BusinessDay 24 Jul 2018 by BusinessDay

IFRS 9 no threat to Nigerian banks’ regulatory capital - Fitch BUNMI BAILEY & MICHEAL ANI

new accounting rule mandating banks to make further disclosures of their assets, portfolio, and including making provisions in advance for nonperforming loans, is seen as a principle that will cause no harm on banks regulatory capital, the US based global rating agency Fitch said in a report released yesterday. “The regulatory capital ratios for rated Nigerian banks are not under threat following the

first-time application of IFRS 9 accounting standard,” Fitch said. This is contrary to earlier views by analysts that Banks’ capital adequacy ratio may worsen as the adoption of the International Financial Reporting Standard (IFRS) 9 could force lenders to make more provisions for loans that were thitherto not recognized. “If Nigerian Banks comply with the IFRS 9 requirement, their books are going to be much more Continues on page 34

See commodities on page 2

news you can trust I **TUESDAY 24 JULY 2018 I vol. 15, no 102 I N300

L-R: Janos Nieddu, director, Chase Publishing; Obeahon Ohiwerei GMD/CEO, Keystone Bank; Omobolanle Osotule, divisional head, marketing/corporate communications, Keystone Bank; Abubakar Sule, deputy managing director, Keystone Bank; Edvaldo Naval, global head of projects, Chase Publishing, at the European Global Banking and Finance Awards 2018, where Keystone Bank was confered with The Most Innovative Bank Of The Year Africa 2018 and the GMD/CEO, with The Best Banking CEO 2018, in London.

FG may force Discos owners to divest stake

L-R: Olumide Soyombo, co-founder, Bluechip Technologies Limited; Kazeem Tewogbade, managing director, Bluechip Technologies Limited; Tope Ajao, director, Bluechip Technologies Limited, and Bolaji Afolabi, vice president, sales/business development, Bluechip Technologies Limited, during its 10th anniversary celebration in Lagos.

Onyinye Nwachukwu, Abuja

he Federal Government may have to ask the Distribution Companies (Discos) to give up some of their holding in the privatized power entities and allow serious investors to run them efficiently and deliver more gains to the economy. This is one of the options on the table to get the power distribution network deliver on privatization goals, Alex Okoh, Director General, Bureau of Public Enterprises (BPE) said on Monday. “We have not discussed that option formally but we are not Continues on page 34

Analysis: Can Oshiomole sack Ngige? Y Chris Akor and Ini Iwok

esterday the National Chairman of the ruling All Progressives Congress (APC), Adams Oshiomole warned the

minister of Labour and Employment, Chris Ngige and other ministers in the incumbent administration of President Muhammadu Buhari that they risk expulsion from the party if they continue

to refuse inaugurating board of parastatals under their Ministry. The party Chairman said he was ready to instil discipline in the APC, stressing that the ministers were not independent appointees

but, chosen within party. “If the minister refuses we will suspend him from the party. For me it is the height of mischief for any minister, you cannot purport Continues on page 34

Apapa ports are most expensive globally …as Lagos, DPR give tank farms 30 days to get loading bays JOSHUA BASSEY & OLUWATOSIN DOKUNMU

lobally, the cost to ship cargo or freight by a shipping container from the United States to Apapa (Nigeria) is about the highest in the world. This is according to moverdb. com in a 2018 Overseas Cargo and Freight Costs template showing freight costs from United States (Los Angeles & New York) to different port destinations of the world. The rates which are as acContinues on page 34

Inside Nigerian banks twitter war: What the numbers say P. 2

businessday market monitor Commodities

NSE

Bitcoin

Brent Oil

Biggest Gainer

$72.91

DANGCEM N236.00

Cocoa

US $2,299.00

0.55pc

Biggest Loser FO N25.20

₦2,675,558.15

-9.68pc

36,711.96

Everdon Bureau De Change +3.05pc

Buy

Sell

$-N 357.00 360.00 £-N 474.00 482.00 €-N 412.00 420.00

2 BUSINESS DAY NEWS

FMDQ Close Foreign Exchange

Treasury Bills

Market Spot $/N I&E FX Window 362.00 CBN Official Rate 305.85

3M -0.00 11.04

6M -0.12 12.18

C002D5556

Trucks/Containers at Apapa bridges causing traffic for business activities in Lagos, yesterday.

Analysts differ on MPC rate decision as inflation falls …11.23% CPI, lowest level in 29 months HOPE MOSES-ASHIKE

s Investors await the decision of the Monetary Policy Committee (MPC) meeting which kicked off yesterday Monday, and will climax today, analysts expressed divergent views over interest rate decision in light of reduced inflationary pressure. While some of the analysts expect a 200 basis point cut in the benchmark interest rate others anticipate no change. “We expect a rate cut of 200bps tomorrow to help the economy along. What are the risks to this view? The outsized budget just announced may trigger some caution on the part of the MPC. However, with money supply growth still weak, we think there is ample room to cut rates, without risking FX stability or inflation,” Razia Khan, managing

director, Chief Economist, Africa and Middle East Global Research, Standard Chartered Bank said in an email to BusinessDay. Nigeria’s (inflation) year-on-year slowed marginally to 11.23 percent in June from 11.61 percent the previous month, but still remains well above the 6-9 percent preferred band. Johnson Chukwu, managing director/CEO of Cowry Asset Management Limited, who spoke with BusinessDay by phone, said the drop in inflation will not change the outcome of the MPC which he votes for a hold. His reason for a status quo is based on the fact of expected inflationary pressure following the expansionary budget which was signed in June 20, pressure from political spending among others. Continues on wwwbusinessday online.com

fgn bonds 5 Years

10 Years

20 Years

0.00% 13.53%

0.02% 14.21%

0.00% 14.21%

Tuesday 24 July 2018

Pic by Olawale Amoo

Nigerian banks twitter war: What the numbers say Iheanyi Nwachukwu

hether intentional or not, but the truth is that a recent tweet by Sterling Bank Plc is attracting the attention it needs. The tweet ‘in shooting for the moon, men become stars’ has awakened other banks’ image makers’ centred on guarding their territory. The tweet mimicked identities of some big banks like Access Bank Plc, GTBank Plc, First Bank of Nigeria Limited and Union Bank of Nigeria Plc ‘shooting for the ‘moon’ which represents Sterling Bank identity. Except GTBank, others could not hold their feelings as shown in their re-tweets. “Heading for the moon without a spacesuit…journey mercies,” Union Bank responded to the tweet that broke the internet.

“We will travel on an imaginary rocket too, if we were a one-customer Microfinance Bank; but with ten million customers and counting, we rather bring the galaxy to you,” Access Bank reacted in a tweet with following hash tag comments which says ‘You Are Worth it; Take Tomorrow; Know Your Elders”. “What an elder sees while sitting, a child cannot see even if he travels to the moon. …And straight into the trash can” First Bank twitted. First Bank continued with hash tag comment which says ‘Respect Your Elders. You First’. Many industry analysts did not see the need for the outburst because each bank’s scorecard year and quarterly results speak volume on its industry positions. For instance, in the financial year ended December 31, 2017, Zenith Bank made the biggest profit in the industry with profit after tax (PAT)

in excess of N177billion. Others in the basket of our select banks include GTBank Plc which recorded N170billion in PAT; while UBA Plc made N78.6billion in full year 2017 profit after tax. Access Bank full year 2017 PAT stood at N62billion; First Bank Nigeria Group’s profit after tax for the year ended December 2017 was N47.7 billion. Sterling Bank Plc reported a profit after tax of N8.5 billion for the financial year ended December 31, 2017. While many bank customers didn’t see the need for banks to demarket each other, others did not see the reason for such display by the financial institution(s). “Times have become so hard, they have resorted to eating each other…they used to dine on us, the customers,” said Victor Nze a bank customer following the outburst on the internet.

18 banks at risk of losing commercial Lagos HQ for 52% of Chinese owned firms in Nigeria Abdullateef Eniola-Giwa banking licence in Ghana ABIMBOLA HASSAN & EMEKA UCHEAGA

ith just five months left to the deadline, banks in Ghana are racing to meet the new capital requirement prescribed by the Bank of Ghana, the apex monetary authority in Ghana. Last year, the bank regulator increased the minimum capital threshold to GH¢400 million ($84 million) from GH¢120 million requirement ($25 million), a sharp increase of around 233 percent. All 34 licensed commercial banks in Ghana are required to have the required minimum capital latest 31st Dec 2018. According to Bloomberg, only 15 out of the 34 banks are close to meeting the new capital requirements ahead of the December deadline. Amongst these 15 banks, six have met the requirement while the other nine are approaching the door step. The policy move is to strengthen the sector and encourage lending in

the second largest economy in West Africa. Ecobank Research estimated last year that based on Q4 2016 banks financial statements, the industry would needed to raise at least GH¢9 billion ($1.88 billion) in order to comply. As expected, the sector’s readiness to raise the required capital threshold is increasingly looking skewed towards the larger Tier 1 balance sheets. There are two recapitalization avenues available to commercial banks to consider which include, capitalizing revenue reserves and selling new shares to existing shareholders or new shareholders via private or public market(s). Speaking on this Bank of Ghana Governor Ernest Addison said, the remaining 18 lenders who are yet to secure the fresh capital investment may likely merge with one another to increase their capital base. Continues on wwwbusinessday online.com

he concentration of Chinese holdings in Nigerian firms is predominant in Lagos State where over half of firms with at least one Chinese shareholder operate. An Asoko Insight analysis of Nigeria Corporate Affiars Commission data indicated that 3,321 registered companies in Nigeria have at least one shareholder of Chinese nationality. Out of the 36 states in the country and the Federal Capital Territory, only Gombe and Taraba State do not have registered firms with stakeholders of Chinese nationality. The FCT accounts for 15 percent of the total number of firms with Chinese ownership followed by Anambra, Kano and Ogun which constitute 6.4 percent, 4.7 percent and 2.9 percent respectively. Other states that completed the top ten are Enugu (2.9%), Kaduna (2.1%), Rivers (2.0%), Delta (1.9%) and Imo State (1.3%). Lagos State is understandably

leading the pack as it is the economic centre of the country with a diverse demography and a government constantly trying to improve the ease of business. “Lagos is the commercial capital and natural centre for merchandise trade because the biggest ports are in Lagos,” said Muda Yusuf, the director general, Lagos Chamber of Commerce and Industry (LCCI). “This is where the market is so importers, traders, and investors coming into Nigeria will go to the trouble to set base in Lagos which may be at an additional cost, but Lagos is still their best bet.” The South West region had a to-

tal of 1,865 companies with Chinese ownership with Ogun and Oyo State driving the numbers with 97 and 24 companies respectively while Ekiti, Ondo and Osun has 4 each. The North Eastern region had only 26 companies with Chinese ownership representing 0.8 percent of the total and was the least of all the regions. Of the total 3,321, 47 firms had no registered address, but were nonetheless categorized as operational in Nigeria, often with a Chinese base of operation. Continues on wwwbusinessday online.com

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

C002D5556

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

6 BUSINESS DAY NEWS

C002D5556

NDDC intensifies project execution in Akwa Ibom, gets wrath from opposition camp IGNATIUS CHUKWU

anaging director of the Niger Delta Development Commission (NDDC), Nsima Ekere, was a former deputy governor of Akwa Ibom State, whose desire to contest for governorship in 2019 is not hidden. The high pace of project execution in his home state, the highest oil state with highest allocation in the NDDC, has rather attracted suspicion and wrath from quarters close to the Akwa Ibom State government. The latest project is the construction of NDDC permanent office complex for Akwa Ibom State, following the ground breaking and foundation stone laying ceremony for the project. The CEO, who performed the ceremony in Uyo, said the Commission was determined to complete all its state offices in the Niger Delta region. Ekere said: “The project will be completed expeditiously in line with our policy that each

state office complex is completed and put to use before the end of the tenure of this current board. This will help us to channel the resources being invested on rented apartments into our core operations and mandate of providing infrastructure to improve the living conditions of the people of the region.” He said when the current board assumed office nearly two years ago, it discovered that NDDC’s head office and state offices across the region were occupying rented buildings. He observed: “Aside from the huge amount of funds spent on these rented properties, the Commission has to contend with inadequate office accommodation for the teaming workforce and the huge work profile it has to contend with in fulfilment of its mandate.” The NDDC boss said the Commission found the scenario very unpleasant and immediately swung into action to reverse the ugly trend. Accordingly, he said, the

current Board and Management inspected the on-going construction of the permanent headquarters complex in Port Harcourt and “this spurred the urgent actions being taken to ensure that the head office building was completed within the shortest possible time.” The next is the 5.15-km Oku Iboku Internal Road Project in Itu Local Government Area of Akwa Ibom State. The CEO also inspected the road and erosion control project, which it is executing at the University of Uyo. Speaking at the commissioning of the Oku Ibokun roads and drainage, Ekere urged the benefiting communities to be grateful to the All Progressive Congress, APC, and administration of President Muhammadu Buhari. He said: “I am very happy with what I am seeing today in this community. Oku Iboku is one of the very prominent towns in Akwa Ibom state. It has a history and pedigree. It is not wrong that the community was not even remembered before now.

Entrepreneurs in Aba seek increased power supply to stay in business GODFREY OFURUM, Aba

ndustrialists in Aba, the commercial hub of Abia State, have attributed closure of industries in the area to inadequate power supply. Consequently, they urged the Enugu Electricity Distribution Company (EEDC) to increase electricity supply to the area, to enable industries operate optimally. Aba Chamber of Commerce, Industry, Mines and Agriculture (ACCIMA), a city chamber, said small and medium industries in the commercial city were shutting down due to inadequate power supply. The chamber in a recent publication in ACCIMA Bulletin noted that few industries were managing to survive, because they provide their own power supply, an indication that their installed capacity utilisation was far from being realised, hence making

the economy more unstable, which in turn results to socioeconomic insecurity. According to ACCIMA, Aba is a city made up of sheer self-help efforts and enterprise. Aba is a town known for its numerous hubs of micro, small and medium enterprises (MSMEs). It is a city bubbling with the abundance of human potentials in various areas of interest, contributing its quota to the revival of Nigeria’s economy. “Despite Aba’s contribution to the economy, the area receives an allocation of 10-15 megawatts of electricity from the national grid, against the required 110-120 megawatts,” he said. The chamber called for more allocation of power from the national grid to Aba, at least 50-80 megawatts of uninterrupted power supply as was done with other cities of the country below Aba in economic activities, saying it should enable the rehabilitation of some industrial

concerns that had shut down, thereby ensuring societal security. Godwin Iheme, managing director, ICI Garment Limited, affirmed that with adequate power supply, Aba industrialists could contribute meaningfully to Nigeria’s gross domestic product (GDP). According to Iheme, inadequate electricity supply has become a nightmare to all of us in Aba. “EEDC rations electricity here. Our factory runs on generator and we spend an average of N10,000, daily on diesel. And recently to help the big diesel engine we acquired a small petrol generator, but the problem now is that the capacity is low for our equipment, which has forced us to reduce our daily output,” he said. BusinessDay investigation also revealed that some areas of the town had been disconnected from the national grid for between three to five years.

Edo berates BEDC over poor supply of electricity to residents

do State government has frowned at the poor supply of electricity by the Benin Electricity Distribution Company (BEDC) to residents of the state. Representative of Governor Godwin Obaseki and commissioner for energy and water resources, Yekini Idaiye, made the government’s position known while declaring open the 4th National Council on Power (NACOP) themed: “Increasing Access to Electricity Through Improved Power Infrastructure,” held at the Government House, in Benin City, Edo State. He said the daily average supply of electricity put at eight hours, was less than 20 percent of the estimated consumer population of 1.2 million who

have post and pre-paid meters. The commissioner said that majority of the consumers are groaning under the estimated billing system with its attendant high corporate fraud on the part of BEDC, noting, “BEDC since inception has not added any value to the Infrastructure it inherited which explains the poor and deteriorated state of the power infrastructure in this part of the country.” He explained that the special technical committee constituted by Edo State government to undertake a comprehensive audit of the power infrastructure in the state revealed the poor state of the infrastructure. According to Idiaye, BEDC personnel on the field are unprofessional in their conduct

and openly engage the services of military personnel to intimidate and brutalise customers, noting, “This programme is coming at the right time as people in the state want improved access to power supply. “Nigerians want to have improved access to power supply and industries want to have electricity to scale up production.” Commandant General of the Nigeria Security and Civil Defence Corps (NSDC), Abdullahi Gana Muhammadu, urged the Federal Government to make electricity more accessible to the people as it will enhance the growth of the Micro, Small, and Medium Enterprises (MSMEs), create employment opportunities, and boost economy activities.”

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

8 BUSINESS DAY NEWS

C002D5556

DPR sanctions 50m barrels of crude in Q1 2018 OLUSOLA BELLO

s part of Federal Government effort to boost crude oil production, the Department of Petroleum Resources (DPR) in the first quarter (Q1) of this year sanctioned about 50 million barrels of crude oil production from various fields across the Niger Delta region. When this is translated into monetary value with average price of $70 per barrel, it comes to about $3.5 billion. The government stake in this would be about 60 percent based on her equity share in the assets if the whole volume is sold. However, Nigeria currently produces an average of 2.15 million barrels a day, including condensate, an improvement over the previous year when not much success was recorded in respect oil production. Also, about 80 acreages are currently under review and it is expected that the exercise would soon be concluded so that more crude oil can be produced for the benefit of the country. In addition, a total of 21 rigs were operational during the period under review, as some of the companies have had the field development programme sanctioned by the DPR. Moreover, the Federal Government recently re-

vealed plans to shore up oil revenue resources by increasing annual oil reserve to 1 billion barrels. Emmanuel Ibeh Kachikwu, minister of state for petroleum resources, while speaking at the Nigerian Content Seminar, said the Federal Government was determined to increase production, stabilise the economy, while also taking advantage of stability offered by the Organisation of Petroleum Exporting Countries (OPEC). In order to help the course of boosting oil production, the Nigerian Content Development and Monitoring Board (NCDMB) and the Oil Producers Trade Section (OPTS), the umbrella body of major international and indigenous operating oil companies, signed a Service Level Agreement (SLA) aimed at shortening the often protracted industry contracting cycle. With this, there would no longer be delay in execution of projects. The SL A commits the 28-member OPTS companies to comply with the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, essentially to submit to the NCDMB documents like their Quarterly Job Forecasts, Nigerian Content Plans, Bidders Lists, Nigerian Content Evaluation Criteria, Nigerian Content Technical Bids, among other

relevant information in relation to industry contracting and procurement cycles. On the other hand, the Board pledged to respond on specific timelines and committed that should it fail to meet the set deadlines, the companies could proceed with their tendering processes after duly informing the Board. Simbi Wabote, executive secretary of NCDMB, signed on behalf of the Board, while Paul McGrath, managing director of ExxonMobil Nigeria, signed on behalf of the OPTS. The SLA with the OPTS is sequel to the one entered into between the Board and the Nigerian Liquefied Natural Gas Company (NLNG) in May 2017, which was the first between a regulator and another entity in the Nigerian oil and gas industry. The executive secretary explained that the SLA with the OPTS was in furtherance of the Boardâ&#x20AC;&#x2122;s efforts to meet the target set by the minister of state for petroleum resources for the industry contracting cycle to be shortened to six months. This initiative is also in line with the Presidential Executive Order 001, which promotes Ease of Doing Business in Nigeria. Initiatives by the NCDMB had helped to cut the cycle significantly to 14 months from 24-36 months, obtainable in the past.

Tuesday 24 July 2018

BUSINESS DAY

C002D5556

COMMENT

comment is free

Tuesday 24 July 2018

Send 800word comments to comment@businessdayonline.com

Lagos ports gridlock: The folly of a nation

MAZI SAM OHUABUNWA OFR sam@starteamconsult.com

ast week, I was trapped for hours on the Isolo-Apapa Expressway in an unprecedented traffic gridlock. Many lanes of the so-called expressway were seized by articulated vehicles especially trailers carrying containers and fuel tankers, forcing other vehicles to drive against the traffic, in an effort to move forward since most of the articulated vehicles seemed stationary. Nigerian road users were sweating and cursing. A friend of mine who was riding with me in exasperation asked: “when will this war end?” I turned to look at him wondering what war he was talking about and what the situation we were in had to do with a war. “Which war are you talking about,” I asked him? “The Nigeria-Biafra war”, he replied with a frown on his face. Startled and wondering where he was going, I played along by providing him the obvious answer” My friend, the war ended about 58 years ago” He retorted “ yes, the physical aspect-shooting by soldiers at the war front may have ended in 1970 but Mazi, the war has been going on other fronts- economic, political, psychological etc” I turned on my seat to face him squarely as he went full blast to throw up all that he had in mind. The following narrative is a summary of the

STRATEGY & POLICY

MA JOHNSON Johnson is a marine project management consultant and Chartered Engineer. He is a Fellow of the Institute of Marine Engineering, Science and Technology, UK.

igeria, like most African countries, has long been a country of political troubles. Since independence on October 1, 1960, the country has gone through cycles of governance such that successive governments-military and civilian, have, according to them, done their best to develop the country. But their best have not provided the required economic development. All efforts to make the economy functional have stalled development in Nigeria as millions of people are unemployed. Today, managing Nigeria’s economy has defied all known theories in economics, says an associate of this writer who is a professor of economics. The nation’s economy is still fragile, and its management by the FG has to be monitored by the organized private sec-

conversation. He said that before the civil war, Nigeria had two main sea ports- Apapa and PortHarcourt. That was why the colonial government built two rail lines from the North to the South. The western line from Kano to Apapa-Lagos and the eastern line from Maiduguri to Portharcourt, with a cross from Jos to Kaduna, which linked the two lines. Both lines carried cargoes of groundnut, cotton, herd and skin from the north, tin and columbite from the middle belt to join jute bags of cocoa, rubber, palm produce, timber and coal from the western and eastern hinterlands to the ports in Apapa and PortHarcourt for export. Latter the ports in Calabar and Warri were developed to support the export of the newly discovered crude petroleum. The eastern ports of Portharcourt and Calabar served as major gateways for the import of textile including Indian madras, automobile parts, stock fish, medicines and other consumer commodities that the Igbo traded on, distributing them across the nation particularly to the middle belt and the far north with Aba & Onitsha as commercial centres where much of the bulk were broken. This commercial prowess combined with a sound agricultural base and nascent industrial complex spreading from the Trans-Amadi industrial Estate in PH through the Factory road in Aba and bifurcating into the Onitsha and Nnewi axis, made eastern Nigeria under the progressive government of Michael Okpara, one of the fastest growing economies in the world. Then the Nigerian Biafra war began in July 1967 and all that changed. First, shipments to the eastern ports were embargoed for strategic reasons. Largely, this was seen as necessary to prevent Biafra from receiving ammunition for prosecuting the war.

The truth is that the punitive policies against eastern Nigeria enacted during the war have not been fully lifted. Where they are said to be lifted, it is only in words, not in spirit Later it became necessary to prevent the import of food items so that Biafrans could be pressured by hunger to capitulate faster. Subsequently, similar embargo was placed on the airports in PH, Enugu and Calabar. When Biafra built new airports in Uli, Uga and elsewhere to ferry in food and other aids to help keep the starving Biafran children alive, the federal government did its best to either destroy the airports or disrupt any flights by the international relief agencies, especially the Red Cross and Caritas International. Thus as long as the war lasted, all shipment into and out of Nigeria was concentrated at the Apapa port. And when the war ended, and the pressure piled on Apapa, resulting in the famous cement armada & flour armada, that clogged the port; rather than reopen the eastern ports fully, the federal government preferred to build a new port around Apapa called Tin Can Island port forcing everybody from all over Nigeria to move into Lagos, whether you are exporting or importing. The mass exodus of many people from the south east and other parts of Nigeria and the continuous population explosion in

Lagos have their roots from this punitive policy measure. Some time later when pressure was mounted on the government to relax this policy and reopen the ports, it was discovered that the ports had silted and had become shallow to admit any big ship and the federal government has not found money to sufficiently dredge the ports to allow big ships berth at the eastern ports. Beyond this infrastructural handicap, the government of Nigeria and some of its agencies have restricted the importation of certain items to Apapa port, thus foreclosing the use of the eastern ports even if they get dredged by public or private effort. Some of the airports in the east are designated as International Airports but in essence are only international in name. So called international airports are de-marketed by the approving agencies. Some are called cargo airports and the only cargo they carry are boxes of easterners going home for burials or Christmas holidays. The truth is that the punitive policies against eastern Nigeria enacted during the war have not been fully lifted. Where they are said to be lifted, it is only in words, not in spirit. The result is that Nigeria is short changing itself. The amount of losses, importers and exporters are experiencing from the chronic logjam at the Lagos ports is huge and depressing the gross domestic product. For several months, an armada of heavy articulated vehicles in addition to causing untold hardship to road users are standing on bridges and flyovers. The damage these large stationary weight is having on the bridges must be enormous and soon we shall begin to feel their effects and pay the price. Despite previous repairs, the third mainland bridge may soon be closed for several weeks for repairs and only God knows what the traffic situ-

ation will be. The combination of the closure of the third mainland bridge, the restriction of movement by the several ongoing road projects in Lagos and the blockage of several roads and bridges by tankers and trailers waiting to enter the Lagos airports will create traffic nightmare of unimaginable proportions. People may try to deny this reality and say the policy has changed. But the test of the change of the policy is to see the eastern ports come alive. If the policy has changed, why is everybody still flocking to Lagos ports? If the policy has changed, why would traffic not be re-routed to the eastern ports to relieve the current stress in the Lagos ports? If the policy has changed why would importers and exporters not be encouraged to use those ports- sea and air. If the policies have changed why are the conditions for using those ports, even in their substandard states, including costs, levies and bureaucratic processes be so prohibitive? Nigeria is denying itself of the benefits of decentralizing port operations and other economic activities. Indeed when eastern Nigerians push for restructuring of Nigeria, part of their grouse is this 58 years shuttering of the eastern economic corridor except for oil & gas. As our people say, anyone holding someone on the ground is also holding himself down. When my friend finished this expose, I shouted wow! And then said a prayer: God please bring this war to a complete end in word and in truth. My friend said a loud ‘Amen’. When we looked up, the traffic had inched up a bit. As we drove on, I promised him I would report this interaction in my weekly column. This is just what I have done.

Send reactions to: comment@businessdayonline.com

Why Nigerians must take charge of their future tor to ensure that it does not slip into recession again. The debt of the nation is increasing, and at the same time the subsidy regime of the FG is back in a vicious form. Nigeria is in an economic dilemma, according a policy analyst. Nigerian and its foreign allies have always made all sorts of confidencebuilding assertions about what the near and medium-term future will bring. Some say Nigeria is an “emerging economic giant” alongside Mexico, Indonesia and Turkey. Others see the country as the “giant of Africa” because of its population of almost 200 million, strength of its military, abundant human and natural resources, the “big brother” role played in sub-regional and regional peace initiatives, and Africa’s biggest economy ahead of Egypt and South Africa. These are characteristics of Nigeria at the moment which needs to be managed well by visionary political leaders for a better future. It is difficult to predict accurately what the future of the country will be, if the fragile nature of the nation’s economy, high unemployment rate, and massive killings across some Nigerian states are not addressed squarely and timely. It has been reported that at least 1813 people have been killed in 2018 alone due to various reasons, according to Amnesty International. The result is that Nigeria has more than three million people displaced by conflict and violence, according to the

Internal Displaced Monitoring Centre and the Norwegian Refugee Council. With this staggering figures show is that Nigeria has Africa’s largest population of displaced persons and also tops the list of countries with the most migrants to Europe through Libya. If this poor narrative is not reversed, no one knows if our political leaders would be able to manage the country for a better future. Bearing in mind the level of insecurity within the country, an observer may predict that the younger generation has no future. Those who prophesy along this line, do so at their peril perhaps, due to error of judgment. The reason is that a straight forward extrapolation from the present to the future is very risky. Even though the past didn’t turn out well, it does not mean that the future of Nigerians can’t be better than what we imagined if we all act positively today. However, in the midst of insecurity in many parts of the country, President Emmanuel Macron of France paid a two-day visit to Nigeria between 3 and 5 July 2018. Addressing young African entrepreneurs in Lagos, Macron challenged the young generation to change the African narrative, in the areas of entrepreneurship, economy culture and sports amongst others. In Macron’s view, the new narrative is to be built now. And ideally, it is the responsibility of the young generation, according to Macron. “It is good for Africa and it is good for France because if Africa doesn’t succeed, France

and Euro will never succeed on the long run,” according to the French President. He further says that “for two very simple reasons, Europe is not an island and all this migration crisis is exactly due to the fact that we have a common destiny and second, because we have a very important African diaspora in France and the rest of Europe and they cannot develop themselves in France or in Europe if their country people don’t succeed.” Macron noted that the young generation has a lot of responsibilities and opportunities to build, innovate and take charge of Africa’s future. The only way the African continent can tackle its challenges including illegal migration is to improve its economy, and provide conducive environment where essentially the private sector can provide jobs for our graduates so that the younger generations will not take the risk of migrating to Europe through the Mediterranean in search of greener pastures. The world, and indeed, Africans look up to Nigeria to take the lead in political and socio-economic affairs of the continent. But for almost sixty years of independence, Nigeria is still demonstrating its potentials, not its greatness. As politicians align and misalign themselves into various coalitions, Nigerians are preparing to muster political leaders who have great esteem for their fellow citizens to take charge of elected and appointed offices come

2019 and beyond. We must redefine our culture. Culture plays a significant role in the nation’s quest for development. This writer observes that nation’s lacking appropriate culture for development remain poor. We as a people must eradicate those aspects of our cultural beliefs and practices which celebrate ignorance and which tend to stall our development. France and other European countries will continue to develop even if Nigeria is not prepared for development. Nigeria’s policy makers must come up with a strategic plan on how the nation is to educate the younger generation as this is the surest way out of poverty. The young generation needs a holistic education - academic, social and thinking skills. “Education is the passport to the future, for tomorrow belongs to those who prepare for it today.” Since no one has the blueprint of what the young generation will be experiencing out there, the best thing is to expose them to skills that will enable them to cope with the challenges of the future wherever they go. Nigerians cannot change the past, but we can take charge of the future of young generation so that they are productive citizens. Nigeria should not gamble on the future of young generation, it should act positively without delay.

Send reactions to: comment@businessdayonline.

Tuesday 24 July 2018

C002D5556

COMMENT

BUSINESS DAY

comment is free

Send 800word comments to comment@businessdayonline.com

[#StopTheKillings]: Would foreign banks be beneficial for Ethiopia? (1)

RAFIQ RAJI “Dr Raji is chief economist at Macroafricaintel. He was previously an Africa Economist at Standard Chartered Bank, London, UK. (Twitter: @ DrRafiqRaji)”

Introduction n June 2018, Ethiopia’s new prime minister Abiy Ahmed survived an apparent assassination attempt. The attack was not entirely surprising. Mr Ahmedhad been ruffling quite a lot of feathers. He purged the military hierarchy, instituted reforms at businesses owned by the military, and signalled the liberalisation of crucial sectors like banking and telecoms; if not for anything else, to ameliorate a perennial foreign exchange shortage. Fears have been raised about whether allowing foreign banks to participate in the Ethiopian banking sector would be beneficial to the country. Not that there was not already some representation by foreign firms. Some already operate representative offices, for instance. But the goal has always been to be able to operate fullyfledged banks. The Ahmed administration is a potential ray of light in

AYO ONIKU Dr Oniku teaches marketing at University of Lagos.

t isn’t breaking news any longer that Nigerian market is the new virgin to betroth in sub-Saharan Africa by retailing giants across the world. In the same manner that the year 2001 welcomed the GSM investors into the country likewise the economy is gearing up to witness reinvention and modernisation in the retailing sector only that the business environment is quite different in this case. The nascent retailing industry is largely characterised by factors that make it munificent and investmentfriendly for Nigerians to participate – technology, capital, manpower (to a certain extent), stocks, government environment, consumer factors, etc. Considering all these factors, it is obvious that average Nigerian investor and entrepreneur can easily walk in the terrain profitably if certain factors are recognised and adopted in the business. Importantly, unlike few sectors like telecommunication and oil and gas where Nigerian investors and entrepreneurs overtly rely on foreign investors for partnership or participation due to capital and technology required for a successful take-off and profitable operations. The retailing industry is quite different because of

this regard; albeit the government insists opening up the financial sector is not being considered at this time. Years ago, this might be taken with all seriousness. But the Ethiopian government rarely signals its policy drift. The recent positive policy moves were a huge surprise, for instance. Opening the gates In early June 2018, the Ethiopian government announced it would allow domestic and foreign investors to take stakes in Ethio Telecom, the state-owned telecoms firm and Ethiopian Airlines, the state-owned carrier. Other stateowned enterprises (SOEs) up for grabs are Ethiopian Power and Maritime Transport and Logistics Corporation. The state would still retain majority stakes in them, however. Regardless, it is a huge change in policy. In a speech to Parliament in June, Mr Ahmed suggested any sale would be gradual, however; over 10 to 30 years. He was probably being mindful of political sensibilities. A serious plan could not be that longwinding certainly. More importantly, as much as 40% of Ethio Telecom, which has some 60 million active subscribers already, could be sold to foreign operators like MTN, Vodacom and others who have long expressed interests in operating in the country. The government added a caveat, however, asserting it would need to do a study over a year or two before

China, hitherto a reliable foreign partner for the erstwhile socialist-styled Ethiopian government, has lately been less enthused. Perennial difficulties in securing foreign exchange and tapped out indebtedness by the Ethiopian government to its Chinese counterpart, are reported to be making the Asian nation slow down the pace of its investment any policy move. No such profound pronouncement has been made for the financial services sector talk, however. For the banking sector, there have been some participation by foreign niche players. In February 2015, Ethiopian banks launched mobile money services with the help of foreign fintech firms: “helloCash” by BelCash, a fintech firm based in The Netherlands and “M-Birr” by MOSS ICT, a fintech firm in Ireland. Another example of a foreign financial services company long operating in the country, albeit in

partnership with Ethiopian banks, is Visa, a credit and debit card company. Since 2004, it has been providing card services to customers of Ethiopian banks. Despite its vintage in the country, however, it has long asked for room to do more. And as early as 2015, the government indicated it wanted to develop a secondary fixed income market. There have been some changes in the financial sector, nonetheless. In June, a new governor was appointed for the National Bank of Ethiopia (NBE), the central bank. There is not much to suggest governor Yinager Dessie, who used to be head of the national planning commission, would be making significant policy changes. Much store is to be put in what Mr Ahmed says and does. And for the banking sector, there is not much as yet. It is certainly inevitable that full banking licenses would be granted to interested foreign banks at some point in the future; especially as the telecoms sector was much more coveted by the government. Besides, the government already allows some foreign participation in the banking sector. In April 2016, for example, the Ethiopian legislature made amendments to its banking laws as it joined the African Trade Insurance initiative. Some foreign banks seized the opportunity when the rules were first relaxed. The European Investment Bank opened an office

in July 2015, for instance; lending to mostly state-run infrastructure projects. So did South Africa’s Standard Bank months later in October 2015. Other foreign banks in Ethiopia are Commerzbank, a German bank, the Export-Import Bank of India, Bank of Africa, and so on. The trailblazer was Turkish state-owned Ziraat Bank, however, opening an office in April 2015. That said, there was similar enthusiasm about these sectors being opened up in early 2015. At a summit in Addis Ababa, organised by The Economist, a British newspaper, it was the telecoms sector that seemed like the government had no plans to consider foreign investment at all. Instead, it indicated that it would be more receptive to liberalising the banking sector. That the case is now the reverse, points to the spontaneity and unpredictability of the Ethiopian government ; irrespective of who is in power. Besides, any liberalisation of the banking sector would have to be clear on whether banks would still be required to deploy almost a third of their funds to government bonds. There is also the fear that any privatisation programme could be marred by corruption, as has been the case in other African countries, and in fact, elsewhere. Note: the rest of this article continues in the online edition of Business Day @ https://businessdayonline.com/

Send reactions to: comment@businessdayonline.com

Making Indigenous Retailers Competitive prevalence of certain munificent environment earlier mentioned. Thus, one right step that Nigerian investors and entrepreneurs alike have taken is the readiness of participation in the sector which is evidenced across the country. Better still the Nigerian investors are in right position to provide strong competition for existing and would-be international retailers in Nigerian market. However, if indigenous retailers fail to understand to leverage on and explore the existing “Nigerian” competitive advantages available in the economy but rather pursue conventional retailing strategies that international competitors are well exposed to and capable to practice over the years may turn disadvantaged to indigenous retailers. In order words, indigenous retailers are not in better and stronger position to compete with international giant retailers on the same playing ground of conventional strategies because the capital, technology and manpower to do so might not be in their vaults. Based on different studies, indigenous retailers have the following competitive strategies to embrace and entrench: • Specialisation is a key to gain competitive advantage in the sector. It is a practice that is widely embraced across the world especially for firm that wants to enter on a small scale or to serve a segment in a market. So far, there are certain areas of retail-

ing that the economy is hungry for that indigenous entrants can focus on e.g. grocery, pharmacy, stationery, electronics, etc. Thus, instead of engaging in supermarket, departmental or superstores, indigenous entrant may fully devote resources into a specialised retailing to be competitive in the industry. In reality, Nigerian market is highly deprived in this area unlike what you see in other economies e.g. Walgreens Pharmacy in the USA; Dixon focuses on electronics in UK; Whole Foods market is a popular food store in both USA and UK markets; but SLOT is presently leveraging on the strategy in Nigeria Telecommunication sector. • Retailer’s brand. The opportunity herein is that a retailer establishes an agreement with a manufacturer for supply of product branded in retailer’s name and such brand is available cheaper on the shelf compared to other manufacturers’ brands. Quality and performance are maintained and cost is saved in distribution and promotion because such product is exclusively available on the retailers’ shelves. Brands like carbonated drinks, confectionery, meats, fashion line, etc are popular with the strategy. For instance, Sainsbury’s pork and sausages are exclusively branded for the retailer and they command high patronage among consumers because of quality, taste and, hence, premium price. • Local needs recognition demands that retailers focus on the

peculiarity of the local consumers or residents in terms of sociocultural and traditional needs. For instance, it is of no strategic important for a retailer or grocery in the South-East to emphasise Garri-Ijebu when it is certain that there are limited clients for such except store branch is located in area dominated by the Yoruba. One fact about Nigerian market is that both consumer demand patterns and buying behaviours are largely a reflection of both geographical and socio-cultural factors. So it isn’t a misnomer in Nigerian market to see a group of consumers from the same geographical zones or cultural background to share the same market behaviours. • Physical design/aesthetic is one of the fundamental requirements in retailing management and strategy. In recent time I have seen and visited indigenous supermarkets in Nigeria that is not different from popular stalls in open market except the assortments on display. Besides, the assortment and proximity, consumers are overtly motivated by aesthetics of supermarkets and stores. In fact, average shopper looks for a store that provides relaxation and pleasure beyond shopping, and in many instances window shopping is therapeutic to many shoppers and it is possible where exterior and interior designs are attractive and pleasing to eyes and body. Importantly,

studies have shown that there is a correlation between window shopping and patronage. • Selling skills are not well-practised among indigenous retailers’ staff towards shoppers and this is strategic to customer retention. This may not be unconnected to a practice of sellers’ market and orientation that once dominated marketing practice in Nigeria. A typical shopper knows that courtesy and treatment received between indigenous retailers and foreign retailers are quite different. The Nigerian employees with foreign retailers are trained on the global best practice while indigenous retailers’ disposition to training and development is still very poor. The fact is that retailing is more strategic in marketing practice because it is the last-end of distribution and channel structure that deals with final consumers. • Other strategies that would work to compete effectively with foreign retailers in the economy are: i. Expansionary strategy that is built on culture of assortment and customer psychology ii. Alliance with local firms for products that meet target market needs and local shoppers’ peculiarities iii. Strategic handling and operation of sales promotion iv. Cost effective strategies

Send reactions to: comment@businessdayonline.com

BUSINESS DAY

C002D5556

Editorial PUBLISHER/CEO

Frank Aigbogun EDITOR-IN-CHIEF Prof. Onwuchekwa Jemie EDITOR Anthony Osae-Brown DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Patrick Atuanya EXECUTIVE DIRECTOR, SALES AND MARKETING Kola Garuba EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, DIGITAL SERVICES Oghenevwoke Ighure ADVERT MANAGER Adeola Ajewole MANAGER, SYSTEMS & CONTROL Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso SUBSCRIPTIONS MANAGER Patrick Ijegbai CIRCULATION MANAGER John Okpaire GM, BUSINESS DEVELOPMENT (North)

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Tuesday 24 July 2018

Fast track budget implementation

he breach between budgetary estimates and implementation in Nigeria seems to be perennial. Because of the role and importance of budget to economy, delay in budgetary implementation has become a growing concern and a contributory cause for poor economic development in Nigeria. In Nigeria, it is not unusual to hear of frequent delays in budget preparation by the executive, delays in budget approval by the legislator, and again delays in the budget execution. The President submitted the 2018 budget to the National Assembly in November 2017 and it took the lawmakers six months to return the budget to the president. Perhaps, the outcome of the delay was the addition of N500bn, raising the figure from the proposed N8.6tn to

N9.1tn. In itself, budget is usually a fundamental framework for strategic planning and decision making by all the key players in the economy. Its delayed implementation is already causing dislocation in the economy and negatively affecting the wellbeing of the people. Delays in budget implementation means funds for essential sectors of the economy are not released, key infrastructure projects, especially human and capital development, are unnecessarily delayed and most times, salaries and pensions owed. For a country struggling with perennial unemployment and poverty, a speedy implementation of the budget will go a long way in creating employment and encourage productivity in the economy generally. What is more, predictable and timely implementation of the budget will enable

the private sector to harmonise its operation in line with government plans and aspirations, all geared towards helping the economic growth of the country. Delay in budget implementation often has deleterious effect on the capital market. The market has been on a losing streak of late and the loses could not just be attributed to profit taking alone but the general lack of enthusiasm on the economy due largely to the absence of a budget almost six months into the fiscal year. The budget may have come in late, but a lot can still be achieved within the time left if the government is determined to reverse the negative effects the absence of a budget has had on the economy all these while. As the head of the executive who oversees the implementation of the budget, President Buhari should realise the enormous tasks ahead of him and mobi-

lise his team to ensure that there is a full and speedy implementation of all the provisions of the budget especially those to do with public expenditure. Heads of ministries, parastatals and agencies must be made to realise the urgency of the moment, and get to work to end ensure they work with the president to deliver on the budget to provide succour to the long-suffering masses of the country. For the future, the executive must determine to prepare and submit the budget to the National Assembly well in advance. This will help to avoid rush hour budget preparation that extends to the next fiscal year and give the National Assembly enough time to thoroughly consider the budget, get all ministries, departments and agencies to defend every provision in the budget and get it passed well on time for timely implementation.

HEAD, HUMAN RESOURCES Adeola Obisesan

EDITORIAL ADVISORY BOARD Dick Kramer - Chairman Imo Itsueli Mohammed Hayatudeen Albert Alos Funke Osibodu Afolabi Oladele Dayo Lawuyi Vincent Maduka Maneesh Garg Keith Richards Opeyemi Agbaje Amina Oyagbola Bolanle Onagoruwa Fola Laoye Chuka Mordi Sim Shagaya Mezuo Nwuneli Emeka Emuwa Charles Anudu Tunji Adegbesan Eyo Ekpo

ENQUIRIES NEWS ROOM 08022238495 08034009034 Lagos 08033160837 Abuja

}

ADVERTISING 01-2799110 08116759801 08082496194 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 www.businessdayonline.com The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 LEGAL ADVISERS The Law Union

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

OUR CORE VALUES

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

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

SO&U lands multimillion Naira Mitsubishi brands marketing deal Stories by Daniel Obi Media Business Editor

O&U, a full service Nigerian top marketing communications company has secured multimillion Naira marketing deal for Japanese Mitsubishi products in Nigeria. The business win followed a hard fought pitch process with other agencies since May this year for the Mitsubishi brands campaign. Massilia Motors Limited, representative of Mitsubishi Motors in Nigeria had last three months thrown open the pitch to creative marketing communication agencies as part of its plan and determination to further project the image of Mitsubishi and boost sales of the Japanese brand of vehicles including popular Pajero in the thriving Nigerian auto market. After the competitive presentations by the contending agencies, it was gathered that the management of Massilia Motors Limited was convinced by Udeme Ufot led SO&U marketing approaches and its 360 execution plan involving TVCs, Print, Out-

Udeme Ufot , group CEO,SO&U

of-Home, Digital, Experiential and direct marketing. The company which has worked for other multinational brands was therefore chosen for the task. Massilia Motors Limited, established early last year, is a joint venture between CFAO and KewalramChanrai Group. In the past, Mitsubishi brands were marketed by the two distributors – CFAO and Kewalrams which created challenges on how to create

a common ground to nurture the brand and make it very attractive to its target market. The two companies resolved this challenge by coming together to form Massilia as sole distributor of Mitsubishi vehicles in Nigeria. Mitsubishi perhaps knows it has good products that could perform better than it was doing in terms of market share, sales and profit, which necessitated the pitch, a source told BusinessDay.

It is expected that SO&U which has successfully worked on brands such as Guaranty Trust Bank, Access Bank, Guinness Nigeria, Procter & Gamble, leveraging local relevance will bring such experience to bear on Mitsubishi brands. The company which deepened Guinness brand with famous ‘Udeme’ campaign said it has purpose of building brands that live in the consumers mind, influence their lifestyle and at the same time deliver profit to their clients. When contacted on the new business, Biodun Adefila, Executive Director – Brand Management at SO&U confirmed the business and relished that the industry will see many more of these wins as this is just the beginning. She encouraged Nigerians to be on the lookout for a definite change in the way they perceive and have related with Mitsubishi brands thus far. She said that Mitsubishi brands have a lot of plus when compared with others, but “the tough luck was that not much of these great stories about the Mitsubishi were coming out. “Our task is to pick up the

exciting stories of performance, ruggedness, durability, attractiveness and dependability about Mitsubishi and build new personae for it. Let people know that here is an absolutely reliable and beautiful vehicle and very importantly, the pricing is unbelievable. It’s great value for money”. On what gave SO&U the competitive edge, Adefila who said that the win has placed SO&U very high in the industry with its creativity that speaks for itself said the competitive edge for SO&U was a deep understanding of the brief and how it went about the details of execution. “Following our laid down structure of work process, we first of all went speaking with current users of the brand, those who like it and those who have heard about it, experts in the industry and car enthusiasts. We got all the data but the clincher was how we interpreted the data and information to become authentic insight. Even the presentation demonstrated the passion and excitement we felt about the brand. We didn’t just present. We delivered the message”, she said.

Advertisers tasked to address industry challenges, discover new business opportunities …Elect Ikechi Odigbo as president, Steve Babaeko, VP of AAAN

ver the years, Nigeria’s advertising practitioners have made significant impact on growing the economy but to scale up this contribution, they have been challenged to frontally tackle issues facing the practice and also discover new grounds for business towards economic growth. In spite of the industry’s substantial role in the economy, the advertising community is suffering from government considerable nonrecognition and patronage, client debt, dearth of talent and unhealthy competition among others. Leading discussion on ‘Growing the Economic Pot: The Role of Advertising’ at Association of Advertising Agencies of Nigeria, AAAN, meeting last weekend in Abeokuta, Ogun State, Chairman of Channels Television, John Momoh believes

that practitioners must brace up and be ready to frontally confront the challenges facing advertising practice in the 21st century. Momoh, who was represented by another veteran in the nation’s media industry, Kingsley Uranta, also encouraged advertising practitioners to leverage the opportunity technology has provided to further enhance their businesses so that they can sustain and boost their contribution to the growth of economic pot.

According to him, advertising may not be experiencing the best of times, but said there are still opportunities that could be explored to actually halt the declining fortunes of the multi-billion naira industry. Similarly, the Publisher of Business A.M, Phillip Isakpa argued for a paradigm shift in the practice. He encouraged them to discover and explore new grounds for opportunities instead of waiting, endlessly, to be contacted for pitches by

clients and government. He directed their attention to SMEs and agriculture, regarded as the backbone of any economy, stating that advertising practitioners had not done enough towards encouraging SMEs to really harness their potentials. “We all know that the SMEs are the backbones of any economy, and if the dream of growing the economic pot is to be realized, SMEs should be given maximum opportunities to harness their potential”. On Agriculture, he said that despite the steady growth the nation’s agricultural sector seems to be recording in the past few years, advertising practitioners had not done enough in that sector to grow the economic pot. Isakpa also regretted that the advertising practitioners failed to leverage the opportunity in economic rebasing of 2014 which saw Nigeria’s GDP hit $510 from $270 and be-

came the largest economy in Africa. He said they could have leveraged the opportunity to attract more investments in Nigeria. In his contribution, Lanre Adisa, Chairman of the Noah’s Ark Communications Group called for a self-appraisal among practitioners in the industry. “We need to re-appraise our roles as practitioners. We need to look out for opportunities in the industry that we can leverage,” he stated. Kelechi Nwosu, former president of AAAN and CEO of TBWA said that advertising practitioners need to be more entrepreneurial to significantly impact the economic pot. Earlier, the immediate past president of AAAN, Kayode Oluwasona described the theme of the lecture as part of the association’s efforts towards enhancing the fortunes of the country, by ensuring practitioners play a major role in growing the economy.

Chivita wins MarketingEdge Outstanding Juice Brand of the Year Award

t the recently held Ma rket i ng Edg e Awards in Lagos, Chivita emerged as the Outstanding Juice Brand of the Year. Having won the award in 2016, the brand’s recognition once again highlights its consistency in the juice beverage category. For keen industry watchers, the Marketing Edge Awards offered a veritable platform to celebrate creativity, innovation, marketing and sustainability for brands, corporate

institutions and distinguished personalities. According to the organizers of the Marketing Edge Awards, the nomination of Chivita for the Outstanding Juice Brand of the Year Award was a result of painstaking review and assessment of the patriotic contributions of the brand to the growth, development and continuing evolution of the juice segment of the Nigerian FMCG industry.

World Friendship Day: “33” Export unveils 2018 edition of ‘City of Friends’

igeria’s beer brand “33” Export from the stables of Nigerian Breweries, has unveiled plans for the 2018 edition of its signature friendship event “City of Friends”. The event is in commemoration of the United Nations’ World Friendship Day Widely reputed for its strong friendship credentials, “33” Export has consistently deepened friendship across the nation by organizing several consumer activities that seek to promote the culture and spirit of friendship and conviviality. The premium beer brand has taken great pride in creating unique friendship experiences for consumers across the country.

BUSINESS DAY

Tuesday 24 July 2018

C002D5556

Marketing&Pr

Jumia merchants acknowledge business boom through the online platform The ability to scale business attracted Chinonso Olejeme and Trust Osunde to register on Jumia as part of 10,000 vendors nationwide. While Chinonso deals on household electronics, Osunde who believes in improving Nigerian youth mindset is managing partner of 21 Attire dealing on female wears. Both confessed that partnering with 6- year old Jumia has assisted the growth of their business as sales have increased phenomenally. In this interview, Chinonso, 2013 graduate of economics from Unilag talks more on Jumia partnership and business environment. Excerpts. Could you explain your role as vendor in Jumia value chain? have been partnering with Jumia as merchant in the last 3 years. Since then, it has been a success story even though there have been some challenges. Could you compare business now and before you joined Jumia? I have brick and mortar store in Ejigbo and Alaba in Lagos selling household electronics to resellers and end users. Prior to joining Jumia, we were doing well but now we are doing greater. Jumia is magic and phenomenal because our sells have skyrocketed by about 400% in the last three years. We sell what we have in the offline business and this has limitation in terms of consumers accessing them, but with Jumia there is big magnitude of exposure to consumers. Sometimes we find it difficult to cope with sales. The question is not about sells but how much can the seller handle. Six years ago, buying online was not popular, so were there hesitation to joining Jumia for online sales? Before joining Jumia, I had smaller online shop but it was not like Jumia. Therefore there was this hesitation to joining Jumia initially. In my online shop we hardly make big sales but when I joined Jumia, sales started increasing. On delivery of the goods, I have some people working with me and what we do is to push the ordered goods to Jumia hub and the hub delivers the goods. What kind of support do you enjoy from Jumia? Jumia has supported my busi-

Chinonso Olejeme

ness in terms of sales. My income has grown in the last 3 years. Jumia is God sent to my business. In terms of loan, there is Jumia loans where the vendor secures loans as little as 4% per month flat. With that loan I am able to source for more goods and grow my business. With your growing volume sales, have you been able to attract more businessmen into Jumia partnership? Some of my relations are already on Jumia. I have four different subsidiaries and they are on Jumia and in Alaba most sellers are on Jumia. On quality, mind you that there are lots of brand in the market and before you upload any item, it must meet Jumia standard. The issue of quality is already taken care of before it is uploaded. If you are caught in malpractices, you will be penalised or lose your license.

The online trading is not growing as much as it should, perhaps due to data cost and traditional behaviour of consumers who want touch and feel, where do you see online business in the next 10 years? Many people may not shop online now but as time goes by, many will shop online. The business has not really taken off. Really joining Jumia has been phenomenal to my business. Prior to joining Jumia we were making about N300,000 but now we make about N2m in a month as profit. What are those challenges you encounter in the online trading? We have challenges and this is partly because of the environment. Abroad, there is return policy where a customer sees it and rejects. Jumia also has 7 days return policy. As a vendor this is big chal-

lenge to us as some of these items are not returned in good condition when they left the shops. Another challenge is that sometimes some customers don’t show up to pick their orders. There is also the challenge of some customers saying that they were trying the system to check whether it works as they really didn’t want to buy anything. These challenges are not good for business and Jumia is working on them. Sometimes, Jumia has to blacklist some customers. On price variation, especially during Black Fridays, how do manage the cut in prices as a business? Price is key to any business. When a customer goes to Jumia, the customer can see all prices of a product from one spot unlike offline shop where the customer has to move around comparing prices. Price is important to us as the products are the same. On Black Fridays, Jumia subsidises some of these products and this is a way of saying thank you to customers. On Black Fridays, we are equally encouraged to reduce profit margins to draw more customers. Government policies are important to businesses anywhere, where do you think government can come in through policies and regulations to enhance this business? It is quite easy to set up your business or be part of Jumia family but many people have challenge of funding to source goods to sell. Government can partner with Jumia to give loans and the beauty of it is that the applications of the loans are monitored.

PLAN tackles postharvest loss through capacity building

he Postharvest Loss Alliance for Nutrition (PLAN) project, an initiative of the Global Alliance for Improved Nutrition (GAIN) recently organized a three-day training workshop on “Proximate Processing Technologies & Methods for Tomato and Plantain” in Lagos. The training workshop funded by the Government of The Netherlands to educate actors and stakeholders in the fresh fruits and vegetables value chain on ways to reduce postharvest losses attracted about 70 participants including entrepreneurs, cooperative societies, research institutions, universities, polytechnics, state agricultural development programmes, financial services providers and regulatory agencies. The workshop content was designed to help the participants acquire the essential knowledge and

Participants displaying their certificates after the three-day capacity building/training workshop on ‘Appropriate Processing Methods and Packaging Technologies for Tomato.

skills to set up and operate smallmedium scale processing/packaging operations in their different locations and was facilitated by Duro Kuteyi, CEO of Betamark Production Company Limited. Augustine Okoruwa, the Senior Project Manager, PLAN said in a statement “The project - Postharvest Loss Alliance for Nutrition, is predicated on the fact that currently in Nigeria, we produce large quantities of fruits and vegetables but almost 50% of what is produced is lost after harvest, so we need to reduce these losses and return them back to the supply chain to reach the tables of consumers.” Speaking further he said “We identified three intervention points in the supply chain of fresh fruits and vegetables; the lack of cold chain storage and logistics, inadequate crating & packaging as well as inadequate

food processing facilities. One of the interventions is proximate processing of fresh fruits and vegetables which means processing them close to where they are produced, thereby adding value to the produce so that they are not wasted”. “If tomato and plantain are processed into other usable forms with good nutritional value like tomato juice, paste, puree and unripe plantain flour and chips, that would help reduce postharvest losses of these perishable commodities. This training is an avenue to sensitize people in the postharvest value chain, to ensure that these nutritious foods are not wasted but processed into value added products. The more we have people who embrace the value addition to our perishable commodities and produce, the better we are able to make the products available throughout the year”.

Rotary Club of Lagos supports Onikan Health Centre with N4m equipment

n continuation of its humanitarian service, Rotary Club of Lagos has donated medical equipment valued at about N4m to Onikan Health Centre and Maternity Hospital. The equipment include extended collapsible stretcher; nebulizer machine for asthma treatment; suction machine, used to remove substances such as blood, saliva, mucus, and vomit from a person’s airway. Other equipment includes adult weighing scale; Paedtraic weighting scale; digital sphyg among others. The equipment is in support of the efforts of government and the hospital in tackling health challenges and reducing infant and maternal mortality rate in the country. World health authorities say Nigeria has the world’s third highest number of new born babies’ deaths with close to 10% of infant mortality. Presenting the equipment, the Rotary Club of Lagos, Ehi Braimah said the equipment were based on the needs assessment conducted last year in the hospital He said the club will continue to play its role in ensuring a lasting impact on people’s lives stating that “whatever the club can do in the area of child and maternal health is not too much” Also speaking at the equipment presentation, the visiting District Governor of Rotary International 9110 Nigeria, covering Lagos and Ogun states, Kola Sodipo who said his visit was to strengthen the club in its humanitarian endeavours appreciated Rotary Club of Lagos for the donation and charged the hospital to put the equipment to good use.

Multichoice seeks to fill the gap in Africa’s film, television industry

he inaugural MultiChoice Talent Factory (MTF) academy has received an overwhelming response with over 3100 entries to the call to entry campaign which closed on the 5th of July 2018. “The extensive response we have received from across the country indicates that there is a tremendous need for a comprehensive educational programme of MTF’s magnitude,” says John Ugbe in a statement. “It also illustrates that emerging African creatives, are eager to further their post-school education, as well as advance their skills and industry experience, but are not always financially equipped to follow their passion,” he continues. During the selection process, which is currently underway, 20 of the most noteworthy candidates will receive the opportunity to hone their television and film production skills during the year-long, funded programme that begins on the 1st of October 2018.

Tuesday 24 July 2018

BUSINESS

COMPANIES & MARKETS

DAY

Passage of fiscal framework bill will unlock investment into the offshore oil sector

Pg. 16

CO M PA N Y N E W S A N A LY S I S A N D I N S I G H T

ARM Life repositions for growth, records 295% PBT …to launch four new products soon MODESTUS ANAESORONYE

RM Life Insurance, a subsidiary of Asset & Resource Management Holding Company (ARM Group) has repositioned for growth, moving the company from a loss position of N500 million in 2015 to N 486.9 million at the end of 2017, and now set to play big in the nation’s insurance space. Having used the last two years from 2015 to 2017 to restructure, the life specialist company is ready to bring innovation in the market with set of new products, technology driven distribution channels, as well as new outlets. Stephen Alangbo, managing director/CEO of the company joined by its top management team, said the company is now ready to deliver new consumer experience with innovative products and efficient claims services. Addressing journalist at the Company’s corporate head office in Lagos, Alangbo said the focus of the company is retail, and so have perfected plans to drive the process with a lot of investment in technology, agency network, aggregators as well as partnerships, across the population segments and different parts of the country. The Company’s gross premium written increased by 31.5 percent to N3.62 billion in 2017 from the N2.75 billion generated in 2016. The sustained focus on growing poli-

ollowing calls for Pensions Fund Administrators to invest the burgeoning pension funds into infrastructure development, Dave Uduanu, managing director/ CEO, Sigma Pensions has said that PFAs are keen on investing in infrastructure but can only invest in investable infrastructure instruments that can guarantee their retirees funds. He said this on the sidelines of the maiden edition of Sigma Pensions Business Roundtable held in Lagos, where stakeholders deliberated on two themes: ‘Opportunities and Pitfalls of Alternative Investing in Nigeria’ and ‘Nigeria Under a Rising Oil Price Picture and Increasing Political Risk.’ Uduanu said: “The roundtable is the first in the series of thought leadership that Sigma Pensions is putting in place to deliberate on key issues within

cyholder’s fund, particularly in the individual life segment, the disciplined risk management practices and investment management strategies, enabled the company to return a profit before tax of N486.9 million for the year 2017, against N123.2 million in 2016, representing an increase of 295 percent increase over the previous year, the company said. During the year a total of N412 million was paid out as claims to policyholders, further underscoring the company’s commitment to prompt claims payment, and efficient customer service. On the balance sheet side, total assets grew by 27 percent

to N16.13 billion in 2017 from N12.71bn recorded in 2016 underscoring the success of the company’s investment management strategy and culminating in 18 percent increase in shareholders’ equity to N3.23 billion, up from N2.75 billion achieved in 2016 “As ARM Life progresses in its quest for leadership in the retail segment of the market, we remain mindful of the importance of building a sustainable business that will continue to engender the trust of our clients and, other stakeholders. The Company is on course to launch new products specifically designed to provide

insurance services for the retail segment of the market.” Despite the challenges in the economy, the Company highlighted huge opportunities in the insurance space, which will be explored towards continuously increase values to all stakeholders. “We remain focused on the implementation of our strategic objectives. Some of the objectives are centred on product and service innovation to improve customer experience and to cater for their evolving needs; focus on digital transformation to improve operational efficiency; and increasing distribution channels and market reach.

CeBIH to leverage digital solution to promote financial inclusion HOPE MOSES-ASHIKE

ommittee of E-Business Industry Heads (CeBIH) will promote digital solutions targeted at the bottom of the pyramid in a bid to expedite access to financial services across the country. Newly elected chairman of CeBIH, Stanley Jacob stated this in his acceptance speech at the election of new executives held in Lagos at the Keystone Bank headquarters. Stanley, who is also the Head of Consumer Distribution at Ecobank Nigeria said the new executive will pursue three broad agenda namely financial inclusion, digital security and strengthened collaboration amongst industry stakeholders. He stressed that CeBIH, under his leadership, will work tirelessly with other stakeholders to reduce financial exclusion which currently is over 40 percent in Nigeria as well as bridge the wide digital divide in the country. “As CeBIH we will actively collaborate with industry to provide the needed financial services at the right pricing to the bottom of the pyramid. We will also ensure adequate capacity building for all stakeholders to equip them in tackling the

exclusion challenge”. “CeBlH will pull industry resources and work with the regulators to promote an industry approach for combating cyber-security and payment frauds. Financial literacy campaigns and robust customer education will also be a key tool to achieving this. “This new Executive Council will strengthen collaboration by promoting the Shared Agency Network Facility (SANEF) with a view to ensuring that the expected benefits are delivered to consumers; partnerships with other financial institutions (OFIs) and FinTechs to deliver improved financial services; Research and case studies to drive emerging payments”, he said. Immediate past chairman, CeBIH, Dele Adeyinka charged the new executives to continue with the mission and vision of the group, which is using collaboration with drive financial inclusion and adoption of electronic payment, which are what CeBIH stands for today. He noted that under the leadership of the outgoing executives, CeBIH reached out to various industry stakeholders and this initiative yielded results which became evident through better engagement of CeBIH in issues pertaining to policy formulation in the industry”.

Nestlé Nigeria CEO appointed VP at NECA ENDURANCE OKAFOR L-R: Mark Collier, chairman, Sigma Pensions; Doyin Salam, senior fellow, Lagos Business School/guest speaker; Vivan Shobo, CEO, Agusto & Co Limited; Dave Uduanu, MD/CEO, Sigma Pensions, and Michael Larbie, MD/CEO, Rand Merchant Bank Nigeria Limited, during the 2018 Sigma Pensions business roundtable in Lagos. Pic by Olawale Amoo

Sigma Pensions boss canvases for investable infrastructure instruments for sector’s funds MODESTUS ANAESORONYE the investment space in Nigeria. As you know, we are one of the five biggest PFAs in Nigeria, as we manage money for a lot of people and they often wonder what their money is being used for, but more importantly, how do we create value for our customers?” “The conference is to highlight the macro risks that the country is facing as a build up to the elections in spite of the high oil prices. The second was on private equity, which we think is quite germane because the banking sector is starved of capital, they are also not lending

anymore and the other source of capital are pension funds and insurance companies, but according to our regulations the only way we can invest in the real sector is through private equity fund. So we thought we should discuss the challenges of investing in private equity, bring some experienced practitioners in the industry to the roundtable to discuss and articulate ways that we can increase the penetration of pension funds in private equity.” “The first takeaway is that it was well received; the second is that we should do more because oftentimes people think everyone knows what the issues are, but they actually don’t. But more importantly, is the fact that we

have started a conversation between the pension fund managers and the private equity firms that will lead to more investment of pension fund in private equity and more investment of private equity in SME and growing companies.” Furthermore, on investing in infrastructure, he said: “Key issue with diversification is unavailability of investment instruments. One of the key instruments we could invest in as a means of diversifying the portfolio, infrastructure is not investible. When we say it is not investible, it means we don’t have instruments through which we can invest in infrastructure, get a good return and get the money back.

auricio Alarcon, Nestlé Nigeria’s managing director /CEO has been appointed the second Vice President of Nigeria Employers Consultative Association (NECA). The announcement was made at the Annual General Meeting (AGM) of the association in Lagos. Alarcon has been involved in the direction of the association for the past one year as a member of governing council. He will play a key role in the governing council and management committee. NECA is committed to building a vibrant and sustainable Business Membership Organisation that is responsive to the needs of its members. It works towards this commitment by providing advice, guidance, training and development programs. Since its inception, the association has grown to become the voice of business in the promotion of an enabling environment for

enterprise competitiveness and growth. Speaking during the AGM, Olusegun Oshinowo, director general of NECA said, “ Alarcon will no doubt lend his wide ranging industry experience towards enhancing NECA’s role of providing consultation and advisory services as well as promoting the development of the workforce of our members and other organisations. We are happy to have him on board.” On his part, the MD/CEO of Nestlé Nigeria said, “I am thankful for NECA Board’s vote of confidence in electing me as 2nd Vice President. This is a welcome opportunity to continue to work within the association to meet its objectives which are aligned to our commitment at Nestlé to provide our employees with good working conditions, a safe and healthy work environment.” An engineer by profession Mauricio ALARCÓN has over 20 years of industry experience. He started his career in an industrial group and then worked in the banking sector before joining Nestlé in 1999.

BUSINESS DAY

C002D5556

Tuesday 24 July 2018

COMPANIES & MARKETS Nigeria’s oil industry is fast losing its competitive advantage. The country has lost market share in the global LNG destinations and rely heavily on imported fuel. Are these real issues to be worried about? rom a general business environment perspective, any foreign investor you speak to about doing business in Nigeria will outline numerous challenges ranging from the threat of crime, and associated need for security countermeasures, lack of essential infrastructures, congestion of the ports, general atmosphere of corruption and weak judicial and law enforcement infrastructure. All these border on peculiar risk and cost elements that erode competitive advantage. For the oil and gas industry, the elephant in the room at the moment is the PIB, the failure to deal with this legislation has caused the country so much loss of investment opportunities. Yes, the petroleum Industry Governance Bill has been passed, a good starting point indeed, however much of the knotty and controversial issues lie in the unpassed components of the legislation. Talking about gas, it is the energy of the future despite the threat of alternative energy sources. Besides the use as energy source, gas is in high demand for industrial processes as feed stock for chemicals and fertilizers. The country’s gas potentials are enormous. This presents a good opportunity to complement revenue from oil exports for economic development if well managed. China and the rest of Asia are driving growth in the demand for gas, due to growing economies and effort to improve air quality. Nigeria was ranked the fourth largest LNG exporter in 2016 according to world LNG report. However, delays in taking final investment decisions (FID) in various LNG projects in the country has started eroding our

Passage of fiscal framework bill will unlock investment into the offshore oil sector Moritz Abazie is the Chairman of Port –Harcourt based Strides Group and CEO Strides Energy and Maritime Ltd. In this interview with BusinessDay, he shares his thoughts on issues facing the oil and gas sector, especially insecurity, the PIGB and impact on the oil servicing industry. Excerpts…

Moritz Abazie

market share in the global market. While we are going slowly on these, the United States, Australia and Russia are ramping up to take advantage of the growing demand. The International Energy Agency disclosed in its latest gas market report “Gas 2018”, that the USA will account for about 75 percent of global LNG export growth by 2023 and will control 20 percent of total market share. By 2016, USA had 4 percent of the market share and occupied the 16th position while Nigeria occupied 4th position in global supply market size. It is noteworthy though that the Nigerian Liquefied Natural Gas Company N-LNG, signed its engineering design contract for Train 7 construction last

week , this is in preparation for the signing of final investment decision (FID) later in the year, this will increase its production capacity from 22 million tonnes per annum (MTPA) to 30 MTPA, source progress no doubt. The House of Representatives recently passed the Petroleum Industry Governance Bill. But, there are some aspects of the bill that are yet to be passed. How would this delay affect the operations of oil serving companies in Nigeria? The PIB issue has been on for about 17 years now; this is quite strange considering the obvious benefits of the proposed bill, whose aim is to increase transparency and

Experts call for reassessment of economic policies to drive job creation AKINREMI FEYISIPO

conomic and policy experts at a two- day dialogue on job creation in Nigeria posited that the country’s economic policies has failed to translate to an increase in jobs, saying that the unemployment figures in the country continue to soar . The experts drawn from the public and private sectors including the academia and development agencies noted that there was the need for urgent and re-assessment of

Nigeria’s economic policy to ensure that growth addresses the challenges of unemployment and job creation in the country. In their separate addresses at the dialogue jointly organised by the Ibadan School for Government and Public Policy (ISGPP),the United Nations Economic Commission for Africa (UNECA) and the office of the Vice President in Ibadan , Ademola Odejide, said ISGPP/ UN-ECA/OVP 2018 report on employment, unemployment and job creation revealed that the nation’s economic growth

process is not employmentintensive and has not been able to generate enough jobs to meet the demand of the growing labour force. Odejide who is the chairman of ISGPP public policy group added that a significant proportion of the workforce is negatively affected by varying degrees of employability and skills mismatch. He pointed out that the low employment-intensity of the economic growth process is directly linked to the structure of the Nigerian economy which is heavily dependent on oil and gas.

stimulate growth in the Nigerian oil and gas industry. After several years of failure, we called for change of strategy, by breaking down the bill into parts for ease of passage starting from the less controversial ones. Hence, the PIB was broken down into four sections. Passage of the first section captioned Petroleum Industry Governance Bill (PIGB) is definitely a good development. This section deals with management of NNPC, when this bill is signed into law, its implementation will see to the unbundling of NNPC, to create four new entities aimed at improving efficiency and transparency in management. Having broken the Jinx, efforts can be channelled to passing the remaining three very important components of the PIB, via the fiscal framework, host community issues and the Petroleum Industry Administration bill. Passage of the fiscal framework bill will unlock investment into the industry especially the offshore sector. The bill on host community issues will help address the challenges of insecurity if it gives attractive stake to host communities, enough to incentivise them to protect oil and gas assets in their various domains. So the interest of oil and gas service providers is not different from that of other stakeholders. Passage of PIGB is good as it addresses industry governance and transparency, but the investment potentials and security of the industry is still locked down in the other pieces of

legislation yet to be passed, hence the need for them to receive accelerated attention. How are insecurity, militancy, transparency and governance issues in the sector affecting your operations and what do you think are the solutions? Insecurity in the oil and gas sector caused primarily by militancy is of serious concern to all stakeholders in the industry. This is a major risk element to assets and human resources that is peculiar to our operational environment. As service providers, investment in security for logistics and project site operation drives project cost up by 50 percent to 75 percent in most cases. Apart from the direct security costs, there are indirect costs like high insurance premium, higher human resource allowances to accommodate the risks, disruptions and attendant delays in project delivery, all these add up to make security cost in our operating environment among the highest in the world. The negative impact of insecurity in the oil and gas sector is born more by the producing companies and of course the government. There is loss of production from illegal bunkering and pipeline vandalization, there is also environmental pollution from spillages. In fact 90% of total spillages in the country results from illegal bunkering and pipeline vandalization. The militant attack on shell Forcados export pipeline in June 2016 resulted to loss of production of 400,000 barrels of oil equivalent per day for

over 12 months in addition to expensive repair costs. Tackling insecurity and militancy in the oil and gas field of Niger Delta can only be addressed as a collaborative effort of the relevant stakeholders. The government and the operating companies must engage the communities in a mutually beneficial alliance or partnership that incentivises the communities to protect oil and gas assets. Therein lies the solution. There has been steady increase in prices of crude oil since January this year. How has this impacted the oil servicing industry? The fortunes of upstream oil and gas services industry are dependent on the annual exploration and production budget spend of the producing companies. This budget spend depends on market projections regarding crude oil price, so the rising oil prices is good news to service providers and of course all other stake holders in the business. The higher crude oil price encourages more production baring OPEC quota applications and hence higher investment in exploration and production. This means more opportunities and improved business environment for service providers. Currently, disruptions in Libya and strike action in Norway are helping push the prices up but experienced players understand that hydrocarbon economics respond to dynamics of commodity price mechanism, which does not lend itself to stability. The rule is to enjoy periods of good weather and prepare for the rainy day.

Eddie Efekoha’s investiture as 49th president of CIIN holds today

he Chartered Insurance Institute of Nigeria has stated that its incoming president, Eddie Efekoha, has the right values and industry pedigree required to ensure the institute continues to play relevant role in the nation’s insurance sector. Addressing newsmen recently at a press briefing heralding the Investiture ceremony of the newly appointed president, Chairman of the Investiture committee, Sunny Adeda, stated that the institute could only benefit from the leadership of Efekoha. He described Efekoha as a

visionary leader whose years of experience in Insurance will be brought to bear on the institute and to the insurance sector as a whole. As the euologies for Mr Efekoha continued to pour in, Deputy Director General of the Institute, Uju Ndubuisi Chukwu, who represented the Director General, pointed out that his passion for the industry had seen him rise through the ranks to become managing director of Consolidated Hallmark Insurance. Chukwu who reeled out his profile to the journalists present, stated that his manage-

ment style has ensured that he has carved a niche for himself in the industry. A representative for the journalists present, Mr Chuks Udo Okonta, reinforced the position of the earlier speakers by saying that Mr Efekoha had endeared himself to the media through purposeful leadership and quality service delivery in all the positions of leadership he has occupied. He charged the incoming president not to rest on his oars but to continue the good work going on at the institute in order to ensure he leaves an indelible mark on the industry.

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

COMPANIES & MARKETS Sovereign default rate spiked in 2017, after 2 decades of low frequency - Moody’s Endurance Okafor

fter about twenty years of low sovereign default frequency, of at most two bond defaults of rated sovereigns per year, the default rate picked up in 2017 with four defaults of rated sovereigns. This was disclosed in Moody’s Investors Service Data Report published on Thursday, 19th July 2018. The annual report had update statistics on the default, loss and rating transition experience of Moody’s-rated government bond issuers for 2017, as well as for the period since 1983. As of the end of 2017, the one-year default rate stood at 3.1 percent, four times higher than the average default rate in the 1983-2017 period. On the reason for the first hike since two decades, Elena Duggar, associate managing director at Moody’s said “the defaults were triggered by a mix of materializing

contingent liabilities on the sovereign balance sheets, rising public debt, balance of payments difficulties as a result of the dramatic fall in oil prices in 2014-16 and country-specific political risks.” Meanwhile, sovereign default is a failure on the repayment of a county’s government debts. Countries are often hesitant to default on their debts, since it will be difficult and expensive to borrow funds after a default event. Nigeria, however did not appear on the default list of the international rating body, as compiled from Moody’s country rated sovereign bond defaults since 1983. According to the report, there were four rated governments defaulted in 2017, which affected about $15.2 billion of debt. The countries that made this list included; The Republic of the Congo (Caa2 negative), Mozambique (Caa3 negative) and Venezuela (C stable) which missed interest payments on their bonds, while Belize (B3 stable) un-

dertook a distressed bond exchange. Meanwhile, Africa’s largest exporter of crude oil raised $3 billion in its biggest Eurobond sale yet in November 2017. The fund was raised in a two-part international bond sale as it seeks to fund a fiscal deficit and reduce its local-currency debt burden. The West African nation divided the offering equally between 10- and 30-year tranches. The yield was 6.5 percent for the shorter notes and 7.625 percent for the 30-year portion, down 25 basis points on each tranche from the initial guidance. The issue received $11 billion of bids, according to central bank Governor Godwin Emefiele. According to the Debt Management Office (DMO), total public debt as at the end of 2017 represented 18.20 per cent of Nigeria’s GDP. The agency disclosed the rate showed Nigeria’s debt continues to be sustainable and is well within the threshold of 56 per cent for countries in Nigeria’s peer group.

LASACO launches motor power bikes for prompt claims settlement

s a strategy of boosting its customer satisfaction drive, LASACO Assurance Plc has evolved a speedy and more scientific claim settlement solution that would make policy holders get compensation faster and more robustly. Tagged Lasaco Blue Response, the solution, which is targeted at automobile insurance operations, would enable the company solve the most critical aspect of claim settlement, assessment, in record time. The solution, first in the industry in Nigeria, would reduce the time frame between accident and claim settlement and encourage more interaction between insurance operators and their clients. It operates with fully kitted and “ready-to-go” motorbike riders who will always “swing into action” whenever there is notification of a claim.

The riders, according to Segun Balogun, managing director/CEO of the company, , would inspect the accident vehicle at the scene of the accident, adjust the claim and offer an on-thespot settlement. This novel solution, he said, would promote efficient claim settlement response and elicit a more enduring relationship between insurance underwriters and their clients, as many people will, through it, have more confidence in insurance, especially automobile insurance operations. Rilwan Oshinusi, deputy managing director, Corporate Services of the company, believed that “with this initiative, our customers and the general public are assured of our focus on excellent service through prompt claims settlement”. LASACO Assurance Plc is a registered composite insur-

ance and financial services company in Nigeria that specialises in General Insurance, Oil and Gas Insurance, Asset Management and Investment Financial services. The company was incorporated on 20th December, 1979 and was granted License to carry out the business of insurance and other related businesses on 7th July, 1980. On 1st August, 1980, the company commenced operations. In accordance with the Decree, LASACO’s shares were offered to the public and were admitted to the Nigerian Stock Exchange (NSE) by way of introduction, thus becoming the first company to be so listed on the NSE. In 1991, the company became a Public Limited Liability Company (Plc). It currently operates from its headquarters at Ikeja, Lagos State Nigeria with branches and underwriting offices in 13 other locations.

Business Event

L-R: Izik Ade Agoye, vice president, Manufacturers Association of Nigeria (MAN);Francis Mechioye, president, MAN, Ikeja Branch; Rotimi Ogunleye, commissioner for physical planning and urban development, and Frank Jacobs, president, MAN, at the associations 51st Annual General Meeting in Lagos.

L-R: Kennedy Boboye, head local coach, Rexona XI Street to Stamford Academy; Toun Adegbite, category manager, skin care & deodorants, Unilever Nigeria; Laurence Griffin, head international coach, Chelsea FC Rexona Academy and Austin Jay Jay Okocha, brand ambassador, Rexona Nigeria, at the Rexona Street to Stamford Africa XI media briefing in Lagos

L-R: Sunny Adeda, chairman, Investiture Planning Committee; Bola Temowo, vice chairman of the Committee; Segun Omosehin, council member, during a press briefing for the forthcoming investiture of Eddie Efekoha as the CIIN President in Lagos

EY seeks to harmonise Country by Country Reporting to multinational enterprises

rnst &Young Nigeria, among other things, seeks to address the many concerns of multinational enterprises on their reporting obligations to the Federal Inland Revenue Service (FIRS) with regards to the Country-by-Country reporting. This is on the back of the income tax (Country-by-Country Reporting) regulations released recently by the Federal government, with an effective date commencing on January 01,

2018. The regulations set the framework for the automatic exchange of Country-by-Country Reports in accordance with the Multilateral Competent Authority Agreement (MCAA) signed by Nigeria in January 2016 and ratified by the Federal Executive Council in August 2016. Speaking on the move, Akinbiyi Abudu, partner & tax services leader (EY West Africa) stated that the event tagged ‘knowledge

sharing session’ is aimed at addressing all enquiries pertaining to the Regulations and the implications for taxpayers. “The Knowledge-sharing session is being organized as part of EY’s commitment in supporting Multinational Enterprises to better understand their compliance obligations in Nigeria and avoid penalties for non-compliance”, Akinbiyi noted. The event is slated for Wednesday, 25 July 2018 in Lagos.

L-R: Sola Fijabi, director, Pace Sports and Entertainment Marketing; Nitichandra Nandekar, managing director, Media Reach OMD; Bridget Oyefeso-Odusami, acting head of marketing & communications, Stanbic IBTC, and Gara Gombe, technical consultant, Higher Institutions Football League (HiFL), at the official seeding and draws dinner of the Higher Institution Football League (HiFL), organized by Pace Sports and Entertainment Marketing in Lagos, recently.

BUSINESS DAY

C002D5556

Tuesday 24 July 2018

Tips & Talking Points

Harvard Business Review

Before hiring a friend, set some boundaries

TALKING POINTS Billion Dollar Baby $12 billion: This year, Netflix is set to spend around $12 billion on content creation. + Citizen of the World 64%: According to research from U.S. firm Edelman, 64% of the global population sees public policy and social issues as topics that business leaders should speak openly about. + Sizing Up the Boardroom 11: The average board of an American public company has 11 members. + The “Office Housework” Bias 44%: A study published in the American Economic Review found that in mixed-sex groups, women received 44% more requests from managers to volunteer than men. + Why Employees Move On 79%: In a survey spanning 10 years and over 200,000 employees, 79% of respondents who quit their jobs say that being underappreciated was the primary reason for leaving.

Can you explain (in simple terms) your startup’s great idea?

iring a friend into your company is risky: Can the personal relationship coexist alongside a professional one? But if you approach the situation carefully, it’s possible to work with each other while preserving the friendship. First, make sure you’re comfortable saying no to the person. If you do become your friend’s boss, you’ll need to have confidence that their emotional maturity can make the dynamic work. Next, set their expectations about

whether they’re likely to get the job. Say something like, “I want to explore the possibility of our working together — but I want to be clear that it might not be a good idea.” Last, think together about how you’d deal with difficult situations that may arise on the job. This will help both of you set the psychological boundaries you’ll need if you’re going to be co-workers in addition to friends.

tartup and technical business leaders often don’t tell their innovation stories well. They rely too much on industry jargon and complex detail to get their points across. This is a huge missed opportunity. When you’re doing good work, you want people to know about it. So whether you’re drafting website copy, a marketing brochure or a press release, follow a few rules. First, use simple language to communicate your message. Jargon and complex terminology will only confuse the reader; clear, straightforward writing will draw in a broader audience. Second, don’t cram many ideas into one story or release. Keep it simple, and build your narrative one idea at a time. Third, consider hiring professional storytellers. Seek out writers who have crafted op-eds or articles for a variety of publications. It’s not easy to tell stories about complicated topics but doing so is essential if you want your company’s work to be recognized.

(Adapted from “What to Consider Before Hiring a Friend,” by Joseph Grenny.)

(Adapted from “Technical Experts Need to Get Better at Telling Stories,” by Karen Mazurkewich.)

To use your time better, track it

Recover from a cultural faux pas

Leaders, does your team want you to be humble?

t’s hard to know whether you’re using your time efficiently. Even if you’re always working hard — and stressed out — are you sure you’re spending your time on the right things? To find out, try a timetracking exercise. For 30 days, use a spreadsheet to log how you spend your time, measuring it in halfhour increments. It might sound arduous, but this exercise can yield some surprising insights. For example, maybe one of your goals is to read more, in order to explore new ideas, but you’re struggling to find the time. The exercise might reveal that you could combine exercising, cooking or commuting to work with listening to audiobooks or podcasts. Time tracking

social mistake in another culture isn’t easy to recover from. Maybe it was a joke that misfired, an unintentional violation of personal space, or a misreading of the context that resulted in someone losing face. Before working in another culture, make an effort to understand the etiquette for apologizing. Find out what verbal and body language people use when faux pas occur. For example, do they say, “Excuse me” or “I’m sorry,” or even smile, laugh, bow or look away? Do they show contrition or humility, address it publicly or discreetly,

h o u l d leaders b e hu m ble? We often say yes, leaders should display humility — but there is no shortage of people who have risen to the top of an organization without it. Why the disparity? Research finds that it has to do with what team members expect. If employees prize egalitarianism, a leader who shows humility can promote creativity and open communication. On hierarchical teams, however, employees are likely to expect their leader to take charge and make important decisions. In these circumstances, humility can look like weakness or indecisiveness. In

might also show you that you’re especially likely to waste certain hours of the day (say, evenings spent scrolling through social media) and that certain tasks carry disproportionate psychological weight (such as managing your email). Only by tracking your time can you truly figure out whether you’re spending it well.

(Adapted from “Track Your Time for 30 Days. What You Learn Might Surprise You,” by Dorie Clark.)

simply ignore it? Keep in mind that most cultures don’t have one-size-fitsall rules for reacting to mistakes, and context is key. Observe how people in the culture behave, and talk to those with whom you are building relationships. You could also consider working with a cultural coach so that you’ll be prepared the next time you realize you’ve made a mistake.

(Adapted from “How to Recover from a Cultural Faux Pas,” by Melissa Hahn and Andy Molinsky.)

c 2017 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate

We have you covered through CBN’s special intervention for speciﬁed retail invisible transactions.

Are you travelling abroad for vacation

Visit any of our designated branches nationwide for your following invisible trade transactions: School Fees Pilgrimage & Other Travel Allowances (PTA and BTA) Medical Allowances

or studying abroad?

We are here to serve you. *Terms and conditions apply

www.ﬁrstbanknigeria.com

FirstBankofNigeria

@FirstBankngr

Firstbankngr

FirstBankofNigeriaLtd

@ﬁrstbanknigeria

+FirstBankNigeria

fact, a humble leader can cause these employees to feel psychologically unsafe, making them hesitate to take risks and speak up. This doesn’t mean a leader shouldn’t display humility at all; rather, it’s important to balance authority and humility. Pay attention to the values your team holds and adjust your behavior accordingly.

(Adapted from “Research : When Being a Humble Leader Backfires,” by Jia Hu et al.)

BDTECH

BUSINESS DAY

Tuesday 24 July 2018

In association with

Nigerian students compete at global robotics competitions

…To showcase tech in China, Mexico, Senegal Stories by JUMOKE AKIYODE-LAWANSON

ollowing the success of Team Nigeria at the First Global Robot Olympic challenge in the United States last year, the China Association of Science and technology has invited three secondary school students to represent Nigeria at the World Adolescent Robotics Competition in China, this July 2018. The students, Tawakalitu Giwa, Oluwaseun Omotayo and Ayomide Adetunji were members of Team Nigeria to the First Global Robotic Olympics in Washington DC, U.S., in 2017, which was sponsored by Aramex and Doculand Nigeria. The students were picked based on their outstanding performance at the First Global Robotic Olympics where Nigeria placed 25th out of the 163 teams from 157 countries, emerging third of the 41 African countries in attendance. In a similar development, five students will be representing Nigeria at the next First Global Robotic Olympics coming up in

Remi Willoughby, CEO, Roboglobal Educational Consulting; Ayomide Adetunji, Oluwaseun Omotayo; Tawakalitu Giwa and Faisal Jarmakani; managing director, Aramex and Doculand Nigeria at the World Robotics press briefing in Lagos on Thursday July 19, 2018.

Mexico City this August. This year, they will be competing with over 190 other teams from around the world. Founded by philanthropic inventor Dean Kamen to inspire a passion for science and technology leadership and innovation

among the world’s more than two billion youths, FIRST Global provides the framework for an Olympics-style robotics event that drives home the importance of obtaining the science, technology, engineering, and mathematics (STEM) skills needed by future

leaders to overcome the greatest challenges facing our world – today and tomorrow. The other students from the team will be attending the Pan African robotic completion in Senegal on the 25th of July 2018. Remi Willoughby, National coordinator of the program and CEO, Roboglobal Educational Consulting said, ‘without any doubt Nigeria is slowly but gradually establishing herself on the map of technology developed nations. This may not be presently evident, however, it is an indication that progress is being made.’ According to her, ‘we have the right talents to compete successfully on the global stage and move Nigeria to a technology advanced nation, but we need the right support and encouragement, and to do this, we need to quickly address the evident deficit in science, technology, engineering and mathematics in our educational system.’ Faisal Jarmakani, managing director, Aramex and Doculand Nigeria and co-sponsor of the First Global project in Nigeria, said, ‘These children are building the

foundation blocks for a technology advanced nation and in the next few years will become global icons paving the way for other children to follow. If they keep getting the right support and encouragement, without any doubt, we will soon join other countries of the world where science and technology have become the backbone of their economic development.’ Jarmakani hinted that the decision to co-sponsor this new set of students for the next robotics Olympics in Mexico with his brother Omar Jarmakani, is based on the need to encourage the youth to embrace technology and robotics. In April this year, Yemi Osinbajo, Vice President of Nigeria praised the effort of Team Nigeria to the First Global Robotic Olympics for their outstanding performance at the challenge. He made the commendation while receiving the six-member team, their project Director, Mentor and sponsors at the Aso Villa, Abuja. Nigeria and Gabon are the only African countries invited to China’s World Adolescent Robotics Competition.

Iheanyichukwu said that once a partner completes the form for preselection, a date would be communicated accordingly for training via a registered email. Noting that the program would create jobs for Nigerians, he said that, ‘Nigerian people spending Nigerian Naira on Nigerian products equals Nigerian jobs. These jobs are the foundation of a thriving economy. ‘If every Nigerian spent an extra N3.33 on Nigerian-made products, it would create almost 10,000 new jobs. And, if every builder used just 5 percent more Nigerian-made products, it would create 220,000 jobs. ‘When you buy Nigerian-made

products, the proceeds remain in the Nigerian economy. The money you spend then pays the workers, that directly or indirectly created the product you purchased. When workers spend their money on Nigeria-made products, the Naira continues to be recycled. Every Nigerian worker also pay taxes on wages earned in Nigeria. ‘Importing countries have little or non-existent regulations or standards for working conditions. By keeping our Naira in Nigeria, we are not supporting these horrible working conditions, especially long hours, exploitation of children, extremely low wages, among others,’ Iheanyichukwu added.

1Market.ng to create 500,000 jobs in five years …Shops for 200,000 affiliate partners

o help in growing the Nigerian economy and create jobs by closing the gap between manufacturers of made-in-Nigeria products and global buyers, 1market.ng has opened up its doors for one million manufacturers and distributors of made-in-Nigeria products across the country through its affiliate partners program. 1Market is a pioneering B2B, B2C online marketplace, specialising in bridging the gap between global buyers and Nigerian suppliers as well as creating an accessible ecosystem for showcasing, marketing and selling exclusively made-

in-Nigeria products. The scheme gives the participants the opportunity to conveniently work from any location with a smartphone, tablet or computer system and earn a living. Enyika Iheanyichukwu, project manager of 1market.ng, who spoke at the unveiling of the program in Lagos at the weekend told newsmen that it is a scheme that gives freedom of working at your pace and convenience while having guaranteed payment. According to him, the affiliate program is a channel through which individual and companies can get paid by signing up vendors for 1mar-

ket or selling 1market.ng products. ‘The scheme has created the largest made in Nigeria e-commerce platform and is signing up over 1,000,000 manufacturers and distributors of exclusively made-in-Nigeria products across the 36 states of Nigeria and Abuja,’ he explained. By registering a made-in-Nigeria manufacturer/distributor, the scheme, according to him, gives many benefits which includes getting paid for registering manufacturers, earning commission by selling 1Market’s products, support from a professional team, product catalogue with more than 5,000,000 selling products, among other benefits.

BUSINESS DAY

Tuesday 24 July 2018

BDTECH

E-mail: jumoke.akiyode@businessdayonline.com

NIGCOMSAT, SAWTEL, PSIN sign tripartite agreement to boost public sector with ICT JUMOKE AKIYODE-LAWANSON

he Public Service Institute of Nigeria (PSIN), Nigeria Communication Satellite (NIGCOMSAT) Ltd. and Sawtel Technological Ltd. have signed a tripartite agreement for the implementation of elearning management system for both civil and public servants in Nigeria. This agreement, when implemented would see public sector productivity boosted by improving their skillset using Information Communication Technology (ICT). According to Abdul-Ganiyu Obatoyinbo, institute administrator, PSIN, ICT is of great importance in manpower development. He said that the agreement will see the institute deploying ICT to train civil servant simultaneously regardless of their location using cutting edge technologies and broadband to achieve this objective. ‘It is a known fact that without ICT in today’s world you cannot make an impact. Public service has the mandate of training and we cannot achieve that without ICT. We’ll definitely need ICT infrastructure to execute these trainings because we cannot bring everybody here physically. But we’re here to achieve the target that we want to in all our economic industries which includes the ease of doing business. ICT is key, even the strategic plan approved by

L-R: Abimbola Alale, managing director, NIGCOMSAT; Abdul-Ganiyu Obatoyinbo, administrator, Public Service Institute of Nigeria, and Mike Amanyi, managing director of Sawtel Technologies Limited, at the MoU agreement signing for the implementation of e-learning management systems for Nigeria’s public sector.

the Federal Executive Council (FEC) as projected by the government, shows that ICT is the central key,’ Obatoyinbo said. He expressed that ‘by the time this infrastructure is in place in about six weeks we should start seeing some immediate regulation. I am confident that by the time the ebusiness rating is carried out under the next assessment Nigeria would have risen up to about 50 – 60 ranges. That only happens when capacity building is in place because when you train a staff you get the results.’ Impressed with the landmark achievement, Abimbola Alele, the managing director of NIGCOMSAT, revealed NIGCOMSAT’s willingness to partner with PSIN and Sawtel

to take this institute to greater height. ‘I congratulate you because you are expanding the horizons of not just only the civil servants but the military, paramilitary and so many other agencies that want to push governance, and you are utilizing the best instrument available right now globally; ICT, to train them because ICT is currently the main driver in the world today. You are not only being ICT compliant but you are also saving lives of people travelling long distance to come here, and also saving government resources because people would pay per diem to come here but with this agreement people can remain at their location, receive the same content, same informa-

tion for training and sit for exams simultaneously,’ she added. On the importance of such agreement, Samson Osagie, executive director, marketing NIGCOMSAT noted that ‘the tripartite agreement is all about realization of the policy objectives of the ICT roadmap in Nigeria. Our contribution is to assist in developing the capacity of the public civil servants in Nigeria through our critical ICT infrastructure. We would provide the critical infrastructure through the optimization of satellite services to the MDAs. This is through public and private partnership, the private which is SAWTEL and PSIN public institutions to create a synergy that is required to boost the productivity of civil servants.’

App of the week

Mike Amanyi, CEO, Sawtel Technologies said, ‘the organization brings a multi-tenant learning management system that would enable PSIN to deliver training concurrently to as many as over a million users globally to the partnership. Having been in the business of delivering eLearning solution for years, this tripartite agreement will change the narrative of capacity building of the public sector space in the country.’ On the nature of the agreement, Mike added that ‘the emphasis of this agreement is that each of the party involved would make contribution to achieving this aim. Sawtel as a private company would provide the software platform for public service to access the training program and modules for the development of their capacity, while Nigcomsat as a satellite company would be providing the satellite and broadband services through which that service can be assessed, while the Public Service Institute of Nigeria is to provide the content. This is the thrust of the agreement.’ Leveraging the internet and ICT solutions, industry watchers have lauded this move as a way to encourage electronic learning and capacity building. As the country digitizes, there is need to deploy various ICT platforms and solutions to encourage people to build up their capacity which is in line with the economic agenda of the government.

skit: With 1 million downloads on the google play store and given 4.5 out of 5 stars, Vskit is heading to be the No 1 entertainment platform in Nigeria. It’s an app for creating and sharing short interesting and funny videos majorly for entertainment. Offered by Vskit Group, the app is becoming popular amongst Nigerian youths because it enhances their never-ending pursuit for popularity, followers, social likes and comments. The app is tremendously fun and features a wide range of lip-synced videos with popular songs in the background, short musical performances, singing, comedy, dancing etc. There are also filters and other video effects available to give users the optimum experience. The social sharing also goes beyond Vskit; once a user posts a video, they can share their videos on Facebook, Instagram, WhatsApp or simply copy the link and share on their various social media platforms. However, for the most part, the app is harmless but from a privacy point of view, Vskit defaults to posting everything publicly like many social media apps, which means anyone can watch and comment on a video. Also, since comments aren’t screened by the app’s maker, another user could leave an offensive comment on your post and while you’re unlikely to find anything explicit in the ‘Popular’ section of the app, it is possible to find stuff you wouldn’t want to see. The app is rated as 12+ and can be downloaded on the Google Play Store for now using the link https:// play.google.com/store/apps/ details?id=com.yomobigroup. chat

come up with some robust best-practices, processes and technology to keep data safe. The company revealed that the upcoming workshop will explore many facets of securing data in the 21st century. Meanwhile, Cyberspace has attained the Capability Maturity Model Integration (CMMI) level 3 certification. The CMMI is a software development process improvement approach, which has become the standard for measuring an organisation’s capability to apply a process based methodology to software development. By implications, the attainment of the CMMI means that Cyberspace software applications have gone through best practice and procedures at all stages of business requirement gathering, software development, testing, de-

ployment and post implementation support. This guarantees customers’ comfort of using the applications. Prior to the Level 3 Certification, Cyberspace has developed, implemented and supporting countless number of business applications. Cyberspace is also a top player in Enterprise Network space with 4G Network Infrastructure in Lagos, Abuja and Delta State. As Systems Integrators, Cyberspace has deployed a number of network valued added solutions to solve complex business challenges. According to Bankole, CMMI helps to integrate traditionally separate organisational functions, set process improvement goals and priorities, provide guidance for quality processes, and provide a point of reference for appraising current processes.

Cyberspace, IBM collaborate to promote big data and cybersecurity JUMOKE AKIYODELAWANSON

yberspace Network Limited in conjunction with IBM are ready to promote big data and cybersecurity across organisations, through a one-day hands-on workshop on data consolidation and cybersecurity. The two companies are collaborating to hold a workshop themed Data Consolidation and Harnessing: The Foundation and Sustenance of National Development. This will help public and private organisations to learn how to utilize big data for transformation and development. Cyberspace is a business partner of IBM with specialisations in server and storage systems while IBM manufactures and markets computer hardware, middleware

and software and provides hosting and consulting services in areas ranging from mainframe computers to nanotechnology. Addressing the media on the upcoming workshop, Olusola Bankole, chief marketing officer Cyberspace Network Limited said; ‘In this workshop, we will be showing participants how developed nations are driving national development with data, the underlying technology behind the successful harnessing of data, and we will also be demonstrating how data can be secured 360⁰.’ The workshop will draw participants from all industry verticals viz public sector, conglomerates and logistics, financial services, higher institutions of learning, telcos and big multinationals. According to Bankole, ‘arguably, big data, as it is

referred today because of the size and technology involved, remains the next frontier for innovation, competitive advantage, and productivity. And it is creating new revenue opportunities across nearly every industry.’ While explaining the significance of big data, Bankole said in quote, ‘it is no news that insight gained from data is driving the biggest nations of the world and engendering monumental innovative result across industries. In Banking and retail businesses, insight from data is used to better understand customer behaviour and preferences. In public Infrastructure, it is used to fuel smart cities. In Healthcare, it is used to better understand and predict disease pattern and find new cures.’ The Cyberspace-IBM workshop which is sched-

uled to hold on Wednesday 25th July, 2018 at Protea Hotel, Asokoro Abuja, the Federal Capital City, will showcase the best practice to gathering data and introduce tools to analyse same, for the purpose of national development. IBM is a well-known brand in the business of providing data servers and storage. Cyberspace, being an IBM partner, has implemented a number of server installations for IBM, especially the P-series of IBM servers. One major issue challenging businesses that had embraced big data is data security. How can we minimize unauthorised access to data? How can we make sure that only authorise users can access the data, even in the face of multifaceted government agencies? IBM and Cyberspace have partnered together to

BUSINESS DAY

Tuesday 24 July 2018

EDUCATION

Weekly insight on current and future trends in education

Primary/Secondary

Higher

Human Capital

Nigerian teacher, others lead discourse to help shape future of Africa’s Education Stories by KELECHI EWUZIE

igerian teacher Ayodele Odeogbola joined past Global Teacher Prize finalists from eight African nations in Nairobi, Kenya, for their first ever summit, with the intention of sharing best practices and helping to shape and influence education policy in Africa. Odeogbola and his peers are among the continent’s best teachers through their success and share a global spotlight through the biggest education prize of its kind in the world. Each of the 15 teachers hailing from Kenya, South Africa, Uganda, Sierra Leone, Malawi, Ghana and Tanzania are now members of the Varkey Teacher Ambassadors (VTA) network. As part of this network, these acclaimed educators continue to work with the Varkey Foundation to shed light on the expertise and capacity of teachers worldwide, giving those who work on the front line of education the recognition and voice that they deserve and helping to influence policy and practice.

The group of 15 convened at Sarova Stanley Hotel, Nairobi, for a high-level conference on Wednesday 18 July and Thursday 19 July to share best practices and formulate a range of initiatives. In order to help them become better influencers and to help their voices reach the ears of governments and policy makers, teachers at the summit received advanced social media training, and were shown how to tell their stories in powerful pamphlets and videos Commenting on his experiencing at the summit, Odeogbola said: “When I teach my students, I want to think that I am teaching the future leaders and key stakeholders of the world. To help develop these bright young minds, I use collaboration, critical thinking, creativity and communication, combined with innovation and new technology to help transform their learning. “For every human challenge in the new world we live in, there is always a technological solution. That’s one of the lessons I brought to this first ever meeting of African Varkey Teacher Ambassadors”. “I learned so much from

Razak Jaiyeola,(l) 54th President of the Institute of Chartered Accountants of Nigeria (ICAN) presenting certificate to an newly inducted member of the Association of Accounting Technicians West Africa (AATWA) in Lagos

my incredibly talented colleagues. Together, I am confident we can help skill the next generation to achieve their true potential,” he said. Cate Noble, chief executive, Varkey Foundation said:

ICAN president charges AATWA inductees to embrace technology to succeed

nstitute of Chartered Accountants of Nigeria (ICAN) president Razak Jaiyeola said that the recent disruptive tendencies of technology across all sectors of the economy will not affect accountants provided they are willing to develop their IT skills and competencies. Jaiyeola while speaking at the 48th induction ceremony of the Association of Accounting Technicians West Africa (AATWA) in Lagos said that ICAN will continue to developed strategies aimed at creating more employment opportunities for AAT certificate holders especially in the area of ICT. He said the Institute will continue to embark on visitation to potential employ-

ers so as to create awareness of the qualification and to widen the employment potentials of the certificate holders. According to him, “the Council has established an entreprenuership committee with the mandate to continually develop strategies for ensuring that chartered accountants in the Small and Medium Enterprises categories are gainfully employed” To him, “In the process of doing this, they would be able to provide employment for many more Nigerians most especially accounting technicians as businesses grow”. The ICAN President further reiterated that the induction ceremony is designed to give the inductees

the opportunity to learn the ethics of the Institute and the acceptable behaviour of Accounting Technicians as well we the rules of professional conduct that regulates the activities of ICAN members as it is not enough pass the required examination. Also speaking, Olufemi Awoyemi, managing director, Proshare Nigeria Limited and the guest speaker at the event told the inductees that there is need for them to build on the knowledge and the qualifications that they have today. He further admonished that the future of the accounting profession will only be easy for accountants who are willing to embrace the new technological trend and ways of doing thing.

“There has never been a more important time for the voices of African teachers to be heard in the crucial debates on the future of African education. “Africa is home to some of the world’s fastest growing

economies and is bursting with energy and new ideas, not least here in the emerging tech hub of Nairobi. But if Africa is to realise its abundant potential, we must ensure its children are skilled for

the bright future they are reaching out to grasp. These challenges can only be solved by governments listening to teachers and putting their views front and centre”, Noble said.

KCOB ‘88 to launch three class projects for alma mater …commemorative 30 years

ings College Class of 88 will on Friday July 27th launch three (3) projects donated to the school by class as they begin the commemorative events to mark the 30th anniversary of its graduation from Kings College Lagos. Olumide Akpata, a member of the organising committee while speaking about the upcoming events said the three-day event, which will begin with a ‘Back-to-School’ Lunch and a Symposium themed, “The Kings College Conundrum: Where Do We Go From Here?” is aimed at giving back to the school while throwing light on the issues of decay vis-à-vis educational and infrastructural development in Nigeria. It would be recalled that due to inadequacies of the school’s waste disposal sys-

tem designed for a far smaller school population, the Class of 82-88 last year raised and deployed N15 million for the redesign and refurbishment of the School’s waste management facility The project, funded by the class in commemoration of their 30th anniversary graduation from the college, is one of three projects to be launched during this year’s anniversary celebrations. Also speaking about this development, another member of the organising committee, Emeka Oragwu, stated that the overriding sentiment behind the donation was the opportunity afforded the group by the anniversary to express its gratitude to the school. “Our successes in life are thanks to the solid intellectual and social foundation we received at Kings

College. What better way to express our thanks than by giving something back to the school,” he said. Included in the activities lined up for the three-day event is a Live Performance of Dike Chukwumerije’s “Made in Nigeria” – a 120 minute depiction of 102 years of Nigeria’s history through poetry, dance and drama at the Assembly Hall, King’s College, Catholic Mission Street, Lagos. Other activities include a Health & Wellness Seminar on July 28, 2018; Sports & Fun Day; as well as an Anniversary Dinner and Gala Nite to wrap the day up. The anniversary celebrations will officially close with a Thanksgiving Service at ‘The Dome’, This Present House in Lagos, followed by a Luncheon on the Prest Lunch Cruise.

BUSINESS DAY

C002D5556

EDUCATION

Tuesday 24 July 2018

INSIGHT

Focus on special education: Attention deficit hyper active disorder Isaac Osae-Brown

hildren’s behavi o u ra l t re n d s tend to differ as they progress through the stages of development. At a certain level, we see certain children whose behaviour becomes aggressive and lazed with short attention span. Parents, teachers and caregivers should exercise great patience and critically find ways to examine the causes of any observed hyper active behaviours and seek to provide effective therapy. Attention deficit hyperactive disorder is a chronic condition. It can have an impact on emotions, behaviours, and the ability to learn new things. Research reveals that ADHD is a highly genetic, brain-based syndrome that has to do with the regulation of a particular set of brain functions and related behaviours. These brain

operations are collectively referred to as “executive functioning skills” and include important functions such as attention, concentration, memory, organization, and social skills. Researchers include that boys are about three times more likely than girls to be diagnosed with ADHD, though it’s not yet understood why. ADHD can have an impact on emotions, behaviours, and ability to learn new things. Since ADHD is a neuro-behavioural condition, there is no cure and the majority do not outgrow it. Approximately two-thirds or more of children with ADHD continue to have symptoms and challenges in adulthood that require treatment. Types Of Adhd: There are different subtypes of ADHD namely: (Inattentive, Hyperactive, and Combined type). Inattentive types of ADHD are usually less disruptive and active than individuals who have the predominantly hyperactiveimpulsive type. Symptoms of the Inattentive type includes: missing details and becom-

ing distracted easily, trouble focusing on the task at hand, becoming bored quickly and difficulty learning or organising new information. The hyperactive type of ADHD is characterised by symptoms of impulsivity and hyperactivity. Individuals with this type can display signs of inattention and can make learning more difficult for themselves and other students. Some experience more difficulty staying focused and may appear to be always on the go, talk excessively, have difficulty waiting for their turn, have troubles sitting still and blurt out during conversation. Anyone with the combination type has symptoms that don’t exclusively fall within the inattention or hyperactive-impulsive behaviour, instead, a combination of symptoms from both of the categories are exhibited. Most children, with or without ADHD, experience some degree of inattentive or impulsive behaviour but it’s more severe in those with ADHD. The behaviour occurs more often and interferes

How to give your children a productive holiday

OYIN EGBEYEMI

hildren of nowadays seem to be very busy, even busier than adults. During term time, they spend about 75% of their time at school. Outside the classrooms, they learn and engage in various activities such as sports, music and other extracurricular activities, which keep them pretty much occupied for nearly 100% of that 75% time slot. So during the holidays, having absolutely nothing to do could come as a bit of a shock to them, especially if they really do enjoy the time they spend at school or doing their extra activities over the course of the academic term. So what should parents do with them during the remaining 25% of their time? This is an area where anxiety may begin to creep in for parents because, as much as they may want their children to enjoy the break over vacations, particularly the summer holiday, which could last over two months, idleness may set in. So they have to find ways to keep children engaged

while they also enjoy their well-deserved rest. The norm for middle to upper class families is to travel abroad for the summer holiday. However, since the recession hit bank accounts and with the high and rising cost of living in the country, many of these parents are beginning to rethink their children’s summer time activities. Fortunately, there are many creative and inexpensive ways to engage children over the holiday. For instance, many educational establishments run summer school or summer camp programmes. The great thing about these is that teachers are really beginning to think outside the box and coming up with fun, creative and educational activities; such that summer school offers something a little different from what the children would normally get from the regular school curriculum. Many summer schools offer a broad range of activities that span from literacy to languages and cooking; while others specialise in specific areas such as science, coding or specialised languages (like Yoruba, Igbo, French, Spanish and Mandarin). Parents have many options to select from…and what makes these programmes even more attractive is their affordability, as they would not cost as much as logistics

for travelling abroad or the equivalent of school fees (at private schools) for that period of time would. If parents want a little more flexibility in their children’s schedules over the long summer holidays, they could actually plan fun and educational activities for them. Fortunately, Lagos State is packed with a lot of recreational activities that many people may not even be aware of. It is a State bursting with a lot of history and life, so parents could arrange for visits to sites such as the Slave Museum in Badagry and the Museum in Onikan. Such visits would expose children to some of the history of Lagos State and Nigeria. Other recreational activities that parents may consider are visits to art galleries and recreational centres such as the Lekki Conservation Centre. Parents may also consider building specific skills in their children over the summer holiday. So they can enrol them in sports lessons (e.g. swimming, golf, tennis) at various gyms and country clubs around them; or even some other alternative arts which are becoming more popular such as painting, acting and music. Oyin Egbeyemi is an executive administrator at The Foreshore School, Ikoyi, Lagos.

with how they function at home, school, and in social situations. The National Institute of Mental Health explains that most children have combination type of ADHD and the most common symptom in preschool-age children is hyperactivity. As with anything else, no two people with ADHD are exactly the same and everyone experiences ADHD in their own way. When you work with a population of students with this disability, you will have to learn how to adapt and modify the curriculum to ensure a better chance of success and task completion. To be diagnosed with ADHD, symptoms must have an impact on the child’s day-today life. Many African countries including Nigeria have children who go through their daily lives with trauma and abuse. Environmental factors coupled with parental socio-economic factors may have an impact on the child’s ability to function effectively. It is advisable to seek help from professionals who will provide therapy to address basic hyperactive behaviour

issues. Treatment options: There are a number of treatment options available after an individual have been diagnosed. The primary goal of treatment is to manage ADHD symptoms and to promote positive behaviours. The best treatment strategies for attention deficit disorder are combinations of different approaches that work together to reduce symptoms. For one child with ADHD, this ideal combination may include medication, diet, exercise and behaviour therapy. For another, it may mean taking supplements and spending time outdoors in nature. It is very important to talk with your child’s doctor about your options. If you use medication, speak with the prescribing professional about his or her expertise with complementary treatment options. Some medical practitioners may recommend behavioural therapy before starting any medications. Therapy can help children with ADHD replace inappropriate behaviours with new behaviours

and help them find ways to express feelings. In addition, parents can receive behaviour management training which can help them manage their child’s behaviour and help them learn new skills for coping with the disorder. We all know the excessive tension that emanates from unwanted behaviour at home and school. This can be curtailed if all stakeholders that include family members, school leaders, medical practitioners and therapists collaborate to ensure that our homes, schools and communities are safe to pave way for an appropriate and acceptable behaviour for our children.

Isaac Osae-Brown works for the Compton Unified School District in California as an Education Specialist and a beginning Teacher Mentor. He is an advocate and a speaker for Special Education services in the United States and abroad. www.facebook.com/ inclusivemindset

UK varsity visits Edo University to inspect facilities for exchange programmes IDRIS UMAR MOMOH, Benin

s part of efforts geared towards consolidating on its Memorandum of Understanding (MoU) with Edo University, Iyamho, the management team of University of Sunderland, United Kingdom has paid a familiarisation visit to the university. Recall that the two universities had early in the year signed an MoU on students and staff exchange programme, joint research, funding among others areas of interest. The University of Sun-

derland team was led by Ian Moody, director of International studies. Speaking with journalists, after the inspection of facilities and infrastructures at the University, Moody commended the management of the institution for its excellent teaching and learning with state-of-art facilities that conform to 21st century requirement. Moody said that University of Sunderland as an institution which ranked amongst one of the best in the world provides a multiculture community for staff and students of Edo university, thereby making it a great

L-R: Martha Onyebuchi Apcon; Florence Atunwa Olumodimu Programme director Digifypro; Qhakaza Mthembu, Head of strategy Digifyafrica; Eki Adzufeh executive director Mipan; Omoeige Pwc

option for partnership. He said the infrastructure and facilities at the institution are comparable with the best in the world. On his part, Emmanuel Aluyor, acting vice chancellor the University expressed happiness with the development saying that the MoU will be of a symbiotic benefit to both Universities. According to him, “We have discussed and look at the curricula of the universities in several areas where we agreed, the harmonisation of the two sides, we do find out that we have a lot of things in common. A lot of things we can work on as a young university and we are looking at areas we can also explore to make delivery of education to our interested parties in the best form of education we can deliver. Earlier, the principal contact for the Edo University, Wisdom Okoye observed that with the massive investment by the state government in the university, in no distant time it can be rightly placed on the world academic map. The visitors were led on a guided tour of the school facilities by Anthony Kifordu, director of Edo International Liaison in order to further strengthen collaboration between the two universities.

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

Energy Report Oil & Gas

Power

Renewables

Environment

N271.3bn lost in power sector over insufficient gas, others OLUSOLA BELLO

s t i m a t e d amount of about N271,263,000,000 has been lost to insufficient gas supply, distribution, transmission and water reserves to date in 2018. The national power generation has remain consistently between 3000 megawatts and 4000mega watts and it does not seem as if it would improve beyond this anytime soon. At the weekend, July 21, 2018, average power sent out was 3,399MWh/hour (down by 81MWh/h from the previous day. According to government report on generation about 1,664MW was not generated due to unavailability of gas while 39.4MW was not generated because of transmission infrastructure, another 1,293MW could not come on stream as a result of high frequency resulting from lack of distribution

infrastructure. About 40MW was recorded as losses due to water management. In monetary value, the power sector the weekend lost an estimated N1,457,000,000 all because of due to insufficient gas supply, distribution infrastructure and transmission infrastructure. The dominant constraint remained unavailability of gas - constraining a total of 1,664MW from being available on the grid. Meanwhile the blame game between the minister of Power,Works and House, Babatunde Raji Fashola and Electricity Distribution Companies (Disco) continues unabated. But stakeholders in the electricity industry have said unless the various operators piloting the sector put their differences aside and collaborate among each other the sector would remain beleaguer and without much progress. They said this against the background of the recent development in the indus-

Babatunde Fashola

try in which the minister of Power, Works and Housing Raji Fashola came hard the distribution companies accusing them of being responsible for inefficient services delivery to consumers. According to them, all the agencies that have one thing or the other to do with the power sector, including ministry of power do their own things independent of other operators in the

he world petrol demand is believed to peak by 2030 largely due to the impact of electric cars and more efficient engines but this could force refiners to change their business model and rely more on petrochemicals for growth rather than petrol. Wood Mackenzie in its latest report said there would be about 4.5million units of electric cars on the road displacing about 2 million barrels per day of crude oil output. It expects the takeup of electric vehicles to cut petrol demand significantly as the world mainstream battery-powered cars. European countries have also initiated policies that will see outright ban on petrol and diesel vehicles “This means that refiners will demand lower volumes of crudes and refining will shift to petrochemicals rather than for petrol,” Tony Ogbuigwe, managing director PEJAD Nigeria said at 18th edition of the Annual

Petroleum Policy Roundtable, organised by Centre for Petroleum Information (CPI) held at Eko Hotels, Lagos on July 20. Ogbuigwe in his presentation said that diesel will rise due to International Maritime Organisation standards but there will be a switch to marine diesel with lower sulphur content, demand for CNG, LPG will rise, more for vehicular purposes. Hence gasoline or petrol demand will fall. The experts at the event said exploits been achieved in electric car manufacturing including reduction in charging time, investments in charging stations and more efficient engines that cover more distance on a single charge should make Nigeria who depend on crude oil to fund its budget jittery. Ogbuigwe said petrochemicals will make more economic sense for investors rather than petrol and this should make Nigeria to begin to develop sustainable policies for the sector. “We need to change what

we are doing with our refineries to meet growing demand for fertilizers and others,” said Ogbuigwe. The current industrial agriculture system is dependent upon petrochemicals and experts say this will continue to fuel demand. Fertilizers will remain a necessity if the current agricultural system is to be maintained and global demand for food. Victor Eromosele who gave the keynote address warns that climate change is here despite denials and can be seen in rising temperatures, heavy rains leading to flooding and the shrinking . “We are seeing parts of Nigeria with temperatures rising about 40 degrees, at least 80 people died in Katsina because of flood. The Lake Chad has shrunk by two-third, all these point to climate change impacts. “The world around us is changing and the danger is that those of us in this part of the world who play ostrich, could be in a dangerous situation as time will pass quickly and others would move on,” Eromosele said.

Olusola Bello, Team lead, Analysts: Isaac Anyaogu, Stephen Onyekwelu, Graphics: Joel Samson.

age investors to come into the sector. Another industry stakeholder, Dan Kunle, an energy expert, said that all the problems plaguing the industry would have been avoided if the current government had looked into what was left to be completed by the Olusegun Obasanjo and Jonathan administrations as far as the power reform was concerned. He said the current government choose to ignore some of the inherent problems in the distribution and also gas production and distribution. The various government agencies are handicapped because they are working in tandem with other stakeholders in the industry . Babatunde Raji Fashola, Minister of Power,Works and Housing had last week stated that the person to turn to when consumers have no meter, no supply of power, or your transformer is bad is the Discos, who are your service providers. “They are the ones who bill you and collect money from you”.

SNEPCo donates ultramodern science lab to Kwara school

Crude refiners see growth in petrochemicals on electric car threat ISAAC ANYAOGU

industry. They said a situation in which the Nigeria Electricity Commission (NERC),Nigerian Bulk Electricity Trading Company (NBET) , generation companies, distribution companies and Transmission Company of Niger (TCN)are all working on their own without synergy or collaborating on how to tackle the issues in the industry with a common

purpose is not good for the growth of the sector. Joy Ogoji, executive secretary of generation companies said recently at BusinessDay Future of Energy Series that most of the issues plaguing the industry can be resolved if all the actors resolve to collaborate and iron out things rather seeing themselves as antagonists. She said the time has come for operators of generating plants, Discos, NBET, NERC, TCN and the ministry of power should sit down and have discussions on areas of common challenges with the aim of providing efficient service s to consumers. In the same vein, Kola Adesina, chairman of Egbin power Plc said if there is no collaborations among the various stakeholders it would be difficult to have a seamless and efficient service delivery from the industry. According to him, slamming policies at will without first discussing with those that are to implement such policies would not encour-

s part of it commitment to enhance the Nigerian education system, especially sciences, Shell Nigeria Exploration and Production Company Limited (SNEPCO) has donated four ultramodern science laboratories to Eruku Secondary Commercial School in Ekiti Local Government area of Kwara State. This is the latest effort by the Shell deep offshore company to spread its social investments across Nigeria and boost the study of science subjects among secondary school students. “The importance of science education cannot be over emphasised particularly in this age of rapid technology advancement. Government alone cannot do it which is why SNEPCo, its government and co-venture partners have continued to intervene in this critical area of youth development just as much as we do in the health sector,” said Managing Director of SNEPCo, Bayo Ojulari, at a ceremony in the school last week to handover the multimillion naira laboratories to the school management. Bayo Ojulari, who was represented by Adedayo Adewuyi, SNEPCo’s General Manager, Deepwater Exploration,

charged the students to take maximum learning advantage offered by the well-equipped laboratories to develop their potential in Science, Technology, Engineering and Mathematics. Jolayemi Kolapo, deputy manager, Community Development, National Petroleum Investment Management Services (NAPIMS), said NAPIMS on behalf of NNPC was pleased to support SNEPCo’s focus on education across Nigeria as a proof-point of government’s commitment to people development in its partnership with oil and gas companies in the country. Kolapo, represented the group general manager of NAPIMS, Roland Ewubare, said: “We believe that our investments should not just be in the bolts and nuts but also in the people. Assisting the Government to provide quality Education delivery is a crucial aspect of our investment and that is why NAPIMS is pleased to partner with SNEPCo on the delivery of this project. We therefore encourage the school to make judicious use of the laboratories for the intended purpose. It is only by so doing that the huge investment made in putting this project in place would be justified.” Bilikisu Oniyangi, Kwara State Commissioner for Edu-

cation and Human Capital Development, described the laboratories as world-class standard and charged parents and teachers to ‘deliberately encourage youths to have inquisitive minds that can help in carrying out research for solving modern day challenges that pose a threat to humanity.’ Oniyangi, who was represented by Comfort Abioye, director, Human Capital Development in the ministry, described SNEPCo’s intervention as timely noting that ‘the project supports the policy thrust of the state governor on the improvement of quality teaching and learning of science subjects aimed at facilitating development in technology and human development’. Management, staff, parents and students of the school, and community leaders who witnessed the handover of the laboratories were all full of praises for SNEPCo, NNPC and their partners for extending their social investment to their community, noting that the laboratories would go a long way in supporting the students’ preparation for internal and external examinations. They called on the statement government to complement SNEPCo’s gesture by providing qualified science teachers to the school.

Email: energyreport@businessdayonline.com, Tel: +234-8023020011; +234-7037817378;

BUSINESS DAY

C002D5556

Tuesday 24 July 2018

Energy Report

The failed Africa LPG summit and implications for Nigeria OLUSOLA BELLO

he failed Africa LPG Summit i s e n g e n d e ring some confidence crisis among the stakeholders in the Liquefied Petroleum Gas (LPG)subsector of the gas industry. Some of them are lamenting of the derogatory and negative images it has brought to the country and individuals. They said the actions that led to the failure of the summit will only compound the bad image the country is grappling with across the globe as their business partners overseas may not trust them. Transacting any business with their partners overseas may be difficult as the LPG players in the Nigerian market may be seen as fraudulent fellows. Timely intervention of some stakeholders saved fragile LPG subsector of the gas industry from imploding over alleged scam by a staff of NLPGA. This development may cause a draw back to the successes already achieved in the sector. However realizing the

implications of such crisis in the subsector, some operators decided to make some deft moves to avert the crisis and calmed down nerves among the members of Nigerian Association of Liquefied Petroleum Gas Marketers NALPGAM and its sister association NLPGA. The whole thing started when members Nigerian Association of Liquefied Petroleum Gas Marketers NALPGAM), led by it president,.Nosakhare Ogieva-Okunbor summoned an emergency fact

finding mission in Lagos to know why Joseph Eremosele who is the executive secretary of Liquefied Petroleum Gas Association (NLPGA) allegedly diverted all monies meant for the organization of the 5th Africa LPG Summit 2018 that failed to hold in Lagos last month. But responding to the issues raised by some of the stakeholders , Felix Ekundayo, deputy President of Nigeria Liquefied Petroleum Gas Association (NLPGA) told the audience that his association discov-

NIPCO plans to increase market share as shareholders get excited over dividend OLUSOLA BELLO

he managing director of NIPCO, Sanjay Teotia, has said the target of his company is to increase its share in the market through it growth and development plans. Sanjay Teotia listed major targets of the company which include: making steady progress to ensure more visibility to NIPCO stations nationwide; ensuring friendly customer care in all its business lines across the nation; aligning with government in providing access to liquefied Petroleum Gas ( LPG) at affordable price and supporting government in providing fuel to motorist through use of Compressed Natural Gas [CNG]. He said this in his maiden address to shareholders at the company’s Plc at the 14th annual general meeting [AGM) held in Abuja. He said: “Even though the present operating environment is very challenging, my management remain focused on pursuing its major targets, primacy of which is growing our market in petroleum

products marketing” Nipco management, he said, would continue to place emphasis in transforming the company’s systems and processes to deliver meaningful value to its stakeholders, among whom the shareholders rank high. He said the management of the company is not oblivious of the fact that to take the organization to the next level, it must improve on its core competencies and explore other business ventures and opportunities. “We are upbeat of improving performance taking into consideration the organization highly motivated and skilled employees as well as exemplary customer service at all our strategic business units” he declared. He expressed appreciation to the support of stakeholders, most of whom are fuel marketers since the inception of the company and particularly in the 2017 financial year, saying that his immediate challenge on assumption of office was fashioning the most adequate focus to channel NIPCO’s energies by my management team” According to him, his team was able to achieve an im-

proved performance as management settled for a strategic standpoint that was hinged on all inclusive administration. His style he said also resulted in high quality engagement with the company’s numerous publics with organization’s operations being better from it. NIPCO’s turnover for the 2017 financial year grew by 35% from N170billion in 2016 to N205billion, profit after tax rose from N1.8billion in 2016 to N2.1billion in 2017. The board therefore recommended a cash dividend of 300kobo amounting to total dividend payout of N563million which was unanimously approved by the shareholders. A shareholder, Sani Yau commended management for its consistent payment of dividends since the company started operations in 2004 notwithstanding the economic headwinds stressing “we are excited about the dividends” He said the company has also shown a lot of concern in the area of social investment through its plethora of interventions in the areas of education, donations for the upkeep of children in orphanages and sports promotion.

ered the atrocities committed by the secretary when all the paid participants could not accessed their bookings online and was reported to the association executive He said that the executives of the association at various meetings asked Joseph Eromosele about the summit, but he was always coming up with excuses. “When we heard about the issue, we constituted an emergency meeting. Eromosele was immediately cut off from commu-

nications, and off all the platforms of the NLPGA, and disclaimers went out”. “The matter is being pursued by the police,” he added.. T h e o r g a n i s e r s, A l l Events Group Pte Ltd, in a report made available to the NLPGA, said it staff were working with Joseph Eromosele through its director of LPG Summit, Vincent Choy, to organise the summit, which failed to hold as planned. The reports said the cancelling of the Africa LPG Summit just days before the start of the event has placed enormous financial and reputational losses on the summit and it remains to see if the damage is repairable. Joseph Eremosele according to report advised them to apply for a visa on arrival for all the participants for the summit and we submitted applications for over 70 of the participants,” the report stated. “ Up to the day of our flight, the 15 June 2018, the letter of approval for the visas was not issued and we were forced to cancel our flight. “We advised all the par-

ticipants who had been relying on NLPGA to organise the VOA that they were not now going to be available, and we had no option but to cancel the event. “ Some other exhibitors and speakers who were asked to apply for their own visas because they submitted their application late were able to obtain their visas,’’ the report said. It also said that the organisers said the President of the NLPGA, Nuhu Yakubu, was unaware that his association (NLPGA) had been working with them as a co-organiser. The president of NALGA , Nuhu Yakubu who spoke to BusinessDay said that what the executive secretary NLPGA did was pure fraud and that his case has been reported to the Special fraud Unit of the Nigerian Police. He said that the executive secretary was dealing with the organizers of the summit for almost a year neither him nor other association members was aware that the summit was going hold. He said total amount involved was $ 124,000 and that he has already started paying back.

Police to support Eko Disco for debt recovery

he management of Eko Electricity Distribution Company has said that the Lagos State Command of Nigeria Police has promised to support the company to boost its revenue generation through debts recovery. Godwin Idemudia, the general manager, corporate communications of the company said in a statement issued and made available to newsmen in Lagos. Idemudia quoted the deputy Commissioner of Police, Lagos State Command, Ayuba Elkanah as having made the promised during a visit of the management of EKEDC to his office. According to him, the police boss said the effort was to support the company to perform its operational du-

ties effectively and be able to recoup its debts owing them in some of the police formation under their jurisdiction. Ayuba Elkanah, he said, stated that aside from the fact that the police needs power supply to power some vital security gadgets, constant power supply is also very vital in enhancing security in the society. “Constant ele ctr icity supply makes the work of electricity distribution companies and that of the police complimentary to each other. Since the work of the two organisations are complimentary, we must find a way to work together for better performance of our respective duties,” he said. Idemudia said that the police chief appreciated

the gesture of the disco in reaching out to the police for mutual engagement instead of resorting to disconnection of police formations and facilities for non-payment without consultation. He said that Elkanah said, the police, through the office of the Provost Marshal, would be ready to work with the company for reconciliation of indebtedness figure and settlement of debts after reconciliation. , the commissioner said. Earlier, the leader of EKEDC team, Chasha Momoh who is the Head Project Monitoring Unit of the Company, said the visit was in furtherance of the cordial relationship between the police and Eko Disco. She stressed the importance of prompt settlement of electricity bill by all organisations whether government or private since the company also pays for the bulk energy it receives from the national grid. In his remarks, Abayomi Faniyi, Lagos State Provost Marshal of the Nigeria Police, a chief superintendent of Police, expressed the readiness of the police to work with Eko Disco towards offsetting electricity debts for both police residential and operational locations.

OLU

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

In association with

Mortgage finance, Land Use Act resonate as experts chart course for housing sector growth Stories by CHUKA UROKO

eveloping housing cheaply and delivering same at affordable prices remain thorny issues in Nigeria that seem to have defied quick-win solutions, limiting investment and constraining growth of the sector. But when experts and sundry stakeholders gathered in Abuja last week, seeking ways of ‘driving growth and sustainability in Nigeria’s housing and mortgage markets’, despite varied views, they had a common focus on mortgage finance and Land Use Act as major barriers to growth. The experts, who gathered for the 12th edition of the Abuja International Housing Show (AIHS), described as the largest housing and construction sector stakeholder’s platform in Africa, identified Land Use Act of 1978 as the most critical constraint to the growth of the housing sector in Nigeria. The place of these two factors in the housing sector is quite critical. No housing market can be said to be mature as those of UK and the US without a well developed and functional mortgage system while there can be no functional mortgage system without a good and flexible land administration system. In Nigeria, both of these are lacking. The growth of the mortgage system in the country has been greatly hampered by very rigid, inflexible and primitive land laws as encapsulated in the Land Use Act. Passed by a decree in 1978 and inserted into the 1979 national constitution, the provisions of the Act can only be changed through a constitutional amendment, necessitating a two-thirds majority of both the federal and state legislatures. Multiple attempts have been made to influence a revisit of the Act, but the process has been too cumbersome to succeed, causing the intending parties to drop their plans in frustration. But developers have to produce houses and mortgage operators have to continue in business. So, “it has become clear that we must

L-R: Jide Odusola, MD, OPIC, Ugochukwu Chime, president, REDAN; Adeniyi Akinlusi, president, MBAN; Hakeem Oguniran, MD/CEO, NMRC, and Olugbenga Nubi, director, Centre for Housing Studies, UNILAG, at the Abuja Int’l Housing show in Abuja recently.

create an enabling environment in which a sustainable mortgage market can thrive, and one of the most important drivers of this is a well established land administration process”, said Adedeji Adesemoye, Head, Project Administration Team, Nigeria Housing Finance Programme, and Deputy Director, Other Financial Institutions Supervision Department (OFISD) at CBN. Adesemoye who spoke on ‘Managing Unintended Consequences of the 1978 Land Use Act’ at the AIHS, highlighted efforts, including the setting up the Nigeria Housing Finance Programme (NHFP) and the Model, Mortgage & Foreclosure Law (MMFL), being put in place to grow the housing market. NHFP is being implemented by the federal government through its relevant ministries, departments and agencies (MDAs) and this is supported by the World Bank International Development Association (IDA). The objective of the programme, Adesemoye explained, was to increase access to housing finance by deepening primary and secondary mortgage markets. The MMFL is a draft bill designed to make delinquency in mortgage repayment unattractive to mortgagors and reduce losses from mort-

gage loans. It is expected to create a more attractive and vibrant environment, thereby attracting investors providing long term, low cost and more available capital to the market. Its main strategy is to encourage the use of administrative procedures to address some of the most negative provisions of the Act. For property investors, this is a good development. But in addition to these efforts, developers also owe it as a duty to themselves to, according to Hakeem Oguniran, the outgoing managing director of UAC Property Development Company (UPDC), be creative in managing the limiting impact of Land Use Act. He advised that developers should de-emphasize the traditional way of raising development finance, explaining that they should go to the capital market to raise funds by floating bonds which offer much cheaper rates at longer tenor. To also address the problem of mortgage market growth, the CBN has come up with an initiative known as mortgage guarantee programme which is mortgage given to a borrower by a lender where an identified third party will take responsibility for the loan if the borrower defaults. Expectation here is that this will push up housing affordability because, with

the new programme, once a borrower defaults, the third party receives a claim from the lender, pays the lender off, and assumes responsibility for the mortgage. “A quality mortgage guarantee programme is used to provide credit loss protection to lenders in case of borrower default”, explained Tokunbo Martins, Director, Other Financial Institutions Supervision Department (OFISD) at CBN, who also spoke at the Abuja International Housing Show. “Mortgage guarantee products incentivize lenders to accept loans with lower down-payments, thus increasing affordability”, she added. The implication of this is that borrowers who, ordinarily, would not have qualified for mortgage loan by reason of their low income, can now obtain loans which enhances their affordability. From the government angle, Babatunde Fashola, the minister for power, works and housing, was of the opinion that one of the surest ways of making housing affordable and growing the housing sector was by industrializing housing development by laying greater emphasis on locally produced building materials. Industrializing the secContinues on page 25

Comfort for investors as CBN deepens efforts at growing mortgage market

ore than ever before, efforts at driving growth in the fledgling mortgage market in Nigeria is gaining traction and expectation is that, if there is no drop or relaxation in the tempo of activities, it won’t be long before the market stats seeing the impact and fruits of those efforts. The mortgage market in Africa’s largest economy remains in slow growth due to a plethora of reasons some of which are now being addressed in the new efforts which involve major stakeholders in the mortgage industry. The Nigeria Mortgage Guarantee Company (NMGC), Model Mortgage Foreclosure Bill, and the Uniform Mortgage Underwriting Standards for both the formal and informal sectors of the economy are the most outstanding of the new initiatives in the industry. The partnership among the Central Bank of Nigeria (CBN), the Nigerian Mortgage Refinance Company (NMRC) and the Mortgage Banking Association of Nigeria (MBAN) is more than enough comfort for both investors and home seekers that it is a new dawn in the market. To address the problems associated with land processes, the CBN is partnering with NMRC, which spear-headed the drafting of a Model Mortgage Foreclosure Bill, as well as MBAN and other strategic partners, to encourage the passage of a Model Mortgage Foreclosure Law in every state of the nation. The apex bank has even provided states with the draft MMFL, and has held an MMFL workshop with their key representatives to ease their task to passage of the law. The bank says it is encouraged by the recent surge in housing policy adjudication, led by the most housing-friendly states in Nigeria, citing the Lagos High Court which has delivered ground-breaking decisions positively impacting the industry and giving comfort to intending homebuyers as well as investors. The judiciary had always been castigated for its slow justice delivery, but the decision by the Court of Appeal in the Thomas Wyatt & Ors matter is an arbiter of the increased sensitivity of the judiciary to mortgage contract relationships, and it is applauded for

that brilliance and clarity. Standardization in mortgage processes is also being addressed head-on as could be seen in the Uniform underwriting standards for the formal sector, informal sector, and non-interest sector which have already been adopted, and are being used by the larger section of the industry. NMRC has launched the MMS mortgage platform, which has been endorsed by the CBN and is encouraging all parties to utilize. This platform will standardize documentation, loan processing and underwriting, property valuation, closing and many other areas. The current effort is however not unmindful of the cultural biases towards mortgage loans. The CBN in particular believes that cultural aversion to mortgage loans is actually one of the toughest battles in the housing sector, but has decided to continue to engage with the public in order to destigmatize mortgage finance, using the positive effects on employment,internally generated revenue (IGR) and generational wealth enhancement. The bank says it is encouraged by the interest shown at state government levels, and so expects to see significant progress in mortgage friendly legislation in future. A significant challenge in the market is lack of knowledge and awareness regarding mortgage loans. The bank’s National Housing Finance Programme (NHFP) national campaign ‘My Own Home’ has been focused on creating such public awareness, and the states and industry are expected to do their part. There has been a significant uptick in public curiosity regarding various types of home financing, and the bank assures it will continue to encourage all industry players to invest in advertising, education and incentivization to ensure the continued viability of the housing sector. CBN believes the entrance of a robust and viable mortgage guarantee product into the housing market is clearly a win for all parties concerned, pointing out however that its existence and/or viability will be directly related to the effort the industry operators invest in ensuring a suitable environment for its development, deployment and administration.

BUSINESS DAY

Tuesday 24 July 2018

How weak bank loan slows real estate performance Endurance Okafor

he real estate industry in Nigeria seems to depend heavily on commercial banks’ funding, as the decline in lending rate to this industry has contributed in pulling it in downward trajectory. Total bank lending to construction and real estate sector declined by 11 percent from N4.81 trillion in 2015 to N4.2 trillion in 2017. On the reasons for the decline in lending to the sector within the period under review, analysts attributed it to the nation’s five quarter recession which was experienced between first quarter of 2016 into the first quarter of the following year. “The economy was in recession, and even the sector is still in contraction. So, lending to most sectors declined. Banks saw other sectors viable enough to give credit to because they were more certain to get their return from those sectors in order to prevent bad debt which is not good for their books,” an analyst commented on the condition of anonymity told Business Day by phone. Like other commoditydependent countries, Nigeria has had to weather the storm of declining petrodollars, following a lengthy collapse in oil prices which started mid2014 and production disruptions caused by disgruntled militants who damaged oil pipelines in their clamour for better compensation for the

oil extracted from their region. This resulted to the country’s longest contraction in more than 25 years, although it emerged from the negative growth when oil prices increased, and as such has expanded for four consecutive quarters into 2018. Bank lending to construction and real estate sectors in Nigeria has remained dismal when compared to the likes of South Africa, the continent’s most-industrialized economy. With a population of about 55 million, mortgages in South Africa account for almost 30 percent of total credit, the largest component of banks’ assets, which amounted to about ZAR5.14 trillion ($382 billion) at the end of January, according to

central bank data. Negative and weak growth in construction and real estate sector of Africa’s largest economy continues to drag growth in the country’s GDP even as it slowed down in the first quarter of 2018 to 1.95 from 2.11 in the previous quarter owing mainly to weak bank lending to the sector. Meanwhile, Africa’s most populous nation has a housing deficit of about 17 million units and its mortgage rates ranging between 7-10 percent for the National Housing Fund (NHF) and between 15-25 percent for commercial mortgage institutions which is considered by industry experts as one of the highest in the world. Another analyst however

pointed out the importance of bank lending to the real estate sector, saying, “this sector of the economy is the kind that is in steadyneedofliquidityandlong term capital; when not available , it will continue to be in the position it is now,” the analyst who asked not be quoted said. The economy, he added, needed to grow more in order for the property sector to feel the impact. “However, the economy has to expand more as this will rub off on the purchasing power of the citizens and, as such, there will be the demand for the products produced by the sector; so making funds available to the sector is not just enough, because if there are no demands to meet their supply, the sector will still be doing as badly

as when it lacked funds,” the analyst added. According to the National Bureau of Statistics, real growth rate of the real estate sector, real GDP growth recorded in the sector in Q1 2018 stood at -9.40 percent, lower than growth recorded in Q1 2017 by 6.30 percentage points and lower by 3.48 percentage points relative to Q4 2017. Quarter-on-quarter, the sector grew by -30.57 percent in the Q1 2018. It contributed 5.63 percent to real GDP in Q1 2018, lower than the 6.34percent it recorded in the corresponding quarter of 2017 and lower than the 7.03 percent in the preceding quarter. This has been ascribed to the constraints placed on foreign exchange access that affected the construction and real estate industry, which is profoundly import-based, and the unbalanced economic climate, which has affected the general inclination to invest in the country’s real estate sector. “The government has a larger role to play in the aspect of policy. If the government is able to develop and implement policies that are favorable to these sectors, definitely, they will see a boom. The prevalence of a lot of taxes and additional charges that are being put on construction companies and real estate developers is not helping and it frustrates the entire process of being able to initiate and complete a project,” Hakeem Sadiq, Founder of Zama,a real estate advisory firm, said.

Mortgage finance, Land Use Act resonate as... Continued from page 24 tor, in the opinion of the minister who was keynote speaker at the housing show, would not only drag down the cost of construction, material wise, but would also create jobs for those involved in the housing value chain including input manufacturers, professionals and artisans. But the experts tasked the government on providing infrastructure and coming up with policy frameworks in the financial sector that will make mortgage accessible and affordable through a significant reduction in interest rate. “The housing market behaves in a particular way; it gravitates where there is effective demand. Government should recognize that the weakest demand comes from the low end market and so should direct regulatory system towards that end with policies to address that problem”, said Femi Adewole, managing director, Shelter Afrique, Kenya. Adewole added that the government should also adopt the zoning system through which it would discover areas where housing need is highest and the type of housing needed, just as it should impose heavy tax on houses that are unoccupied to discourage further development in that area.

Dangote pledges collaboration with FMBN, supports N500bn recapitalization

frica’s richest man and President/ CEO, Dangote Group, Aliko Dangote, has pledged collaboration with the Federal Mortgage Bank of Nigeria (FMBN) in the bank’s renewed drive towards affordable housing delivery for the largely un-housed Nigerian citizens. Dangote who was at the apex mortgage bank’s office in Abuja on courtesy visit along with Isyaku Rabiu, chairman/CEO, BUA Groups of Companies, expressed preparedness to partner with FMBN to boost affordable and social housing delivery for Nigerians. This development has brought both excitement and hope in the nation’s housing sector given that the two business moguls are frontline cement producers. What they can do to the housing sector using their cement product which is a major component of housing development can only be left to the imagination.

L-R: Rahimatu Aminu Aliyu, Executive Director, Loans and Mortgages, FMBN: Ahmed Dangiwa, MD/CE, FMBN; Aliko Dangote, President/CEO, Dangote Group; Adewale Adeeyo, chairman, FMBN; Isiaka Rabiu, chairman, BUA Group; Umar Dankane Abdullahi, executive director , Business Development and portfolio management, FMBN; and Aji Kolo Bama, board member, FMBN, during the visit to the FMBN head office in Abuja at the weekend.

“Dangote, who ranks as Africa’s richest business man and investor, and Rabiu, a leading Nigerian businessman with vast investment in manufacturing, infrastructure and agriculture, are Africa’s two largest producers of cement, a

critical input in the housing construction industry”, a statement from FMBN obtained by BusinessDay at the weekend noted. Dangote told members of the FMBN board during the visit that he was in total support of the proposed

N500 billion recapitalization of the bank, explaining that it was a much needed development that would help power FMBN’s efforts at more effectively discharging its mandate. Recently, the federal government announced plans

to inject N500 billion (about $1.4 billion) into FMBN over the next five years in an effort to spur homeownership that has failed to take off in the country. Expectation is that the inability of the mortgage industry to bridge the huge housing deficit estimated at 17 million units may soon turn the corner following this intervention. The support for the fund coming from Dangote has given fresh hope for the fund and its purpose. Experts in the mortgage industry expect the N100 billion annual fund intervention to make housing more affordable as it is expected to encourage Nigerians to take mortgage as a preferred choice of raising fund for owning homes. Interestingly, Dangote also assured that his company was ready to collaborate with FMBN towards reducing the housing deficit by increasing the tempo and scale of social housing provision across the country.

“Count me as a friend of FMBN. We are open to collaborating and supporting the good work that your bank is doing towards ensuring the provision of affordable housing to medium and low income earners in Nigeria”, he said, advising the management of the bank to consider adopting mass housing models that have worked in other countries such as Ethiopia. In the same vein, Rabiu also said he was committed to a close partnership with FMBN. “I am committed to forging a partnership that will add value to FMBN’s work and I look forward to further engagements in this regard”, he said/ Adewale Adeeyo, FMBN’s board chairman, commended the two business moguls for their visit and good intentions to partner with FMBN, assuring that the bank would work closely with them towards the consolidation and implementation of the partnership.

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

Markets + Finance ‘Providing proprietary research, commentary, analysis and financial news coverage unmatched in today’s market. Published weekly, Markets & Finance provides all the key intelligence you need.’

Transcorp surmount headwinds as profit hits 3 year high of N10.87bn BALA AUGIE

ransnational Corporation of Nigeria (Transcorp) Plc, the leading diversified conglomerate with interest in oil and gas, Agric, power, and hospitality just released its half year results that showed improvement in key ratios, sales and profitability. The impressive result means the firm has surmounted the headwinds brought on by lower oil price, devaluation of the currency, and disruption of case pipe lines by Niger Delta militants. Shareholders will have their earnings magnified as the firm’s diversified revenue bases are unerpining profitability and margins. With multimillion dollar projects in its pipe line that cuts across its business segments, the leading diversified conglomerate is dedicated to ensuring that each revenue units are a cash cow. In the finance parlance, a firm with a well diversified portfolio- able to spread its investment in more than one portfolio- is better positioned to weather the storm of whirlwinds when one investment underperforms. Likening the above portfolio theory to the corporate world means Transcorp is better position to surmount macroeconomic headwinds because of its diversified revenue base than firms that have a single source of revenue. For the first six months through June 2018, Transcorp recorded sales of N54.08 billion, which is double N21.21 billion recorded in 2014. The steady growth in sales was largely driven by income from energy sent out in the last 3 years as the firm’s investment in the power plant has yielded fruit. Revenue from energy sent out hits N29.79 billion in June 2018 from N11.11 billion recorded the corresponding period of 2016. In September 2012, during the privatization of Nigeria’s national power assets, Transcorp Plc won the bid for the Federal Government of Nigeria’s distressed

power generating company, Ughelli Power Plc – operator of Ughelli Power Plant. The $300 million investment was part of strategic investor Heirs Holdings’ commitment to USAID’s Power Africa initiative. In November 2015, Transcorp Ughelli Power Limited and Ughelli Power Plc merged, and Transcorp Power Limited was born. The merger harmonized the management and operations of Transcorp’s power business for greater efficiency. When Transcorp took ownership of the 1000MW capacity plant in 2013, our mission was to take it from generating only 160MW of power daily, back to producing at its full 972MW capacity. Today, Transcorp Power has increased its generating capacity by 525%, and plans to grow it to over 3,000MW in the next five years. Transcorp is efficient in managing costs directly attributable to projects as gross profit increased to a five year high of N24.57 billion. See Charts. The largest conglomerate in Africa’s largest economy recorded a profit after tax of N10.87 billion in June 2018 from a loss of N12.19 billion recorded in 2016, a period when an economic downturn deal a blow on margins. A combination of a weak currency brought on by the devaluation of the Naira by the central bank from N197/$ to N282 that resulted in foreign exchange loss of N14 billion in 2016 and gas shortages caused by attacks on oil facilities by militants in the Niger Delta region deal a blow on earnings. While Transcorp’s net profit margins of 45 percent in the period under review is lower than the all time high of 71 percent in 2014, the ratio is higher than 46 percent recorded as at June 2017. The gradual improvement in net profit margins means the firm is able to turn each Naira in invested in sales into higher profit. Earnings Before interest and Tax (EBIT) margin increased to 32 in June 2018 from 24 percent recorded as at June 2016, thanks to steady sales growth.

A gradual economic recovery is also responsible the conglomerates operating performance. In the first quarter of 2017, Nigeria existed its first recession in 25 years, thanks to a rebound in crude oil price and output and the relative calm in the Niger Delta region. Transcorp’s leverage or gearing ratios have improved as debt to equity (D/E) ratio fell to 95 percent in June 2018 as against 114 percent recorded in 2016 and 114 percent in 2017, respectively. This means the proportion of debt a to equity in the balance sheet of the firm has reduced, which has also lowered exposure to financial risk.

Federal Government’s renewed commitment to the power sector by way of the N701 billion guarantees to NBET for payment for energy sold and associated invoices will help strengthen the conglomerates’ cash flow position and balance sheet. A speedy payment of monies owed to generating companies will boost investor confidence that Transcorp is being paid for services rendered. The NBET owed Transcorp Power Limited about N50 billion by December 31, 2016. Transcorp’s share price closed N1.17 as of 2:00 pm on Friday, valuing it at N46.77 billion.

BD MARKETS + FINANCE (Business Team lead: PATRICK ATUANYA - Analysts: BALA AUGIE and LOLADE AKINMURELE)

BUSINESS DAY

C002D5556

Tuesday 24 July 2018

Interview Financial Inclusion: Nigeria needs to imbibe Obadiah Mailafia, a development economist and former deputy governor of the Central Bank of Nigeria (CBN), undertook a survey on Financial Inclusion in Ghana last December with much of his survey work based on one-on-one unstructured interviews with experts and stakeholders both in the public and private sectors to glean some insight into Accra’s rapidly growing mobile money market which has been a boon for financial inclusion in the West African country. Mailafia’s survey, he fondly recalls, was enriched, by an interview with the Vice-President of Ghana, Muhammadu Bawumia, himself a distinguished development economist and former central banker who has been a major driver of the financial inclusion agenda in Accra. In this exclusive chat with BusinessDay’s Lolade Akinmurele in Nigeria’s capital city of Abuja, Mailafia shares lessons from his Ghanaian experience that could be useful in driving financial inclusion in Africa’s most populous nation where large swaths of its people are financially excluded, undermining economic growth in a country that will be the 3rd most populous country in the world by 2050, yet is plagued by a dearth of requisite infrastructure.

ccording to the World Bank data, the number of adults with an account in Nigeria declined to 40 percent in 2017 from 44 percent in 2014. For context, the 40 percent drop was below the average account ownership of 43 percent for Sub-Saharan Africa and even further below the 58 percent average index points for lower middle-income countries. Why are we in reverse gear and what is the implication of this damning trend on the economy, as I would imagine there is a correlation between economic development and financial inclusion? The revelation that we are losing ground with regards to financial inclusion is highly regrettable. Financial economics has established categorically that there is a direct correlation between economic growth and the level of financial inclusion. This can only mean that our growth prospects are being undermined. Several factors account for this loss of ground. First, the recent economic recession affected households businesses and individuals. The general level of incomes fell, making disposable income of many to be depleted. It would have discouraged many from keeping accounts in the banking system. Secondly, the BVN initiative and the anti-corruption fight scared many bank account holders to withdraw from the banking system entirely. A third factor is the array of charges being introduced on bank account holders who wish to withdraw money from the bank. These new charges have been such that some market women, private traders and other businesspeople have decided it is not worth their while to keep their money in the banking system. We have to reexamine where we have made mistakes so we can recover the lost ground and make progress. What must happen between monetary authorities and relevant stakeholders if the country must ease access to financial products and services? First of all, the structure of interest rates is way too high. The monetary authorities would tell you that they have to keep them high so as to tame inflation and also to attract portfolio investors. While I am a hawk as far as inflation is concerned, I find the argument about portfolio investors unconvincing. We cannot orient an entire financial system just to encourage foreign portfolio investors. The fundamental logic of monetary policy must be to ensure a stable and sound financial and

Mailafia

monetary system that guarantees growth and collective welfare. The monetary authorities need therefore to bring down interest rates to affordable level so as to boost growth. Linked to this is the cost of funds. The kinds of hidden charges that banks place on their loans are iniquitous. We need to create boost long term by deploying the idle pension funds for use in infrastructures and mortgages. We need a more vibrant financial system where businesses have access to affordable credit that will allow them to thrive and flourish. Some 34 million bank accounts versus 145.1 million mobile subscribers. Mobile money is easily a more viable

option in driving financial inclusion in Nigeria. A similar approach is yielding fruit in Ghana. But, what, in your view, are the biggest constraints to the growth of mobile money here in Nigeria? The main challenge is regulatory. The CBN defines a commercial bank as a financial organisation that takes on deposits and gives out loans. In this sense mobile money providers are not welcome. I found that to be the experience when I did a survey on financial inclusion there. The Bank of Ghana was quite averse to the idea of mobile money providers. Commercial bankers were also averse to it, not desiring new competitors on the scene. Ghana

overcame the problem by encouraging Telcos (telecommunications companies) to register new independent financial companies with mandate to engage in mobile money business. The framework for their supervision is shared between the central bank and the telecommunications regulatory commission. So far, it is working very well. Our key players in Nigeria need to learn from and imbibe the lessons of the Ghanaian experience. Much has been said of the need for Nigeria to adopt a telco-led mobile money market as is the case in most East African countries and Ghana, what are the ills of replicating that here? What in your view is holding the CBN back from breaking

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

Interview Ghanaian lessons, says Mailafia the monopoly of banks in that space and bringing in the telcos? Yes, you are right; East Africa has made much more progress than our own ECOWAS region. What we need is a change in mindset. Our banking oligopolies have behaved in a collusive manner to ensure they keep competition to the minimum. This is not helped by the fact that some people in our apex bank have close links with the commercial banks. What we need is a change in mindset and a creative approach that allows telcos to branch off into the financial sector. The more, the merrier. This will bring down the costs of funds and will benefit everyone in the economy. While the financial inclusion rate in Nigeria is sliding, inclusion rate in Ghana climbed to 58 percent in 2017 from as low as 41 percent in 2014 helped by the almost meteoric rise in mobile money services. From your little time there, what did you learn about the Ghanaian mobile money structure that makes it successful? The matrix of institutional infrastructure underpinning the Ghanaian payments system aims to enhance ease and speed of transactions by business agents, government, banks, traders and other business entities. In 2008 the Bank of Ghana (BoG), issued branchless banking regulations and guidelines to enable commercial banks leverage digital technologies in the financial inclusion space. But those guidelines limited the role played by mobile network operators (MNOs). Subsequently, Ghana signed the Maya Declaration in 2012 while joining the Better Than Cash Alliance (BTCA) in 2014. By so doing, the authorities were demonstrating a firm commitment to enabling digital financial inclusion. To help manage the growing digital financial services (DFS) sector in Ghana—which grew from an estimated 150,000 active users in 2011 to more than 4 million in 2016 — the central released new guidelines governing e-money issuers and the use of agents in financial services in July 2015. According to available data, Ghana currently has 38 million mobile subscribers, which amounts to 130% telephony penetration. Was there an initial kick-back to the existence of mobile money providers by the traditional banks? From our interviews with BoG staff, there was much resistance by commercial banks to development of mobile banking by TELCOs. Within the central bank itself, with its known conservative bent, there was some resistance with regard to mobile banking. The BoG gradually overcame the resistance through a form of legal creativity. The TELCOs were allowed to float independent companies in which they were major shareholders. These companies became legal entities independent of the TELCOS; able to do essentially banking business while not being commercial banks in the full sense of the word. By year 2016, there were six main digital financial services providers across Ghana. These are: MTN, Tigo, Airtel, Vodafone, Fidelity Bank and e-Zwich. MTN, Tigo, Airtel and Vodafone are all mobile network operators offering mobile money services throughout the country. In addition to these DFS-oriented financial services providers, there are more than 27 commercial banks, some 60 non-bank financial institutions (NBFIs), 138 rural and community banks, 503 licensed MFIs and hundreds of licensed individual susu collectors that have

become active across the country. Mobile money is clearly getting popular in Ghana; in most instances used to pay utility bills, buy goods and services, make direct payments for loans and savings contributions, buy airtime and data bundles, send to/receive money from other mobile money users, and send money to and withdraw money from a bank (MTN Money and Airtel Money, Ghana). The BoG has provided policies that are enabling banks to conduct m-banking in the quest to support the development of branchless banking in the country. From our own discussions with some commercial banks, it is evident that banks in Ghana are integrating their mobile banking operations with mobile money service providers to ensure enhanced financial inclusion for the unbanked. For example, Ecobank is collaborating with Airtel to provide mobile money to unbanked subscribers of Airtel services. Zenith Bank, United Bank of Africa (UBA) and⎫ Standard Chartered Bank have also partnered with Airtel to offer banking facilities to Airtel money services in Ghana. Mobile money has grown in parallel with other financial electronic payment services (e.g., e-zwich, Afric Xpress, eTransact Ghana) that enable loading and sending of electronic cash, while facilitating remittance transactions via phone, among other services. There is a perceptible gap in the rate of mobile money usage between the rural countryside and the modern urban sector. Rural and poor people are least likely to hold an active financial account; while

for females, financial account ownership is somewhat below the national average. The second largest gap in financial service use is between urban and rural residents; Are there any innovative yet profitable products that the banks can create to attract the unbanked populace plying their trade via informal channels? Well, I’m afraid, there is no magic wand. We need a piecemeal, gradualist approach that builds on what we have to gain territory and improve how things work. As a starting point, I recommend that the social transfers presently being paid out by government to the poorest people should be predicated on having a viable bank account. And all such transfers should be effected through the banking system. What role can fintech and digital payment platforms play in deepening financial inclusion and do you consider the CBN’s plan to revoke the license of some 15 mobile money operators who do not meet a N2bn minimum capital requirement, a threat to financial inclusion? Fintech companies and digital payment platforms are very important in the business of financial inclusion. We should do more to encourage them. Well, I find the minimum capital requirement of N2 billion for mobile money operators way too high. We should not forget that this business involves high volumes and very small fees. It takes time to build the business and even more time to make a

Widespread digital payments and financial services is driving financial inclusion globally and it can add 12. 4% to Nigeria’s Gross Domestic Product (GDP) by 2025, according to advisory firm, Mckinsey Global Institute (MGI)

profit. Setting such high minimum capital requirements can only discourage new players while making difficult to run a profitable business. What is the role of financial literacy in raising financial inclusion and what is lacking in terms of leveraging this as a tool to bring more people into the financial fold? Interestingly enough, the regression in financial inclusion is also reflected in regression in general literacy levels. There is anecdotal evidence that illiteracy is increasing. Many more children are not in the education system than before. Illiteracy is, sadly, on the increase. The same goes for financial literacy. I am aware that CBN and agencies such as the Securities and Exchange Commission (SEC) have had some financial literacy initiatives. We need more and more of those. Financial literacy is an important component of financial inclusion in general. The CBN is probably not going to attain its 80 percent financial inclusion target by 2020. If you were hired by the CBN as an independent consultant this week, what would you do differently to achieve the set goal in record time? First, I will remove the inordinate charges on OTC banking transactions. People should be free to bring in their money and take it out any they like. This singular decision will enhance bank accounts by as much as 20 percent. Secondly, I will accelerate action in implementing the mobile money infrastructure. We will use all the 36 branches of the CBN to institute financial literacy programmes, in local languages, to get more people into the banking system. We would also work with government to get beneficiaries of all social transfers to have bank accounts and to ensure that all such social transfers are done through the banking system. We will also get a company to build for us solar-based POS machines so that all transactions in our local markets, from Wuse Market in Abuja to Alaba Market in Lagos and throughout our other major markets from Onitsha to Jos, Kano, Nnewi and Aba, are done with POS machines. It will work magic for financial inclusion. Widespread digital payments and financial services is driving financial inclusion globally and it can add 12. 4% to Nigeria’s Gross Domestic Product (GDP) by 2025, according to advisory firm, Mckinsey Global Institute (MGI). Other than lifting economic growth, what other benefits can be derived from inculcating a formal savings culture in a country where the savings to GDP ratio is about 5 percent and pension assets are less than 9 percent of GDP. Financial inclusion can be a great boon for savings. Our level of savings, as you rightly observed, are quite low. Savings in Asia can be as high as over 50 percent. The propensity to save derives from several factors: culture, national psychology, availability of financial infrastructure and so on. National savings provide the pool of funds that are invested for an economy to grow. It is also crucial to infrastructure development. We need to do all we can to promote savings. One way of doing so is obviously through promotion of financial inclusion.

Politics & Policy

BUSINESS DAY

C002D5556

Tuesday 24 July 2018

2019: NIM, others lead merger process with 15 political parties to unseat Buhari …To notify INEC this week INNOCENT ODOH, Abuja

he Nigeria Intervention Movement (NIM) has finalised plans to effect the merger of some leading political parties and movements in the country to be able to effectively dislodge the ruling APC government led by President Muhammadu Buhari by 2019. A statement issued on Monday by the media assistant to NIM, Olubori Isah Obafemi, noted that not less than 15 political parties and movements have already signed on to the deal; with a strong readiness to dissolve into a common political platform ahead of the 2019 general election. Some of the gladiators and leaders nominated by NIM to drive the final stage of the merger are Olisa Agbakoba, Buba Galadima, Ghali Umar Naaba, Donald Duke and Umar Dangiwa. Others include Abdujalil Tafawa Balewa, Datti Baba Ahmed, John Darah, Olu Agunloye and Mallam Isa Ozi Salami. “It is worthy of note that NIM and President Olusegun Obasanjo’s Coalition for Nigeria Movement (CNM) were front liners in the initiative that translated into the grand alliance of some like-minded political parties and movements, which was recently launched as Coalition of United Political Parties

Olisa Agbakoba

(CUPP) in Abuja two weeks ago,” the statement said. NIM disclosed that the latest move became inevitable for NIM, as the antecedent of electoral alliance in Nigeria has proved a great deal of futility and despondency in Nigeria since it has barely achieved its purpose, due to political self-interest of coalescing

parties and their gladiators. “Nigeria’s political history is clearly replete with failures of electoral alliance, especially as it concerns adopting common platforms or flag-bearers of past alliances at the critical point of elections,” NIM stated. “It is to that extent that the National Secretariat of NIM was

Osun 2018: Ogunbiyi’s supporters allege manipulation of PDP primaries ... Protest emergence of Adeleke as candidate …SSG dumps APC, picks ADP guber ticket BOLADALE BAMIGBOLA, Osogbo

undreds of supporters of People’s Democratic Party (PDP) in Osun State on Monday stormed the secretariat of the party located along Osogbo/Ilorin road, Osogbo, protesting alleged manipulation of Saturday’s governorship primary election of the party, just as they demanded immediate redress. The protesters, who are supporters of Akin Ogunbiyi, a PDP aspirant that came second in the PDP governorship primary election on Saturday, said the exercise was manipulated in favour of Ademola Adeleke, who eventually won the election. Armed with placards with inscriptions such as “We don’t want dancing Senator”, “Ogunbiyi is our candidate”, “Ogunbiyi won Osun gubernatorial primary” and so on, the protest which lasted almost one

hour, grounded vehicular movements on the ever busy Osogbo/ Ilorin road. Spokesperson for the protesters, Funmiso Babarinde, said Ogunbiyi won the Saturday’s election but had his victory upturned through manipulations that took place at the venue of the exercise. Babarinde said: “The process leading to primary was fraught with irregularities. Also, the main primary was done in such a manner that prevented the actual winner of the exercise, Akin Ogunbiyi, to be announced. “We want the party leadership to look into the votes gathered by the aspirants again and ensure that proper thing is done. We see the September election as the major faith decider for PDP in Osun State. “We can’t afford to miss this opportunity to return to power. Dr. Akin Ogunbiyi won the primary. Let the national secretariat look at the processes leading to Osun gov-

ernorship primary and also look at what transpired on Saturday again before deciding whose name it will submit to Independent National Electoral Commission (INEC).” Meanwhile, Secretary to Osun State government (SSG), Moshood Adeoti, has resigned his position in Governor Rauf Aregbesola’s cabinet and his membership of the ruling All Progressives Congress (APC) in Osun State. Adeoti, an indigene of Iwo, a town in Osun West Senatorial District, was one of the aspirants that jostled for the governorship ticket of APC and lost out to Gboyega Oyetola, who emerged candidate of the party in the direct primaries adopted to pick gubernatorial candidate by the ruling party. The SSG and his supporters were therefore, received Monday into the Action Democratic Party (ADP), at the party’s secretariat, where he also announced his defection to the party.

mandated in June to embark on a national consultation with leaders of political parties for the purpose of exploring the prospects of initiating a formidable alliance or merger of front line political parties. This will include other groups that are yet to apply for registration with INEC or those with pending registration towards an understanding for a fusion into a common political platform for the 2019 elections in order to enable the required cohesion for ousting the ruling political platform in Nigeria. “However, alliance talks, being coordinated by the Director General of NIM recently delved more towards the prospects of sealing a formidable and result oriented merger as a way of consolidating the progress made with the formation of CUPP. “So, in a bid to quickly wrap up the merger deal this week, for parties, which prefer merger to alliance, the National Secretariat of NIM, in a deft move to meet the statutory deadline for merger or fusion of parties in Nigeria, is expected to urgently send a formal notice to the Independent National Electoral Commission (INEC) in lieu of the 21 days notice required by INEC for the merger of political parties as stipulated by the Nigeria’s Electoral Act,” the statement added. It is very clear to aligning stake-

holders that merger of political parties by the law is still achievable and it is the sure bet for defeating Nigeria’s ruling forces in 2019, and this will not prevent cooperation and collaboration with parties that simply prefers to operate only within the electoral alliance of CUPP,” the statement said. Some of the fresh and neutral nomenclatures already agreed by parties and stakeholders involved and to be proposed for INEC approval this week includes Accord of All Democrats (AAD); Nigeria Intervention Movement (NIM); Zenith of Nigerian Patriots (ZNP); Alliance of All Progressives (AAP). However, in the case of a likely delay by INEC, the merging parties have already slated two newly registered political parties for adoption at a joint national convention scheduled to hold in August 2019. “To seal the strategic plan of the aligning parties, a Memorandum of Understanding (MoU) capturing all vital agreements has already earlier been endorsed by all parties and stakeholders involved in this historic process; with a strong resolve to surpass the 2013 merger process of the All Progressives Congress (APC), which has started crumbling for lack of common ideology and process profundity,” the statement said.

Igbo suffering because they elect unqualified persons into office - Umeh GODFREY OFURUM, Aba

ictor Umeh, senator, representing Anambra Central Senatorial Zone in the Senate, has said that Igbos are suffering today because they elect unqualified persons into public office. Umeh made the observation in Aba, Abia State, at a political rally, organised by Alex Otti Campaign organisation, where Otti, declared his intention to contest the forthcoming governorship election in the state, on the platform of the All Progressives Grand Alliance (APGA). He explained that APGA was keen on sanitising Igboland, by ensuring that right people with right educational qualification and good score cards are elected, to serve the people. According to Umeh, “We must do away with some people with questionable records. We need men, who are trustworthy, not those full of deceit. We need someone, who knows the sufferings of the people and has all the necessary education and experience. “Someone, who has come to serve not to steal; my brothers, why Igbos are suffering is because we elect unqualified persons. We must say

no to such”. He stated that Otti is an Officer of the Federal Republic (OFR) and is well educated and experienced in financial and human management, stressing that the Igbos’ journey in Nigeria does not require lackadaisical people. “It requires people that have integrity. Otti left his juicy job to make Abia look like where humans dwell. He wants to remind us all that here was the home of the great Michael Okpara, the former administrator of the old Eastern Region. “The money required to develop Abia cannot just come from Abuja and what you may have here. Otti knows the path to money and he alone will get you to the right places to get it. If you send a thief to go out there and seek for investors to develop Abia, he’ll only go there and they’ll give him tea to take and he’ll return empty-handed. By mere reading the name of Otti, they’ll see trust and come down here,” he said. According to the senator, “Otti has the interest of Ndi-Igbo and will help in uniting us to get what’s due to us in Nigeria. I was here in 2015, but the crowd I see here today after four years shows that you’re not happy, because you are yet to get what you want.

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

Politics & Policy

Oshiomhole threatens to sack Ngige from APC INIOBONG IWOK with Agency report

ational Chairman of the ruling All Progressives Congress (APC) Adams Oshiomole has warned Minister of Labour and Employment, Chris Ngige, that he risked expulsion from the party if he continued to refuse to inaugurate board of parastatals under his ministry several months after they were appointed by the president. Oshiomhole had upon resumption of office as the party’s chairman, written a letter to the minister asking him to inaugurate all board members in his ministry, but Ngige in a reply had stated that he had inaugurated three boards in the ministry but was not in a hurry to inaugurate that of Nigeria Social Insurance Trust Fund (NSITF) because of an alleged N40 billion corruption scandal by the former board. But speaking yesterday in Abuja, Oshiomhole said that Ngige was

Adams Oshiomole

not appointed as an independent candidate, adding that he was unduly capitalising on the President Muhammadu Buhari’s fatherly disposition.

“If the minister refuses we will suspend him from the party. For me it is the height of mischief for any minister, you cannot purport to be an honourable minister

PDP constitutes committee on change of name …expels serving senator, 3 others OWEDE AGBAJILEKE, Abuja

eoples Democratic Party (PDP) has set up a harmonisation committee on possible change of the party’s name. This comes as the main opposition party has expelled four of its members in the Ogun State chapter of the party for alleged anti-party activities. These were the outcome of the party’s 80th National Executive Committee (NEC) meeting in Abuja on Monday. According to the party’s constitution, NEC is the second highest decision making organ after the National Convention. Addressing a press conference on Monday night, PDP national publicity secretary, Kola Ologbondiyan, listed the expelled members to include a serving senator, Buruji Kashamu (PDP, Ogun East), Semiu Sodipo, Bayo Adebayo as well as Segun Seriki.

He accused them of hobnobbing with the governing All Progressives Congress (APC). The party spokesperson also disclosed that the NEC applauded the recent fusion with members of the Reformed All Progressives Congress (R-APC) and 38 other political parties. He, however, did not list members of the harmonisation committee, even as he refused to state the timeframe within which the panel will submit its report. Similarly, Ologbondiyan pointed out that the party has created a template for respective states on how to handle fusion with other political parties. He said certain percentages of the party’s structure would be given to incumbent governors. “We are not imposing out desire on State structures,” he assured. The party chieftain also revealed that NEC approved the decision of the National Working Committee to

seek redress in law court on the just concluded governorship election in Ekiti State. Speaking earlier at the opening of the meeting, National Chairman of the party, Uche Secondus charged members of the party across the country that Nigerians are looking up to them to halt the disastrous slide in the state of the nation. He urged party leaders to join other democrats to save Nigeria as she heads to disaster under the watch of All Progressives Congress, APC, administration. Secondus said the situation in the country demands that all hands must be on deck to see off the incompetent APC regime. “The situation in the country demands that all people of goodwill must join hands to legally see out this competent APC government. “In our wildest imagination, none of us thought that Nigeria could deteriorate to the level it is today,” he said.

and you act dishonourably and nobody is greater than the party. “And if the President condones disrespect for his office, I will not condone disrespect for the party.

When we expel the minister, we will prevail on the president that he can’t keep him in his cabinet; people who have neither respect for his own decisions nor for the party without which they would not have been ministers,” Oshiomhole said. Oshiomhole, who is the immediate past governor of Edo State, said he had resolved to instill discipline in the APC, adding that any minister who had refused to inaugurate board members in their ministry was disrespecting the president. “So when a minister sits in his office to appropriate the powers of the board in a democracy, not a dictatorship, awarding contract that didn’t go through boards those are clearly abuse of office in which they are liable. “If they did that in the past; under my leadership we will not tolerate it. They either comply or we will expel them from the party. When we expel them we will find out how a government can keep a rebel in his cabinet. There is no question about that”. Oshiomhole added.

5 governors, 30 senators, 135 Reps to dump APC in few days - Frank JAMES KWEN, Abuja

he immediate past Deputy National Publicity Secretary of the All Progressives Congress (APC), Timi Frank, has said that about five governors, 30 serving senators and 135 House of Representatives members will all dump APC in few days from now. Frank maintained that there was no going back in their plan to stand by Nigerians who have asked them to leave. In a statement the former APC spokesman signed and made available to journalists in Abuja, he said the move to retain the support of rAPC members and leaders by the presidency was coming too late, wondering what has changed if the party could not fulfil its promises in the last three years. He stressed that, “in a matter of days Nigerians will have cause to celebrate our final exit from the party of killings, poverty and propaganda to

join hands with real progressive group in the country.” According to Frank, all the latest moves by President Muhammadu Buhari and the leadership of APC to persuade the leaders of rAPC are all efforts in futility. “The same people that could not respect the agreement we had in the last three years are now begging, promising heaven and earth to our leaders. “In deception, they have failed to realise that Nigerians now know their true colour. Their much-talked about integrity is a delusion; they are wolves in sheep’s cloth. “Our plan to reject them and their party is not for personal gain. It is primarily to team up with real progressive groups to rescue the country from the current handlers who rejoice when Nigerians are killed in their number, who value lives of cows to Nigerians and religiously persecute opposition members in the name of fighting corruption,” he said.

Party chieftains demand arrest, prosecution of PDP LG chairman’s killers INIOBONG IWOK

he Lagos State chapter of People’s Democratic Party (PDP) yesterday urged the Inspector-General of Police (IGP), Ibrahim Idris, to direct the AIG Zone 2 to immediately arrest and prosecute killers of the party chairman of Apapa Local Government Area (LGA), Borishade Adeniyi, at a peace meeting in Eti-Osa area of the state at the weekend. The leaders, including Charles Remi Akitoye, who is former national secretary of PDP and now member, Board of Trustees of the party; Muiz Dosumu, state secretary of PDP; Ola Apena, former deputy chairman of the party, among others, made the

call at a press briefing at the Ikoyi residence of former PDP Deputy National Chairman, Olabode George. The party chieftains, who insisted that all they demanded was justice, that the well-known perpetrators of the heinous crime who stormed the venue of the PDP meeting with guns and other dangerous weapons are brought to book, stressing that the call became imperative because the state police command had demonstrated element of bias as it had deliberately rushed to judgment without verifiable facts, concerning the sad incident. Dosumu, in the prepared speech, entitled: ‘We Demand Justice,’ said the party read with dismay and total consternation the statement issued

by the Lagos State Police Public Relations Officer, CSP Chike Otti, about the unfortunate and condemnable incident that led to the death of Aborishade. He described the statement as biased, skewed, and distorted and a deliberate rush to judgment without verifiable facts, saying that the flawed statement gave the sickening impression that the PDP in the state was a chaotic organisation where factions were pitted against each other in constant unrest. The party chieftain said this categorisation was far from the truth, maintaining that what happened in Eti-Osa was a very disturbing incident where some sponsored murderous hoodlums intruded

upon a peaceful assembly of PDP LGA Chairmen and party members and got Aborishade killed. “The thugs, who are well known, stormed the occasion with guns and all kinds of cudgels, shooting indiscriminately with the despicable intention to maim and kill innocent members of our party who had assembled lawfully. “It was in this murderous frenzy that Honourable Aborishade was brutally cut down, while many others were variously injured. It, however, befuddles the enlightened and the reasonable mind when our members who were victims went to report the incident at the Ilasan Police Station but ironically ended up being detained and per-

emptorily accused as suspects. This is dubious, unacceptable, illogical and apparently a twisted turn of justice,” he said. While urging the state police command to withdraw from what he termed “it’s obvious, undisguised partisan position”, Dosumu said it was PDP’s stand that the IGP should direct the AIG Zone 2 to handle this investigation as confidence in the Lagos State Police Command had eroded. “As a law abiding organisation that carries out its affairs with dignity, with civility and good faith, we demand that the Lagos State Police Command should withdraw from its obvious, undisguised partisan position.

BUSINESS DAY

C002D5556

Tuesday 24 July 2018

Live @ The Exchanges Top Gainers/Losers as at Monday 23 July 2018

GAINERS

LOSERS

Company

Opening

DANGCEM

N234.7

N236

1.3

GUARANTY

N38

N38.8

0.8

N20.25

N20.8

0.55

CAP

N34.5

N35

N107.5

N108

NASCON

Market Statistics as at Monday 23 July 2018

Closing

Change

Company

Opening

Closing

Change

N27.9

N25.2

-2.7

OANDO

N5.55

N5.15

-0.4

UPL

N2.55

N2.3

-0.25

VOLUME (Numbers)

0.5

STANBIC

N48.8

N48.55

-0.25

VALUE (N billion)

0.5

DANGFLOUR

N9.1

N8.9

-0.2

ASI (Points) DEALS (Numbers)

…Admits pioneer FGN Green Bond to its platform Stories by Iheanyi Nwachukwu

Olukemi Awodein, managing director, Chapel Hill Denham Advisory Limited; Mallam Ibrahim Usman Jibril, honourable minister of State for Environment; Patience Oniha, director-general, Debt Management Office Nigeria; and Bola Onadele. Koko, managing director/CEO, FMDQ OTC Securities Exchange (FMDQ), at the Listing Ceremony for the Federal Government of Nigeria N10.69bn Green Bond on FMDQ in Lagos.

commendable feat for the Federal Government of Nigeria, with the MoF, MoE and DMO, in their respective roles, addressing environmental challenges as well as championing development in the Nigerian DCM. To commemorate these remarkable achievements, the OTC Exchange hosted the FGN, represented by the Director-General of the DMO, Patience Oniha, along with other key representatives from the DMO to an impressive and memorable Ceremony. Also present at the Ceremony were the Honourable Minister of

State for Environment, Ibrahim Usman Jibril, the sponsor of the issue and Registration Member (Listings) of FMDQ, Chapel Hill Denham Advisory Limited, represented by its Managing Director, Investment Banking, Kemi Awodein, along with key representatives from Chapel Hill Denham Advisory Limited, and other parties to the issue. Tumi Sekoni, Associate Executive Director, FMDQ, whilst welcoming the guests gathered to commemorate this milestone, congratulated the issuer for the successful issue of the debut N10.69

billon 5-Year Green bond in the DCM. She highlighted that the Bond would help address the nation’s infrastructure gap and environmental challenges in a sustainable manner to deliver prosperity for Nigerians and further deepen the domestic DCM by increasing the range of investible debt securities in the markets, invariably contributing to Nigeria’s development. She further reiterated the OTC Exchange’s commitment to continue to support the initiatives of the DMO towards the development of a highly liquid, deep and well-developed DCM in Nigeria.

CIS pledges to work with SEC on capital market studies

he Chartered Institute of Stockbrokers (CIS) has pledged to work with the Securities and Exchange Commission (SEC) in its desire to infuse Capital Market Studies (CMS) into the curriculum of schools in the country. Already, the apex regulator of the Nigerian capital market, is developing a curriculum on capital market studies as part of the financial literacy programme, Which is geared

Adedapo Adekoje, president, Council of the Chartered Institute of Stockbrokers

towards boosting investment education. Dapo Adekoje, president of CIS made the pledge during a meeting between CIS and Management of SEC in Abuja. Adekoje commended the SEC on its investor education initiatives and assured that the Institute was willing to support any programme that would help deepen the market. According to him “We have visited some schools and realised that

3,624.00 226,272,612.00 2.208

MARKET CAP (N Trn

FMDQ supports sustainable development, climate change solutions lobally, countries are resorting to mobilising funds from the debt capital markets (DCM) to finance environmentally friendly projects to support development for the good of their citizenry. The Federal Government of Nigeria, through the Ministry of Finance (MoF), Ministry of Environment (MoE) and the Debt Management Office (DMO), has taken a cue from other countries, by listing the first green bond in the Nigerian DCM - the Federal Government of Nigeria N10.69 billion Series 1 5-Year 13.48% Fixed Rate Bonds due 2022 - on FMDQ OTC Securities Exchange (FMDQ or the OTC Exchange). The proceeds from the issuance will be used to provide access to electricity for 45 communities across the country, develop off-grid Independent Power Plants (IPP) for universities and create afforestation programmes that aim to increase forest coverage through the plantation of seedlings to cover 131,000 hectares of land. This is yet another

36,711.96

most students do not have elementary knowledge of the capital market. We believe that if Nigerians are aware early in life of the benefits of investing in the capital market that will increase percentage of participation and also help to deepen the market”. In her remarks, acting Director General of SEC, Mary Uduk, said the Commission is open to any collaborative efforts that would increase financial literacy among Nigerians.

13.298

FCMB holds ‘study abroad’ exhibitions for Nigerians

irst City Monument Bank (FCMB), has announced its nationwide programme, put together to guide Nigerians who wish to study abroad on how to prepare and get necessary support from FCMB, Colleges and Universities abroad as well as the Bank’s technical partners to achieve their dreams. This exhibition is part of the bank’s contribution to quality education for national development. The support, known as Education Advisory Service (EAS), is said to also include overseas admission information services, school fees remittance, school living allowances and travel fares, loans to support school fees payments, visa process, travels and examination preparation. FCMB also disclosed that customers and intending candidates for the EAS can access its website for additional information. Also, the Bank has designated branches nationwide, with specialised desks and highly professional staff, to effectively respond to inquiries. Olu Akanmu, executive director, retail banking at FCMB said, a schools’ exhibition fair is being organised by the bank in Port-Harcourt, River State capital, beginning from Saturday, July 21, and venue is Golden Tulip Hotel. In Abuja, the exhibition takes-off on Monday, July 23 at Transcorp Hilton Hotel while in Kano, Tahir Guest House hosts the programme on Wednesday, July 25. FCMB further informed that Nigerians in Lagos Island and Lagos Mainland should visit Eko Hotels, Victoria Island and Sheraton Hotel Ikeja on Friday, July 27, and Saturday July 28, 2018, respectively to interact with international delegates from Ireland, United Kingdom (UK), Canada, Australia and

United States of America under the EAS. Akanmu said, “At FCMB, we walk and work with our customers to fulfil their life aspirations, their families and their businesses, including the provision of the best education. The FCMB Education Advisory Services in partnership with MOD Services and international partners also cover school admission process, Visa processing, travel and examination Preparation. We recognise that knowledge of what to do and how to do it matters in securing good overseas education. FCMB will also be providing prompt school fees and living allowances remittance, loans to support school fees payment and international cards to support living overseas for Nigerian students”. Akanmu added that, “we have Lufthansa Airline, beside other partner airlines on board to offer students, discounted fares under this scheme. This also covers their guardians accompanying them. In addition, we have AXA Mansard coming on board to provide medical cover for the students to the tune of $60,000 a year”. The bank said up to N5million school fees support to customers from the bank and Credit Direct Limited, one of the subsidiaries of FCMB Group Plc (the holding company), Flexx account (in foreign exchange) for students going abroad to study, prompt and secure international funds transfer through internet banking platforms for the payment of school fees and other educational expenses abroad are integrated in the offer. There is also the issuance of FCMB debit cards, including the pocket money card (preloaded) that can be used to withdraw cash from overseas ATMs and make payments at stores and supermarkets.

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

34 BUSINESS DAY NEWS FG may force Discos owners to divest stake Continued from page 1

taking any option off the table,” Okoh responded Monday to a question posed by BusinessDay on the side-lines of an investor’s forum organized by the BPE. “If the Discos currently because of the way that their balance sheet has been compromised are not able to raise sufficient investment capital to improve the distribution network, the provision of meters, and all that, then we have to look at the possibility of how to admit other investors who may have the capacity financially and in terms of the technical expertise to improve the distribution infrastructure,” he added. The Federal Government owns 40 percent stake in 10 of the DisCos and fully owns Yola DisCo. BusinessDays examination of the financial statements of some of Nigeria’s electricity distribution companies (DisCos) indicate that they reported losses of over N196.23 billion to end the 2016 financial year. This compares with a loss of N104.69 billion they recorded in the 2015 financial year. DisCos in Africa’s largest economy are being squeezed by surging operating expenses and finance costs. A breakdown of the figures shows Eko Disco, Kaduna Dis-

co, Ikeja Disco, Abuja Disco, Ibadan Disco, and Benin Disco recorded losses of N28.66 billion, N17.90 billion, N65.63 billion, N47.44 billion, N24.98 billion and N11.62 billion as at December 2016. Okoh said government was tired of the situation where the “general populace is receiving the wrong end of the stick all the time,” stressing that what the public wants is improved power supply and power delivered at a reasonable cost.” DisCos have ascribed much of the challenges in the sector to the absence of a cost reflective tariff, which essentially forces them to price power below the cost of production and in the process balloons their debts. Data from the financial statements show that the firms are highly indebted to suppliers or creditors as total and other payables spiked by 97.47 percent to N472.88 billion in December 2016 from N239.57 billion as at December 2015. Okoh confirmed that the BPE and other agencies that are involved in supervising the power sector are discussing to ensure that they are able to build a bridge that allows, first efficient service delivery and second, cost recovery for the investors in the sector. He said there is a proposal to set up a coordinating body for

all of those agencies responsible for power sector reform, to be in constant dialogue with the key private sector players in the sector, according to the DG. “Privatisation of the power sector isn’t going right way and hasn’t achieved its full objective, I will be the first to admit,” Okoh said blaming industry issues, some of which are related to power pricing, efficiencies of the current operators of the discos in terms of how they enumerate and meter their customer base. He also listed infrastructural issues, in terms of the distribution infrastructure- upgrade and expansion. He admitted that electricity tariff at the moment are not at the level it should be to cover for the service delivery, but that the issue is the appropriate pricing which has not been properly worked out if the efficiency that the discos should have brought into the system is factored in. “So until we are able to pull all of these various aspects that contribute to the efficiency of the power sector especially at the distribution end of the chain, it will be very difficult to determine what the appropriate pricing or tariff should be,” he however stressed. BusinessDay analysis reveals that in 2016, DisCos reported Aggregate Technical and Commercial Collection (ATC&C) Continues on wwwbusinessday online.com

L-R: Olukemi Awodein, managing director, Chapel Hill Denham Advisory Limited; Ibrahim Usman Jibril, minister of state for environment; Patience Oniha, director-general, Debt Management Office Nigeria, and Bola Onadele. Koko, MD/CEO, FMDQ OTC Securities Exchange (FMDQ), at the listing ceremony for the Federal Government of Nigeria N10.69bn Green Bond on FMDQ in Lagos.

reliable and have greater credibility thus, I agree with the report,”

Bismarck Rewane, CEO, Financial Derivatives Company Limited said in a phone response to BusinessDay. Nigerian banks have to reflect the full impact of additional expected loss reserves due under IFRS 9 in regulatory capital from 1 January 2018, the date on which the new accounting standard was introduced into the country. Some other regulators have allowed banks to stagger the impact on regulatory capital over a period of years, allowing them more time to make good any shortfalls, often over a five-year period. Nigerian banks’ First Quarter (Q1) March 2018 financial statements restated equity at 1 January 2018 to reflect the impact of additional IFRS 9 expected loss reserves required in line internal model

Can Oshiomole sack Ngige? Continued from page 1

to be an honourable minister and you act dishonourably and nobody is greater than the party.”

“And if the President condones disrespect for his office, I will not condone disrespect for the party,” Oshiomhole fumed. “When we expel the minister, we will prevail on the president that he can’t keep him in his cabinet; people who have neither respect for his own decisions nor have respect for the party without which they would not have been ministers,” Oshiomhole threatened. The APC Chairman’s comment have brought to the fore the lack of internal discipline mechanism within political parties in the country. Over the years, analysts have raised concern about the continue disregard for party rules and regulations, lack of discipline among members and chieftains of political parties while the parties appear incapable of enforcing party discipline or the supremacy of the party. How feasible is Oshiomhole’s threat to expel erring ministers from the party and get the president to sack such a minister? The dynamics at play brings to fore the differences between the parliamentary system of government, where the party is supreme and the presidential system of government, where the president, and not the party, is supreme. In the former, parties contest for parliamentary seats and the leader of the party with the majority of votes is called upon to form the government whose continuity in power sorely depends on his party maintaining its majority in parliament

and its members in parliament supporting all party decisions and policies at all time. The moment the leader – or prime minister loses the support of his members and loses a vote of confidence, the government is dissolved and another general election is called. The party in this system is therefore supreme and party loyalty and discipline is an absolute necessity. The presidential system, on the other hand, vests most powers on the president and provides for a strict separation between the party and the government. Therefore, once elected, the president and ministers could discard the party, call its bluff and still continue in government till the end of their term(s). That has been the problem of democracy in Africa and Nigeria. Countries with presidential system of government tend to have very weak parties and those with parliamentary system of government on the other hand, have strong parties who are ready to enforce party discipline. Take for instance South Africa that, despite designating its leader President, operates a parliamentary system. Party supremacy is central in South African politics and we saw how the African National Congress (ANC) peacefully eased out an obstinate Jacob Zuma and installed its new party leader, Cyril Ramaphosa as president in a matter of days. There, the party is supreme and all its members, no matter how highly placed, must respect the wishes and demands of the party.

Continues on wwwbusinessday online.com

Apapa ports are most expensive... Continued from page 1

IFRS 9 no threat to Nigerian banks’ regulatory.... Continued from page 1

Tuesday 24 July 2018

C002D5556

calculations. The impact varies considerably across banks but no breaches of regulatory capital ratios materialised. “The average non-performing loans (NPLs) of banks today in Nigeria is about 14 percent. And if you take away the four banks that are challenged, it could be lower,” Rewane concluded. Ayodeji Ebo, MD/CEO at Lagosbased Afrinvest Securitries Limited said this positive comment from Fitch further buttresses the efforts of the CBN to ensure Nigerian banks have strong capital base to absorb external shocks. According to him, most of the major Nigerian banks have very strong capital base (above 15.0% regulatory threshold) due to the strict monitoring and policies of the CBN. Policy introduced includes banks with CAR below regulatory limits are restricted from paying dividend to provide further buffer

for these banks. The Central bank of Nigeria (CBN), on Wednesday, February 15, 2018, amended the rules on internal capital generation and dividend payout ratio. The new rules state that Deposit Money Banks (DMBs) and Discount Houses (DHs) that have capital adequacy ratios of at least 3 percent above the minimum requirement, Composite Risk Rating (CRR) of “low” and Non-Performing Loan (NPL) ratio of more than 5 percent but less than10 percent, shall have dividend pay-out ratio of not more than 75 percent of profit after tax while those that meet the minimum capital adequacy ratio but have a CRR of “Above Average” or an NPL ratio of more than 5 percent but less than 10 percent shall have dividend payout ratio of not more than 30 percent IFRS 9 was approved by the International Accounting Standards Board (IASB) in 2008 be came

operational on January 1, 2018.

curate as of early 2017 shows that the Apapa port from New York is the most expensive destination among the countries included in the template. It costs about $4,982 to ship a 20 feet container from New York to Apapa which is about twice the amount to ship a container of the same size to Cape Town (South Africa) - $2,542. Shipping a 40 feet container from New York to Apapa has a freight cost of about $7,436 almost double the cost of shipping a container of an exact size to Cape Town ($3,795). Although shipping costs from Los Angeles to Apapa is a bit cheaper, the freight costs to Nigeria is the second highest globally which is about $3,027, a little behind the most expensive freight cost of $3,573 to Saudi Arabia for a 20 feet container. For a 40 feet container, it costs $4,519 to Apapa and $5,333 to Saudi Arabia from Los Angeles. Freight costs to Cape Town from Los Angeles are found to be approximately $2,276 and $3,397 for a 20 and 40 feet container respectively. This higher cost to Lagos is despite the fact that New York to Lagos is just 6,516 nautical miles and will take approximately 27 days for a ship to sail the distance, while the distance between New York and Cape Town is 9,097 nautical miles and takes a ship approximately 38 days to sail the distance. A probable reason for the higher costs to Apapa ports as compared to other ports in the world is the inefficiency embedded in the sea port operations at Apapa. The average turnaround time for ships at Apapa is

estimated in excess of 30 days showing grave inefficiency as compared to an average of two days for the most efficient ports globally. “The economy of Apapa is estimated to generate over N20 billion per day,” said Paul Gbadedo, group managing director, Flour Mills of Nigeria. Despite the huge contribution from the N7.3 trillion Apapa economy, the access to the ports has actually shrunk which is evident in the gridlock caused by tanker drivers seeking to get into the ports to load their containers. Meanwhile the search for a lasting solution to the gridlock around Lagos, and Apapa in particular, continued on Monday, with the Lagos State government resolving not to grant any further approval for the development of petroleum tank farms within Apapa and its environs going forward. The state government, in collaboration with other stakeholders, also issued a 30-day ultimatum to existing tank farm operators in the area to secure loading bays for trucks doing business with them or incur the wrath of government. The Department of Petroleum Resources (DPA) has been given the responsibility of monitoring the compliance of the tank farm owners with the directive. The resolutions were reached at an extended meeting involving many stakeholders in the maritime and transportation sectors, including Nigeria Ports Authority (NPA), Nigerian Shippers Council, tank farm owners, DPR, security agencies as well as clearing and forwarding agents at Government House, Alausa, chaired by Governor Akinwunmi Ambode. Continues on wwwbusinessday online.com

Tuesday 24 July 2018

C002D5556

NPO maintains NPC IGP summons Saraki for questioning over Offa robbery Bill is draconian

nspector General of Police (IGP), Ibrahim Idris, has again summoned Bukola Saraki, Senate president, to appear at the office of intelligence response team (IRT) office in Abuja over the robbery incident that took place in Offa, Kwara State, in April. In a letter dated July 23 and addressed to the Senate president, the IGP asked Saraki to be at IRT’s office at 8am today “for further investigation.” Saraki is being summoned following speculation that he is set to defect from the APC to the PDP. Saraki had earlier been summoned as some of robbery suspects in the Offa bank robbery incident confessed that they were thugs of the Senate president, an allegation he had denied. The lawmaker was asked to appear at force headquarters for questioning, but the police eventually said Saraki should not appear in person but respond to the allegations of the suspects in writing. It could be recalled that in June the IGP dragged the Senate president, and the Senate before the Federal High Court in Abuja for declaring him an enemy of democracy. Specifically, the IGP, in his suit marked FHC/ABJ/ CS/554/2018, prayed the court to bar the Senate from taking further steps with regard to a resolution it reached on May 9, wherein it purportedly passed a vote of no confidence on him. The Senate had in the said resolution, declared the police boss as unfit for any public office, following his repeated

refusal to appear before it to answer questions pertaining to the spate of killings across the country and the inhuman treatment allegedly meted out on the lawmaker representing Kogi West, Senator Dino Melaye. However, the IGP dismissed the resolution against him as a deliberate blackmail and witch-hunt, insisting he had the backing of the law to send a senior officer of the force of the rank of deputy IGP or an assistant IGP to represent him before the Senate. In the suit he filed through his lawyer, Alex Iziyon, the IGP specifically applied for, “An order of perpetual injunction restraining the respondents, whether by themselves, or through their servant, agents and or privies, whatsoever from acting on the said resolution contained in the gazette dated May 9, 2018, or causing same to be acted upon by any person or authority or government agency, or carrying out similar or like resolution against the applicant.” He equally sought a declaration that the respondents acted ultra vires their powers under sections 88 and 89 of the constitution of the Federal Republic of Nigeria, 1999 (as amended) in the votes and proceedings leading to the resolution contained in the gazette dated May 9, 2018, imposing a penal sanction on the applicant. Meanwhile, Justice John Tsoho has ordered service of the relevant court processes on the respondents through the Clerk of the National Assembly, even as the case was adjourned till June 27 for hearing.

he Nigerian media and its stakeholders have re-emphasised its opposition to the Nigerian Press Council Bill 2018, pointing out that the bill was anti-people, draconian, a carry-over from the military, unconstitutional and subjudice Nd u k a O b a i g b e n a, president of the Newspaper Proprietors’ Association of Nigeria (NPAN), who is also the president, Nigerian Press Organisation (NPO), which comprises of the NPAN, the Nigeria Guild of Editors (NGE), the Nigerian Union of Journalists (NUJ), reaffirmed this yesterday at the Public Hearing on the Nigerian Press Council Bill 2018. The hearing was organised by the Senate Committee on Information and National Orientation, chaired by Senator Sulaiman A. Adokwe and was declared open by the Senate president, Bukola Saraki, who was represented by the Senate’s spokesman, Aliu Sabi Abdullahi. Obaigbena spoke even as the Life Patron of the NPAN, Ismaila Isa, clarified that the media community turned out overwhelmingly for the hearing, out of utmost respect for the National Assembly, the Senate and the Committee. Also present was the publisher of Vanguard Newspapers, Sam Amuka.

35 NEWS

BUSINESS DAY

Experts seek sustainable funding of SWF, call for Constitutional amendment OWEDE AGBAJILEKE, Abuja

he need to amend Section 162 of the 1999 Constitution with provisions that guarantee automatic savings of surplus revenues from oil, gas and minerals with the Nigeria Sovereign Investment Authority (NSIA) has been stressed. In a communiqué issued at a roundtable on ‘The Savings and Stabilisation Mechanism for Nigeria,’ on Monday in Abuja, experts expressed disappointment that despite earning trillion of dollars in oil revenue, Nigeria has no significant savings. They therefore express support for sustainable and frequent injection of funds into the Sovereign Wealth Fund (SWF) account. The event was organised by the Oil Revenue Tracking Initiative of the Shehu Musa Yar’Adua

Foundation and the Nigeria Natural Resource Charter (NNRC). According to them, the absence of rules of practices governing deposits, withdrawals and investments of the Excess Crude Account (ECA) led to Nigeria being ranked the most poorly governed sovereign wealth fund among 33 resource-rich countries in a 2017 report by the Natural Resource Governance Institute. They charged the political class to negotiate and agree binding rules for ECA revenue inflows and outflows until such a time as the constitutional amendment is effected to entrench the Excess Crude Account. ParticipantsincludedObiageli Ezekwesili, former vice president (Africa Region) of the World Bank; Andrew Onyeanakwe, a professor at the Centre for Petroleum, Energy Economics and Law, University of Ibadan;

economic analyst, Bode Longe, civil society organisations, development partners, among others. They say Nigeria has failed to make the transition to a capable state in order to enable it produce enviable development outcomes such as the diamond rich nation of Botswana. In her submission, Ezekwesili expressed disappointment at non-compliance with the legal framework setting up the Fiscal Responsibility Act with regards to fiscal discipline. “Part of the challenge that we have is that contrary to what countries like Brazil, New Zealand and Australia from where we looked at best practices in Fiscal Responsibility Act to set up the Fiscal Responsibility Commission is that unlike those countries, we were unable to find the political consensus around this issue.

‘Abuja 2018 investment expo focuses on affordable housing for economic advancement’ HARRISON EDEH, Abuja

s over 120 exhibitors and about 3,500 participants are expected at the forthcoming third edition of Abuja Investment Expo, which would focus discussions on making affordable housing easier, catalysing economic development, would also address concerns in registering land titles in Nigeria. Johnson Anene Somadina, vice president in charge of commerce at the Abuja Chamber of Commerce and Industry, said the chamber chose the theme of the expo to be: “Land as a catalyst for

economic advancement” to ensure constructions and land administration take a leading role in driving Federal Government’s economic diversification. According to Somadina, ”We are not restricting ourselves to construction and housing in the expo, but because of the strategic importance of land in rendering services, while also driving economic advancement, that is why we chose the theme.” The expo seeks to address among other key issues, difficulties of accessing mortgage financing and provision of funding for

construction, he said, adding, “If the cost of funding for construction is high, it will add to the difficulties in housing delivery.” The expo, he stated further, is intended to project issue of quality and affordable housing for the Nigerian people. “We also want to use it to canvass for the local production of building material, which we are sure will contribute to reducing the cost of building in the country. We also want to use that to address the issue of difficulty in assessing land and difficulty in registering land titles,” he said.

Reps unravel 1.8bn hidden equity of NDPHC KEHINDE AKINTOLA, Abuja

ouse of Representatives Ad-hoc Committee probing $30 billion financial infractions by the Niger Delta Power Holding Company (NDPHC) on Monday expressed grave concern over the non-disclosure of 1.8 billion equity of the company. Worried by the development, the Ad-hoc Committee chaired by Darlington Nwokocha, frowned at the nonreflection of the full details of the company’s shareholding in its annual financial reports since 2005. To this end, Nwokocha mandated NDPHC managing director to get all the details of 1.9 billion shareholding of the company, stressing that only 1 million had been down, reflecting in its balance sheet since the company came into existence. “How come what has been showing in your annual returns had remained constant since 2005 showing only one million shares while your other documents with us are showing 2 billion shareholding,” he inquired. Nwokocha, who warned against further delay in correcting the error, said: “You know very well that if you

don’t do this reconciliation soon it could lead to serious litigation issues. Please get us all the necessary details.” While responding, Chiedu Ugbo, NDPHC accounting officer, assured that all the grey areas would be sorted out with the regulatory agency saddled with company registration in Nigeria, during this week. “We will try to reconcile the missing links with the CAC and get back to the committee within the week with a certified copy of the documentation,” he assured. While responding to questions on the challenges the company is currently facing, Ugbo, who denied knowledge of such allegations, said: “to the best of my knowledge, I have not seen any charges from the records and none has been presented to me.” Speaking on the accounts being operated by the company, Babayo Shehu, NDPHC executive director, finance, argued that the company has one major account domiciled with the Central Bank of Nigeria (CBN) with two other domiciliary accounts. He said prior to now, “the company operated 40 bank accounts but we closed almost because of Treasury Single Account (TSA) as ordered by government.

Akinwunmi Ambode, governor,Lagos State (2nd r); Hadiza Bala Usman, managing director, Nigeria Port Authority (NPA), (r); Ladi Lawanson, commissioner for transportation, Lagos State (l), and Tunji Bello, Secretary to the State Government, (2nd l), during the governor’s meeting with NPA, Tank Farm Owners, Shippers Council and other stakeholders on the Apapa traffic situation at the Lagos House, Alausa, Ikeja.

AIB to host international aviation symposium IFEOMA OKEKE

viation safety in Africa has received a boost as Accident and Investigation Bureau (AIB) will host an Aviation Safety Symposium from July 24 to 26. The National Transportation Safety Board (NTSB) in partnership with the US Department of Transportation’s Safe Skies

for Africa (SSFA) programme is facilitating this symposium, holding in Lagos. It will focus on lessons learned and safety issues from NTSB accident/incident investigations. The NTSB has investigated over 146,000 accidents and issued 14,650 safety recommendations. This three-day symposium will provide an opportunity for open discussion and dialogue

among participants. During the event, NTSB experts will share some of the lessons learned from investigations that have contributed to the improvement of aviation safety. The participants drawn from various African countries will also learn from NTSB’s experience with the coordination of the services of the US Federal Government to assist victims and their

family members who have been impacted by major transportation disasters. The Safe Skies for Africa (SSFA) Initiative, which was formally announced by the President Bill Clinton in 1998 was introduced to improve safety, security and air navigation in sub-Saharan Africa. The U.S Department of Transportation is the implementing agency.

A1 BUSINESS DAY NEWS

C002D5556

Tuesday 24 July 2018

Osinbajo to deliver keynote address at Venia Business Hub’s Coworking confab

ice President Yemi Osinbajo is billed to deliver the keynote address at the 2018 edition of the Coworking Conference 2018, an annual gathering of innovators, entrepreneurs and investors, organised by Venia Business Hub, holds July 26, at IMAX Filmhouse, Lekki, Lagos. Kola Oyeneyin, CEO, Venia Business Hub/creator, Coworking Conference Nigeria, said in addition to delivering the keynote address, Osibanjo would be interacting with entrepreneurs, building and shaping Nigeria through their various ideas and platforms. Earlier in the year, the Vice President went on a tour of Hubs, Coworking Spaces and Entrepreneurs creating amazing products and services, transforming the entire landscape of Nigeria; from Technology to Agriculture, Media to Insurance. Most of these businesses have traced their origin to one co-working space/hub

or another. “One of the places he visited was our “Featured Innovator” of CWC 2018, Iyin Aboyeji’s Flutterwave as a startup took off from Venia Hub, and has now gone on to become arguably the biggest success stories of Africa’s Fintech industry. “This is what this conference is all about, and we are glad that the Vice President whose mantra since taken office has been “nation building through innovation”, will be “collaborating” with entrepreneurs in the true spirit of co-working,” Oyeneyin said. Oyeneyin further explained that the entrepreneurial ecosystem in Nigeria has seen a fundamental shift since the emergence of Coworking and Tech Hubs, with many successful entrepreneurs tracing their startup story and locations to co-working spaces across Nigeria - including Eskimi, Accounteer, Taxify, Branch Int’l and AutoGenius, among others.

R-L: Ituah Ighodalo, senior pastor, Trinity House, his wife Ibidun; Ingo Herbert, consulate general of the Federal Republic of Germany, Lagos; Adeola Azeez, deputy country head, Deutsche Bank Nigeria, and Oluwatoyin Ogundipe, vice chancellor, University of Lagos (UNILAG), during the 8th year anniversary of Trinity House in Lagos. Pic by Olawale Amoo

Nigeria’s cyberspace vulnerability holds risk to national security, businesses - experts JUMOKE AKIYODE-LAWANSON

he openness and vulnerability of Nigeria’s cyberspace will pose a threat to the nation’s national security, the growth of businesses and the development of the economy at large, IT experts have warned. “Nigeriaisvulnerablebecause we don’t have anynationalframework in terms of having digital sovereignty. Today, a country’s boundary is no longer visible. The boundaries have become digital and I have been talking to the government about having that in place. “Countries like Venezuela attacks us here in Nigeria and the government doesn’t know, but because I work for companies, I check where attacks are coming from. Algeria attacks us. I have reports, this is not a projection, these are information that we have. The country is vulnerable and cyber crime is like normal crime; in the sensethatifyoudon’thaveafence, the thief will naturally go to where it is easier for him to steal and get away with it,” Rex Mafiana, CEO, FPG Technologies Limited, told BusinessDay. Countries like Russia, China and United States engage in cyber

warfare and analysts say this virtual form of conflict will increase as the 21st Century develops and the internet takes over everything. This has therefore grown the worries about vulnerability in Nigeria’s cyberspace as experts say the country is not prepared for a cyber war. IT experts tell BusinessDay that the Federal Government of Nigeria and businesses alike seem not have concrete plans in place to prevent cyber attacks against critical infrastructure, reduce national vulnerability to cyber attacks and minimise damage and recovery time from cyber attacks should in case they occur. “The problem is that the business owners, especially in Nigeria, are not paying enough attention to technology and that is why they are also not paying enough attention to cyber security because they feel it is technical. Today, cyber crime has become a core business risk that should be addressed at the board level,” Mafiana said. Industry analysts say it is only a matter of time before the vast intrusion of Nigeria’s cyberspace, asalreadyterroristsgroupssuchas Boko Haram have already started perpetuating crimes through the

internet,gettingsensitiveinformation and uploading threat videos online, which shows a breach in government secure information technology systems. “With e-government and the move to digitise almost all government services, it is very easy for Nigeria to be attacked online. A seven year old Russian or American can easily shut down this whole country by hacking our cyberspace. “The average age of our law makers is 60 years old so they are not thinking about how fast technology has evolved and how vulnerable we are to attacks perpetuated online and that is why hackers are not taken seriously in Nigeria,” Subomi Sodipo, CEO, CFmobile, says. Mafiana, who runs one of Nigeria’s foremost cyber security companies, FPG Technologies, the only four-star partner of Checkpoint, which is a leading unified threat management solution in the world, told select journalists while speaking at a media briefing for the company’s fifth-year anniversary, that the company was trying to sensitise business owners and the government on the need for cyber security.

Edo slashes market levy by 40%, as NURTW lauds developmental strides

o boost the profit margin of traders in the state, Edo State governor, Godwin Obaseki, has reduced by 40 percent the levy paid in selected markets. Obaseki announced the cut when he received members of the Market Women Association led by Blackie Ogiamien, who paid him a courtesy visit at the Government House in Benin City, Edo State. In a related development, members of the National Union of Road Transport Workers (NURTW) in the state have thrown their weight behind Governor Obaseki for delivering the dividends of democracy to the people. According to the governor,

traders who would benefit from the cut are those whose businesses are not viable in Agbado, Oliha, Ogiso and Uwa markets in Benin City, the state capital, and declared that traders who were paying N5,000 before the announcement, will now pay N3,000. He assured market women that his administration has made double ticketing and touting history in the state, noting that he would give priority to Edo citizens on job creation. He said that in the coming months, the state government would ensure that power, water and sanitation issues receive the desired attention in all the markets within Benin metropolis.

Obaseki said that traders who trade in densely populated areas would have access to health care services, and urged the traders to support his administration’s effort to eradicate child labour in the state by reporting suspected cases to the appropriate authority. Earlier, the leader of the traders, Madam Blackie Ogiamien, commended the governor for the steps taken to spread development across the state, adding that Obaseki’s governance style is worth commending. She lauded the governor’s resolve to address double taxation and touting which place much burden on the traders, noting that the gesture would increase their profit.

Aviation stakeholders seek template for new national carrier IFEOMA OKEKE

takeholders in the aviation sector have called on the Federal Government to explain to Nigerians how it intends to manage, fund and execute the proposed national carrier, Nigeria Air. OnJuly17,theFederalGovernment unveiled Nigeria Air as the country’s new national carrier. The unveiling of Nigeria Air, which took place at Farnborough, England, has since received both criticisms and commendations. Speaking in an interview with journalists on the sidelines of the 22nd League of Airport and Aviation Correspondents (LAAC) seminar in Lagos, last week, Nick Fadugba, chairman, African BusinessAviationAssociation(AfBAA), had said that there were many unanswered questions in terms of themanagement,fundingandfleet as it concerned the newly unveiled national carrier. Fadugba analysed the soon to be established carrier Nigeria Air, stating that as it stood government was already de facto owner of both Aero and Arik through the Asset ManagementCompanyofNigeria (AMCON) and wondered how it

would juggle them. According to Fadugba, as it stands the national carrier may have to have a synergy with other carriers so they can better harness the huge market that foreign carriers, due to their organisation are taking advantage of. Hesaid,”Therearemanyquestions that need to be answered in terms of the management, the funding, and the fleet. So, I believe the government now need to brief the Nigerian people on the national carrier. Rather than doing it abroad we need to come home and explain to the whole nation what the concept is. “More importantly, I am interested in how the national carrier interfaces with all the other airlines in Nigeria. Because remember that the government is the de facto owner of two other airlines: Arik and Aero. So, this is the first time I have seen one government own three airlines. Government needs to coordinate its airlines strategy in terms of moving forward.” He noted Nigerian is blessed with the biggest domestic aviation marketontheAfricacontinent,biggerthanSouthAfrica,Kenya,Ethiopian and many other countries. He said: “We have not been

able to harness this market for our own benefit. The beneficiaries are foreign airlines, our airline need to work together. If you have five aircraft, 10 aircraft, it is nothing in the world of aviation. We need a critical max. If you look Ethiopia, they have a 100 aircraft, that is one airline, and yet we have 10 airlines here with maybe five aircraft each. “We need to work together otherwise the economics of the business are not in favour of the operators. They need to come together to scale up to get a critical max. They can work together in training, maintenance, in spare pooling,aircraftacquisitions.There aremanyareasAfricanairlinesand Nigerian airlines in particular can work together. So we need more cooperation in Nigeria among our airline brothers and sisters.” Allen Onyema, chairman of Air Peace, said he welcomed the national carrier being established by the country, but asked for a level playing field for the domestic investors who had put their money in the airline business without any form of support and protection from government, and were expected to thrive in the harsh economic environment.

Rivers, Kebbi, Adamawa top June highest inflation list BUNMI BAILEY

igeria’s inflation on a year-on-year basis was the highest in Rivers, Kebbi and Adamawa states, recording rates of 13.8 percent, 13.6 percent and 13.4 percent, respectively, according to National Bureau of Statistics (NBS) June 2018 inflation report released Monday. On month-on-month basis however, June 2018 inflation was highest in Kogi having 2.9 percent, Oyo had 2.5 percent, and Gombe had 2.0 percent, while Plateau had 0.1 percent, Kaduna had 0.2 percent and Edo had 0.4 percent recorded slowest rise on a month-on-

month, all item based on June 2018. The inflation figures for the states remained largely the same for May. “Some of these places are already having the herdsmen crisis. Some of these states are where food is produced in the country. The issue of farmers leaving their farms as a result of these crises will have an impact on food prices, making them go up and that is what exactly we are seeing in these areas,” Ayo Akinwunmi, head of research at FSDH Merchant Bank said in a telephone response. The Consumer Price Index (CPI) which measures inflation declined marginally for

the 17th consecutive by 11.2 percent (year–on-year) in June 2018. This is 0.37 percent points less than the 11.6 percent recorded in May 2018. Johnson Chukwu, CEO, Cowry Assets Management Limited, said he expected the decline to pick up in August and that the decline would be difficult to sustain. He said,” The decline will be difficult to sustain till the rest of the year. For the month of August, we might see an up pick in inflation rate. Remember that there was no disbursement of the capital budget because it was approved in June so the impact of the budget was not reflected in the June figure.

BUSINESS DAY

C002D5556

Tuesday 24 July 2018

NEWS

Take advantage of government incentives, improved business environment - Osinbajo KEHINDE AKINTOLA, Abuja, & IHEANYI NWACHUKWU

ice President Yemi Osinbajo on Monday reassured international community and investors of the administration’s commitment towards continued implementation of strategies and policies in the direction of achieving economic development. Some of the initiatives include: Economic Recovery and Growth Plan (ERGP), unprecedented investments in capital projects in the past three years, tax incentives and the Ease of Doing Business. According to Osinbajo, these strategies and policies are aimed at attracting “investors into various sectors of the Nigerian economy with the aim of growing and diversifying the economy, creating jobs and improving the quality of life, just as he underscored the importance of Nigerian capital market in the attainment of these objectives. Osinbajo was represented by Patience Oniha, directorgeneral, Debt Management Office, stated this in Abuja at the 2nd capital market stakeholders’ forum organised by Senate and House of Representatives Committees on capital market and institutions in collaboration with Securities and Exchange Commission and other stakeholders. “Financial markets are known to be engines of growth

because of the strategic role they play in the flow of funds to businesses and governments. There is extensive literature on the fact that there is a strong positive correlation between the level of development of the financial system and economic development, for the simple reason that financial markets act as intermediaries between lenders and borrowers. “While this correlation is certainly the case for the advanced market economies, the same cannot be said for Nigerian capital market in the areas of legislations, regulations, technology and be products amongst others which have attracted local and foreign investors to the market and I would like to commend the regulators and operators alike for these achievements. “There is however, room for innovation, increased depth and efficiency of the capital market and this represents an opportune time for these to begin to occur in anticipation of increased and more sophisticated demand for capital market products,” he noted. He also tasked the stakeholders to come up with various innovations that will provide opportunities for wall and medium scale businesses to access required funds for growth. “While deliberating on big businesses, I hope that creative ways for enabling small and medium businesses to access

capital will also be considered as they have a great potential for growth, job creation and effective source of local resources.” He also tasked private sector to “take advantage of the government incentives and improved business environment, given the large and diverse resource base of Nigeria including its entrepreneurial human resources and the demand for capital will increase perhaps, well beyond the current levels.” He expressed optimism that the forum on how the Nigerian capital market could become a reliable source of large pools of stable funds that could be readily assessed by local and international institutions seeking to do business in Nigeria was highly commendable. In his remarks, Yakubu Dogara, speaker of House of Representatives, who reiterated the commitment of the eighth Assembly and development of the capital market, said the National Assembly had so far delivered some of the legislative actions enunciated in the communiqué issued at the maiden capital market stakeholders’ forum held in June, 2016. Dogara, who was represented by Pally Iriase, majority deputy chief whip, said: “It is instructive to note that the National Assembly has recorded relevant milestones that is expected to drive the operations of Nigeria’s capital market.

Nigeria is ripe for increased American investments - Saraki … cites legislative support in ease of doing business CALEB OJEWALE

pportunities in sectors such as FinTech, health, infrastructure, and agriculture have been outlined as ripe for increased investment and private sector participation, during a recent meeting between Bukola Saraki, Nigeria’s Senate president, and some members of the American Chamber of Commerce. The Senate president re c e n t l y h e l d s e r i e s o f meetings in the US, aimed at highlighting Nigeria’s p ro s p e c t s f o r i nv e s t o r s in different sectors of the economy, and identified key sectors for investment and increased private sector participation to include agriculture, it and communications, financial services, mining and natural resources; oil and gas, and infrastructure. “For those who venture, one thing is certain: few markets have greater potential in terms of return on investments than ours. Nigeria has an estimated population of about 193 million people, 60 percent of whom are under the age of 25. “Ours is one of the fast-

est growing populations globally; and we are set to overtake the United States as the third most populous countr y in the world by 2050,” Saraki said. According to Saraki, the unique histor y of Nige ria and the United States, make it imperative that she should remain by far our biggest and closest trade and investment partner. The evolving new vision for the Nigeria economy is within this context of our relationship matrix with the United States as we share similar and converging values. However, in recent times, it would appear that China has been the more willing and enthusiastic partner for business and investment. The Senate president also explained that, outdated infrastructure related laws have been reviewed and bills passed to increase private sector participation in those sectors. Among these are: the Nigerian Railway Corporation Bill; the Federal Road Authority (Establishment Etc.) Bill; the Nigerian Ports and Harbours Authority Act (Amendment) Bill; and the National Roads Fund (Establishment) Bill. Creating an economic

regulatory framework for these infrastructure laws is the National Transport Commission Bill, which is on the verge of being passed. We believe these are a very welcome development for our economy and for restoring investor confidence in our business environment. “As many of you w ill know, Nigeria is one of the Sub-Saharan countries eligible for preferential trade agreements under the African Growth Opportunity Act (AGOA) of Congress, which was started in 2000 to help enhance economies in the region and improve economic relations with the US. “It is encouraging that AGOA has been extended by 10 years to 2025. And we are already seeing the positive impact of that extension, with African non-oil export under AG OA increasing from $1.3million in 2001 to $4.2bn by 2016. “This is definitely the way to go, and it is our hope that we will take advantage of AGOA in the present to expand our trade engagements. But going forward, our vision is to exit AGOA at some point into a full fledge t ra d e a g re e m e n t b a s e d trade relations,” he said.

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES Trade war threat sparks €38bn European fund exodus

Mesut Özil’s exit from German national team stokes racism debate Page A4

Page A5

World Business Newspaper

Donald Trump threatens Iran with severe ‘consequences’ Oil price surges after Twitter diatribe over Rouhani warning not to ‘play with fire’ Demetri Sevastopulo

S President Donald Trump has threatened Iran with severe “consequences” if it makes any more threats towards America, in some of the harshest rhetoric he has aimed at Tehran since assuming office. In a late-night Twitter post on Sunday, Mr Trump warned President Hassan Rouhani in capital letters: “Never, ever threaten the United States again or you will suffer consequences the likes of which few throughout history have ever suffered before.” He went on: “We are no longer a country that will stand for your demented words of violence & death. Be cautious!” The tweet appeared to be a response to Mr Rouhani’s statement on Saturday warning Mr Trump not to “play with fire” when it came to dealing with the Islamic state. “Don’t play with fire, or you will regret,” Mr Rouhani said, according to the state-owned Islamic Republic News Agency. “’Iranian people are the master and they will never bow to anyone.” Brent crude, the international oil benchmark, was up more than 1.5 per cent in midday London trading on Monday following the rhetorical brinkmanship, hitting $74.26 per barrel. West Texas Intermediate, the US benchmark, was up more than 1 per cent hitting $69.11. IRNA said Mr Rouhani told a group of Iranian diplomats that Americans should realise that establishing peace with Iran was the “mother of all peace” while war would be the “mother of all wars”. The warning from Mr Trump echoed the bellicose “fire and fury” rhetoric that he employed last year during a heated exchange with North Korean leader Kim Jong Un. While Mr Trump often capitalises words for effect, his Sunday evening comments appeared to take that approach to a new level.

The Twitter post came several hours after Mike Pompeo, the US secretary of state who is a hardliner on Iran, gave a speech to Iranian-Americans in California that castigated the regime in Tehran. “We are asking every nation who is sick and tired of the Islamic Republic’s destructive behaviour to join our pressure campaign. This especially goes for our allies in the Middle East and Europe, people who have themselves been terrorised by violent regime activity for decades,” Mr Pompeo said. The White House did not immediately respond to a request to clarify Mr Trump’s Twitter post. Relations between the US and Iran have deteriorated markedly since Mr Trump abandoned the landmark nuclear deal signed during the Obama administration. Iran has also expressed anger that the US is pressing European countries to make it difficult for them to maintain the nuclear agreement. The decision to leave the agreement has also damaged relations between the US and its main allies in Europe — the UK, France and Germany — which all argue that the existing deal is the best way to ensure that Iran does not develop nuclear weapons. Earlier this month, the Trump administration told the EU that European companies operating in Iran could face US sanctions, after it rejected a European request to exempt certain industries, including finance and energy. Washington refused to carve out exemptions in order to maintain maximum pressure on Iran. Mr Trump came into office threatening to tear up the Iran nuclear deal, but he was persuaded to hold off for months by some top officials, including Rex Tillerson, then secretary of state. Mr Tillerson was replaced by Mr Pompeo, who is a hawk on Iran, while John Bolton, another antiIran hardliner, replaced General HR McMaster as the White House national security adviser.

Fiat Chrysler Europe boss quits after Manley named new chief Alfredo Altavilla’s departure raises prospect of turmoil at Italian-American carmaker soned executives. Peter Cambell At the weekend, FCA apiat Chrysler’s European pointed Mike Manley, head of head Alfredo Altavilla the company’s US subsidiary is leaving the company Jeep, as chief executive with imafter being passed over mediate effect, after announcing for the chief executive’s role, that Sergio Marchionne will not in a departure that strips the return to the company due to ill carmaker of one of its most seaContinues on page A4

US president Donald Trump, left, and Iranian president Hassan Rouhani, right. Relations between the two countries have deteriorated markedly © FT Montage/ Getty

Leon Cooperman to close hedge fund Omega Advisors for family office Money will be returned to investors at the end of the year Lindsay Fortado

eon Cooperman is closing his hedge fund, Omega Advisors, and converting it into a family office because he does not want to spend the rest of his life “chasing the S&P 500”. The 75-year-old hedge fund manager will return outside capital at the end of the year after two and a half years of positive performance, he said in a letter to investors. Omega manages around $3.6bn, a “significant amount” of which is partner capital, according to the firm. Mr Cooperman said his decision to return money to investors was not driven by health concerns, and that he will continue managing his own money and work with Omega’s vice-chairman, Steve Einhorn, to consult each other on their family offices. Omega’s Credit Opportunities Fund will continue under a different name with the same portfolio managers, Sam Martini and Eric

Schneider, while Rebecca Pacholder, another Omega portfolio manager, will launch a new fund focused on high-yield debt and distressed securities. Mr Cooperman said he would be “a substantial investor” in both funds. As the pioneers of the hedge fund industry grow older, many are grappling with succession planning. Some, like Mr Cooperman, shut their doors, while others pass the baton to other managers to carry on the firm they started. Mr Cooperman founded Omega in 1991 after retiring from the partnership of Goldman Sachs, where he was chairman and chief executive of the bank’s asset management arm. His career was marred by an insider trading investigation by the US Securities and Exchange Commission, which he settled last year for $4.9m, without admitting wrongdoing or facing a ban from the industry.

After the SEC accused him of generating “substantial illicit profits” of $4.1m in 2016, investors including the retirement plan for Goldman Sachs employees withdrew their money, driving down assets under management from $5.4bn to $3.6bn. The hedge fund billionaire said his plan to retire was “reinforced” after he saw a Kenny Rogers concert last winter. “Mr Rogers, best known for his signature song ‘The Gambler,’ (‘You’ve got to know when to hold ‘em, when to fold ‘em’), clearly doesn’t follow his own advice,” wrote Mr Cooperman. “He had great difficulty in getting around the stage and acknowledged that, at almost 80, he shouldn’t be performing any longer, but that he’d been divorced four times and needed the money!” He added: “Well, I’ve been happily married to the same woman for 54 years, don’t need the money, and know when to fold ‘em.”

China’s $74bn cash injection highlights growth worries Central bank action indicates policymakers are moving to ease monetary policy Gabriel Wildau

hina’s central bank injected Rmb502bn ($74bn) of cash into the banking system on Monday morning through loans to commercial banks, in the latest indication that policymakers are moving to ease monetary policy as the economy slows. The injection was the People’s Bank of China’s largest ever using its so-called Medium-term Lending Facility, a policy tool created in 2014 to provide loans to commercial banks for three to 12 months. The loans comes on top of other recent monetary easing moves, including a cash injection of about Rmb700bn in late June, when the PBoC cut the share of deposits that banks must hold on reserve at the central bank, where they

are unavailable for lending and investment. The provision of extra liquidity shows Beijing is moving to support growthasaslowdowninhousingand infrastructure adds to pressure from an escalating trade war with the US. China’s economy grew at 6.7 per cent in the second quarter, official data showed last week, its slowest pace since 2016. A broad measure of credit from both banks and nonbank sources grew at its slowest pace ever in June, while growth of M2 money was also the slowest on record. Though second-quarter growth was only 0.1 percentage points slower than the pace of the previous nine months, economists expect further deceleration in the coming months, as the impact of a fierce campaign to restrain run-

away debt growth has strangled financing flows to many companies. Financial stress is rising among marginal borrowers: 150 peer-topeer lending platforms have collapsed since the beginning of June amid a wave of borrower defaults. Policymakers are now attempting to walk a tightrope between staying the course on deleveraging, which will address long-term financial risks, and supporting short-term growth. “Releasing liquidity can activate some credit flows, but it’s still too early to call this broad-based stimulus,” said Shao Yu, chief economist at Orient Securities in Shanghai. “This is more about replenishing liquidity than fully opening the floodgates. Right now deleveraging is still the main emphasis.”

BUSINESS DAY

C002D5556

NATIONAL NEWS

FT Fiat Chrysler Europe boss quits after...

US banks urge UK to cut corporate taxes to stop Brexit exodus

Continued from page A3 health. Mr Altavilla’s departure will add to analyst fears of possible “ management turmoil” at the Italian-American carmaker as executives who missed out on the top job decide to leave. FCA shares opened 4 per cent lower following the weekend announcement, and were trading 3 per cent lower during mid-morning. Mr Altavilla, one of Mr Marchionne’s key lieutenants at FCA, was considered a strong contender for the chief executive role, alongside chief financial officer Richard Palmer and Mr Manley. FCA said he was leaving “to pursue other professional interests”. A spokesman said: “The group thanks Alfredo for his contributions and wishes him all the best for the future.” Following his departure, Mr Manley will assume control of the Europe, Middle East and Africa region, while the role of global business development, also held by Mr Altavilla, will be reassigned and will report to Mr Palmer. This reallocation adds to Mr Manley’s roles, which also include head of North America, a post held by Mr Marchionne, as well as chief executive. The new head still needs to fill his old role running the Jeep and Ram brands, as well as deciding what changes he wants to make to FCA’s ambitious midterm plan. FCA reports its half-year results on Wednesday, which is expected to be the first time that Mr Manley addresses shareholders directly since his elevation. “Manley has a very tough job ahead of him, not least with the financial community,” said Max Warburton, an analyst at Bernstein, on Monday. “The second quarter call this week will be a baptism of fire.” At the weekend, the company said Mr Manley and his team would carry out FCA’s growth plan to 2022, which was outlined in June by Mr Marchionne. Mr Manley is expected by analysts to make some changes to the strategy. Analysts have predicted that executives who missed out on the top role may leave the business. “If there are four or five people who were hoping to get it, there is definitely a risk of management turmoil afterwards,” said Philippe Houchois, an analyst at Jefferies. Mr Altavilla joined Fiat in 1990 and has worked in many divisions including its powertrain and strategy arms. He has run its Europe, Middle East and Africa division since 2012. He is on the boards of Telecom Italia, and industrial group Actuant Corp. His departure was first reported by Bloomberg News.

Tuesday 24 July 2018

Wall St executives say London losing edge against New York after Trump deregulation drive Martin Arnold

U Mesut Özil was criticised after being photographed with Recep Tayyip Erdogan in London before June’s Turkish elections © AFP

Mesut Özil’s exit from German national team stokes racism debate Footballer quits after backlash over photograph with Turkish president Guy Chazan

he shock decision by one of Germany’s most high-profile footballers to quit the national side citing “racism and disrespect” over his Turkish roots has reignited a fierce debate over the country’s attitude towards race and immigration. Mesut Özil was strongly criticised after being photographed with Turkish president Recep Tayyip Erdogan at an event in London shortly before June’s Turkish elections. The 29-yearold Arsenal midfielder said the incident had prompted hate mail and threats against him and was blamed for Germany’s disappointing performance in the World Cup. Germany’s justice minister Katarina Barley said Mr Özil’s decision to leave the national team, announced at the weekend, was an “alarm signal” that highlighted the prevalence of racism in German society. On Monday Chancellor Angela Merkel’s spokeswoman said the integration of people with an

immigrant background “was one of the government’s key tasks”. “Mesut Özil is a great football player who has achieved a lot for the national football team,” Ulrike Demmer said. He had made a decision “which we should respect”. She added that sport had played a big role in integrating ethnic minorities, and praised the German Football Association (DFB) for its “many initiatives, campaigns and projects promoting integration and cohesion in our country”. But there was criticism of Mr Özil’s behaviour from other quarters. “I don’t think . . . the case of a multimillionaire who lives and works in England says much about Germany’s ability to integrate immigrants,” said Heiko Maas, foreign minister. The popular newspaper Bild said Mr Özil had failed to see how incensed Germans were at the sight of the footballer endorsing Mr Erdogan. “Özil talks about his ‘values’,” the paper said. “But he ignores the fact that Erdogan is not for but against the values of his German and Turkish homeland . . . [He]

is increasingly transforming the freedom-loving, moderately religious Turkey into an Islamist dictatorship.” Annette Widmann-Mauz, the German government’s immigration commissioner, said much as she sympathised with Mr Özil’s family roots “players in the national football team must accept criticism when they allow themselves to be used in election campaigns”. In a three-page statement posted on social media, Mr Özil, who played 92 matches and scored 23 goals for the national team in an international career spanning nine years, said he had been born and brought up in Germany — “so why don’t people accept that I am German?” The controversy over the picture of Mr Özil’s meeting with the Turkish president overshadowed the German team’s preparations for this month’s World Cup. Ilkay Gündoğan, another German player with Turkish roots also photographed with Mr Erdogan, said that there was nothing political about the picture. But Mr Özil had kept silent on the matter — until Sunday.

EU in last-ditch attempt to avoid trade war Juncker hopes to ‘de-escalate’ tensions at Washington meeting with Trump Jim Brunsden

russels will make a lastditch attempt to convince Donald Trump not to go ahead with punitive tariffs on the EU car sector, even as hopes diminish that a full-blown trade war with the US can be avoided. Jean-Claude Juncker, president of the European Commission, will meet Mr Trump in Washington on Wednesday, in a meeting that EU officials said would be aimed at “de-escalating” tensions by exploring “various avenues” for trade talks. But, in a sign of the seriousness with which Brussels is taking the threat to its car exports, the European Commission is also pressing ahead with work to identify US products that could be hit with retaliatory tariffs if the initiative fails.

One senior EU official said that the European Commission is considering different options, including potentially hitting €10bn of US products with 20 per cent tariffs, or opting for a longer list of €18bn of goods on which lower levels of additional duties could be applied. Products being lined up for inclusion on the list include suitcases, construction vehicles and photocopiers. Mr Juncker’s trip comes after repeated threats from Mr Trump to hit some €50bn of EU-made cars and car parts with additional tariffs, which the US president has indicated could be set at 20 per cent. That rhetoric has escalated in recent days, with the US president this month describing the EU as “a foe” that has “taken advantage” of the US on trade. Mr Trump has already applied punitive tariffs to EU steel and

aluminium exports, and is engaged in a widening trade war with China. The US administration is currently investigating whether car imports constitute a national security threat. Brussels preparations to retaliate are guided by its assessment that any US move to hit cars would violate World Trade Organization rules, so allowing the EU to take countermeasures within certain legal limits. EU trade commissioner Cecilia Malmstrom, who will accompany Mr Juncker on the trip to Washington, said last week that the aim was to “try to see how we can work together” to address trade concerns. “Let’s approach this like the allies and partners we are,” she said, adding that the visit would also involve meetings at the US Congress and with other administration officials.

S banks are calling on the British government to cut taxes and red tape that they say could lead to financial assets and jobs pouring out of the UK after Brexit. Senior Wall Street executives have warned UK government ministers that the City of London is losing its competitive edge against New York, especially since US president Donald Trump slashed corporation tax and pushed for looser regulations. One top US bank executive said after meeting UK chancellor Philip Hammond this month: “I think they know there is a ticket to pay to keep [London] as a financial centre.” Stephen Jones, chief executive of UK Finance, a lobby group for British lenders, said: “Competitiveness is a big agenda, and the tax cuts and deregulation in the US have put this firmly on the radar. “There is a perception that [in the UK] this is still a relatively hostile business and regulatory environment.” Mr Hammond said at a Treasury event last week that he hoped an increase in UK financial services firms’ activities in emerging markets would offset any loss of activity in the rest of the EU after Brexit. The financial services industry generated between £190bn and £205bn in the UK in 2015, according to Oliver Wyman. The consultancy found that just under half of the revenues were generated by work for UK clients, about a fifth were from EU-related business, and almost a third related to business from the “rest of the world”. But bankers have said that if the UK does not become more competitive, it could lose business with the “rest of world” after it leaves the EU. The top US bank executive said: “If this government stays in place, it realises it has to swing back to the middle ground after Brexit, otherwise it risks losing some of this. The question is [do we move business to] New York; that is the real risk.” Several big banks, including JPMorgan Chase, Citigroup, Goldman Sachs and Bank of America, have done in-depth reviews of the relative tax competitiveness of the countries in which they operate. UK Finance is also benchmarking Britain’s attractiveness as a financial centre against other countries, and plans to publish the results later this year. While the UK bank levy — a tax that the UK government introduced following the financial crisis — is steadily being reduced from 0.18 per cent of bank liabilities to 0.1 per cent over the next three years, the government in 2015 also introduced an 8 per cent corporation tax surcharge on bank profits over £25m.

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Trade war threat sparks €38bn European fund exodus June sees fastest monthly outflows for 5 years as Trump rhetoric spooks investors Attracta Mooney

urop ean investors pulled cash from mutual funds at the fastest rate in almost five years in June, withdrawing €38.3bn as fears of a global trade war spooked markets. Equity, bond and money market funds based in Europe all suffered at least €11bn in net outflows during the month, marking it the worst month for redemptions since September 2013, according to Thomson Reuters Lipper, the data provider. The investor flight came as the White House outlined plans to impose tariffs on imports from China, rattling markets and prompting fears that a trade war could threaten global supply chains. Detlef Glow, head of Lipper Europe, Middle East and Africa research, said heightened insecurity had prompted the outflows, with investors fearing “possible trade wars and the increasing political controversy between Iran and the US, which can lead to higher energy prices and therefore higher costs for companies”. “Some of the outflows can be seen as a switch into risk-off mode by the European investors,” he said. Ben Seager-Scott, chief investment strategist at Tilney, the financial planning company, said many investors had experienced several years of strong growth across their portfolios but were now concerned about potential losses. “There is elevated political risk now. There is concern about trade wars and currency risk. This would

spook a lot of investors,” he said. June marked the second month in a row of net redemptions from long-term funds domiciled in Europe, after 16 previous months of inflows. According to the Lipper figures, which encompass open-ended funds in Europe including exchange traded funds, emerging market equity, global bond and European equity funds were among those hardest hit with redemptions. Darius McDermott, managing director of Chelsea Financial Services, the discount broker, said investors had started to go back into European equities last year but the Italian election had knocked confidence. He added that Mario Draghi, the European Central Bank president, was starting to reverse the bloc’s quantitative easing programme, “so the future — and how markets will react to the new world of quantitative tightening — is very much unknown”. Mr McDermott said emerging markets funds had gone out of favour again due to the dollar strengthening. A strong dollar is viewed as bad for emerging markets as companies’ debts become more expensive. “China growth has continued to slow slightly and trade wars [are] obviously having an impact on investor sentiment,” he said. US President Donald Trump this month kicked off the process of imposing tariffs on a further $200bn of imports from China. Beijing has accused Washington of “trade bullying” and slapped tariffs on $34bn of US exports.

‘Severe’ housing shortage hits US home sales, lifts prices Sales of previously owned homes falls for third month while prices hit new peak Adam Samson

ales of previously owned US homes fell for the third-straight month in June and prices struck a record high amid a “severe housing shortage”, according to data released on Monday. Existing home sales fell 0.6 per cent in June to an annualised rate of 5.38m units, according to the National Association of Realtors. The key gauge of the US housing market was down 2.2 per cent from the same month in 2017. There was a mismatch between demand among would-be homebuyers and “the actual pace of home sales, which are declining”, said Lawrence Yun, chief economist for the NAR. “The root cause is, without a doubt, the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is

going under contract very fast, and in many cases has multiple offers,” he said. The lack of supply and robust demand sent the median existing-home price to $276,900 in June, up 5.2 per cent year on year, setting a new high. Freddie Mac, the US-government backed mortgage financier, cited the same trends in its July housing market report, also issued on Monday. “Exceptionally low housing supply and weaker affordability slowed the housing market in the first half of 2018,” it said. The group believes that conditions will “slightly improve” going into the late summer, “with added new home construction helping to alleviate some of the current supply shortage”. It forecast a 2.5 per cent increase this year in total home sales, which includes both existing homes and newly built ones, with prices rising 6.7 per cent.

Hasbro shares leap after forecast-beating earnings Peter Wells

asbro shares ripped higher by almost 12 per cent in early trade after the toymaker reported earnings that were not as dire as analysts predicted. Still, the recent bankruptcy and liquidation of Toys ‘R’ Us stores worldwide weighed on the company’s revenue, which shrank in the second quarter. Total sales at the Rhode Island company, which is behind Transformers robot toys, My Little Pony, Play-Doh and Monopoly, fell 7 per cent from a year ago to $904.5m in the three months ended June 30. But this sailed past the mean forecast of $833.1m in a survey of analysts by Thomson Reuters. Sales in the US and Canada were down 7 per cent year-onyear, largely due to the Toys ‘R’

Us liquidation, but fell 11 per cent across its other international markets, most notably in Europe, as a result of managing inventory in a retail landscape that was evolving quickly. One bright spot was the company’s entertainment and licensing segment revenues, which rose by 26 per cent to $64.7m The company reported net earnings of $60.3m, or 48 cents a diluted share, which easily topped analysts’ forecasts for 30 cents a share. Shares were 8 per cent higher in early trade on Monday at $101.17, but had been up my as much as 11.8 per cent. Brian Goldner, Hasbro’s chairman and chief executive, said the company was investing in innovation, entertainment and a modern global commercial organisation to spur profitable growth in 2019 and beyond. “We are focused on moving

beyond the near-term disruption of losing a major customer, with a clear path forward including new retailer activations to meet the consumer demand made available by the Toys ‘R’ Us departure,” he added. Traditional toymakers have been struggling as they vie for the attention of children who are increasingly shifting their interest towards electronic games on mobile devices and videos on YouTube. Hasbro has been doing a bit better than rival Mattel, from which it snatched the licensing rights to Disney dolls in 2014 and thus the revenues from big franchises such as Frozen. In an effort to boost sales, particularly in the wake of the Toys ‘R’ Us bankruptcy, Hasbro in May struck a $522m deal to buy a suite of media brands including the Power Rangers.

Tesco to launch new chain of discount stores Latest effort by UK’s biggest retailer to take on cut-price rivals Aldi and Lidl Murad Ahmed

esco is set to launch a new chain of discount stores as early as September across the UK, in its latest effort to take on cut-price rivals Aldi and Lidl who have transformed the expectations of price-conscious consumers. The UK’s biggest retailer has drawn up plans to open up to 30 stores in the autumn, planning to refit some existing stores to introduce the new format or reopen mothballed sites that Tesco still controls, according to a person with knowledge of the plans. The person said the new chain is expected to be called Jack’s — thought to be a reference to Tesco founder Jack Cohen — with a division of the company having recently attempted to register the name as a trademark. However, it remains unclear if the company has successfully acquired the Jack’s name. Speculation about an alter-

native supermarket chain has grown since job advertisements appeared for roles at the company that involved a “new retail format . . . operated separately from the core Tesco business”. The Mail on Sunday and The Guardian were first to report on details of Tesco’s upcoming discount chain. Tesco declined to comment. British supermarket groups have come under pressure in recent years from the expansion of German grocers Lidl and Aldi, which offer a narrower range of products bought in huge volumes at deeply discounted prices. In response, traditional retailers engaged in damaging price wars, but have since sought to introduce new ways of shoring up their market share while boosting profits. In the meantime, the ripple effects from Aldi and Lidl’s push into the UK continue to transform the sector. Earlier this month, Tesco announced a deal with Carrefour of

France to combine their market strength to jointly purchase ownbrand products and other goods as part of a long-term tie-up that will initially run for three years. The effort is a direct response to the German discounters, whose cheap own-brand options have proved popular for priceconscious shoppers. Tesco also acquired food wholesaler Booker for £4bn earlier this year to boost profits, though falling sales in its core UK supermarket business has led the group to invest in cutting prices in fresh foods in recent months. Earlier this year, J Sainsbury, the UK’s second-largest grocer, announced a planned takeover of third-ranked Asda, a subsidiary of US-based Walmart, with the groups promising that they could achieve price cuts of up to 10 per cent on everyday items if the tie-up can be completed. The deal is being investigated by the Competition and Markets Authority.

BUSINESS DAY

Tuesday 24 July 2018

LEADERSHIP

Goldman’s cool crisis commander bows out, finally Lloyd Blankfein steered bank through turmoil, but is his legacy assured? ROBERT ARMSTRONG, LAURA NOONAN & ARASH MASSOUDI, FT

ost chief executives, upon their departures, are measured by how their companies grew under their stewardship and the returns reaped by their investors. On both of these metrics, Lloyd Blankfein is unexceptional. In 2006, the year he took the helm of G oldman Sachs, the renowned investment bank had revenues of $38bn and net income of $9.5bn. That is roughly the same level of revenue and profit that analysts expect Goldman to generate this year. The shares are up 50 per cent over the intervening 12 years, well below the S&P 500 index. But Mr Blankfein — whose departure was announced go days— will be measured not just against the market but also against the leaders of L ehman Brothers, Bear Stearns, and Merrill Lynch — peers and competitors who were not able to steer their own institutions to safety during the financial crisis. Goldman has unique strengths that sustained it as an independent bank, but two particular characteristics of its chief executive made the journey easier: an ability to keep his head when others were losing theirs, and skill as a manager — both of people and of risk. Another aspect of Mr Blankfein’s legacy will, however, only come into sharper focus in years to come. It will fall to David Solomon, the Goldman president who is expected to succeed Mr Blank-

Lloyd Blankfein

fein later this year, to complete the strategic re-positioning of Goldman — shifting its focus towards traditional banking activities, using technology as a platform. The crucial pivot that allowed Goldman to limit the damage from the crisis was a sharp move away from trading, which contributed the meat of the bank’s profits in the years leading up to the crisis and provided Mr Blankfein’s start. “He is the most improbable CEO Goldman ever had,” says Roy Smith, a professor of Finance at New York University and Goldman partner in the 1980s. “He came as a small fry in a gold trading firm that Goldman bought [J. Aron & Co, acquired

in 1981] but probably shouldn’t have. He was trading a commodity when Goldman didn’t know how to spell the word — when it was an investment bank and brokerage with some arbitrage and proprietary trading on the side.” The trading business grew fast and when Mr Blankfein took over the CEO and chairman roles, it represented more than half of the company’s revenues and profits. But Mr Blankfein was not a gun-slinging trader: he had spent his career first as a salesman and then a risk manager. “He leaned against the conventional wisdom, both within the firm and more broadly. In 2005-6-7, when the numbers were great and there was a lot of ‘this time

CV: Lloyd Blankfein BORN - New York, 1954 EDUCATION - Harvard, BA in history, 1975, Harvard Law School, 1978 GOLDMAN CAREER 1982 Joins J Aron, a commodities trading firm recently acquired by Goldman 1988-1994 Partner 1994-1997 Co-head, currency and commodities

1997-2002 Co-head, fixed income 2002-2004 Vice-chairman, fixed income 2004-2006 President and chief operating officer 2006-present Chairman and chief executive INTERESTS Reading, history, swimming, running

is different’ going around, Lloyd would get up and say ‘Plenty of time to have our worst year ever’,” a senior Goldman partner recalls. During the crisis itself, colleagues remember him as consistently calm and maintaining his sense of humour throughout. “Lloyd successfully led Goldman Sachs through a oncein-75- year financial storm and its bitter aftermath, and has repositioned the firm for today’s world,” says Hank Paulson, who preceded Mr Blankfein as chief executive of Goldman before stepping down to become Treasury secretary. “His keen intellect and sense of humour have made him an effective spokesman for his industry and his firm.” In the end, it may have been Goldman’s careful management of its own balance sheet risks that precipitated a sort of second crisis — a crisis of reputation rather than solvency, and focused almost exclusively on Goldman, rather than on the industry as a whole. The bank became the symbol for Wall Street double- dealing: reducing its exposure to the teetering housing market even after it continued to underwrite complex mortgage security deals. Mr Blankfein was hauled before the Senate for this alleged “big short” and attacked in the press. In the second crisis, the cool-

ness of manner and dry wit that served Mr Blankfein so well in the first became a liability. When in an interview in 2009 he said that Goldman was “Doing God’s work,” he may have been attempting irony. If so, the humour was lost on the public. But, remarkably, Mr Blankfein survived the reputational damage the bank suffered and the investigations and fines which followed. “There was obviously a bit of a wobble in 2010 in the wake of the DoJ investigation and the [$550m] fine [from the SEC],” a partner at the time recalls. “He was probably within 5 or 10 per cent of being replaced by [vice-chairman] Mike Evans.” He survived, once again, because of his coolness and ability to keep things in perspective. The job did not get easier in the years that followed. Goldman’s revenues stalled between 2012 and 2015, and started to slip in 2016. Lines of business that had served the bank well historically were not well suited to a world in which regulators had doubled the bank’s capital requirements and discouraged most forms of proprietary trading. A rival at another investment bank says: “Right up to 2012 Lloyd really positioned Goldman Sachs as a great winner from the crisis . . . [but] he failed to realise after that the secular changes in the markets.” His legacy would have been stronger “if he’d gone home in 2016 . . . before the downturn in fixed income”. While Goldman, and Mr Blankfein, may have been late to change, the bank has significant ambitions for technology-based retail and consumer banking. The bank aims to add $5bn in new revenue by 2020, with $2bn of that to come from lending. The retail bank has made waves both by being entirely virtual — and by paying high rates for customer deposits. Mr Blankfein’s legacy, beyond ensuring Goldman’s survival, depend on these new growth gambits. If they pay off, Mr Blankfein may be remembered as the last leader of a Goldman Sachs that ruled Wall Street and the first leader of a sedate provider of financial services.

Tuesday 24 July 2018

C002D5556

BUSINESS DAY

Tuesday 24 July 2018

STRATEGYBRIEFING IDEAS THAT POWER High PERFORMANCE

Strategy: Balancing agility and consistency BRIAN REUBEN

ne of the fundamental attributes that describes super-performing companies is their ability to maintain a clearly defined position. Unlike the several companies that change their strategy like they are changing diapers, high performing organisations understand positioning as it relates to strategy and they work hard to establish one as well as protect it. It is easy to overlook the importance of maintaining a clearly defined unique position that differentiates your company in the pursuit of short term profit. It is easy to get involved in activities that has no alignment with the strategic direction of your company because they present profitable opportunities. It is easy to become preoccupied with meeting monthly and quarterly targets so as to keep our heads above the water and forget the long run impact on the company. Successful companies avoid becoming all things to all people. Rather they rank effectiveness above efficiency. Being strategic effective means doing those things consistent with the strategic position the company has chosen. High performing

organizations take this very seriously. Think about Apple, Google, Ikea, LinkedIn, and other global giants and you can quickly tell what they stand for. Through the years of difficulty and abundance they have stayed true to their identity. But if organizational leaders are merely consistent,they risk rigidity.In changing environments they can struggle to adapt and may cling to old habits and practices until those practices become counterproductive,distracting them from the more important new work that needs to be done. Consistency must then be balanced with agility. Agility means you must recognize when you must adjust your approach in the pursuit of your desired position. According to one analysis ,88% of companies appearing on the Fortune 500 list in1955 were not on it in 2014 (having merged,become bankrupt,lost their profitable position). Think about Kodak that lost their advantage and went bankrupt because they refused to adjust their approach. Just as successful managers must change similarly as they assume additional or different responsibilities through their careers.these leaders must pivot when needed. They must pivot when

needed,and agility requires that they be intellectually curious, ready to learn from others,communicative, collaborative,and willing to change. But then unrestrained agility presents its own challenge. When agility is not balanced with consistency companies soon loose focus and stand for nothing. They start to run after the ‘latest trends’ until they loose their position. Unbalanced agility can lead to chaos and instability which ultimately brings failure. High performing organisations maintain a healthy balance of agility and consistency. They change course when the situation demands it. They have high quality standards,achieve goals,and expect consistency, but they are also open to change,keep an eye on the external environment,and understand when old ways of working no longer pass the test of the market in which they compete.They stay true to their approach until it is no longer reasonable and combine continuous improvement with ideation and strategy. Sadly only a few business leaders understand how to balance consistent and agility at the same time. Some don’t even know there’s such a tihing as balancing agility with consistency. So the question, how

do I stay through to my approach and remain flexible enough to adjust when I have to? The first step is to understand yourself. Are you a person more driven towards agility or consistency? Are you more naturally aligned with deep focus or ideation? Do you succeed more in situations of chaos and rapid change or in periods that require relentless pursuit of a clearly defined goal? Somehow you know yourself, if in doubt ask a spouse or trusted and sincere associate. Once you know where you stand the next step is to support yourself with people who have the attribute you lack to help you gain balance. You must also empower such people to speak up, challenge you and disagree with you. You don’t need good impression, you need results. But until this balance forms part of your corporate culture you can’t have much results. You have

to be directly involved for things to work and even so there still will be internal frictions from your people. Put in place therefore operational processes to help you balance agility and consistency. To ensure consistency, develop strong dashboards and balanced scorecards to assure outcomes are consistent reached and continually improving.To assure agility,develop a fluid planning model that allows your company to change outside of the formal annual planning process and create an annual strategic planning process that looks outward to the external environment and forces the organization to contemplate big ideas. Besides this is the need for your own development and growth. You have to become a more balanced leader. You cannot be strategically effective without balancing agility and consistency. There is no choice here.

Brian is an author, advisor to business leaders, keynote speaker and an entrepreneur. He has trained and advised senior executives at renowned organizations including Africa Reinsurance Corporation, UAC, United Securities Limited, BusinessDay among others. Brian is the Director of BusinessDay Training and sits on the board of a number of organizations in Africa.

This Page Is Open For Sponsorship, for details call 0708 234 5251.

BUSINESS DAY

C002D5556

NEWS YOU CAN TRUST I TUESDAY 24 JULY 2018

Opinion Kemi Adeosun and Buhari’s fight against corruption

OGHO OKITI Dr. Okiti is the president, Time Economics Ltd @ Dr_Okiti 081.7153.0058

s predicted by a number of analysts, within two weeks o f t h e P re m i u m Times news on the Minister of Finance Kemi Adeosun, on what some have described as the “Oluwole Gate”, Nigerians have forgotten the scandal of a treasury minister forging a certificate in order to become one. Within two weeks, the news has been swept away from social media headlines and replaced by conditional cash transfer in Ekiti State. But suddenly, the (Honourable?) Minister herself has finally spoken. Her excuse is that the certificate was obtained on her behalf through a third party, adding that she was embarrassed. Before the Minister spoke, it was clear for more than a week after the story broke that the government had more important issues to

deal with. While everyone in government kept quiet and feigned ignorance, NYSC, under pressure to either clarify or deny it, released the most insipid statement you will probably ever read from a Nigerian government agency – confirming that the Minister applied for exemption, but it would confirm later what the outcome of the application was. Pressed for further comments and specifically from the government, Lai Mohammed poured scorn on the matter when he argued that NYSC, as government agency, have already spoken and there was nothing more to add. Before then, otherwise very vocal presidential spokespersons, including Garba Shehu, denied that they have heard of the allegations. I found it interesting that the weekday after the story broke, the Minister met with representatives of the International Monetary Fund (IMF), and I imagine they would have discussed Nigeria’s debt growth, its fragile economic recovery, high unemployment, and Nigeria’s fiscal policy ahead of the 2019 elections. However, I can also imagine that it would have been awkward, knowing that

their host was just accused of forgery, and not knowing if she would remain in her post long after the meeting. But they should not have bothered, people don’t get sacked for certificate forgery in the Nigerian government. In the last three years, there is an established approach to irritations such as this. After the scandal becomes public knowledge, virtually all government personnel feigns ignorance, and whenever they finally speak on it, they promise unending and long winding investigations. Before anything concrete happens after that, the public has forgotten, or is distracted by another scandal. It is “see no evil, talk no evil”. Indeed, as a journalist, I have been able to gather three narratives about corruption under APC from those I speak to. The first narrative is that of surprise. Those that supported the government towards the 2015 elections genuinely thought the President and the party were genuinely intent on fighting corruption. This group now believes that while significant progress has been made on fighting the corruption of the past;

there has been no progress on fighting the corruption of the present, nor have any systematic processes or procedure been put in place to prevent future corruption. To this group, they figured, and very quickly that APC was not intent on fighting corruption but intent on fighting the corruption that competes with the party. There is a marked difference between the two. The corruption fight pursued by APC is competitive, myopic, partisan, and above all, lacks credibility. The second narrative I have gathered about dealing with corruption under the APC is that which absolves the President of every wrongdoing. It flows from the period of campaign, where APC campaigned and rose to power on the back of the fight against corruption. But key to that success was the perceived integrity of the President and his strong mindedness against corruption. Therefore, this second narrative suggests that any form of corruption in the administration did not originate from the President, has not come to the knowledge of the President, and when or how it finally comes to his knowledge, it is diluted and

explainable. The conclusion of this narrative is that, while his general followers cannot vouch for those that work with Mr. President, and that though the President may be presiding over corruption, he is certainly doing so unconsciously. The third narrative is quite close to the ones I have discussed above but nonetheless, has its own variant. And that is that it takes time to fight corruption. That is, corruption itself fights back, delays the process or dilutes the outcome. In this narrative, the notion is that the courts are slow, the public biased, or sometimes even in favour of those that are corrupt or those that are corrupt are succeeding in persuading the courts to the detriment of Nigeria. Back to Kemi Adeosun, there is no doubt in my mind that she would have served if she completed her university education in Nigeria. I also know that many Nigerians that went to schools abroad rarely see their futures in Nigeria and think it is unnecessary to “waste” a year serving a country that may never appreciate them or recognise their service. I then also know that this is

definitely the mindset playing round in the ministry and the presidency after the scandal broke – that Kemi Adeosun is doing Nigerians a favour by coming home to serve and be a minister. So, looking at the “Oluwole Gate” scandal, there are elements of the three narratives I have gathered in the past. For instance, if it were someone in opposition found with a forged certificate, the APC would have been brutal and cry to the roof. Also related to the second narrative, since the story broke, there has been no word from the Presidency. They are too busy to notice that one of their own has forged a certificate, nor do they see any relation to their “loud speaker” corruption they claim to be fighting. Worse still, they cannot be bothered about a treasury minister forging a certificate. And in relation to the third narrative, they see those requesting for clarification as corruption fighting back. In all these, a government intent on fighting corruption has willfully forgotten the one in its closet, but forgetting that the first rule of fight against corruption is credibility. They have simply lost it. I thank you.

How we lost America to greed and envy •The US president is hostile to the core values the country used to stand for MARTIN WOLF Wolf is the Chief Economics Commentator of The Financial Times.

ho lost China? This cry went up in the US after Mao Zedong’s victory in China’s civil war in 1949. It was a strange question. When did the US own China? Strange or not, this cry helped Republicans win power in 1952. It promoted the rise of Joseph McCarthy, whose politics had similarities to those of Donald Trump — above all, in the charge that traitors infest the US government. In the senator’s case, the target was the state department; for Mr Trump, it is the FBI. The question today is: who lost America? And is it lost for good? Nobody of course owns the US, apart from Americans. Yet, for westerners and many others, the US stood for something so attractive that it seemed to be “ours” — the guarantor not just of its own freedom and prosperity, but that of hundreds of millions of others. My father,

a refugee to the UK from presecond-world-war Austria, had no doubt. The US was the bastion of democracy. It had saved Europe from falling to Nazi or communist dictatorships. As a journalist and documentary filmmaker, he knew about its mistakes. But the US was not just any great power. It embodied the causes of democracy, freedom and the rule of law. This made him fiercely pro-American. I inherited this attitude. In the postwar world, US policy had four attractive features: it had appealing core values; it was loyal to allies who shared those values; it believed in open and competitive markets; and it underpinned those markets with institutionalised rules. This system was always incomplete and imperfect. But it was a highly original and attractive approach to the business of running the world. For those who believe humanity must transcend its petty differences, these principles were a start. Yet today the US president appears hostile to core American values of democracy, freedom and the rule of

law; he feels no loyalty to allies; he rejects open markets; and he despises international institutions. He believes that might makes right. The Chinese president Xi Jinping and Russian president Vladimir Putin have might. He admires them. German chancellor Angela Merkel and UK prime minister Theresa May are decent women trying to lead democracies. He abuses them. So why is Mr Trump in power? The answer lies with a political failure that the US might be unable to overcome. Mr Trump’s accession to power is partly an accident, but not only an accident. The rise of China and the unanticipated impact of globalisation have profoundly affected the US view of itself and its global role. An anxiety that spreads from left to right has replaced the hubristic euphoria of the post-cold-war “unipolar moment”. The US no longer sees itself as so dominant and the world as so friendly. Mr Trump may be an outspoken protectionist. But Hillary Clinton was no defender of liberal trade.

Mr Trump’s view that the rest of the world has taken the US for a ride is widely shared. In a country that has succumbed to protectionist ideas, it is not so surprising that the protectionist won. Again, once anxiety over China arrived, a nationalist was a natural choice. Yet something still more important is happening. The striking feature of the US economy is that, despite its unique virtues, it has recently served the majority of its people so ill. The distribution of income is exceptionally unequal. Labour force participation rates of prime-aged adults are exceptionally low. Real median household disposable incomes are the same as they were two decades ago, while mean incomes are much higher. Uniquely, mortality rates of middleaged white (non-Hispanic) adults have risen since 2000 in the US. Mr Trump loves to tweet his shock over every highprofile terrorist outrage in Europe. But, in 2016, there were just 5,000 murders in the EU, a rate of one per 100,000 people (including

terrorist attacks). There were 17,250 murders in the US, a rate five times greater. Mr Trump might start to worry about that. The poor state of so many Americans is in part the product of plutocratic politics: a relentless and systematic devotion to the interests of the very rich. As I have argued before, a politics of low taxes, low social spending and high inequality is sustainable in a universal suffrage democracy only with a mixture of propaganda in favour of “trickle down” economics, splitting the less well off on cultural and racial lines, ruthless gerrymandering and outright voter suppression. All this has indeed happened. These are the politics of “pluto-populism” or of “greed and grievance”. They have been stunningly successful in making Republicans attractive to many in the white working class. The structural biases in voting are also remarkable. In the past three elections for the House of Representatives, it took 20 per cent more voters for the

Democrats to win a seat than for the Republicans, on average. Republicans have also won the presidency twice in the last two decades despite losing the popular vote. Mr Trump is the logical outcome of a politics that serves the interests of the plutocracy. He gives the rich what they desire, while offering the nationalism and protectionism wanted by the Republican base. It is a brilliant (albeit unplanned) combination, embodied in a charismatic personality that offers validation to his most passionate supporters. Will Trump’s protectionism do many in his base any good? No. But, in their eyes, he is a real leader, at last. Who lost “our” America? The American elite, especially the Republican elite. Mr Trump is the price of tax cuts for billionaires. They sowed the wind; the world is reaping the whirlwind. Should we expect the old America back? Not until someone finds a more politically successful way of meeting the needs and anxieties of ordinary people.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08022238495 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.