirmed cases and number of deaths MILES JOHNSON

T

he Italian government has placed a dozen towns in emergency quarantine and closed schools and universities across northern Italy after the number of reported coronavirus infections topped 100 on Sunday, in the largest outbreak outside Asia.

Italian authorities said on Sunday that the total infection count had reached 132. Ninety of the cases are located in Lombardy where two elderly people have died in the outbreak.

Other cases include 25 in Veneto, including two in Venice, two in Emilia-Romagna and one reported case each in Lazio and Piedmont.

Ansa, the Italian newswire, reported on Sunday that there were suspected but unconfirmed cases in Milan and the region of Umbria.

People have been barred from leaving the affected towns in the northern regions of Lombardy and Veneto unless they have special permission, under measures announced by Italian prime minister Giuseppe Conte on Saturday.

Public gatherings and events were suspended in Milan and Venice.

Mr Conte said Italy had adopted “rigorous and meticulous controls”.

The measures were introduced in Italy as G20 finance ministers — who met in Riyadh this weekend — said they stood ready to take action if coronavirus posed a drag on the global economy. They noted that downside risks to growth persist as coronavirus increases economic uncertainty and disrupts supply chains.

The virus could knock 0.4 percentage points off China’s 2020 gross domestic product, reducing its annual economic growth to 5.6 per cent, IMF managing direc-

tor Kristalina Georgieva said this weekend. That would reduce global GDP growth by 0.1 percentage points, she said.

However, this relatively optimistic forecast is based on the assumption that China’s economy will return to normal in the second quarter. The impact on growth will be “more protracted” if the spread of the virus lasts longer and is more widespread, Ms Georgieva added.

Chinese president Xi Jinping said the virus would have a “relatively big impact on the economy and society” in China. “The epidemic situation is still severe and complex, and prevention and control work is in the most difficult and critical stage,” Mr Xi said on Sunday.

South Korean President Moon Jae-in said the outbreak had reached a “crucial watershed” and “the next few days will be a very important critical moment”, while Bank of Japan governor Haruhiko Kuroda said the BoJ would ease monetary policy if necessary.

Lombardy is home to Italy’s financial capital Milan, and together with Veneto the two regions account for 30 per cent of the country’s gross domestic output. Any prolonged disruption there is likely

to affect the national economy, which is already on the brink of recession.

Schools and universities across Lombardy, Veneto and EmiliaRomagna will be closed this week and the final two days of Venice’s annual carnival on Monday and Tuesday have been cancelled because of the outbreak, Italian officials said on Sunday. All public events in Veneto, including sporting fixtures, have been cancelled for at least a week.

Several Serie A football fixtures, including Inter Milan’s match against Sampdoria, have been suspended, and some large Italian companies, including the bank UniCredit, have instructed employees in the affected towns not to come into work.

Health authorities are struggling to work out how the outbreak started. The first cases were announced on Friday and doctors do not know the source of the illness.

The World Health Organization’s European regional director Hans Kluge expressed concern at the upsurge in new cases and a lack of clarity over its spread, and said on Twitter that he was sending a team to Italy “to learn about virus spread

and [how to] contain it”.

Among the affected towns in Lombardy are Codogno, Castiglione d’Adda and Casalpusterlengo. Residents in all three towns, which lie to the south-east of Milan, were told to stay indoors on Friday after the first coronavirus cases were diagnosed in the area.

The special measures have been enforced across an area with a population of about 50,000 people.

Residents have been instructed by the Italian government to stay in their homes and the country’s civil protection agency has passed an emergency decree. Those who break the instruction risk fines or imprisonment.

Fashion designer Armani said it would hold an empty show in Milan on Sunday, the final day of the city’s fashion week. The event will instead be livestreamed online. MIDO, the world’s largest eyewear trade fair, which is due to take place in Milan at the end of February, said it was suspending the event until June as a result of the outbreak.

Brussels is on alert over the Italian situation, which the European Commission said it was watching “very closely”.

Stella Kyriakides, EU health commissioner, praised Italian authorities for their “swift action and transparent communication”, including taking necessary measures to trace and contain the spread of the virus.

She said the commission stood ready to provide support to Italy and was in touch with other relevant bodies including the World Health Organization and the EU’s European Centre for Disease Prevention and Control.

“We are working closely with member states to ensure that EU health systems are equipped and ready, including the launch of a joint procurement to support the access to the personal protective equipment that may be needed,” she said. “It is only together that we can address this situation.”

The bloc’s economic affairs commissioner Paolo Gentiloni said there was “no need to panic”.

French health minister Olivier Véran said on Sunday that new cases of coronavirus in France were “very likely” and health authorities were ready in case of an epidemic, adding he was “particularly watchful” of the situation in Italy.

Luca Zaia, regional governor of Veneto, said the rapid spread of the virus showed that local-to-local transmission had occurred and it would no longer be sufficient to try to isolate travellers from China to stem the outbreak.

Giulio Gallera, a Lombardy councillor for welfare, tried to calm worried locals.

“The message we want to give is that in the area of the outbreak, the measures taken are efficient and positive,” he told reporters. “The aim is to contain the situation as much as possible.”

Philippines: Rodrigo Duterte takes aim at the oligarchs Continued from page 55 water companies escalated, he praised the billionaire Manuel Villar, whose wife is the proDuterte senator Cynthia Villar, leading some to suggest that the family’s Prime Water business might be seeking to enter the market in Manila. Mr Villar described this as “speculation” in Philippine media, and said he and the president did not discuss it. Both Mr Uy and Mr Villar declined interview requests.

When asked about the water dispute, the justice secretary Mr Guevarra voiced confidence that the new contracts could be drawn up in a way “that would eliminate unlawful provisions”.

And he dismissed the notion that voiding the old agreements would hurt the country’s investment climate.

“Maybe in the short term, it will have a chilling effect on foreign investors, when you think a government is interfering in contractual relations and chang-

ing the rules of the game midstream,” says Mr Guevarra. “But in the long run, when you have a contract that’s equitable and fair to both sides, foreign investors will see that contract as a more stable one than a contract that is highly profitable to investors, but subject to potential abrogation anytime.”

Many companies might draw a different conclusion. “This is a government that doesn’t respect contracts, so how can you do business with it?” says one senior fund manager in the Philippines. “[It] doesn’t respect arbitration awards, even China will notice that.”

Some believe the clashes between the Duterte administration and businesses in the Philippines will accelerate the process of cash-rich conglomerates seeking new places to put their money. “Big business groups view this [the water contracts] with alarm,” says Mr Bernardo, the former finance official, whose directorships include two www.businessday.ng

Ayala-controlled companies, Globe and BPI. “It will reinforce what they want to do anyway: diversify outside the country.”

Before the water dispute came to a head, Ayala was putting money into a range of businesses, from Malaysian real estate to an automotive technology company in Germany, solar panels in the US, and two companies controlled by Myanmar-born tycoon Serge Pun. Back in Manila, Ayala is hammering out details of a water agreement with its new shareholder Mr Razon set to join the business.

“The game plan for many of these businesses is to ride out the rant, then quietly fix things behind the scenes,” says Ronald Mendoza, dean of Manila’s Ateneo School of Government. “But by then your stocks have fallen.”

Additional reporting by Guill Ramos ABS-CBN: why popular broadcaster is in president’s sights Rodrigo Duterte’s war on the

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families behind Manila’s water concessions is mostly happening above the heads of ordinary Filipinos. But the president’s threat to take ABS-CBN, the country’s largest broadcaster, off air is causing millions to take notice.

The network is the country’s most viewed, thanks to shows like its nightly Tagalog-language newscast TV Patrol and the long-running police drama Ang Probinsyano. But ABS-CBN has long been a target of the Duterte administration, with the president threatening to allow its franchise to expire when it comes up for renewal on March 30 — a decision now in the hands of Congress. This month Jose Calida, the solicitor general, called on the supreme court to revoke ABS-CBN’s broadcasting licence, accusing it of “highly abusive practices”.

Some of the accusations against ABS-CBN have a familiar ring: as in the case of Rappler, the news website facing legal action

by Philippine authorities, Mr @Businessdayng

Calida has accused the network of evading taxes and breaking the law by using Philippine Depositary Receipts, a security several other media companies have deployed to address a constitutional ban on direct foreign investment in the sector.

Mr Duterte’s spokesman says the palace had nothing to do with Mr Calida’s petition. Few in Manila believe that, and the supreme court is packed with the president’s nominees.

ABS-CBN denies the charges.

“We have all the government and regulatory approval for our services,” says Kane Errol Choa, the company’s head of communications.

Unlike Ayala and First Pacific, which have kept quiet after being attacked by Mr Duterte, ABSCBN is covering its legal battle as news. Mr Calida last week asked the supreme court to impose a gag order to stop the station and its executives from discussing the case. The court has yet to decide on whether it will grant the order.

BD Money

Monday 24 February 2020

BUSINESS DAY

PERSONAL FINANCE

Cover Story

Investing

Fixed Income

Why dollar savings may be a good investment option in 2020

Top ways entrepreneurs can win in a tough business environment

Bitcoin halving in few weeks might create new cryptomillionaires. Here’s why gains may come sooner

Attracting FPIs important to CBN over coming months

With declining T-bill and government bond rates fueled by the rotation of fund from high-yielding CBN OMO bills into government securities amid recent fears about a currency devaluation...

The Nigerian business environment is challenging and entrepreneurs have to find new ways to combat these hurdles or risk losing their market.

Page 59

The world of cryptocurrency is counting down to an event, as rare as leap years that could boost Bitcoin price and possibly create new millionaires.

Page www.businessday.ng

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Given the downward trajectory of the foreign exchange reserves since July 2019, attracting Foreign Portfolio Investment (FPI) will be important to the Central Bank of Nigeria (CBN) over the coming months, according to Coronation Merchant Bank Limited.

Page 63

Page 61 @Businessdayng

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Monday 24 February 2020

BUSINESS DAY

Personal Finance Money myths that could cost you money (2) SEGUN ADAMS

M

oney makes the world go round – this is why people work for it, sing, dream and even make wrong assumptions about it.

Misconceptions about earning, spending and saving money are very common.

But these beliefs are not as harmless as they seem.

Here we add to last week’s list of money myths that could cost you money.

Cheaper by the dozen One way shoppers try to save money is buying in bulk because the unit price of items tends to be cheaper that way.

While this can be a great way to save some naira, it can also be an inefficient use of money and could prevent you from buying other important things you need in the immediate period or even increase your debt.

This is because the more of one item you buy, the less of another item that can be purchased for a given budget.

Buying enough cereals to last you a lifetime might result in you eating cereals throughout the month because you cannot afford to buy anything else.

The example is on the extreme, but it shows buying-bulk might mean forfeiting other items on your list or buying them on credit.

Unless the price of cereal would go astronomically high soon, it is wise to spend on the various needs you have today.

Another downside is that bulk-buying could lead to wastefulness and cost you money.

Items bought it bulk can get damaged or spoilt or consumed at a faster rate than if less was bought.

Expensive is Quality Have you ever bought a more expensive variant of an item only to end up feeling like you have paid more than its worth?

People often mistake costly for quality but this is not always the case.

In fact, the money difference between various grades of an item could run into several thousand while the real difference might be just one or two extra features – as mundane as an extra camera or product colour in the case of a phone.

This doesn’t mean there aren’t inferior products that sell correctly at a low price.

But the next time you want to pay “an arm

and a leg” for quality, do your research to be sure you aren’t simply buying into a belief.

You will win a jackpot The chances of picking six distinct numbers from a range of 1 to 49 are 1 in 14 million but that has not stopped many people from trying.

Even though many lottery schemes are only a fool’s errand, in 2016 Nigerians spent an average of N154bn on betting according to the Lottery Operators Forum (LOF).

The allure of a grandiose life promised for correctly picking six combinations or predicting soccer match outcomes is so compelling that many repeatedly stake their money and end up with debt and drinking problems.

“

We conclude that high income buys life satisfaction but not happiness and that low income is associated both with low life evaluation and low emotional well-being

As far as changing your fortunes through gambling is concerned, it is easier for the proverbial camel head to pass through the eye of a needle.

Money can buy happiness People are easily defrauded because they often think their lives would be so much better if they had more money.

To an extent, this might be true because money offers one access to more opportunities and in fact, the world’s happiest countries and are richest.

But this is not always the case.

A 2010 study by Princeton University’s Woodrow Wilson School based on US survey suggests a positive link between life satisfaction and money up to about $75,000 a year – but not happiness.

“We conclude that high income buys life satisfaction but not happiness and that low income is associated both with low life evaluation and low emotional well-being,” said the researchers, Daniel Kahneman1 and Angus Deaton.

This is because happiness in life is defined by much more than money. Think of all those things you tell admit you can’t trade for the world like family, love and your pet dog.

Early Shoppers get the best deal Ask the average shopper when the best time to get an awesome discount is, they would probably say during holiday sales or Black Friday and they are probably right.

But late shoppers many times get even better deals than the early worms.

For instance, in the weeks leading to Christmas shoppers can get discounts up to 20 percent off their purchases but postChristmas the items not sold would be offered at a give-away price so stores create room for other seasons like Valentine’s Day sales.

Looking for early shoppers discount sometimes makes people prey to retailers sleight of hands which involves raising products price so high that discounts on those items are nothing but the original cost of the items.

However, the late shopping tactics works and saves money.

It’s too early or late to save for retirement People often think it is too late to save or invest for post-work life but that is a wrong assumption.

Those who think it is too early believe they have all the time in the world but the average Nigerian in the formal sector would work for only about 45 years – earnings might not be awesome in the earlier years.

The others that believe it is too late are unaware of the fact that there are ways to still put sometimes tangible aside for retirement (as long as one is still working) by investing in certain assets that offer high returns.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder.

Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Olufikayo Owoeye; Graphics: Fifen - Famous www.businessday.ng

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@Businessdayng

Monday 24 February 2020

BUSINESS DAY

59

Personal Finance Why dollar savings may be a good investment option in 2020 ENDURANCE OKAFOR

W

ith declining T-bill and government bond rates fueled by the rotation of fund from high-yielding CBN OMO bills into government securities amid recent fears about a currency devaluation, saving in foreign currency like the US dollar may hold investment opportunity for Nigerians and investors.

Nigerians who currently save in US dollar or have domiciliary account could reap huge profit when the foreign currency becomes scarce or when the value of naira depreciates, projections by BusinesssDay shows.

Needed for import transactions, the US dollar is usually sorted after by Nigerian importers and it is also in high demanded

by Nigerians who travel abroad for educational and health tourism.

But the plunging price of crude oil, the product where Nigeria gets 95 foreign of its foreign earnings from, the country at risk of a dollar supply shortage. According to industry sources, it will be a big opportunity for those who were able to secure enough dollar when it was available.

I think this has become a go-to option for many investors particularly retail investors since last year, Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers said.

According to him a lot of industry players are expecting the naira to weaken later in the year, and “many investors consider the dollar savings a good option,” Akinloye told BusinessDay. With increasing exposure to external vulnerabilities, Nigeria is at risk of a higher current account deficit and declining reserves which has remained highly defenceless to capital flow reversals.

For an oil-dependent nation like Nigeria, plunging oil price fuelled by the Coronavirus outbreak could mean additional shock for Africa’s most populous nation as the decline in global oil demand and the consequent fall in prices may throw the naira off balance.

To defend the naira and keep it stable against the US dollar the Central bank has

continued to intervene in the FX market but the increased dollar sales by the apex bank in the face of high demand by foreign portfolio investors exiting the nation’s fixed income market has been the key culprit responsible for the country’s continued decline in external reserves.

While the apex bank has assured that it is unlikely it will devalue the naira in 2020, industry analysts believe that the regulator may be forced to leave the market to determine the exchange rate when it reserves get some more heat from the declining oil price.

The reserve which has maintained downward trend in the last eight months worsened by a 49 percent decline from $37.73 billion the week earlier to N37.23 billion as of 13th February 2020, data by the Central Bank show.

The Central Bank could devalue the Naira between 5-10 percent in 2020, analysts at EFG Hermes have said. Nigeria’s exchange rate between the naira and the dollar has remained flat at about N360www.businessday.ng

‘

A self-driven devaluation would be a precedent in Frontier markets, as usually central banks are forced to devalue rather than seek it

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’

N363 at the Investor and Exporter window following staunch defence by the apex bank.

While querying whether the CBN was cooking a mini devaluation, analysts at EFG Hermes posited that the apex bank could be forced to devalue the naira later in the year 2020 “A self-driven devaluation would be a precedent in Frontier markets, as usually central banks are forced to devalue rather than seek it,” they said.

With two currency devaluation under his belt, the current Central Bank Governor, Godwin Emefiele is prepared to fight off naira depreciation even though it may be doing that at a high cost.

According to the Milk Index report by the Rand Merchant Bank (RMB), a South Africa-based investment bank, the naira has one of the highest levels of discrepancy among the eight currencies that were analysed in Africa.

The currency of Africa’s largest economy was estimated to be overvalued by over 160 percent fuelled by the country’s rate cut and portfolio outflow.

“RMB saw some weakness in the naira driven by the exit of offshore investors and the rate cut by CBN,” Neville Mandimika, SSA Economist and Fixed Income Analyst at Rand Merchant Bank said in 2019.

A currency is overvalued if the value on the exchange market is higher than is believed to be sustainable. This may be due to a pegged or managed rate that is above the market-clearing rate, or, under a floating rate, it may be due to speculative capital inflow.

If the naira is devalued later this year or allowed to be determined by market forces, an investor that obtained the US dollar at the current exchange rate can get as high as percent return when the dollar becomes scarce, as complied from BusinessDay estimates.

Battered by the global drop in crude price to $50 per barrel from around $100 two year earlier, Nigeria devalued its naira in 2016, and from a peg of N197/$ before the devaluation, exchange rate in the country hit the roof at N500/$ fueled by the excess demand from Nigerians who were in search for dollar to meet their personal, business travel, medical, and school fees needs. @Businessdayng

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Monday 24 February 2020

BUSINESS DAY

Monday 24 February 2020

BUSINESS DAY

Investing

Cover Story

Top ways entrepreneurs can win in a tough business environment Bunmi Bailey

T

he Nigerian business environment is challenging and entrepreneurs have to find new ways to combat these hurdles or risk losing their market.

Looking through different successful entrepreneurship books by authors such as Chris Omoijiade, Fred Mouawad and Neil Patel, there are more than a dozen ways entrepreneurs can stay ahead.

Discover and understand your why What has kept and grounded successful entrepreneurs is that they discovered their Why. In business, because it is so tough you are going to come across times that you will have everything that has to do with business. Everybody will go through crazy times asking why they did not invest their time and money in something else.

According to Omoijiade, your why is your anchor and foundation. It is the essence of why you do what you do and understanding it, is critical in starting your journey has an entrepreneur. “People don’t buy what you do; they buy why you do it. You must have a driving force inside of you because that is what is going to keep you till the next morning,” he said.

Do some soul-searching.

Before starting a new business venture, you have spend time to reflect on your passions, intentions and how your ideal company should look like. “Your startup is an embodiment of your whole and a reflection of your beliefs,” Mouawad explains.

Build a winning team One of the only ways to excel in business is to build a winning team. You cannot excel or get far alone. You cannot be a successful entrepreneur if you don’t build a strong and solid team. Many entrepreneurs are struggling because they don’t have a winning team but rather build things by themselves. When you build a business where employees and stakeholders realize that the business is part of the parcel of what they are, it will succeed. One of the reasons business fail is because employees feel that they don’t have a stake in that business.

Many times we feel that it is just giving

them salaries but it goes beyond that.

That is why you need to put the structures in place to make them feel important and part of the business.

Plan your finances Most entrepreneurs use thir saving to start their business and in most cases it is risky. That is why you need a plan to minize it. Plan out your finances in the beginning and try to stick to it, but know that the plan will have to be adapted along the way.

Pick the right type of business.

Don’t just pick the right business; also pick the characteristics of the industry you’re selecting. In some industries, everyone is cordial and friendly while in others tough talk is the norm industries require you to be formal and understand traditions. Some depend on your ability to form personal connections with customers.

Consider whether all aspects of the business will be a good fit for you.

There is no free lunch, be ready for opportunities Entrepreneurs who want to build a business empire or get ahead are those who are ready to pay the price. There is no free lunch. Many businesses struggle a lot www.businessday.ng

because they are not thought through and know that there is a price to pay. You need to understand that you must pay the price in so many ways.

Build products and services for the market, not yourself You are not in the business for yourself but others. In mapping out those products and processes, you must ensure that you are not just thinking for yourself. You cannot push products in the market and expect it to be successful. You can fill the pulse in the market by listening to your customers. You set up a business based on the needs of people. Develop the art of listening to the market and get feedback. Ask the right questions to your customers to get the right answers.

Embrace risk The definition of an entrepreneur is someone that can take risks. Many times we find people who are very conscious and want to get ahead in their business but are not willing to take a risk. Such people are not entrepreneurs but self-employed. You can’t get far without risks.

Stay ahead of trends or set the trends There are a lot of people who get lost in

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their present situation and are not following the treads of the industry and the world. The world is moving at such a fast pace that is why you must keep up otherwise you will be crushed. Keep your eyes out for the trends and know what is making the world tick. Once you can discover that, you are in business.

Leverage on technology If you don’t leverage technology, your business will go extinct. In your operations, how much are you leveraging on technology, are you constantly dishing out things and thinking that this is going to remain the same? There is a strong need for technology in our modern business space. For you to scale to a level you want to, you must leverage technology.

Keep your eye on the future.

It is not easy to run a business, that is why it is easy to lose your focus for a long lasting business. “Build an advisory board to provide you with additional external perspective.” Mouawad recommends.

Mouawad also recommends thinking through your exit strategy--as a seven-time entrepreneur, this is probably always top-of-mind for him. “Do you plan to sell the company, pass it on to the next generation, or go public?” he asks. Thinking through your exit options “forces you to evaluate your company--and figure out how to increase its value,” he says.

Stand out in a world of too many similarities A lot of us are part of what is called “ a wandering generality”. You follow what everyone else is doing instead of you to be a meaningful specific. Your desire to be distant, special, irreplaceable and unique means that you must refuse to be average. If you are distant in the way you do your business, your customers will come around.

Develop emotional intelligence Emotional intelligence is the capacity for you to be aware, control and express your emotions. People take this aspect for granted. Not even a day or a week is sufficient enough for you to develop emotional intelligence.

Omoijiade emphasied that emotional intelligence has been rated as one of the top scaled for you to move ahead in life. “The ability for you to understand and control yourself and also express yourself to others can make a difference in your business between success and failure. Some people have succeeded and failed because of emotional intelligence,” he said.

Invest in personal development and build personal communication and interpersonal skills There is no successful businessman that sells only to himself. Dealing with people and how you relate with them will show how successful your business is.

Once you are in the business of selling, developing these skills is very important.

@Businessdayng

61

Bitcoin halving in few weeks might create new cryptomillionaires. Here’s why gains may come sooner SEGUN ADAMS

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he world of cryptocurrency is counting down to an event, as rare as leap years that could boost Bitcoin price and possibly create new millionaires.

First Things First The Bitcoin halving is due to a rule written into the crypto’s underlying code by its pseudonymous creator Satoshi Nakamoto so that its rate of supply slows after every four years till the 21 millionth, and final Bitcoin unit is created.

The halving works by reducing the reward of mining Bitcoin after every 210,000 blocks.

Bitcoin miners help secure and facilitate transactions by solving computational puzzles that verify previous Bitcoin transactions and chain those blocks of transactions together.

This process is to ensure there is no double-spending.

Successful miners with blocks are re-

warded with units of Bitcoin (and some transaction fees). This process creates new Bitcoins.

In May 2020 (when the number of blocks hits 630,000), the next round of halving will see the Block reward fall from 12.5 to 6.25 bitcoins. This would make it less incentivizing to keep increasing Bitcoin supply (making transaction fees more reliable income source) and signals the market getting closer to the 21 million maximum minable Bitcoin.

Economics 101-what halving does?

Unlike Fiat currency like the Naira that the Central Bank of Nigeria (CBN) can print to increase supply, Bitcoin has a fixed total supply which makes it deflationary instead of inflationary.

In the case of the Naira, it can be illadvisedly printed infinitely but the problem is people would have to give up more and more units of the Naira for the same goods or services bought.

It is not so in the case of Bitcoin because the closer the supply gets to 21 million, the more difficult it would be to get a hold of a

unit and this would force the value up. In this case, less Bitcoin would buy more goods and services.

Halving limits the supply of Bitcoin relative to demand and this is why crypto-enthusiasts believe there would be an upsurge in the asset’s value in the coming months.

What history shows Blockgeeks.com in a recent article noted that the surge in Bitcoin price after a halving has been slowing down since the first halving in 2012.

After the 2012 Halving, Bitcoin rose 9,336.36 percent to $1,038 in a year.

In post-2016-halving, Bitcoin rose from 288.60 percent from around $650 to $2,526 a year after.

While there is an expectation for price gain after this year’s halving, the effect might be milder because, in anticipation of higher gains, speculators could go bullish on Bitcoin.

Golden Cross-why gains may come early A rare occurrence last week signalled the www.businessday.ng

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cryptocurrency could rise to over $20,000 in as little as two months.

The signal “Golden Cross” is one of the strongest bull indicators in technical analysis and it occurs when 50-day moving average rises above its 200-day moving average.

“Last time this happened #Bitcoin pumped 170% in under 60 days,” said Cointelegraph Markets analyst, Keith Wareing on Twitter.

While Bitcoin recently retreated from a break-out of its $10,000 resistance, 2019 shows this could be followed by a swift surge in price.

In April last year, Bitcoin fell to $4,995 after signalling a golden cross but rose 175 thereafter to $13,880, Bitstamp data shows.

While there was no halving in 2019 when the rare Golden Cross last occurred, it is not unlikely the expected surge before halving would be due to early positioning ahead of expected gains (i.e. Pricing in).

Whichever way, it might be a good time to hold on to your coins and prepare for the takeoff!

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Monday 24 February 2020

BUSINESS DAY

Equities

How NSE’s biggest 30 rank by dividend yield SEGUN ADAMS

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ividend yield is a key consideration for investors in the equities market which has pared most of its years gain after a stellar start to 2020.

The equity market was unable to hold on to its first gain in six trading sessions and declined by 0.65 percent on Friday, bring year-to-date return to 2.04 percent.

Dividend yield is important because a high yield signals good a buying opportunity particularly for value investors who seek attractive returns on undervalued stocks.

Also known as dividend return per stock, dividend yield is the percentage value of a company’s dividend per share to its market price.

Assuming dividend per share of a company remains unchanged, yield increases when stock prices decline and vice-versa.

However, it is unwise for investors to price in only yield when doing their stock valuation because yields tend to be ‘surprisingly high’ for illiquid stocks trading at low prices.

So investors that want to take position in high dividend stocks need to complement yield with the dividend track record of such company and other market indicators.

BusinessDay computed and ranked dividend yields of the thirty most liquid and capitalized stocks on NSE which accounts for over 90 percent of the bourse’s market value. The rationale is that some of these stocks still have an attractive valuation, and hold potentials to deliver returns to investors.

Data compiled on Friday from Bloomberg provided figures on dividend yields for 23 stocks except for EcoBank, Union Bank, Sterling Bank, Lafarge Africa, Sterling Bank, BUA and International Breweries.

First-tier lender Zenith Bank currently has the highest dividend yield among NSE biggest companies. Zenith has a dividend yield of 15.66 percent and has gained 6.45 percent to N19.85 per share this year.

Oil and Gas major Total has a dividend yield of 13.08 percent, the second-highest among peers. The company’s shares have declined by 3.52 percent this year to N107 per share.

United Bank for Africa (UBA) has a dividend yield of 11.49 percent and has gained

3.5 percent to N7.4 per share this year.

Nigeria’s biggest listed company Dangote Cement has a dividend yield of 10.39 percent and has surged 19.72 percent to N170 since January.

GTB has a dividend yield of 9.57 percent but has declined 5.89 percent to N27.95 so far.

At N12.1, Dangote Sugar’s dividend per share is 9.4 percent of its share price which has shed 11.3 percent to N12.1 this year.

Nascon has a dividend yield of 7.69 percent and has gained 0.39 percent to N13 this year.

Mid-tier lender FCMB which has gained 2.63 percent year-to-date to N1.95 per share is the 9th top ranking NSE 30 company with a dividend yield of 7.18 percent.

Mobil has a dividend yield of 6.19 percent but has lost 9.94 percent to N133.2 per share this year. www.businessday.ng

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Other big stocks ranked by dividend yield are Guinness (6.03%), Seplat (5.98%), Nestle (5.62%), Flour Mills of Nigeria (5.24%), Stanbic (5.19%), Fidelity Bank (5.14%), Nigerian Breweries (4.66%), Okomuoil (4.62%), First Bank of Nigeria Holdings (4.52%), Presco (4.01%), Transcorp (3.23%) and MTNNigeria (2.54%).

Themis capital splashes N150million on UAC shares Late on Friday, UAC plc announced the purchase of its shares by an insider Themis Capital to the tune of 15.6 million shares. The date of transaction was 14th February 2020 at a weighted average price of N10. This could be that the share is currently undervalued.

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Monday 24 February 2020

BUSINESS DAY

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Fixed Income Attracting FPIs important to CBN over coming months HOPE MOSES-ASHIKE

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iven the downward trajectory of the foreign exchange reserves since July 2019, attracting Foreign Portfolio Investment (FPI) will be important to the Central Bank of Nigeria (CBN) over the coming months, according to Coronation Merchant Bank Limited.

Nigeria’s external reserves have declined to $36.8 billion as at February 18, 2020 from $40.0 billion in July 2019, data from the CBN revealed.

FPIs account for a significant proportion of the CBN’s $36.8 billion forex reserves. “If the CBN cannot sell sufficient Open Market Operation (OMO) bills to foreigners in early 2020 then this could, in our view, present challenges to its FX reserves management and disrupt the current N362.50/dollar exchange rate,” analysts at Coronation said.

During the second half (H2) of 2019 the CBN lost reserves (largely providing US$ to the NAFEX market) at an average US$1.1 billion per month. It has begun to arrest the slide. January’s outflow was US$0.6 billion, Guy Czartoryski, head, research Coronation Asset Management said.

FPI buying of the CBN’s OMO bills is critical to the success of CBN reserve management. Foreign holdings of OMO bills likely account for over US$5.0 billion of the CBN FX reserves.

In the OMO market, Czartoryski said the first key test of 2020 has been passed, namely US$1.71 billion of Foreign Portfolio Investment entered via the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) market in January, almost certainly destined for the OMO market A substantial part of the CBN’s FX re-

‘

Nigeria’s OMO yields look comparable to risk-free yields of local currencies in other markets, notably Ghana and Egypt when it comes to competing for global local-currency capital flows

’

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serves can be attributed to the FPI hence, the need to maintain foreign interest in the OMO market in 2020.

The next test is February. Does FPI continue to enter the OMO market in spite of oil prices (Brent) at US$54.00/bbl and concerns over the global spread of the coronavirus?

Nigeria’s OMO yields look comparable to risk-free yields of local currencies in other markets, notably Ghana and Egypt when it comes to competing for global local-currency capital flows.

Some investors look at the spread over inflation as an indication of currency security –though the Non-Deliverable Forward allays this fear to some extent (it hedges price, not liquidity).

The OMO market, at N6.0 trillion (US$16.5bn) in September 2019, was six times the size of the T-bill market. There are over N4.5 trillion in OMO bills to be redeemed in in the first quarter of 2020.

Pension fund, mutual fund and insurance companies have moved money from the OMO market into T-bills. Banks, as the conduit of this liquidity, have been very liquid with funds –until recently.

Since the de-coupling of the T-bill and OMO markets last October, T-bill yields continue to fall. Foreign portfolio investors still receive OMO yields around 14 percent. T-bills sell at between 4.5 percent and 6.5 percent. Liquidity has been rotating out of the OMO market, via banks, into the T-bill market. Inflation remains at close to 12 percent.

“We are familiar with the flat, or gently upwardly-sloping but straight Naira yield curve. Now we have a yield curve that actually inflects. The market does not think that low T-bill rates are here to stay. It is pricing in a steep rise in rates a year or two ahead. The question is, how do we get to that environment?” Czartoryski said.

The report by Coronation Merchant bank stated that the results of OMO bill sales to Foreign Portfolio Investors during January and February 2020 will provide an important indicator of whether the CBN’s FX reserve management is succeeding.

Foreign investors may find OMO yields, currently at 14.92 percent per annum attractive, but could be deterred by the recent decline in liquidity in the OMO market.

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Monday 24 February 2020

BUSINESS DAY

Market Wrap-up Here’s how the market performed last week

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total turnover of 1.499 billion shares worth N17.907 billion in 18,515 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 912.175 million shares valued at N12.126 billion that exchanged hands last week in 17,083 deals. The Financial Services industry (measured by volume) led the activity chart with 1.226 billion shares valued at N12.974 billion traded in 11,741 deals; thus contributing 81.79 percent and 72.45 percent to the total equity turnover volume and value respectively. The Consumer Goods followed with 83.882 million shares worth N3.090 billion in 1,937 deals. The third place was Conglomerates industry, with a turnover of 49.719 million shares worth N104.199 million in 517 deals. Trading in the Top Three Equities namely, Zenith Bank Plc, Sovereign Trust Insurance Plc, and Guaranty Trust

Bank Plc. (measured by volume) accounted for 636.624 million shares worth N10.123 billion in 4,539 deals, contributing 42.47 percent and 56.53 percent to the total equity turnover volume and value respectively.

The NSE All-Share Index and Market Capitalization depreciated by 1.32 percent and 1.30 percent to close the week at 27,388.62 and N14.268 trillion respectively.

All other indices finished lower with the exception of NSE Industrial Goods index which appreciated by 1.02 percent while NSE ASeM Index closed flat.

Twenty-four (24) equities appreciated in price during the week, higher than nineteen (19) equities in the previous week.

Twenty-eight (28) equities depreciated in price, lower than thirtyfive (35) equities in the previous week, while one hundred and eleven (111) equities remained unchanged, higher than one hundred and nine (109) equities recorded in the preceding week.

Chart of the week

WeekAhead Ahead Week Week Ahead (Monday, 8th National April – Friday, 12th April, 2019) Results expected from the Bureau of Statistics include Gross Domestic Product on Monday 24th February Pension Assets and selected Banking Data expected on February 25 GDP by expenditure on February 27 Fourth-quarter capital importation on Friday 28th February Equities Last week, the bears dominated the domestic equities market, amidst continued risk-off sentiments and the absence of positive market catalysts. Consequently, after 4 trading days of losses, the benchmark index dipped by 1.32% w/w to 27,388.62 points. Amidst continued weak market sentiments, investors to trade cautiously, taking positions in fundamentally justified stocks.

Money market and fixed income We expect the OVN rate to remain depressed in the coming week, supported by a significant boost to system liquidity from OMO inflows worth NGN927.75 billion on Thursday.

Treasury bills The bullish trend to continue in the Treasury bills market, supported by relatively healthy liquidity.

Bonds Sustained demand next week across the bond yield curve, as market players seek to re-invest excess liquidity from incoming maturities.

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The consumer price index (CPI), which measures inflation, rose by 12.13 percent (yearon-year) which is the fastest in almost two years, according to data released by the National Bureau of Statistics.

Food inflation accelerated to 14.85 percent in January, the highest since March 2018.

The increase in VAT from 5 percent to 7.5 percent which took effect in February alongside expected electricity tariff hike will continue to pressure consumer price in the near future.

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Monday 24 February 2020

BUSINESS DAY

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Company IN FOCUS

BUSINESS DAY Monday 24 February 2020 www.businessday.ng

C&I Leasing plc: Reaping fruits of a growing leasing market OLUFIKAYO OWOEYE

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he Nigerian leasing industry has come of age as it continues to provide succor to many organizations across all sectors in the economy. The industry has achieved consistent double-digit growth rate over the years, buoyed by market opportunities, and lease awareness among corporates.

A report released by the Equipment Leasing Association of Nigeria, ELAN in 2017 shows volume surged 14.5percent to N1.44trillion in 2017 as against N1.26trillion in 2016.

While in 2018 outstanding lease volume surged 16.3percent to N1.68trillion from N1.44trillion in 2017, bringing the cumulative volume in the past 10 years to about N8.3trillion and this is expected to hit N10trillion when the final figure for 2019 is released Analysis of the volume by sector in 2017 shows that the oil and gas took the lead with N449billion, representing 28percent of the total portfolio, while transportation followed with N355 billion, representing 20percent. Manufacturing moved to N217 billion from N180 billion in 2016, while Agriculture, Government, Telecommunications and other sectors (education, healthcare, construction, and consumer sectors) recorded considerable growth.

One company that has continued to play a prominent Nigeria’s leasing space is C & I leasing, incorporated in 1990 as a limited liability company, and licensed by the Central Bank of Nigeria to offer operating and finance leases and other ancillary services.

The company commenced full operations in 1991 and in 1997, C & I Leasing concluded a major restructuring and diversification project that saw its conversion to a public company with its shares listed on the official list of the Nation’s bourse as the only leasing and rental services company.

The leasing company has also evolved into a group of three major divisions; Fleet Management, Outsourcing and Marine

divisions with two subsidiaries in Ghana namely Leaseafric Ghana Limited and United Arab Emirates (EPIC International FZE).

Leaseafric was incorporated in March 1992 and licensed by the Bank of Ghana as a nonbank financial institution. Aureos West Africa Fund bought into the company to take a 51.28percent stake and in August 2007.

The Fund and Ecobank Ghana Limited, holding between them 59.05percent shares, sold their stakes to C&I Leasing Plc. Aureos West Africa Fund subsequently bought out other shareholders totaling 17.58percent which was subsequently sold to C&I Leasing Plc in March 2012. C&I Leasing currently holds 70.89percent equity stake in Leaseafric Ghana Limited.

United Arab Emirates (EPIC International FZE) incorporated as a free trade zone establishment in United Arab Emirates and licensed to trade in ships and boats, ships and boats spare parts, components, and automobiles and it commenced operations fully in 2014 with four vessels. The vessels are then chartered from C & I Leasing by the various international oil companies. This arrangement has expanded and helped grow

the fleet size of C & I Leasing to 22 vessels currently.

In 2018, C & I completed the buyout of 27.5percent minority stake in C & I Petrotech JV marine limited in the process, taking 100 percent ownership of six vessels deployed in a longterm contract with Shell Petroleum Development Company of Nigeria (SPDC). It also announced the acquisition of two brand new 2018 ‘ASD 2913 Tugboats’ named ‘MV Chidiebube’ and ‘MV Folashade’ with SIFAX Marine Limited under the SIFAX C&I MARINE LIMITED joint venture arrangement. The boats have since been deployed for a long-term contract with Nigerian Liquefied Natural Gas Company (NLNG).

The leasing company announced a share reconstruction through consolidating every four ordinary shares currently held into one new share in the company, reducing the issued paid-up Share capital from N808,505,000 being 1,617,010,000 ordinary shares of 50 kobo each to N202,126,250 being 404,252,500 ordinary shares of 50 kobo each According to the company, the purpose of the reconstruction is to allow the company to have enough unissued shares to accommodate future plans to raise

capital through the equity capital market. The additional capital will be used to finance the company’s expansion plan, extinguish some liabilities and enhance the company’s capital mix.

Following 2018 maturity of a Ten Million Dollars unsecured, coupon redeemable, convertible loan stock in C & I Leasing, representatives of ABRAAJ - managers of the Aureos Africa Fund converted their loan stock to equity.

The company’s Rights Issue of Five Hundred and ThirtyNine Million, Three Thousand, Three Hundred and Thirty-Three (539,003,333) ordinary shares of Fifty Kobo each at N6.00) was concluded in January and according to management, 58% of the proceeds would be used to refinance existing loans, 29.17percent for business expansion, 9percent in Investment in working capital.

In its recently released 2019 full-year result for the period ended 31 December, the company made N1.75bn in profit for 2019, an increase of nearly 50 percent year-on-year after gross earnings rose double digits in the year.

The improvement in performance followed a 29 percent increase in gross earnings to nearly N36bn, C&I unaudited financial report shows.

C&I leasing in the year under review saw a 34 percent surge in net lease income to N11.81bn, fuelled by about 46 percent jump in rental income which to N25.49bn, a growth faster than lease expenses which stood at N13.68bn in 2019.

Net outsourcing income for C&I leasing also rose 25 percent in the year on the back of stronger inflows while net tracking income declined by 14 percent owing to a faster rise in tracking expense while income dipped.

Finance cost increased yearon-year by almost a million to N5.65bn in 2019 and income from Join Venture fell to almost

a quarter.

However, gains from net interest income which rose from N134.49m in 2018 to N174.15m, a 27 percent increase in other operating income to N989.57m were enough to help support income.

C&I Leasing noted an increase in expense items including impairment charges but was able to report an increase in its profit before tax by 31.8 percent to N1.86bn.

Owing to the company’s performance in the year, earnings per share rose to N4.26 in 2019 compared to 67k in 2018.

Shares of the company gained 9.48 percent to N6.35 a unit on Wednesday to emerge among NSE’s best-performing stocks in the day. On a year-to-date basis, C&I leasing has returned 7.63 percent to investors compared to 2.54 percent gains in the broad market.

No doubt the leasing industry has attracted investors from the financial and other sectors desiring to tap into the opportunities in leasing and as a means of hedging against other non-performing product offerings.

While finance lease remained the predominant type of leases accounting for 65percent of the transactions in 2017, operating lease continued to make a strong showing at 35percent.

The surge in operating lease in not unconnected with the growing popularity among lessors as a risk mitigating mechanism against default and response to current market dictates especially from corporate customers who require service-oriented lease In terms of transaction value, the banks still take the lead, particularly financing big-ticket leases, and providing funds to lessors for lease transactions.

The non-bank lessors, however, accounted for about 80percent of customer base mainly from the Small and Medium Scale Enterprises (SMEs).

Looking ahead in 2020, the push by the government to generate more revenue would have a diverse effect on the industry in 2020. The increase in VAT to 7.5 percent from 5percent will further make leasing transactions to be more expensive, especially in operating lease where it will apply to rentals in addition to the cost of assets. On the other hand, the industry may benefit from transactions falling within the scope of the expanded exemptions aimed at cushioning the effect of the increase in VAT. According to ELAN projections, 20 new companies are expected to join the association in the coming year, bringing the total lessors in the country to 152.

How well players such as C & I Leasing would survive in the face of increasing competition and macro-economic challenges, only time would tell.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.