BusinessDay 24 Jul 2019 by BusinessDay

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news you can trust I **WEDNESDAY 24 july 2019 I vol. 19, no 356 I N300

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NGUS sep 18 2019 361.03

As Kachikwu, Enelamah, Ambode lose out Average age of nominees is 60 years Some under EFCC investigation Senate suspends recess for screening see full list p. 37

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CBN to begin monthly check of banks’ LDR after Sept 30 … retains benchmark interest rate at 13.5% … no plans to bar banks from OMO/TB auctions HOPE MOSES-ASHIKE, SEGUN ADAMS, GBEMI FAMINU, Lagos, & ONYINYE NWACHUKWU, Abuja

MICHAEL ANI, ENDURANCE OKAFOR, BUNMI BAILEY, DAVID IBIDAPO, Lagos, TONY AILEMEN, INNOCENT ODOH, OWEDE AGBAJILEKE & HARRISON EDEH, Abuja

he Central Bank of Nigeria (CBN) will from September 30, 2019 begin a month by month monitoring of loan to deposit ratio (LDR) threshold of Deposit Money Banks (DMBs), Godwin Emefiele,

Continues on page 38

Buhari picks politics over policy with ministerial list ive months after winn i n g t h e Fe b r u a r y 23 presidential election and almost two months after he was sworn in for a second and final four-year term, President Muhammadu Buhari unveiled a ministerial list long on politicians but largely lacking in technocrats. Buhari submitted the 43-man ministerial list to the upper chamber of the National Assembly for screening on Tuesday and

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Continues on page 38

Inside L-R: Olusegun Osoba, former governor of Ogun State; Vice President Yemi Osinbajo; Dapo Abiodun, Ogun State governor; Abimbola Jakande, wife of the celebrant; Ibikunle Amosun, former governor of Ogun State; Lateef Jakande, celebrant/first civilian governor of Lagos State; Bola Tinubu, national leader of APC; Babajide Sanwo-Olu, governor, Lagos State, his wife Ibijoke, and Babatunde Fashola, former minister of power, works and housing, at the 90th birthday of Jakande at in Lagos.

Boris Johnson wins Tory contest to become UK P. A1 prime minister

Wednesday 24 July 2019

BUSINESS DAY

news L-R: Babatunde Fowler, chairman, Joint Tax Board and executive chairman, Federal Inland Revenue Service (FIRS); Salihu Alkali, FIRS coordinator for FCT, Kogi and Nasarawa states, and Abiodun Aina, coordinating director, Domestic Tax Group, at the inaugural meeting of the National Tax Policy Implementation Committee, in Abuja. NAN

Analysis

Nigeria/Siemens deal could unravel power sector privatisation ISAAC ANYAOGU

he power agreement signed between the Nigerian government and Siemens, a leading German electric company on Monday while capable of doubling Nigeria’s output by cutting losses associated with dilapidated power assets has implications for the power sector privatisation. Findings show that the deal could cost as much as $3billion, of which the Federal Government is providing guarantee through the ministry of finance, but the agreement is heavily dependent on DisCos improving their collections to recover cost. But since privatisation five years ago, DisCos have struggled to match collections with power received. The last report by the regulator, the Nigerian

Electricity Regulatory Commission (NERC) said that DisCos collected only 65 percent of the value of electricity sold in the three months ending 2018, but remitted only 33percent to the value chain. In monetary terms, total billing to electricity consumers by the eleven DisCos was 172.9billion but only a total collection of 106.7billion representing 65.5% of billing was recorded according to the third quarter of NERC. “The collection efficiency indices indicate that a sum of 3.45 out of every 10 worth of electricity sold during the third quarter remains uncollected as and when due,” NERC said. Thirty-three percent of the remittance indicates a value of N2.1every N7 worth of electricity sold. The Siemens presentation to the Nigerian government is based on the assumption

that Nigeria’s power market can earn $40 billion more if it reduces Aggregate Technical and Commercial Collection (ATC&C) Losses and expands generation capacity by 2028. ATC&C loss is the difference between the amount of electricity received by a DisCo from the Transmission Company and the amount of electricity for which it invoices its customers plus the adjusted collections loss. According to the proposed deal, Siemens will carry out a comprehensive upgrade of Nigeria’s weak electricity grid capable of wheeling less than 5,000MW and reduce technical and non-technical losses. It will aggregate all DisCos’ investments in their network including cables, switches, transformers and substations to raise distribution above the current 4,000MW. BusinessDay gathers that

Siemens will also try to resolve gas constraints to power plants by seeking to tap into the AKK pipeline for fuel supply so abandoned turbines can be restarted and use off-take previously flared gas. Half of Nigeria’s 13,000MW generation is constrained due to lack of gas. Through smart metering and improvement of DisCos capacity, it is hoped the DisCos would raise collections and repay Siemens investment, which may be classified as a loan to their books. However, the challenge for Discos is that their books are already strained. Most of their shares were used to finance loans to buy power assets. They are technically bankrupt and a new facility will irreparably dilute their stakes enough for the government to them over in the event of default.

•Continues online at www.businessday.ng

43 Sadiya Umar Faru

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IMF lowers its global growth forecast ‘downside’ Investors laud Lafarge restructuring as stock hits 8-month high again as risks remain totractedtheincrease in risk averMARKETS

David Ibidapo & Gbemi Faminu

n a way to show investors’ approval and reaction to the sale of Lafarge South Africa Holdings to LafargeHolcim Group, coupled with the improved financial position of Lafarge Africa Plc, investors on Tuesday bought the company’s stock leading to higher share price. As at the end of trading on Tuesday in Lagos, Lafarge stock price rose 9.92 percent to its highest in the last 8 months at N14.40, raising its year-to-date returns to 15.66 percent. Lafarge Africa, Nigeria’s second-largest cement maker, returned to profitability in the first half (H1) of 2019, following a 40.7 percent decline in the cost of funds that helped boost

…YTD returns jump to +15.66%

the firm’s bottom line despite a mild decline in revenue. Lafarge’s net income rose by 246 percent to exit its loss position of N6.34 billion in the corresponding period of 2018 to a profit after tax of N9.27 billion in 2019, according to the company’s report released to the Nigerian Stock exchange (NSE) Monday. This was on the back of a 41 percent decline in finance cost to N14.05 billion in H1 2019 from N23.71 billion in H1 2018, while the company cut considerably its expenses during the period under review. Mobolaji Balogun, Chairman, Lafarge Africa said at the company’s Annual General Meeting (AGM) held on www.businessday.ng

Monday, that the company has realized so far a sum of $114 million from its move to deleverage its South African holdings. This $114 million is said to have been used to refinance the company’s debt and boost its operational performance. This was evident in Lafarge’s interest borrowing falling by 16.25 percent to N13.4 billion in H1 2019 from N16 billion in H1 2018. Also bank overdraft for the firm dropped to N964.7 million from as much as N1.5 billion the same period last year. Like every other firm, Lafarge Africa had its own fair share of economic and business headwinds, evident in

the last 5 quarters after the second-largest cement maker by market share recorded losses consecutively due to the poor performance of the South African unit. Its parent company, Switzerland-based LafargeHolcim, agreed to purchase the shares for the consideration being a set-off of all the outstanding amounts due by the company to Caricement under the InterGroup Loan Agreements at the closing date, which is July 31, 2019. This is coming after the Securities and Exchange Commission (SEC) approval for the merger between Lafarge Africa Plc and Lafarge Ready Mix Nigeria Limited.

ENDURANCE OKAFOR

he International Monetar y Fund trimmed its forecast for global economic growth again as the U.S.-China trade war continues, Brexit worries linger and inflation remains muted. The global economy is expected to expand by 3.2 percent in 2019, the fund said in a report released Tuesday. The revised economic growth figure is 0.1 percentage points lower than the IMF had forecast in April and is 0.3 percentage points below the fund’s growth estimate at the start of the year. “Risks to the forecast are mainly to the downside,” the IMF said. “They include further trade and technology •Continues online at tensions that dent sentiment www.businessday.ng and slow investment; a pro-

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sion that exposes the financial vulnerabilities continuing to accumulate after years of low interest rates.” “Mounting disinflationary pressures that increase debt service difficulties, constrain monetary policy space to counter downturns, and make adverse shocks more persistent than normal,” the fund added. The IMF points out that global trade volume growth declined to around 0.5 percent on a year-over-year basis in the first quarter of 2019. “Weak trade prospects—to an extent reflecting trade tensions—in turn create headwinds for investment,” the IMF said.”

•Continues online at www.businessday.ng

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NEWS

UK government’s export credit agency doubles appetite limit for Nigeria to £1.25bn … signs agreement with NEXIM Bank HOPE MOSES-ASHIKE

K Export Finance (UKEF), theexportfinanceagencyof the UK government, has recentlyconfirmedthatithasdoubled the country limit for UK companies wanting to do business with Nigeria from £750 million to £1.25 billion. A statement from the UK Department for International Trade made available to BusinessDay notes that UKEF has also entered into a strategic partnership with Nigeria’s Export - Import Bank (NEXIM) on plans to forge stronger relationships in promoting investment, regional and global trade between Nigeria and the UK, signing an MoU that will foster greater co-operation in trade through cofinancing in the form of guarantees and insurance. Her Majesty’s Trade Commissioner for Africa at the UK DepartmentforInternationalTrade,Emma Wade-Smith, said: “Nigeria is the UK’s 38th largest trading partner in the world and one of our most strategically important markets on

the African continent. “The UK’s finance-led export and investment promotion work, supported by the work of UKEF, supports more deals to drive greater value to the UK economy and is instrumental in supporting African markets, such as Nigeria to grow. That’s why I am particularly excited about this MOU agreement between UKEF and NEXIM as it demonstrates the UK government’s long-termcommitment to ourtrading partnership with Nigeria.” AbbaBello,MDofNEXIMBank, said: “NEXIM is delighted with this collaboration and transactional partnership opportunity that will further foster commercial exchanges between the countries as well as promote cooperation on technical assistance related to trade towards broadening Nigeria’s export basket, especially of value-added services and solid minerals in line with President Muhammadu Buhari’s administration ERGP strategic objectives of economic diversification and building of a globally competitive economy.”

C&I Leasing’s Global Ambassador, Zuriel Oduwole, lends voice to end child marriage in Mozambique ISRAEL ODUBOLA

uriel Oduwole, NigerianAmerican teenage education advocate and C&I Leasing plc’s (C&I Leasing) global ambassador, has lent her voice to the passage of a bill that seeks to end child marriage in Mozambique. The bill, which is awaiting assent by Mozambican President Filipe Nyusi, seeks to prohibit marriage of children under the age of 18, between children and adopts measures to end existing premature unions, with punishments ranging from eight to 12 years in prison, and a fine of up to two years. In a statement on Sunday, her management team said Zuriel’s long-time advocacy for girl-child education was instrumental to the unanimous decision made by Mozambique’s national assembly in passing the bill. After a recent visit to some schools in Mozambique, the C&I L easing ambassador had requested a meeting with Nyusi to make her case for girl-child education even

more personally, a request that was granted in less than a day. Zuriel, according to the statement, believes that signing the law would be the game changer that would ensure gender equality and the “emergence of a productive womanhood within the country and continent’s human capacity for development”. “Zuriel epitomises the powerful voice of an educated girl, and the evidence of the need to ensure all girls across the continent and the globe are free from life’s discrimination of education, opportunities and personal development, so the world can fight its battles for growth and development with two hands, instead of one,” the statement read. Commenting on Zuriel’s advocacy work, Andrew OtikeOdibi, managing director, C&I Leasing Plc, said the company is committed to the girl-child education project, especially as this resonates with its core values of Fairness, Integrity, Responsibility, Excellence and Safety (FIRES).

Borno to invest ‘heavily’ in water sector to end scarcity Ladi Jossy, Maiduguri

orno State government will invest ‘heavily’ in the water sector to ensure its availability, affordability and safety for both human and animal consumption across the state, the governor says. The state governor, Babagana Zulum, disclosed this on Monday shortly after the commissioning of the nine million litres Water Supply Project jointly executed by the International Committee of Red Cross (ICRC) and the state government. Governor Zulum said the Alamdari Water Project was of a great value to the government of Borno State, which explained why government accorded priority to it be-

cause of thousands of citizens in the metropolis that would depend on it. According to Zulum, the ICRC had realised the importance of the project and decided to step in by signing a memorandum of understanding (MoU) with the state government in 2017, which made possible the completion and commissioning of the project. The governor stated that during his electioneering campaign, he made it clear to the people that if elected, he w ould maintain and improve on the existing water sources and develop a c o mp re h e n s i v e wat e r management and utilisation programme for sustainable development in Borno State. www.businessday.ng

Transcorp defies Nigeria’s tough operating environment in projection for positive outlook Iheanyi Nwachukwu & Endurance Okafor

ransnational Corporation of Nigeria plc (Transcorp) on Tuesday July 23 held its half-year analysts parley for journalists, financial analysts and investors with the President/CEO, Valentine Ozigbo, projecting improved performance outlook for the conglomerate in the remaining quarters of the year 2019. The positive projection by Transcorp comes despite the inclement operating environment. Transnational Corporation of Nigeria is a publicly quoted conglomerate with a diversified shareholder base of about 300,000. Its portfolio comprises strategicinvestmentsinthepower, hospitality, agribusiness and oil and gas sectors. Notable businesses include Transcorp Hilton Abuja, Transcorp Hotels Calabar, Transcorp Power and Transcorp Energy. At the parley, attended by

CEOs of its subsidiaries and other senior management staff, the company presented its financial results for the half year ended June 30, 2019. Highlights of the group’s results showed gross revenue of N37.76 billion and Profit Before Tax (PBT) of N5.05 billion for the period under review, with a dropin year-on-year performance. This drop was mainly attributable to gas and transmission challenges faced by the power business, which are being addressed by its management. The hospitality business on the other hand recorded significant topline growth following the recent renovation and improvements in service delivery. Commenting on the results, Ozigbo said, “Our half year results were affected by severe gas shortages as well as transmission and other technical challenges in our powerbusiness,especiallyduring the first quarter of the year when supply dropped from an all year peakof150mmscf/dtoanaverage

of 89mmscf/d. We are happy with growth in our hospitality business as it affirms the decision we made toinvest$100millioninupgrading the Transcorp Hilton Abuja.” Ozigbo noted, “With the support of our Board, management is implementinganumber ofaction plans aimed at addressing the gas supply challenges in a sustainable manner. These include the activation of a recently reviewed Gas Supply and Aggregation Agreementaswellastheoptimisationof the opportunities embedded in it, and the exploration of additional affordable gas supply sources. “Actualisation of these as well as improvement in transmission and market payment for electricity generation will drive recovery in the second half of 2019. This is in addition to even more significant contributions from our hotel business, which is expected to sustain the increased occupancy rates seen in the first half of the year.” Reiterating Transcorp’s bull-

ish performance in recent years, he stated, “Through a mix of operational efficiency and strategic business development, we are confident of a more positive Q3 performance and we remain committed to our value-creating purpose of improving lives and transforming Nigeria.” Analysts present at the event expressedtheirappreciationofthe detailed presentation and clarification provided by the Transcorp team. They identified with the challengesfacedbycompanyduring the period under review and reaffirmed their faith in the Board and Management to successfully execute their laid-out plans to ensure a turnaround performance in Q3 2019. Transcorp Consortium, with its bid price of N105.3 billion ($293m) recently emerged the Preferred Bidder for Afam Genco, comprising Afam Power plc and Afam Three Fast Power Limited, afterahighlycompetitivebidconducted by the Bureau of Public Enterprises.

L-R: Olisa Edozie Nelson, Fisayo Fosudo’s manager; Linda Ochugba, digital sales manager, BusinessDay; Fisayo Fosudo, Tech YouTuber; Lehle Balde, senior associate, strategy and partnership, BusinessDay, and Patrick Atuanya, editor, BusinessDay Media, after the signing of the Partnership Agreement between Fisayo Fosudo and BusinessDay in Lagos.

Obaseki not within your reach, Ogbeide-Oyo family tells people threatening his life ...assures Edo people of better days under Obaseki

he Ogbeide-Oyo family in Edo State, which gave birth to the Obaseki family, has dared those issuing threats on the life of their son and Governor of Edo State, Godwin Obaseki, declaring that the governor is not within their reach. In a communiqué issued on Monday in Benin City and signed by the chairman, Ogbeide-Oyo Voice Worldwide, Peter Owen Amadasun, and the secretary, Oyuki Obaseki (Jnr.), the family said: “Those people that see themselves as destroyers of life, let it be known to you that our son is not within your reach. “Sadly, our attention has been drawn to the purported threat to the life of our son by some persons who are hell bent on reversing the gains made under his able watch. We condemn this threat in its entirety. “Therefore, we use this me-

dium to inform well-meaning Nigerians and call on the apropos security agencies to probe this threat and put it under rigorous investigative scrutiny with those involved questioned and if found culpable should be made to face criminal prosecutions no matter how highly placed.” The family explained that their “clarion call is premised on the fact never a day passes without the usual solemn report of one form of criminality perpetrated on innocent Nigerians across the length and breadth of our beloved country. We must not wait until they execute their evil plot before the needful is done.” They advised: “If anyone has any issues against him, we enjoin them to bring cogent and verifiable evidence to indict him rather than resorting to crude methods culminating in this odiousness.

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“A man who has sacrificed his all for the development of our dear state should not be messed up on the altar of re-election and unnecessary show of force.” They noted that: “The antecedent of the Ogbeide-Oyo Family in the history of Benin Kingdom is one to be relished and be proud of. In over a century we have contributed to the development of the state in particular and the country in general. “This family has produced notable and distinguished men and women continuously from one generation to the other. “Very recently, Godwin Nogheghase Obaseki came into political prominence when he became the Governor of the state. Notice the word Political. This is because Godwin Nogheghase Obaseki has always been a consummate professional for over 30 years. @Businessdayng

“This prominence is what has endeared him to so many politicians who needed economic direction and financial credibility for their State. “When our son decided to run for Governorship one thing was very clear to us, that he will bring his financial sagacity and professionalism wrapped in administrative competence to play. Above all, we knew the people of Edo were in for the best time they have ever had with any democratic or military government. “The successes recorded by our son and brother, His Excellency Godwin Obaseki has made Edo people not only call him the Wake and See Governor but it has made the Edo man know that governance is what you do and not so much of what you say. The joy our son and brother, His Excellency has brought to the family is indescribable.”

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NEWS

Nigeria population projected to reach 733m by 2050 … to become 3rd most populous country in the world Jonathan Aderoju

ollowing a recent report published by the Population Division of the UN Department of Economic and Social Affairs, Nigeria’s population has been projected to hit 733 million by 2050. According to the UN, “The World Population Prospects 2019 published by the Population Division of the UN Department of Economic and Social Affairs, notes the world’s population is expected to increase by two billion people in the next 30 from 7.7 billion currently to 9.7 billion in 2050.” However, India is projected to surpass China as the world’s most populous country around 2027, and is expected to add nearly 273 million people between now and 2050 and will remain the most populated country through the end of the current century. The report notes that after this re-ordering between 2019 and 2050, the ranking of the five largest countries is projected to be preserved through the end of the century, when India

could remain the world’s most populous country with nearly 1.5 billion inhabitants, followed by China with just under 1.1 billion, Nigeria with 733 million, the US with 434 million, and Pakistan with 403 million inhabitants. “India is expected to add nearly 273 million people between 2019 and 2050, while the population of Nigeria is projected to grow by 200 million. Together, these two countries could account for 23 percent of the global population increase to 2050,” the report states. The world’s population could reach its peak around the end of the current century, at a level of nearly 11 billion, according to the study, which presents the main results of the 26th round of the UN’s global population estimates, projections and global demographic patterns. The new report notes that more than half of the projected increase in the global population up to 2050 will be concentrated in just nine count countries, led by India and followed by Nigeria, Pakistan, Democratic Republic of the Congo, Ethiopia, Tanzania, Indonesia, Egypt and the US. The report further notes that

in 2019, around 40 percent of the world’s population lives in intermediate-fertility countries, where women have on average between 2.1 and four births over a lifetime. Average lifetime fertility of 2.1 live births per woman is roughly the level required for populations with low mortality to have a growth rate of zero in the long run. Intermediate-fertility countries are found in many regions, with the largest being India, Indonesia, Pakistan, Mexico, the Philippines and Egypt. The report highlights that “disparate population growth rates” among the world’s largest countries will re-order their ranking by size. Previous UN projections had estimated that India will surpass China as the world’s most populous country as early as 2022. The 2017 world population report, released by the UN two years ago, had estimated that the population of India would surpass that of China’s by around 2024. In its 24th round of estimates released in 2015, the UN had projected that India will become more populous than China by 2022.

Edo inaugurates panel to probe financial impropriety in Colleges of Education, Agric College, others ... inquiry to cover 10-year time span

do State governor, Godwin Obaseki,hasinauguratedafiveman Commission of Inquiry with a charge to investigate financial misappropriation among other allegations in the state’s three Colleges of Education and its College of Agriculture in the last 10 years. Speaking during the inauguration of the commission headed by former Head of Service (HOS) in the state, Gladys Idahor, in Government House, Benin City, the governor urged members of the commission to get to the bottom of what transpired in the colleges and how the institutions crumbled under the watch of those who they were entrusted with. The institutions to be investigated include the colleges of education in Ekiadolor and Igueben; Michael Im-

oudu College of Physical Education, Afuze, and the College of Agriculture, Iguoriakhi. The governor said the Commission of Inquiry became necessary becausethestategovernmentdiscovered huge outstanding emoluments due to staff of the institutions. “I charge you to expose anyone that has taken any actions or decisions that have criminal implications as I assure you that appropriate action would be taken. I assure you that your findings will be implemented within the next 90 days after submission of your report.” Obasekidisclosedthatthetermsof reference of the commission are to examine the finances of the institutions (receipt and disbursement) received over the last 10 years and determine

if they are in accordance with the laws of the institutions and the rules and regulations guiding the public service. The commission is also to “examine the administrative structures of the institutions in line with the laws establishing them and examine the mode of employment and promotion at the institutions with a view to determine if due process was followed. “They will investigate any matter that may be incidental to 1 to 3 above and make appropriate recommendation that will assist government in repositioningtheinstitutionsforbetter service delivery.” The governor added, “My administration is determined to reposition these institutions to achieve the goals they were set up to achieve by the founding fathers years ago.

Air Peace aircraft makes emergency landing in Lagos, experiences nose wheel failure IFEOMA OKEKE

Boeing 737, with the registration marks 5NBQO operated by Air Peace Limited on Tuesday, July 23, made an emergency landing at the Murtala Muhammed International Airport, after its nose wheel failed. The aircraft, with 133 passengers and six crewmembers on board, was on approach to MMIA, Lagos, from Port Harcourt. According to a statement by the Accident Investigation Bureau, (AIB), from the information provided, the aircraft nose wheel collapsed on landing on the runway (18R) and the nose wheel gear tire sheared off. “The AIB was informed of a minor injury but no fatality.

Our team of safety investigators has commenced investigations. “As the investigating agency, AIB needs and hereby solicits for your help. We want the public to know that we would be amenable to receiving any video clip, relevant evidence, or information any members of the public may have of the accident; that can assist us with this investigation,” the statement added. In a statement signed by Toyin Olajide, chief operating officer, Air Peace, the airline commended Simisola Ajibola and her crew for handling a situation in Lagos this morning. According to the airline, “Ajibola noticed sudden weather changes when approaching Lagos and demanded to land on the Interwww.businessday.ng

national runway as it is longer and wider than the domestic runway. “After landing safely and rolling to the runway exit, the nose gear developed a problem and partial collapsed. The crew notified the airport authorities who quickly ensured the safe disembarkation of the passengers via the passenger door. “We are committed to the safety of our passengers at all time. We will continue to operate in line with international practices and in accordance with regulatory guidelines. We are being assisted by the various authorities to determine to cause of the incident.” Air Peace said it was being assisted by various authorities to determine the cause of the incident. https://www.facebook.com/businessdayng

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Poverty generators everywhere Small Business handbook

Emeka Osuji

t is becoming so hard for me to discuss the Nigerian economy now. It is even harder to write about it or anything at all, most especially the economic prosperity and poverty reduction we owe the people. This is an area in which I have abiding interest. Over the past six year, I have written this column in the hope that our poverty reduction programmes would by now have yielded visible results. Unfortunately, this can no longer happen; not with Boko Haram, herdsmen and now bandits changing batons in the marathon race of killing of our citizens. It is really much easier to write about politics because of the crisis of leadership that has apparently overwhelmed everyone, resulting in the total failure of governments, national and subnational, to protect the citizens. The standard approach to problem solving is to first recognize, understand and then apply solutions to a problem. But in Nigeria, we don’t do that. We can’t identify a problem by its name, lest we name an important person or group of people, who may jolly well be behind it. “Our forests have been occupied by strange people”. Who are the strange people? Don’t ever try to name them, even if you know. This is the only country where aliens invade forests and attack citizens everywhere and the people call them bandits. What a word! These must be a special type of thieves. The president has promised to move 100 million people back to the prosperity they used to know. But he did not say how many more will get back into that black hole due to the activities of bandits. The rest of this article is taken from an earlier work of mine. Our poverty reduction strategies will profit from a commitment to first seeking, and then properly understanding, how poverty comes about. Doing otherwise would be a fatal error in any effort to improve the condition of the poor.The correction or avoidance of such error

is our current interest in this column. A pathway is never good enough until both sides of it are rid of weed; we begin today to more specifically identify what we consider the architects of poverty, or more appropriately the poverty generators in Nigeria. We believe this is an exercise that will produce good results because it will enable us to unmask the elements behind poverty in this country, and understand why poverty seems to get more intractable, the more we try to fight it. Understanding the causes of poverty, we hope, will not only sharpen our focus on strategies to reduce it but also stimulate and direct pointed remedial measures at it. The political system in Nigeria is our number one suspect on the list of poverty generators in the country. I understand that for some strange reason, the study of history is being deemphasised in Nigeria, but we need to do a bit of it here. The first group of Europeans to visit Nigeria were the Portuguese, who came to the Benin Kingdom in 1485. They were however superseded by the British, who arrived in Benin in 1553. The interest of the British in the natural wealth of the kingdom of Benin led to the development of significant trading relations. It wasn’t long though before the Oba of Benin discovered the hidden intensions of the British, including the plan to establish a colony over the kingdom. He then tried to cut communication with the British who responded very forcefully with guns and canons that weakened and practically commenced the obliteration of the Benin kingdom. That was what later became known as the Benin Expedition of 1897 – a very ferocious and punitive attack that resulted in the stealing of Benin artefacts that are yet to be completely returned to Nigeria. At the end of the day, the British established a Colony in Nigeria and soon the whole of Northern and Southern Nigeria became one colony for the British to plunder and exploit. Once you are colonized you will surely be plundered. This is probably why the word colony is never welcome anywhere in the modern world. Although the British are gone, the idea of colonization remains attractive and functional around us. Perhaps, in a bid to completely drop that toga of the colonial political past, our leaders travelled further north to pick up the American governance style – the presidential system of governance. And the

stage was set for the mass production of poverty-stricken people, as one group recolonizes another through political office holding. The presidential system was introduced by the military through the flawed military constitution of 1979. Perhaps, also it was felt that since Nigeria is called a federation, it would be well-served by a constitution type that has served the greatest democracy in the world - the United States of America. But the truth is that Nigeria is neither a federation nor a democracy, to say nothing about the quality of leaders that make the presidential system work in America, in comparison to the kind of political prostitutes and tribal champions we have all over the place. Have we heard of anyone who decamped from one party to the other in the United States, even with the emergence of outsiders like Donald Trump? The focus is on the nation and they keep their eyes on that ball. Here we keep our eyes on the purse and our share of the cake. Nigeria is currently witnessing a gale of defections by professional defectors for reasons other than good governance. In the next one year, honour will flee and Nigerians will sit back and watch adult comedy by clowns that somehow strangely extracted the title of honourable from their country. The economy will barely breathe and poverty gains traction. In addition to producing uncontrollable leaders with executive powers, the cost of the presidential system is another reason why it should not even be touched with a 20 foot pole. Today, we see legislatures that are openly robbing the people; impeachment is sold for cash and looting in the form of obscene self-allocated salaries and retirement benefits are rife. We see people get into government houses and emerge as emperors stealing everything, including those nailed to the ground (because they also steal peoples’ land) and in such measures as to single-handedly hand pick their own successors. At the end of the day, the people are reduced to observers, jobbers, slaves, paupers, armed robbers and political thugs, who perpetually serve those privileged to grab power. This is why no matter how much we budget in Nigeria, the country goes nowhere. The money will be stolen by leaders who are not accountable to anyone but themselves. This system of government is a disaster. No country at our level can survive with

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In our judgement, the biggest poverty generator in Nigeria is her political system and form of government that literally turns the gun against those it is meant to defend

it because it is too expensive and unaccountable. It survives here only because those who ought to change it are the ones milking the nation. There was a novel by James Hardly Chase titled “There is always a price tag”. Before the school system was run down, such that people who spoke Queens English were derided and said to be speaking grammar or turenchi,and all kinds of exotic and backward languages like Pigeon gained ascendancy in an English speaking country, we all read literary works like those of Hardly Chase. That book projected the debatable idea that everyone can be bought or paid off. Today,the system of government has made it true that there’s always a price tag. We have people who are still dogged by their primordial backgrounds exercising executive power. They are prone to many frailties including nepotism, which is the worst form of corruption.If you add the fact that executive powers corrupt absolutely, you have leaders who belong to jail houses but will not go there because justice has got a price tag. There are people here spending the rest of their lives blocking investigation and trials. This is why we have politicians who say one thing today and another tomorrow because their words reflect only the body language of those holding evidence of their crimes. The presidential system of government is a winner-takes-all system, laden with opportunities for sleaze. It offers great premium to office-holders to be corrupt and works where there is high level of education, strong institutions, proper federal structure and detribalized leaders. Nigeria scores zero in all of these. That is why you do not try it unless your institutions are strong enough to correct and punish those who misalign themselves with their oaths of office and the constitution. Nigerian institutions are subsumed in their leaders who pick and choose what misalignment to pamper or punish. In our judgement, the biggest poverty generator in Nigeria is her political system and form of government that literally turns the gun against those it is meant to defend.The best they can expect is to die of poverty.Reform or change the political system and poverty will fell your impact. Dr Emeka Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emekaosujii

I shall pass this way only once One of my favourite quotes is: ”I shall pass this way but once; any good that I can do or any kindness that I can show any human being, let me do it now. Let me not defer or neglect it for I shall not pass this way again.” - Etienne Girellet egrettably, the families of Akande and Ogunlana lost a gem a couple of days ago; Mrs Mosunmola Akande (née Ogunlana). A beautiful woman, both on the inside and on the outside. Sister, as I always called her, lived like someone who perpetually kept it in mind that she would pass this place only once. It was almost ironic that even in her unassuming nature and manner, she never failed to leave her unmistakable imprint of warmth, compassion and kindheartedness on all who were lucky enough to come her way. If we are to go biblical, you could say she indeed numbered her days. This heavy loss was all the more painful because it’s barely two years since her darling husband Kayode my brother, passed on too. Someone once said that life is like an un-

stable thread that can cut at anytime. So true. If only we could all be more mindful of this. The Bible says, “love thy neighbour as thyself. There is no commandment greater than this.” Indeed none comes close. What does this mean though? To Love others by treating them as you would like or expect to be treated. Putting others first. Pursuing the common good. A little less self. Simply put, neighbourly love. A greater effort to imbibe this doctrine starting with you and I and this society called Nigeria can and will transform into the haven we all desire. So remember this when you hold that public office and control the people’s purse. Remember this the next time you see a vehicle which indicates that it wants to join your lane. Especially when it finds itself behind a broken down vehicle, leaving it with no choice. Put me first as you would like me to do for you. As individuals working at cross purposes, failure of a society is inevitable but as individuals working together, cooperating and forging ahead with a common purpose, we could form an unbeatable team. “For myself, I am certain that the good

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of human life cannot lie in the possession of things which one man to possess is for the rest to lose, but rather, a thing which all can possess alike, and where one man’s wealth promotes his neighbour’s.” - Spinoza. Through my writings I try to draw attention to things we do every day. Things we habitually do without giving much thought. Seemingly insignificant behaviour which unknown to us, have far reaching implications for self and society; as they inadvertently reflect our values. And this is why I couldn’t agree more with the wise man who once said, “nations develop or decay in response to the value system they operate by.” Still wondering why Nigeria is like this? I believe every life is a unique message God sends to the world. A message whose ultimate goal is to bless humanity in one way or the other and unique because the culmination of your peculiar experiences, upbringing and a multitude of other factors, both good and sometimes adverse, is you; a product like no other. Sister had a way of always making me feel superhuman. No matter how much I

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Character Matters with Daps

Dapo Akande doubted my own abilities, she would succeed in making me believe I could do it. I really treasured that and I will miss it greatly. Life has taught me that many small things come in big sizes but every now and again, you’ll come across a gem, though small in size yet priceless in value. Take care not to miss it. Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@ gmail.com

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Wednesday 24 July 2019

BUSINESS DAY

comment Economic reforms: Egypt has a message for Nigeria

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lanrewaju Rufai

hen President Muhammadu Buhari was first elected President in 2015, Nigeria and Egypt were facing similar economic travails. Both nations had experienced drastic drops in their foreign exchange earnings from oil and tourism, and as a result were suffering chronic shortage of foreign currency and an inability to bridge budget funding gaps with loans from international lenders. Furthermore, both nations had resisted calls for a market-based exchange rate policy and instead adopted protectionist measures to maintain the values of their currencies. In November 2016 however, Egypt embarked on a different economic path. With its economy on the brink, the Egyptian government agreed to a $12 billion International Monetary Fund (IMF) bailout which was contingent upon the adoption of a marketbased exchange rate policy i.e. a float of the Egyptian Pound, as well as the phasing out of various government subsidies. Despite entreaties to embark on a similar path, Nigeria opted for a ‘managed float’, a system of multiple

exchange rates and import restrictions which allowed the Central Bank of Nigeria (CBN)maintain the artificially high value of the Naira without making the needed structural reforms. In the aftermath of Egypt’s acquiescence to the IMF’s bailout conditions, the Egyptian Pound crashed and lost 50% of its value, while inflation climbed to as high as 33%. Nigeria on the other hand only saw a 20% decrease in the value of its currency while the nation’s inflation rate settled at about 14%. The contrast in the immediate fortunes of both countries led several Nigerians to believe that the CBN adopted the right approach. On the surface, the Central Bank of Nigeria’s managed float seemed to have solved the nation’s problems. The nation’s dollar shortage eased and foreign portfolio traders who had dumped the bank’s securities returned. The reality however was that the CBN’s adopted policy had only postponed the day of reckoning for the Nigerian economy. Basically, while Egypt had bitten the devaluation bullet and suffered its immediate consequences, but in the process, positioned itself for long term economic stability and growth; Nigeria had decided to embark on a different route by employing unconventional methods of maintaining the value of the Naira and postponing its day of reckoning. Three years down the line, the results are in: one nation is reaping the benefits of its decisions, and that nation is not Nigeria. Data made available in the past week has shown that inflation in Egypt, which had climbed to 33% after the IMF bailout, slowed to single digits

for the first time since the Egyptian Pound was floated in late 2016. The Egyptian central bank also disclosed that core inflation, which excludes price volatile items such as food, had also slowed to 6.4% in June. On the other hand, Nigeria, which was in a similar situation to Egypt in 2016 but chose a different approach, continues to experience double-digit inflation, with the Nigerian Bureau of Statistics estimating the national inflation rate to be 11.2%, one of the highest rates on the continent and well below the CBN’s 6-9% target. Furthermore, in terms of economic growth, Egypt is currently the healthier of the duo. While the Nigerian economy has been stuck in low growth for three years and is projected to only grow by 2-3% this year, the Egyptian economy is projected to grow by 6%. This means that the Egyptian economy will grow at more than double the projected growth rate of the Nigerian economy. In addition to this, the Egyptian pound has emerged one of the best-performing currencies globally. In another sharp contrast to Nigeria, the Egyptian government has continued to phase out government subsidies which hitherto consumed a significant chunk of government revenues. In less than three years, the Egyptian government has succeeded in reducing subsidy spending by over 50%. This is a sharp contrast to Nigeria where the Buhari administration has continued to subsidize petroleum products despite committing to eliminate it. In addition to these, data from the United Nations Conference on Trade and Development (UNCTAD) reveals that for the second consecutive year,

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While the Nigerian economy has been stuck in low growth for three years and is projected to only grow by 2-3% this year, the Egyptian economy is projected to grow by 6%

Egypt will be the largest recipient of Foreign Direct Investments (FDI) in Africa. Nigeria, which earlier in the decade occupied this position, has experienced a plunge in FDI and is no longer among the top five FDI recipients in Africa. A galling statistic which illustrates the nation’s fall from grace in light of the nation’s reluctance to engage in structural economic reforms. On the flipside, as impressive as the headline statistics from Egypt are, the story has not been completely rosy. There remains discontent across Egypt over the increased cost of living as a result of the phasing out of government subsidies. Nevertheless, there is no doubt that the country is on the right track to long term economic stability and growth. Nigeria on the other hand remains stuck in a vicious cycle brought about by an unwillingness to confront reality and endure short term inconveniences in hope of a prosperous future. Overall, the key lesson to inculcate from Egypt’s experience is that structural economic reforms and fiscal prudence are key to ensuring the long-term growth and stability of any economy. As Nigeria continues to grapple with poverty, youth unemployment and mounting public debts, this lesson cannot be overemphasized. The message from Egypt to Nigeria is clear: endure the short-term inconveniences and reap the long-term benefits of fiscal prudence. There is no other path to sustainable economic growth. Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.

Forget diversity and inclusion: Just be nice and compassionate Why is it Difficult to be Nice? t one point or the other, you must have felt excluded or left behind or passed over, either at school, in the workplace, political meetings, market etc. It could even be at a family meeting. How did you feel, especially when you were left out for no fault or wrong of yours? Left out because of your physical appearance, status, ethnicity, religion, sex, accent etc. How do you feel when a less competent person is chosen over you due to any of the aforementioned reasons that have no bearing on performance and productivity? Of course, you would feel cheated, disgusted and frustrated. You will sense hatred in the veins of those who caused you this harm; you see them as humans without compassion and care. If you have your way, you want to get out of such a system or environment and go to a place where you are treated with care, respect and dignity. Why is it difficult to show compassion, respect and treat others with dignity? Why are truly nice people becoming the scarcest of commodities? What happened to genuine kindness? Why, Why Why? Our Tolerance for diversity and our capacity for inclusion are not just virtues that make us human, they are strategies without which no individual or organization will ever be truly successful, whether it’s in life, legacy, business, or what have you. Don’t get me wrong, there is so much mention of the words “diversity” and “inclusion” in our lingua today. It is mentioned in thousands of articles and echoed in almost all the conferences happening these days, but we are far from touching the impact of these realities beyond the politics of sloganeering. If we learn to love one another, to show respect and treat each other with dignity,

will the campaign for diversity and inclusion be necessary? Being nice and compassionate is almost becoming antiquity in the business, Social, political and surprisingly even in the religious world. Inclusion happens when we accept and respect the point of view of each other and treat our interactions with compassion and care. Any business that desires to be successful in today’s complex world needs to adopt a strategy that places human at the core of its business. A strategy that lives above prejudice, that challenge age long assumptions, that ridicule practices that shame others because of their race, ethnic or religious background, physical appearance or gender, age or status. In the business world, for instance, compassionate and caring organisations attract the best talents. These bring fresh thinking that leads to creativity and innovation and by extension superior performance. Imagine a world filled with such understanding, the earth will be happier, businesses will do better, agitation will be less, and conflicts will plummet. Workplaces will be more ideal, homes, societies, countries will reap huge benefits. Diversity and inclusion: The intricacies The debate in respect of the business case for diversity and inclusion will continue to dominate the narratives. This is not because of the failure to see its benefit but because of fears of disrupting the age-long practices that encourage segregation, harassment, oppression and suppression of the outgroup to the detriments of beneficiaries of such system. Over rationalisation on the need to practice authentic diversity and inclusion will continue to in governments because of the various political permutations. However, businesses cannot afford to continue

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with such practices in this era. Any business that failed to embrace diversity and inclusion as part of its core strategy for growth and transformation may sooner than expected become a victim of disruption. A genuine and disciplined approach beyond mere sloganeering of Diversity and Inclusion (D&I) must be adopted by every business regardless of form, size and nature. Juliet Bourke and Bernadette Dillon of Deloitte observed that even though 71% of organisations aspire for a culture that is inclusive however, many of them are yet to make any significant progress. The question is what holds business leaders from doing the right thing if they are convinced that diversity and inclusion as a business strategy works? For most of them, the problem is, how will they start. Most advanced economies have made tremendous progress in the area of Diversity and Inclusion because they have come to realise that greatness does not come from homogenous appearance and thinking but rather in diversity of knowledge and fresh perspectives. In the developing economies, however, Diversity and Inclusion is almost like a taboo especially because it is the employer dictated market, where unemployment is as high as 60%. The continued negation of adoption of diversity and inclusion is a recipe for those economies to continue to operate at mediocre level with lacklustre performance, as usual, thus the high incidence of poverty, illiteracy, unemployment, conflicts and heightened tension in governance will continue unabated. Defying the Canon: Once upon Qantas Air When we focus on diversity, it self-compels us to reflect on our behaviours, examine our blind spots, challenge our assumptions and master our unconscious bias. To achieve

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Olukunle A. Iyanda diversity and inclusion requires a deliberate effort towards culture shift, Qantas Air gives a fine example. In 2013, the airline was in serious performance problems. The company reported a loss of AUD$2.8 billion, the worst performance in its ninety-eight years of history. The performance problems were occasioned by various factors, chief among which were: industrial action, high cost of aviation fuel, the strong Australian dollar, stiff international competition and a domestic price war with Virgin Australian. Added to these is the stringent government policies that limited access to foreign finance. The future of the airline looked bleak and many had hurriedly concluded that the end of Qantas Air was in sight. However four years after, in 2017 Qantas recorded a dramatic turnaround. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng

Dr Iyanda is a Strategy and Innovation Advisor and is Founder/CEO, BROOT Consulting Nigeria Limited.Email:iyanda@brootc.com

Wednesday 24 July 2019

BUSINESS DAY

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Banditry, killings and seeming conspiracy of silence

or Nigerians, these are perilous and uneasy times as their lot is being made worse on daily basis by a myriad of issues that have gone beyond the daily and normal challenges of life and living. An otherwise rich country, Nigeria has become an enclave where lives of citizens simply mean misery and pain. Poverty, hunger and long suffering have become national identities and stubborn visitors in many homes, all because the national economy is slowing and leadership seems inept, insensitive and clueless. As if these are not enough, the country is today under siege with the activities of people who, for political convenience and other considerations, have been identified as bandits—a nebulous description that neither locates them to any region or district nor links them to any known sect. The bandits are not only killers, they are also rapists and kidnappers who have made major highways in Nigeria dreadful, risky and unsafe. Like wild fire, the activities of these killer-bandits are spreading, leaving in their trail destruction, death and woes.

But there is a greater challenge and that is a seeming conspiracy of silence. The government whose statutory or constitutional role is to protect lives and property remains silent. President Muhammad Buhari whose duty is to ensure that this constitutional provision is pursued, has chosen to maintain a studied silence. This silence, at such trying times as these in the land, is not golden. It is hurting and heart-rending. The silence becomes all the more thoughtprovoking and head-whirling when the mindless killings by the bandits are placed side-by-side with mere agitations by self-determination seekers in some regions of the country and the government’s swift reaction to them. Nigerians are worried that the federal government which once vowed to ‘crush rascals and economic saboteurs’ in the country does not see the ungodly activities of the bandits bad enough to attract prompt and decisive action. We join the rest of Nigerians to condemn, in its entirety, government’s un-golden silence and more the excuse by its apologists that it is dealing with this act against God and humanity silently. In street parlance, it is said that whenever and wherever there is crisis, any

onlooker is either a villain or a conspirator. We cannot agree more. These mindless killing of innocent Nigerians have brought to the fore the true character of an average Nigerian politician and nowhere has this been more clearly demonstrated than in Ondo State where many of them have been going to in the last couple of days to commiserate with the Afenifere leader, Reuben Fasoranti, whose daughter was brutally murdered by the so called bandits. What many of them were heard saying in their brief interviews with the press amounted to dancing on the blood of that innocent woman who was cut short in her prime for the simple reason that she was a Nigerian citizen where human lives are worth less than people’s political ambitions or parochial interests. The views expressed by some politicians right in the presence of a bereaved father that the killing of his daughter should not be allowed to divide the country, and also exonerating a known killer-group of perpetrating the killing before police investigation were not only hypocritical but also self-serving. We are worried about all of this and the looming danger if nothing is done to halt them. We are all the

more worried by the deafening silence and inaction of the president and, by extension, the government because this silence has created room for various interpretations of the activities of the bandits. We believe that the unity of this country is sacrosanct and non-negotiable and therefore, we expect the government to promote this unity by rising to the occasion of protecting lives and property of all Nigerians irrespective of class or creed. We take exception to the idea of government condemning “this dastardly act” and mobilizing all its security apparatus to “fish out the perpetrators” only when the killing or kidnapping involves a ‘big man’ and his family but turns blind eye and deaf ear when a poor man and his family are involved. The life of every Nigerian should be precious to the government and should be treated as such. We believe that the impunity which these bandits have exhibited in carrying out their killing trade is because none of them has ever been arrested and none is being tried anywhere in any court, nor is anyone of them in detention anywhere for their actions. This, we think, emboldens them to do more.

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Wednesday 24 July 2019

BUSINESS DAY

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Gbajabiamila’s 33 aides: Who betwitched Nigeria!

Franklin Ngwu

n addition to about six media aides, the Speaker of House of Representatives, the right Honourable Femi Gbajabiamila on July 17th further announced the appointment of about 27 more aides bringing the total number of current aides to about 33. I was reliably informed that more appointments are on the way! While there is no doubt that the distinguished speaker should have aides, the problem is the number of aides and their functions in a country described as the poverty capital of the world. In the list, there is a special adviser on political matters and then a further six special assistants on the same political matters with one for each of the six geo-political zones. In addition to a Senior Legislative Aide, there are Special Assistants on Legislative Matters, Members Affairs, Policy and Inter-paliamentary affairs, Former Member Affairs, Executive Relations and also on Intergovernmental Affairs and Executive Relations. Is the Speaker now the President of the country, a concerned Irish friend asked me. No, he might be planning to be president in 2023, another friend replied on my behalf. Interestingly, as some of

the positions were given to former members of the Lower Chamber, the Speaker will likely end up having over 100 aides in his fantastic stakeholders strategy of creating jobs for the boys and planning for 2023 as my friend hinted! By the time the Senate President and other principal officers of the National Assembly finish appointing their aides, we might end up having over 1000 aides serving just about 16 individuals. When you add the aides of the remaning 101 senators and 352 members of the house of representatives, you can imagine the number of aides serving our national assembly members. According to BudgIT, while the total severance package for the 109 senators of the 8th Assembly was about N666, 854,627.5, that of the 360 House of Representaives totaled about N2, 145,505,013. Adding the two gives us about N3 billion (three billion naira). Like many other Nigerians, I lamented on reading the amount used for severance package of the 8th assembly until a friend sent me the breakdown of the 9th Assembly budget especially the amount allocated to welcome the new members. While N4.68 billion is budgeted as ‘Welcome Package’ for new members, about N16.21 billion is allocated, among other things, but essentially for induction and inauguration of the 9th National Assembly. Adding the figures above for serverance pay, welcome package and induction/ inauguration gives a total of about N23.7 Billion. This is a country that is significantly living on debts with over N24.4 trillion of national debt mainly

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As we have more people that serve not for the common good but for their own interests, our debts will keep rising while our productivity keep declining

borrowed within the last four years of PMB’s administration. An economy with over 22 million unemployed people using almost 50 kobo of every one naira it generates to service her increasing and highly unsustainable debts. Who really bewitched Nigeria! A serious problem with Nigeria is that it is difficult to know who our role models are in some of our lamentable behaviours. Even when you think that things will get better with some people in authority, it actually gets worse. As we adopted the American presidential system and having lived in the United States of America and as a Lawyer, it is expected that Hon. Femi Gbajabiamila should know better and be different. Nancy Pelosi, the Speaker of the United States House of Representatives has about 15 aides with seven of them providing most of the legislative functions. For instance, while Patty Ross is the legislative assistant in eight different areas, Sarah Swig is in charge in 21 areas including trade/commerce, education, telecommunication, elections, energy and many more. The Chief of Staff, Robert Edmonson in addition to his enormous duties as the chief of staff also acts as the legislative assistant in three areas- Budget, Appropriation and Transportation. If Nanci Pelosi can effectively function as the speaker of the US House of Repsentative with about 15 aides, it is difficult to understand what our most distinguished speaker Femi Gbajabiamila is doing with over 30 aides. Moreover, Femi is a veteran of assembly affairs having being in the House of Representative since 2003. Productivity is not really

in the number of aides but in the commitment and patriotism to serve for the common good. As we have more people that serve not for the common good but for their own interests, our debts will keep rising while our productivity keep declining. It is the reason why we are using about N6.21 trillion from our total revenue of about N7 trillion for recurrent expenditure and debt servicing according to the 2019 approved budget. Of the three key components in a budget of about N8.92 trillion, consumption in the name of recurrent expenditure takes the lion share of N4.07trillion while debt service takes the second position with N2.14 trillion and capital expenditure the lowest with only N2.09 trillion. Moreover, as our total revenue is about N7 trillion, we have to further borrow about N2 trillion more to most likely pay the numerous aides of the Speaker and other politicians. If we are genuinely committed to a more productive and better Nigeria, a patriotic expectation of the Senate President and the Speaker is to initiate and ensure that legislative tasks becomes a part-time job. This will save Nigeria billions of Naira that can be used to provide most needed infrastructure. Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mailfngwu@lbs.edu.ng,

Funding Nollywood for national development: The PPP alternative

ollywood has become a most significant manifestation of Nigeria’s popular culture. In its local dimension, it has continued to be the staple entertainment form which most Nigerians have got used to. Africa Magic is a 24-hour channel which streams Nollywood movies directly into people’s home and offices. But Nollywood’s feat is no longer as a local movie industry. Apart from being the second largest producer of films after Hollywood, Nollywood has also achieved a global status that ensures that movies made in Nigeria are seen from Ghana to Barbados, and from the United States to Brazil. And all this from a phenomenon that started as a cottage industry with a very lean budget, and by individuals with the determination to transform how we relate to the cinema. In the 70s and 80s, most Nigerians were used to the cinema as part of the nightlife entertainment. However, a radical transformation of the social scene, basically through the looming consequences of insecurity, led to the collapse of the cinema culture. A further development was the high cost of making an average 33-mm movie. Several of the pioneers of the cinema in Nigeria went into indebtedness, and many more had to close shop, with many more, including the celebrated icons, dying silently and on a daily basis from virtual bankruptcy. The video film revolution indeed came almost by some sort of innovative accident. Nollywood’s struggle to its present state has been herculean. First, it had to contend with the attention of Nigerians that had been taken over by television soap operas and the DVD menu provided by mostly Hollywood and Bollywood movies. Second, there was

also the suspicion by those who felt that the video film does not in any way translate into the cinema. However, the greatest of the challenges that Nollywood had to face, and which seems to give credence to those who distrust its aesthetic capacity, came from the perception that its proliferative ability was achieved at the expense of quality productions. From the early 90s till mid-2000 when Nollywood was at the height of its notoriety, it was able to attract both approval and opprobrium in equal measures. There are those who still cannot stand any Nollywood movies; and there are those whose days are not complete until they have watched a movie or two on Africa Magic. Indeed, Nollywood kept increasing in proliferative and intellectual stature. It has gotten to a state where its influence can no longer be neglected. I am not sure if there is any statistics that can reveal, for instance, the number of those who have been influenced by what they watch on Nollywood. There is no longer also any doubt about the significance of Nollywood and the Nigerian film industry to the current economic status of the Nigerian state. It has been proven beyond any contrary evidence that the film industry is one of the active enablers of Nigeria’s economic productivity. When Nigeria rebased its economic profile in 2013, one of the revelations of the exercise, which many already suspected, is Nollywood. When Nigeria rebased her economy in 1990, her total nominal Gross Domestic Product (GDP) was 59.5%. Twenty-four years later in 2014, it had increased to 89.22%, making Nigeria the largest economy in Africa, and the 26th largest in the world at a GDP worth of $503 trillion. Apart from the service sector which

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contributed 51% (an increase from 26%), Nollywood and the music industry achieved a significant 1.42%. This is critical because its presence had not mattered to the economic profile of Nigeria before now. From 2014 till date, Nollywood has grown bigger and better by coming to terms with its own limitations. Indeed, Nollywood studies has floated the idea of a “new Nollywood” founded on the challenge of making more cinematographically sophisticated and aesthetically appealing movies. Unfortunately, Nollywood still lies largely at the fringe of Nigeria’s economic profile. Despite the laudable economic act that brings Nigeria’s economic data up to date as a development necessity, it is not sufficient to achieve economic growth only through a rebasing of the economy. While the rebasing exercise revealed some significant sectors of the Nigerian economy, what is needed is for the government to commence an exploitation of the statistics as a means of rethinking the economy. Nollywood is one such revelation, but its capacity to instigate the economy is still largely unharnessed. This is despite its huge economic potentials for transforming Nigeria’s economic status. Presently, Nollywood accounts for $7.2 billion of the GDP, directly employs more than a million Nigerians which makes it possibly Nigeria’s second largest source of employment aside from agriculture. It is generating $590 million annually, and it has the potential to serve as one of the major outlets for diversifying Nigeria’s mono-economic framework. Nollywood is still a neglected variable that has not been factored strategically into the policy reflections of the Nigerian govern-

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Tunji Olaopa ment. What worries me is that this does not turn out to become an unfortunate incidence of failing to plan even with the data by a nation renowned for “planning without fact”. This is troubling because one of the sources of Nigeria’s underdevelopment is the lack of critical data that are the sine qua non for successful economic planning. Yet, with the 2013 rebasing exercise, some new economic information, especially about the role Nollywood has played so far, have come to light. What are we doing about it? Despite its runaway successes since its inauguration in 1992, Nollywood has consistently battled with some severe challenges that have compromised its potentials and possibilities. Let me highlight two. The first is the scourge of piracy. Nollywood movies are produced within a month, and an average one costs between $25,000 and $70,000. Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Prof. Tunji Olaopa, retired Federal Permanent Secretary & Professor of Public Administration. tolaopa2003@gmail.com, tolaopa@isgpp.com.ng

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Wednesday 24 July 2019

BUSINESS DAY

AGRIBUSINESS

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Lack of quality assurance, finance hinder market access of agro commodities – Experts Stories by Josephine Okojie

ig e r i a’s i nab i l i t y to have an effective standardised system to access quality of agricultural commodities as well as inadequate finance for the sector has continued to limit market penetrations, experts say. The experts who spoke at the 2019 BusinessDay’s Agribusiness and Food Security Summit held in Lagos recently said that good market penetration of agricultural commodities is crucial in the country’s quest to diversify the economy through the sector. “Lack of grading and quality assurance and inadequate market information as well as finance are the three major factors limiting market access of agricultural commodities in the country,” said Ayodeji Balogun, country manager, AFEX Commodities Exchange. “ There is still a big issue with the quality of agricultural commodities. Aflatoxins levels in our maize are at points where they are harmful to the health,” Balogun said. “Finance in the sector has

been tilted to the supply side without financing the demand side and this is what causes price volatility. We need to have a systematic structure that balances both the supply and demand side of financing,” he added. He grouped the risks faced in the sector under macro and micro risks. He identified food security, inflation, foreign exchange and economic diversification as macro risks while product availability, credit risks, business and cash

approach in which we focus our resources and our expertise on specific segments of the agricultural value chain. As a tech driven, data focused company, we are perfectly positioned to do this,” Kolawole said in a statement. S i m i l a r l y , S i m i A jay i , c o founder &chief marketing officer, SeedMoney Africa, explained that through collaboration and strategic partnerships, African agricultural market can be made more efficient and profitable for stakeholders. Speaking on the company’s future plans, Ajayi said that the business plans to expand and replicate its operations in some elected African countries within the next two years. “We have proven our model works, and we have gotten great f e e d b a ck f ro m ou r p a r t n e r s, clients and stakeholders. If African agriculture is going to be worth $1 trillion by 2030 as forecasted by the AfDB, then we have to play our part in making this happen by building a more structured and more efficient market,” he said. “Our produce is insured and what that means is that your investments are safe. No risks, just rewards,” he added. www.businessday.ng

re p re s e n t i n g t h e m a n a g i n g director said that lack of a clear understanding of the sector by banks have hindered credit to farmers. “We need to understand the key ingredients in each stage of production so that we can mitigate each level of risks in the various value chains,” Anjorin said. “Banks need to understand each process from the downstream to the upstream in the agricultural sector. We also need to understand

NBMA, police reinforce collaboration on food safety

SeedMoney Africa launches Season 2, offers ROI of 17% eedMoney Africa, an agri-tech company has launched season 2 of its agric investment platform for individuals anywhere to invest in any crop production of their choice to earn a minimum 17 percent on their returns of investment in 9 months. The agric investment platform was created to improve the lives of smallholder farmers in Africa by giving back 10% of the profits to farmers and the communities in which they operate. S eun David Kolaw ole, cofounder &chief technology officer, SeedMoney Africa, disclosed at the launch that by leveraging technology and harnessing the power of data, SeedMoney offers numerous investing opportunities for its members. Ko l a w o l e w e n t f u r t h e r t o explain to BusinessDay how the company intends to creatively use technology to track produce from farm to market, thereby making it possible to identify and compensate individual smallholder farmers. “Unlocking Africa’s agricultural potential requires not just i n n ov a t i o n , b u t a h a n d s - o n

flow risks under micro risks. He stated that the country can address the issue of price volatility by creating a trading platform where agro commodities can be traded for the future, this according to him, will help farmers hedge against price volatility. Sp e a k i n g d u r i n g a p a n e l discussion on risk management approaches and solutions for agricultural financing and trading, Segun Anjorin, head – high local corporates, Eco Bank who was

the market and structure so that we can understand how we recoup our loans,” he added. He noted that there will be a tremendous shift to the sector in terms of financing owing to its enormous potential to transform the country’s economy and create jobs. Data from the National Bureau of Statistics (NBS) selected banking report for q1 2019, shows that banks credit to the agricultural sector hits N638.5 billion. The loan to the sector accounts for 4.2 percent of the total lending of commercial banks to the economy for the period. B o d e Ab i k oy e, e x e c u t i v e director, Bank of Agriculture (BoA) said that government need to fix the deficiencies along the value chains to encourage banks to lend more to the sector. “ We n e e d to p rov i d e t h e infrastructures to address the inefficiencies in the sector,” Abikoye said. He said that provision of critical infrastructure across various agricultural value chains is a prerequisite for enabling Nigeria stimulates economic growth and reach its target of diversification through agriculture.

he National Biosafety Ma n a g e m e n t A g e n c y (NBMA) and the Nigeria Police Force have reinforced collaboration and commitment to safeguard the use and handling of genetically modified foods in the country. Rufus Ebegba, director general and CEO, NBMA), made this known when he paid a courtesy visit to Bala Ciroma, new commissioner of Police, FCT Command to strengthen the collaboration between both organisations. “We have come to acquaint ourselves with the new

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commissioner of Police and ensure that our pre-existing collaboration with the Police continues seamlessly to guarantee that our mandate to safeguard the use, handling and transportation of GMOs is carried out effectively,” Ebegba said in a statement. “The collaboration between NBMA and the Nigeria Police Force comprises joint activities that ensure that illegal GMOs are appropriately confiscated and the defaulters are legally brought to book as required by the National Biosafety Management Act 2015,” he added.

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Giving his remarks during the meeting, Bala Ciroma, commissioner of Police, FCT command, gave the assurance that the collaboration between NBMA and the Nigeria Police Force will continue as it is part of their duty to collaborate with regulatory agencies to ensure that their mandate is carried out effectively and efficiently. “We understand the significance of your Agency to Nigeria’s economy and how important your work is to achieving Nigeria’s food security so we will do as much possible to assist your responsibilities. We will have a better Nigeria. NBMA was established in 2015 by an Act of parliament to ensure adequate level of protection in the field of safe transfer, handling and use of genetically modified organisms (GMOs) resulting from mo dern biote chnolog y that may have adverse effects on conservation and sustainable use of biodiversity taking into account risks to human health, animals, plants and the environment. The meeting which held in the office of the commissioner of Police was attended by management staff of the FCT Command and NBMA.

Wednesday 24 July 2019

BUSINESS DAY

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Rising CO2 to deplete crop nutrients in Africa, globally - Study Josephine Okojie

ithin the next 30 y e a r s , increasing carbon dioxide (CO2) could significantly reduce the availability of critical crop nutrients such as protein, iron, and zinc in Africa and globally, a new study finds. According to the study, the total impacts of climate change shocks and elevated levels of CO2 in the atmosphere are estimated to reduce growth in global per capita nutrient availability of protein, iron and zinc by 19.5, 14.4, and 14.6 percent respectively. One of the biggest challenges to re ducing hunger and under-nutrition globally is by producing foods that provide not only enough calor ies but also make enough necessary nutrients widely available. “We have made a lot of progress reducing undernutrition around the world recently but global population growth over the next 30 years will require increasing the production of foods that provide sufficient nutrients,” Timothy Sulser, senior scientist at the International Food Policy Research Institute (IFPRI)

and study co-author said in a statement. “These findings suggest that climate change could slow progress on improvements in global nutrition by simply making key nutrients less available than they would be without it,” Sulser said. The study, ‘A modeling approach combining elevated atmospheric CO2 effects on protein, iron and zinc availability with projected climate change impacts on global diets’ was co-authored by an international group of researchers and published in the peer-reviewed journal, Lancet Planetary Health. It represents the most

comprehensive synthesis of the impacts of elevated CO2 and climate change on the availability of nutrients in the global food supply to date. Using the IMPACT global agriculture sector model along with data from the Global Expanded Nutrient Supply (GENuS) model and two data sets on the effects of CO2 on nutrient content in crops, researchers projected per capita availability of protein, iron, and zinc to out by 2050. Improvements in technology and markets effects are projected to increase nutrient availability ov e r c u r re n t l e v e l s b y 2050, but these gains are

substantially diminished by the negative impacts of rising concentrations of carbon dioxide, the study stated. While higher levels of CO2 can boost photosynthesis and growth in some plants, previous research has also found they reduce the concentration of key micronutrients in crops, the study finds. The new study finds that wheat, rice, maize, barley, potatoes, soybeans, and vegetables are all projected to suffer nutrient losses of about 3 percent on average by 2050 due to elevated CO2 concentration. The effects are not likely to be felt evenly around

the world, however, and many countries currently experiencing high levels of nutrient deficiency are also projected to be more affected by lower nutrient availability in the future, it said. The study said that nutrient reductions are projected to be particularly severe in South Asia, the Middle East, Sub Sahara Africa, North Africa, and the former Soviet Union— regions largely comprised of low- and middle-income countries where levels of under-nutrition are generally higher and diets are more vulnerable to direct impacts of changes in temperature and precipitation triggered by climate change. “In general, people in low- and middle-income countries receive a larger portion of their nutrients from plant-based sources, which tend to have lower bioavailability than animalbased sources,” said Robert Beach, senior economist and Fellow at RTI International and lead author of the study. “This means that many people with already relatively low nutrient intake will likely become more vulnerable to deficiencies in iron, zinc, and protein as crops lose their nutrients. Many of these regions are also the ones expected to fuel the

largest growth in populations and thus requir ing the most growth in nutrient availability” he said. “The impact on individual crops can also have disproportionate effects on diets and health. Significant nutrient losses in wheat have especially widespread implications. “Wheat accounts for a large proportion of diets in many parts of the world, so any changes in its nutrient concentrations can have substantial impact on the micronutrients many people receive,” added Beach. The researchers also emphasized the need for further work to build upon their findings, including additional study of climate impacts on animal sources, such as poultry, livestock, and fisheries, crops’ nutritional composition, nutrient deficiencies resulting from short-term climate shocks, and technologies that could m i t i g a t e re d u c t i o n s i n nutrient availability. Quantifying the potential health impacts for individuals also requires a consideration of the many factors beyond food consumption— including access to clean w a t e r, s a n i t a t i o n , a n d education—that influence nutrition and health outcomes.

: N4, 000,000 Other Cultural practices @ N100,000/hectare.: N2, 000,000 TOTAL N19, 300,000 ========= Note: The project scope can be higher or lower depending on the financial strength of the prospective investors. Various governments can also set up this project and lease it out to individuals and corporate bodies on maturity. It is a way of diversifying the economy and also to create jobs and income opportunities for Nigerians. It is also one of the strategies for food security in the country and also in line with the transformation agenda of the country.

metric tonnes of oil can be obtained annually from 20 hectares plantation. A tonne of red palm oil is a minimum of N150, 000. Gross revenue of N37.5 million is obtained from red palm oil. We can also get 7.5 metric tonnes of palm kernel per hectare. This gives us 375 tonnes from 20 hectares. This translates to annual income of N26.25 million. Total income realizable is about N63.75 million while the annual operating expenses is put at N15 million. This leaves us with net income N48.75 million annually for the investor for the rest of his/her live. There are still other sources of income such as palm fronds and palm kernel shells. Serious minded investors can be assisted in the realization of this worthwhile investment. Author ’s contact : 08023058045 or email: olumakindeoni2@yahoo. com.

How to establish an oil palm plantation OLUMAKINDE ONI

il Palm is native to West Africa. Nigeria used to be the world’s largest producer of oil palm before the oil boom era. Indonesia has now taken over as the top producer and oil palm and allied industries is now the main stay of its economy. In the early 70’s, Malaysia came to Nigeria to obtain oil palm seedlings and seeds, according to experts. Apart from household consumption, oil palm serves as by-product to numerous industries such as the food and beverage, cosmetics and the pharmaceutical industry among others. The palm can be used in various ways; the leaves are used in making brooms and as roofing materials (in the rural areas). The bark of the fond can be peeled and woven into baskets. The main trunk can be

spitted like dawn timbers and used as part of building materials. Palm wine can be obtained from oil palm tree and oil are readily obtainable from the fresh fruit bunches. When the fruit is processed the residue obtained can be used as fuel (for cooking and fertilizer to improve soil nutrient). Red Palm Oil is used in Cooking, making soap, candle and margarine. Palm Kernel oil can be extracted from the nut. The residue obtainable in the process of palm kernel oil extraction otherwise called palm kernel cake is used to as livestock feed. Palm Kernel Oil is used in vegetable oil and soap making. Palm kernel shells are also useful as energy source and industrial r aw m a t e r i a l s s u c h a s mosquito coils when banded. The uses to which oil palm can be made seem non exhaustive. This clearly indicates that investment made in the establishment www.businessday.ng

of oil palm plantation is nothing but a wise one. The market is guaranteed for all the products of oil palm plantation in this era of global food crisis. Technical Information To e s t a b l i s h o i l p a l m plantation, it involves getting a good site with rich, well drained acidic soils are abundant. The soil should have adequate quantities of potassium, magnesium and nitrogen. Soil tests should therefore be carried out to determine the nutrient status of the land obtained. It is usually better to use the early maturing variety called tenera which bears fruits as from the fourth year. Other requirements include seedlings procurement ; this can be obtained from reputable n u r s e r i e s. P r o s p e c t i v e investors must engage the ser vices of Agricultural experts in the course of

establishing this project. Other cultural practices are planting, regular weeding, pruning and fertilizer application. Serious minded investors will be guided accordingly in the implementation of this project Financial Implication We are recommending a 20 hectare plantation for a start. 20 hectare oil palm plantation can conveniently service a palm oil mill that will be established by the owner when the plantation starts to fruit. To e s t a b l i s h a 2 0 hectare plantation a sum of N19.3million will be required broken down as follows: Pre-Investments : 300, 000 Land Acquisition: N10, 000,000 Land Clearing/Preparation : N3, 000,000 Seedlings procurement 400/hectare (8000 @ N500)

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Income analysis A matured plantation will start to give investor 12.5 tonnes per hectare of red palm oil annually from the fourth year per hectare. 250 @Businessdayng

Wednesday 24 July 2019

BUSINESS DAY

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Wednesday 24 July 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

EQUITIES

Nigerian stock valuation sees marginal decline on weak investor sentiment ISRAEL ODUBOLA & SEGUN ADAMS

nvestors in Nigerian stocks paid seven times for each naira earning of listed companies three months ago, but with the lacklustre performance of the domestic bourse, stockholders are currently pricing naira stocks cheaper for each naira earning. Confidence in the Nigerian market has waned on the limited growth prospects of companies amid a lack of clarity in the polity environment and weak macro fundamentals, all of which investors are pricing in their valuation. Price-to-earnings ratio, which indicates the naira amount investors expect to invest in a company to receive one naira of its income, has declined by 6 basis points from 7.5 three months ago. It stood at 6.9 times on Monday. “It is a reflection that investors have a weak appetite for Nigerian stocks,” said Gbolahan Ologunro, equity analyst at Lagos-based CSL Stockbrokers Ltd. “Investors are not seeing expected reforms especially from fiscal authorities.” Meanwhile, most stocks across emerging markets

have seen a decline in their price to earnings valuation since April. However, at Monday valuation, Nigerian stocks remained undervalued; trading much lower compared to emerging and frontier markets which are trading at 13 times and 12.4 times their earnings, respectively. In context, investors are willing to pay 18 times for one rand of South African stocks, 15 times for Egyptian stocks, 12 times for Kenyan stocks, 14 times for Chinese stocks and 15 times for Indian stocks. Analysts say while other emerging markets (EMs) have benefited from policy normalization in advanced markets evidenced by their positive gains year-to-date, Nigerian stocks are down on the absence of bold policy pronouncement to revive the market. “Despite the trade tensions, some stocks in the emerging markets space are doing well, just that Nigeria is an outlier,” Ologunro said. Emerging market stocks are up 9.5 percent this year, according to figures compiled from Morgan Stanley Capital International (MSCI) emerging market index, which tracks stock performance in the EMs.

While stocks in South Africa, Kenya and Egypt have gained 10 percent, 7 percent and 5 percent respectively, equities in Africa’s biggest economy have tanked 11 percent this year. The most liquid and capitalized stocks which account for over 90 percent of market value, tracked by NSE 30 index, have taken a beating and

are down 19 percent since the start of the year. In comparison, the broad market has lost 11 percent after a bearish performance Monday. The inability of President Muhammadu Buhari to constitute cabinet almost two months after being sworn in for a final four-year term is also weighing on the country’s stock market

and has made investors develop some forms of scepticism towards the domestic bourse. Investors wished the former military leader emulate his Senegal and South African counterparts – Sackey Mall and Cyril Ramaphosa, who immediately hit the ground running by naming ministers within days of be-

ing sworn into office. Analysts at Lagos-based investment house, Afrinvest Securities, expect the bearish performance at the Nigerian Stock Exchange to be sustained despite attractive prices in fundamentally sound stocks, even as halfyear earnings result will do little to spur investor interests.

TECHNOLOGY

Interswitch needs to focus more stock sales at London Stock Exchange - analysts …raise timing concerns on dual listing possibility DAVID IBIDAPO

hile confirmation on the possible listing of Interswitch, an electronic payment and digital commerce solution, on the London and Nigerian Stock Exchanges this year as reported by Bloomberg is on-going, concerns are being raised over the timing of the move. Analysts say Interswitch may need to focus more stock sales on the international market against the domestic market. It was reported over the weekend that the Nigerianbased payment firm has hired advisers to resurrect plans for a stock market listing. According to a report by Bloomberg, JP Morgan Chase & Co., Citigroup Inc. and

Standard Bank Group Ltd are among the firms working on an initial public offering, which may value the financial technology company at $1.3 billion to $1.5 billion. While analysts are rather optimistic that the potential listing of Interswitch on the Nigerian Stock Exchange Market (NSE) will be welcomed with a smile on the faces of investors on the back that the Fintech space is an industry gradually gaining momentum globally, timing may be a major challenge. “A look into sub-Saharan Africa, the industry is more or less in its growth stage, hence increase investors’ excitement on the news of the intention of Interswitch to list,” Gbolahan Ologunro, research analyst at CSL Stockbrokers Ltd, told Business-

Day. In a market currently saturated with negative investor sentiments which have seen the NSE trend bearishly closing on Monday at a year-todate (YTD) return of -11.45 percent, a good pricing of Interswitch shares on the NSE upon listing could see investors reward stock with higher prices, analysts say. “We should see an uptick in the stock performance of Interswitch upon listing on the back of good pricing which investors perceive as a fair value for the stock,” Ologunro explained. “However, if priced at a discount to what investor’s fair value is then the reverse may be the case.” Interswitch being a forerunner or major face of the Fintech industry may have to face through some peculiar

headwinds inherent in both markets when the timing is put into consideration. “I do not think this will be a good time for listing coming into the NSE except if its turns up to be a dual listing on both exchanges,” Paul Uzum, a Lagos-based stockbroker, told BusinessDay. On the back of trade concerns, monetary policy actions of systemic important banks, “investors are not too sure about the direction of the global economy and where it is headed,” Ologunro explained further. More so, the analysts noted that fears over Brexit may dampen investor sentiment on the London Stock Exchange market (LSE). Britain’s finance minister had over the weekend promised to leave the EU if conser-

vative leader Boris Johnson is elected as the next British prime minister. Hence, concerns over the probability that there may be a “no deal” Brexit giving a possible exit on the 31st of October 2019, could inhibit investor’s sentiments of Interswitch shares on the LSE. Taking a clue from how events of the market introduction of MTN Nigeria and Airtel had played out so far being companies with good prospects and potentials to deliver growth in earnings in the medium to long term, “we haven’t see a lot of positive interest from investors on these stocks as investors maintain caution,” Uzum noted. However, Uzum maintained that getting benefit from the listing when finally

concluded, Interswitch may need to focus more sales on the LSE than on the NSE if it ends up being a dual listing, “weak investors sentiment will definitely prevail on the NSE.” According to Bloomberg, Interswitch pulled earlier plans to list in 2016 after the price of crude oil fell dramatically, causing a contraction in Nigeria’s economy. According to Interswitch then, an uptick in growth may accelerate payments between companies and thus revenues at paymentservices providers. The question, therefore, remains whether the management team of Interswitch are optimistic on growth in the Nigeria economy and global space which could impact significantly on their revenues.

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

Wednesday 24 July 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

FINANCIAL SERVICES

Deap Capital considers converting N1.7bn debt to equity, proposes name change at AGM GBEMI FAMINU

he Board of Directors of Deap Cap i t a l Pl c, a Lagos-based financial services provider, has proposed to convert the company’s debt worth N1.7 billion to ordinary shares of 50 kobo each to creditors. Shareholders’ confirmation of the proposed actions at the company’s forthcoming Annual General Meeting will pave way for an increase in the company’s share outstanding by 850,000 units of shares to 2.3 billion shares from its current 1.5 billion shares. The company is prepared to hold its 11th annual gen-

eral meeting on August 22 to discuss different matters including its proposed change of name from Deap Capital Management and Trust Plc to Deap Plc, consideration of the company’s financial results between 2013 and 2018 among other matters. Deap Capital also announced effected changes in its board of directors and management team. The company board which was reformed following the new board structure is made up of 7 people. While the chairman and a non-executive member are returnees on the board after a five-year suspension, the other five are new members which according to the company secretary

are made up of two people from the current board and 3 from a turnaround team setup to veer the company to a better track. Analysis of the company’s financials for 9 months which ended June 2019 shows that the company experienced a downturn in its financials. While it had no record of its total income for the year, the company whose financials recorded the same figures for its loss/ profit before tax, loss/ profit for the year and loss/ profit attributable to company owners recorded a 15 percent drop in its finances from N30.8 million in the corresponding period of 2018 to N26.2 million in 2019.

L-R: Dele Ajayi-Smith, member, membership committee, LCCI; Obaro Omatseye, senior legal officer, Lagos Chamber of Commerce International Arbitration Centre (LACIAC); Baylon Duru, Liquified Petroleum Gas chairman of LCCI; Muda Yusuf, DG, LCCI; Michael Olawalecole, vice president, LCCI; Soboma Ajumogobia, vice president, LCCI; Nwanne Okafor, entertainment and creative specialist, and Felix Awogu, MD, at the inaugural meeting of the Creative, Entertainment and Sports Group, LCCI in Lagos.

TRANSPORT

Gokada records 99.8% safety milestone since commencement of operations … reiterates commitment to passenger safety MODESTUS ANAESORONYE

n-demand motorbike hailing service, Gokada, a technology-driven alternative transportation platform for quick intracity mobility, is pleased to announce that it has achieved a landmark 99.8 percent safety record since it officially commenced operations in 2018. This translates to just 0.02 percent incident rate per ride. The brand which prides itself on safe, fast and efficient intracity transporta-

tion is focused on changing the face of transportation in Nigeria by leveraging technology to connect users to the nearest motorbikes within their location, helping them reach their destination quicker without the inhibition of traffic jam. This impressive safety milestone was recorded across nearly two million rides via its platforms. Speaking on the critical milestone, Ayodeji Adewunmi, Gokada Co-CEO reiterated the brand’s commitment to promoting safety, fast and efficient transport and

helping passengers reach their destination with ease. “Before now, commercial motorcycles were believed to have been responsible for about 69 percent of the road accidents in Lagos. “We were committed to reversing this ugly trend by prioritizing the safety of our pilots and the thousands of customers who ride on our bikes. In pursuit of this goal, we upskilled our drivers, expanded their capacity for defensive driving and put in place mechanism to comprehensively track every ride for any incident,” Ayodeji said.

L:R Gbemileke Lawal, brand manager, Eagle Aromatic Schnapps; William Macaulay, winner of the 2nd Edition of Eagle Schnapps Awankere Festival Draughts Competition, and Austin Imafidon, sales operation manager, Central 2 Region Intercontinental Distillers Limited, at the grand finale of the Awankere Festival (Okere Juju).

CONSUMER GOODS

Darling Nigeria explores global hair trends at interactive stakeholder event IFEOMA OKEKE

arling, one of the leading manufacturers of hair extension products, hosted an interactive stakeholder’s engagement event as part of activities to highlight global hair trends and the evolution of the Darling Hair brand. The event which held at the Oriental Hotel, Victoria Island, Lagos on Wednesday, July 17th, 2019 had in attendance top executives from Darling Nigeria, as well as key stakeholders including hairstylists, beauticians, beauty bloggers and brand influencers. Darling took attendees on a journey of how the brand has evolved over the years since its inception, also providing insights on the latest

hair trends around the world and how the brand is working tirelessly to stay ahead of the game by constantly creating the best quality and trendy hair extensions. Speaking at the event, the Business Head, Godrej West Africa, Chitwan Singh expressed the vision of the Darling brand, reiterating the brand’s commitment to creating trendy hairstyles that the Nigerian woman desires. He said, “30 years since inception, Darling has continuously catered to the needs of over 150 million women in 21 countries across all continents. This has led us to research the global trends around the world to expand our market and provide our customers with the best and unique products. It is our goal

to continuously bring the best supplies, the best fibres, and the best trends together to make Darling a choice hair brand across the country. We have come together to create a truly Nigerian product that will transcend and eventually become a global brand.” The event also featured an interactive session where hairstylists and consumers gave their feedback on the various hair trends around the world and how Darling can expand on their portfolio and continue to manufacture the best hair extensions in the country. In her remarks, Ayodele Otujinrin, Marketing Manager, Darling Nigeria, also expressed Darlings’ devotion to helping Nigerian women transition easily between several trendy looks.

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L-R: Ayo Babatunde, MD/CEO, SunTrust Bank Limited; Angela Sere-Ejembi, director, financial markets department, Central Bank of Nigeria (CBN); Akinsowon Dawodu, MD, Citibank Nigeria; Olufemi Adaramola, chairman, Money Market workgroup at the Financial Markets Dealers Association (FMDA), and Mary Gbegbaje, acting executive secretary, FMDA, at a money market seminar organised by the FMDA Money Market Workgroup in Lagos.

L-R: Olajide Adamolekun, chief financial official, Cars45; Mayokun Fadeyibi, head, commercial operations and marketing; Raymond Olawale, MD/CEO, OLOWORAY Autos; Mohammed Iyamu, vice president, trading, Cars45, and John Egwu, head, Carsbazr, at the unveiling of Cars45 5th franchise retail outlet in Lagos. Pic by David Apara

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Wednesday 24 July 2019

BUSINESS DAY

cityfile Gowon Estate residents raise alarm over robbery attacks

Security personnel evacuate a victim of the violent protest by members of the Islamic Movement in Nigeria (a.k.a Shiites) in Abuja on Monday. The Shiites are demanding the release of their leader, Ibraheem El-Zakzaky, who has been in detention for alleged murder since Dec. 2015. NAN

Heavy traffic expected on Lagos-Ibadan road as rehabilitation resumes August 3 …as Sanwo-Olu assures repair of bad roads in Lagos JOSHUA BASSEY with agency report

eavy traffic expected is to be expected on the LagosIb a d a n E xpressway, as Julius Berger Nigeria Plc, the construction company handling its rehabilitation will resume work on the road from August 3. This was disclosed by Clement Oladele, the sector commandant of the FRSC in Ogun State. The rehabilitation work would cover Berger end of the road to Ogun River Bridge at the popular Kara Cattle Market totalling 1.4 kilometres. “The rehabilitation work will initially affect 600 metres of the corridor and cause the temporary closure of the inward Lagos traffic to enable the construction company carry out the rehabilitation work on the road.

“The temporary diversion of traffic will transfer the Lagos inbound traffic to the same carriageway conveying traffic outward Lagos, thereby accommodating both the traffic inward and outward Lagos on the same section of the expressway,” said Oladele on Monday. Against this background, Oladele admonished motorists plying the expressway to plan their trips by allowing more travelling time in view of the rehabilitation work that would narrow the carriage way and slow down traffic flow. The sector commandant further advised the general public to use alternative corridors like the Epe/AjahIjebu-Ode, Lagos-Ota-ItoriAbeokuta and Ikorodu-Sagamu roads. “Motorists are expected to cooperate with the FRSC patrol teams and sister traffic

control organisations as well as the emergency agencies that will be strategically deployed to control the diverted traffic around the sections. “We also wish to remind them to drive within the maximum speed limit of 50km per hour prescribed by the National Road Traffic Regulations, 2012, as the maximum speed in construction zones. “They are also enjoined to observe lane discipline and avoid driving against traffic as violators risk impoundment of their vehicles and N50,000 traffic fine,” he said. The commandant urged motorists observing traffic emergencies while on the road to call the FRSC tollfree number- 122. In Lagos, the state governor, Babajide Sanwo-Olu has said that 100 roads are targeted in the first phase of the ongoing road rehabilitation by the Lagos

State Public Works Cooperation (LSPWC). Sanwo-Olu, who went on inspection tour of some of the roads in Agege, last weekend, also disclosed that the rehabilitation was being handled in phases. The governor appealed to residents whose roads were not listed in the first phase of the rehabilitation to be patient, assuring that every part of the state would be covered. He said the LSPWC has been mandated to work day and night so as to hasten the pace of work, promising regular visits to the eight gangs rehabilitating the roads in different parts of the state. For residents of Ikorodu, especially those living around Igbogbo and Ishawo axis, the governor said before the end of this month or early August, the main contractors would be back on the roads.

Quarry site caves in, injures 4 in Ibadan REMI FEYISIPO, Ibadan

our people suffered var ying degrees of injuries when a quarry site suddenly caved in on the workers in Ibadan, Oyo State. The quarry site located around Camp Area, Gbopa,

Ologuneru, Ido local government, Oyo, was said to be manned by unknown workers. According to sources, the workers had resumed duty with trucks scrapping ‘filler sand’ when heap of sand collapsed on the workers. www.businessday.ng

It was gathered that passers-by who noticed the scene quickly stormed the site in rescue mission while those rescued were said to have been rushed to the University College Hospital (UCH), Ibadan, in a patrol van belonging to the Federal Road Safety

Corps (FRSC). An officer of the FRSC, Oyo State command, who does not want his name in print, said that the patrol van had to support the rescue effort when a distress call was placed to the officers on patrol within the vicinity.

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esidents of Gowon Estate in Egbeda area of Lagos State have ra i s e d a n alarm over increasing attacks and armed robberies in the area. They spoke on Monday, as they called for an immediate intervention of the police and other security agencies in the state. One of them, Nathaniel Okoro, a former chairman, Gowon Estate Community Development Association (CDA), lamented that the beer parlour at the Car Wash on 51 Road was robbed with the patrons helpless. “On 34 Road, someone coming out of B Close, to go to work was accosted at around 5.30 a.m., and attacked with some machete cuts while being robbed. “Similarly, on the same 34 Road, Orange Bar which experienced an armed robbery incident in 2015, was again burgled on July 21, 2019. “Also, in a Customs block, on 51 Road, robbers entered a flat and robbed the occupants which resulted in a fatality. “Two ladies going to work in the morning on a certain day were accosted at Ponle bus stop entrance and robbed,’’ Okoro said. Dauda Oyebanji, the chairman, Gowon Estate

Community Mosque, also said that on 411 Road, A Close, some residents of blocks were attacked and robbed few months ago. He noted that within the same area on 411 Road, where an electricity transformer is installed, it had become a free spot for youths in the area to gather from 8.30 p.m. to 10 p.m. to smoke hard drugs like Indian hemp, among others. Oyebanji said that residents of the blocks had cried out repeatedly over the menace without the situation being put under control as perpetrators were said to be wards of security personnel. “In most cases the smell of Indian hemp takes over flats in the buildings, thereby making it impossible for occupants to breathe properly,’’ he said. Another resident who preferred anonymity said: “Something needs to be done by the Lagos State task force on environmental and special offences and the police anti-robbery unitRapid Response Squad (RRS) to stem the tide and urgently too. However, Bala Elkana, spokesperson of the Lagos police command, advised residents of the estate to organise their internal security.

Enugu: Police nab 2 over robbery, recover rifle, cartridges

he police in Enugu said they have arrested two armed robbery suspects suspected to be operating within Nkanu West local government area of the state. Spokesperson of the police in Enugu, Ebere Amaraizu, said that the suspects, who had been on police wanted list, were arrested on July 12 at about 1:00 a.m. Amaraizu added that the command recovered a single-barrel locally-made pistol and two live cartridges from the suspects. According to him, the susp e cts w ere tracke d down by operatives of Special Anti-Robbery Squad (SARS) after a tip-off. He identified the suspects as Chidiebere Chikezie, 22, a native of Nnewe in Aninri local government area and Onyenatuluchi Ejiofor, 21, from Isochi in Abia. “They were arrested in an uncompleted building located at Ozalla commu@Businessdayng

nity in Nkanu West local government area in Enugu State,’’ he said, just as he assured that the suspects would be charged to court after a thorough investigation on their nefarious activities. The operatives, he added, on July 10, also arrested two suspected electricity transformer vandals. Amaraizu said that the vandals allegedly vandalised an electricity transformer in Okunator village in Umulokpa community of Uzo-Uwani local government area of Enugu State. “Ikechukwu Oforchebe, 22, a native of Okunator village in Umulokpa and Emeka Amuzie, 22, a native of Eziora village in Amofu, both in Uzo-Uwani local government area, were caught vandalising the armoured cable of Okunator village. “SARS operatives recovered a bundle of transformer armoured cable from the suspects,’’ he said.

Wednesday 24 July 2019

BUSINESS DAY

Wednesday 24 July 2019

BUSINESS DAY

INTERVIEW

National Assembly intervention is an impediment to peaceful resolution of Edo Assembly impasse – Ojezua Anslem Ojezua, chairman, Edo State chairman of the All Progressives Congress (APC), in a session with a select group of journalists in Lagos, spoke extensively on the seeming crisis in the state House of Assembly. He urged the National Assembly and those who feel aggrieved for any reason to wait for court’s pronouncement, as the case is already before a court of competent jurisdiction. Ojezua, who said that the state’s party leadership was already addressing the impasse, expressed the fears that some steps being taken by individuals and institutions outside the state may be jeopardising efforts at settling the matter. ZEBULON AGOMUO was there. Excerpts: We have been reading so many things concerning the situation in Edo State. What is the real story behind the crisis in the state House of Assembly? ell, you know, it seems to be more of a question of how well are we managing our success in Edo State. As you know, this is the first time we have recorded on absolute victory in the sense that all the seats in the House are for APC; it has never happened before. So, with that as a background; whatever that is happening now will look like, is it an irony or paradox? I don’t know how to describe it, but it is true that we are having issues in relation to the leadership of the House but it does not amount to a crisis, because Edo is functioning; even the House of Assembly itself is also functioning; they have a leadership in place; they are working and there is no crisis; what we have is the House that has been inaugurated; a leadership has emerged; some members are not happy with it and they are taking steps they feel is necessary to change what they cannot have; some have gone to Abuja; they have also been to court as you can see; they have also gone to the National Assembly; all that put together is to stimulate the prospect of a crisis, but in Edo State, there is no crisis. If they have gone to court, we subscribe to that because that’s what the law says; that should there be any disagreement that they cannot resolve on their own, they can

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seek redress; they should not resort to self-help. Thankfully, in Edo, all the parties are in court. So, we await the court’s decision, but as a party, we are also taking steps to seek reconciliation for our members in the House. If you recall, when the House was inaugurated, there were nine (9) members; today they are twelve (12). There are prospects that, that number will increase. I think what has actually restrained or is now being an impediment to a peaceful political resolution is the intervention of the National Assembly; so if their intention is to come and help us in Edo, I think they have compounded, somewhat, our problem.

solution and also watch the judicial pronouncement. They didn’t that; they could not even wait for the National Assembly process to be completed before they went to town, and therefore, they may have in doing that justified the speculation in town, arising from an audio where one of the members-elect was boasting that the matter had been resolved and that the Senate president and speaker of the House of Representatives have already been told what to do, and two or three days later, they did that which the boy said, even though prematurely of their own processes. That, to my mind, has compounded our problem rather than help to resolve it. But, that is why I said when they are through with whatever they are doing; we will continue our process. We were on course. This thing as you see it will be resolved. This is not the first time we are having problem in Edo State House of Assembly. If you recall, in 2014 just after I was elected as chairman, PDP wanted to buy up our members in the House in order that they would impeach our governor. We heard figures as much as N50 million. At a stage, we had to take steps to renovate our House of Assembly, when the roof was removed and members were moved to the Government House. So, if the need arises, we will do anything we have to do to preserve our independence as a state.

How do you mean? Oh! The threat that they would come and take over our House of Assembly; the ordinary man in the street is seeing it as if there’s going to be an alien invasion of our state, as if Edo State is a colony of some people in Abuja; that is the impression. And we are having a hard time convincing them that, that is not the intention. Some people would think that what is playing out in Edo is the voice of Jacob and hand of Esau. They say that ordinarily, given the cordial relationship that exists between the National Chairman of your party and the Edo State Governor, what is happening now, should not happen; what really is the problem? I agree with you whole-heartedly that what is happening now should

If they have gone to court, we subscribe to that because that’s what the law says; that should there be any disagreement that they cannot resolve on their own, they can seek redress; they should not resort to self-help

’

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Anslem Ojezua

not happen. I agree. And I think both of them have the responsibility to do the right thing. Sir, can you clarify if it is true that the National Chairman of your party wants to impose leadership on the House of Assembly in order to remove the governor. Do you have that information? I don’t have that information and I cannot say I share that view. But you know, when things like these are happening, people are bound to speculate. It gives room for speculation. So, unwittingly, we may have opened ourselves to all sorts.

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As the chairman of the party in Edo State, what steps have you taken to ensure that the other lawmakers-elect who are yet to be sworn in are inaugurated, and also to end the impasse? We have been working with leaders of our party in various parts of the state, particularly, leaders of those concerned that you spoke of. I did say that we are recording some progress. Three (3) other members have been sworn in to make the number twelve (12). The very day Professor Julius Ihonvbere moved his motion in the House of Rep@Businessdayng

resentatives, two of those members were actually at the airport waiting to come to Benin to be sworn in when they were informed that they should return because the National Assembly is coming to take over the Edo State House of Assembly; they went back. I said, that for me is a minus rather than a plus in terms of National Assembly intervention. So, I believe that when their intervention dissipates, we will continue the process of reconciliation that we have started. Is that to say until the National Assembly decides what to do, then you continue what you were doing in terms of reconciliation?

You see, we don’t even believe that the National Assembly has any business in this matter. We don’t even believe that it is right for them to take steps. But you know that we obliged to be polite to them when they came calling for very obvious reasons. So, we made all the facts known; if we had rebuffed them, the tendency would have been to believe that we had something to hide. They have come, and they have all the facts. What are the facts? That the House was, in fact, inaugurated; that a leadership is in place; that they are actually functioning and that the matter is in court. With all that knowledge; what we expected them to report and to recommend is that in light of all these facts, they should seek political

They said it was only five (5) members that were originally on the side of the governor; and later four were allegedly kidnapped, abducted and taken, at gunpoint, to be sworn in. What actually is the true position of things? Were they really kidnapped? You know politics in Nigeria, even everywhere in the world, sometimes you have this drama playing out. If a man is kidnapped and he is released; what does he do? He will go to police, make a statement and seek to prosecute his abductors, particularly when they can be identified. So, all that is part of the drama. But what I have told you is www.businessday.ng

that 12 out of 24 have been inaugurated. There are 12 that are yet to be inaugurated, and we, as a party, are working to see that everybody is complete as part of the family. When you spoke earlier, you said offices were zoned accordingly and equitably. How come that the other party did not buy into it to the extent that they are protesting up till now? One thing that is significant, for which I am particularly grateful is that since I made my statement several weeks ago in two national dailies, nobody has come out to say that it is not true. Whether they agree or not is a different kettle of fish; and you know, in politics, you don’t seek a 100 percent, you seek a consensus and it is measured in terms of majority. So, in those meetings that I alluded to, there was a consensus, and everybody signed off on it. They decided to go against the position of the party and we feel it should neither be tolerated nor condoned in the interest of the party because when you go and keep a first aid box, you don’t know for whom you keep those things. Today, it is Obaseki, who knows tomorrow? Is there any plan for sanction against the erring members? Well, you know the first thing we want to do is to first of all achieve peace and reconciliation. I do not think that sanction will be the first way or thing to do. Sanction will be the last step after you have exhausted all avenues for reconciliation. The good news is that the House is inaugurated. They have formed a quorum in reaching their decisions. But what is even more interesting now, and that is one peculiar attribute of parliament; the constitution makes provision for 24 members; but at the moment we have 12; and so, when you want to calculate a quorum, you are going to be calculating the quorum on the basis of 12; that is the peculiar nature of parliament. So, as far as we are concerned, there is no problem, unless a court of law, properly

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Edo is not a colony of the National Assembly or of anybody or of any entity. So, they shouldn’t worry at all. All that is playing out is politics and it will be resolved, politically so-called, makes a pronouncement to the contrary. What would be your message to the National Working Committee of your party; two, to the leader of the party who is Mr. President, on Edo matter? You know, I would rather not send a message to them through this medium. I have made my position clear. I honestly do not think they need to get involved in this. For those of them who have gotten involved, their involvement has not been helpful; I think it is time for them to let go and allow us to @Businessdayng

handle it at home.

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What would be your message to the people of Edo State? To continue to live in peace, not to be worried about the so-called threat of an invasion; there will be no invasion against the people of Edo. Edo State remains a sovereign part of Nigeria; we are what is called federating partners; we are not any body’s houseboys. Edo is not a colony of the National Assembly or of anybody or of any entity. So, they shouldn’t worry at all. All that is playing out is politics and it will be resolved, politically.

Wednesday 24 July 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Here’re what importers, exporters want to see in $1.5bn Lekki Deep Seaport amaka Anagor-Ewuzie

igerian shippers, (exporters and importers), want the federal government together with the promoters of the $1.5 billion Lekki Deep Seaport, to expand the Lekki-Epe Expressway, Epe-Shagamu Road and develop a functional rail line to ensure smooth movement of cargoes in and out of the Port. According to them, the promoters also need to ensure that the government establishes truck and trailer transit parks within the Epe axis to serve as truck holding-bays, for trucks coming to the seaport to pick laden containers or drop empties. They further say government needs to limit the number of oil tank farms licensed to be situated within the Epe axis while the existing ones as well as refineries should de-emphasise haulage by road by also making use of the railway or pipeline as alternative means of evacuating products. “There is need to expand the roads leading to the Lekki Deep Seaport to eight lanes to avert the reoccurrence of the Apapa problem,” said Iheanacho Ebubeogu of

the Nigerian Ports Authority (NPA). Ebubeogu, who said that Nigeria needs deep seaport soonest to allow for berthing of bigger ships, said promoters of port projects in Nigeria should learn not to depend on port plan but port master plan. “Port plan covers the jurisdiction of the port while port master plan covers the port itself and its maritime industrial environment. For instance, if the NPA had had the vision of port master plan

at the time Apapa port was built, the whole of Creek Road and Wharf Road would have been secured and owned by the NPA,” he said. “If the NPA had Creek Road, the authority would not have allowed two tank farms to be located on the Creek Road. We must have port areas where the port managers collaborate with the city administrators to regulate traffic,” he added. Citing America as example, Ebubeogu said the World Trade Centre and

amaka Anagor-Ewuzie

he Nigeria economy is presently losing about $25 billion yearly to illegal activities on the waterways, Rotimi Amaechi, former Minister of Transportation, has said. According to him, Nigeria loses as much as $7 billion annually to illegal bunkering alone, while activities such as illegal fishing and smuggling and others generate about $25 billion lost annually. Speaking at the colloquium held in his honour by maritime stakeholders under the aegis of ‘Team Maritime Nigeria,’ Amaechi said global container liner

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several residential houses located 10 meters from the port, suggested that new ports like Lekki should have ring road that is exclusively reserved for the port operation. “If we keep using single mode of transportation without rail and waterways, the roads will fail due to the pressure on them. For example, when Apapa-Oshodi Expressway was constructed, it was conceived that the road was meant to serve the Tin-Can Island Port, but today the road has become a municipal traffic area used by residents,” he said. A recent study, Folarin said, shows that about 1 million vehicles transit from Oshodi through Apapa to Lagos at peak period, showing that new ports like Lekki should plan for future growth. “If we fail to do the right thing today, in the future, if Nigeria prospers and the volume of cargo increases, it will become difficult to manager prosperity than poverty,” he added. Lekki port is owned by the International Consortium led by Lekki Port Investment Holding Inc. (Tolaram Group), which holds 75 percent of the equity share; Lagos State Government 20 percent and the NPA hold 5 percent.

AfCFTA: Group fears Nigeria will turn into dumping ground for fake products

Nigeria loses over $25bn yearly to illegal activities on waterways - Amaechi such as Maersk Line spends as much as $18 million on securing their vessels coming to Nigerian ports. Amaechi disclosed that it has become worrisome that to import goods to Port Harcourt, Warri and Calabar Ports, Nigerian shippers are forced to pay War Risk Premium on the imports to shipping companies. “The illegal economy in our waters is about $25 billion and a lot of ‘free money’ is going into the pockets of some powerful Nigerians at the expense of the country. As a Governor, Americans under President Obama told me that Nigerian bunkers are the 7th largest producers of oil in Africa. Tha is illegal

its environs belong to the Port of New York because it enabled the port authority to regulate the tenancy to ensure that the traffic flow from the city will not be in conflict with the port. Upon completion, Lekki Port will have a total of three container berths, one dry bulk berth and three liquid berths. It is expected to have 16.5 meters draught for berthing of larger vessels and accommodate 2.7 million TEUs of projected container capacity per annum.

“With the development of these critical infrastructure within the Lekki Port axis, Nigeria’s first deep seaport will become a destination hub for trans-shipment and local cargoes, without recording incidents of traffic congestion that have been bedevilling business activities in the nation’s major seaports, Apapa and TinCan Island Ports for the past seven years,” Tony Anakebe, a maritime analyst, said. Lekki Port, which is a multi-purpose seaport located at the heart of the Lagos Free Trade Zone, will be one of the most modern ports in West Africa. The Nigerian Ports Authority (NPA) awarded 45 years concession to Lekki Port LFTZ Enterprise on a Build, Own, Operate and Transfer (BOOT) basis. “To avert the reoccurrence of what is happening in Apapa today, government in building new port infrastructure, should ensure that between the port entrance and about 4 kilometres away should be only warehouses for storing cargoes and roads for movement of cargo by trucks,” said Kunle Folarin, chairman of Port Consultative Council (PCC). Folarin, who noted that there is no port corridor in Nigeria because there are

amaka Anagor-Ewuzie

bunkering,” he explained. He added that “When one computes all these economic losses on our waters, it will fall within $20 and $25 billion, which if invested in developmental projects, Nigerian economy will change for the better.” The former minister, who attributed the recent signing of the $195 million maritime security contract between the federal government and HSLi Global, an Israeli firm, to huge economic losses on Nigeria’s water, said it is important to ensure that Nigerian maritime domain are protected 24/7. HSLi Global, he said, has started training Nigerian security operators that would mount the waters.

Group under the aegis of the National Association of Government Approved Freight Forwarders (NAGAFF), has expressed fear that the recent signing of the African Continental Free Trade Area (ACFTA) by the federal government will likely open the nation’s economy to further danger of becoming a dump ground for substandard, fake and life endangering products. The group, which says, Nigeria signed the agreement without due consideration to metrology, added that the government failed to ensure that made-in-Nigerian products can compete effectively with imported goods. Metrology is the science of measurement, and it is the component of the National Quality Infrastructure

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(NQI) to ensure accuracy of measurements to the international system of units. The National Metrology Institution (NMI), which is domiciled in Standards Organization of Nigeria (SON), is the custodian of the national primary measurement standards for all fields of measurements namely: mass, volume, length, pressure, temperature, force. Boniface Aniebonam, founder of NAGAFF, said Nigeria needs to build adequate infrastructure for metrology in order to provide the required confidence in made-in-Nigeria products and services, and will be highly competitive amongst the foreign products. According to him, for Nigeria to benefit from AfCFTA, it must ensure NMI is adequately functional and proactive to quality assurance and standards. “NAGAFF will continue @Businessdayng

to advise the government on the need for government to pay greater attention to the informal sector than continuing with uncommon support for the organised private sector with their ‘bogus and unverifiable economic inputs,” he said. While stating that Nigeria Customs are not familiar with matters on quality assurance and standards, Aniebonam said NMI and SON efficiency are of utmost importance to Nigeria gaining from the free trade agreement. He also said Nigeria needs critical infrastructure like steady power supply and human resource development to ensure that AfCFTA does not become an economic suicide for Nigeria. He cited ETLs as example of programme that eventually left Nigeria to serve as a dumping ground for products from other African countries.

Wednesday 24 July 2019

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

What new exchange rate for import duty could do to economy

Industries Limited; Golden Penny Sugar, a subsidiary of Flour Mills of Nigeria (FMN), and BUA Sugar Refinery Limited, complained that the high rate of smuggling of cheap unlicensed sugar into the country affected their revenues in 2018. In addition, consumer pricing that is expected to

rise due to the Nigeria’s reliance on importation of production inputs and finished products. “This will definitely increase the cost of imported goods as the naira value of duties will rise. Also, for manufacturing companies, this will further squeeze their margins due to the inability to pass on the additional cost to the consumers amid squeezing consumer spending,” Ayodeji Ebo, managing director of Afrinvest Securities Limited, said on phone. “The increased tariffs may discourage manufacturers who claim they are already moving to nearby countries with better trade policies. Thus, this may impact trade volumes and the increase in revenue the government desires, may never come,” Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers, said. Although, Ayo Akinwunmi, head of Research, FSDH Merchant Bank, said that the new tariff is a positive development as this will generate more revenue for the government, its downside is making the naira value of imported commodities to go higher.

According to him, the NPA needs to issue permits to registered freight forwarders as contained in the CRFFN Act, section 19 (1) to urgently avert any security breach in view of the volatility of the port axis and most especially unwarranted human traffic. Amadi enumerated long dwelling time of cargo, traffic

gridlock, and non-provision of empty containers holding bay by shipping companies as the various challenges facing the port industry in Nigeria. He requested for a holistic approach to the charges slammed on Nigerian importers arising from shipping companies not having holding bays.

BUNMI BAILEY

he newly adjusted Customs exchange rate for duty payment on imported goods may increase investor uncertainty as regards doing business in Nigeria, encourage smuggling, increase corruption and market prices of goods, analysts say. Recall that earlier last month, the Central Bank of Nigeria (CBN) increased the exchange rate for Customs duty by 6.5 percent to N326/$ from N306/$ with the aim of generating more revenue. By implication, importers and exporters who bring in products into the country through the seaports will now have to pay additional N20 per dollar for cargo clearing at the ports. Also, the introduction of a new exchange rate for Customs duty payment implies a deviation from the customary use of the official rate in clearing imported products, and this adds to the increasing concerns on multiple exchange rate system. According to a recent report by CSL Stockbrokers, a Lagos-based firm, the adjusted rate creates a

L-R: Jean-Aime Nzegengui, technical director, ARTF, Gabon; Daniel Dargent, ambassador of Belgium; Bill Twehway, managing director, National Port Authority of Liberia; Hadiza Bala Usman, managing director, Nigerian Ports Authority (NPA); Chidi Izuwah, director general, Infrastructure Concession Regulatory Commission (ICRC); Fidel Okhuria, managing director, Nigerian Railway Corporation (NRC), and Niyi Alli, director operations, NRC, during the West African Ports and Rail Evolution Conference and Exhibition in Lagos on Monday.

new exchange rate in the economy in addition to the Nigerian Autonomous Foreign Exchange Rate Fixing rate (NAFEX), official rate, parallel market rates, thus increasing the multiple exchange rate saga. “The practice of a multiple exchange rate system in Nigeria will only continue

to increase investor uncertainty and hamper growth of Foreign Direct Investments into the country,” the report stated. “We also believe that increase in the cost of clearing goods at the ports would only further encourage smuggling as well as increase corruption among Customs officials,”

the CSL Stockbrokers report further stated. The high rate of smuggling through the Nigerian borders has had negative impacts on several businesses. For example, earlier this year, major sugar producers or refineries in Nigeria such as Dangote Sugar Refinery Plc, a subsidiary of Dangote

NPA approves integration of CRFFN into authority’s web portal

he Nigerian Ports Authority (NPA) has agreed to integrate the Council for the Regulation of Freight Forwarders in Nigeria (CRFFN) transactional portal into the Authority’s web portal. Hadiza Bala Usman, managing director, who gave this approval while receiving members of the CRFFN gov-

erning board in her office, explained that the move was to create a synergy between the activities of the Authority and the Council. Usman assured the NPA would always support the Council in its quest to have a smooth operation in the Ports. She said the NPA was presently carrying out a

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review of the concession agreement with the terminal operators which is being bank-rolled by the World Bank for a more efficient port operation as well as to put them in shape in line with international best practice. Earlier, Abubakar Tsanni Amadi, chairman of the CRFFN, said the NPA was seeking for a mutual rela-

tionship between both parties with a view to further have an efficient service delivery through seamless port operation. He called for collaboration in addressing the issue of unauthorised access to the ports, especially as it concerns those with no legitimate business in the Port.

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Wednesday 24 July 2019

BUSINESS DAY

BANKING

In Association with

Need for data protection and management in banking sector Stories by HOPE MOSES-ASHIKE

head of the enforcement date for the Nigerian Data Protection Regulation (NDPR), the Chartered Institute of Bankers of Nigeria (CIBN) Centre for Financial Studies last week engaged the bankers on a sensitisation programme, targeted at ensuring implementation of the regulation. The Centre, a wholly owned subsidiary of CIBN is mandated to provide thought leadership and enlightenment on topical issues affecting the banking and finance industry as well as the economy at large. Data management and protection is one of the key issues that should be of great concern to the banking industry. This is all about protecting the right to privacy. The NDPR 2019 is the first comprehensive and robust effort to regulate the data management. The objectives of NDPR are to safeguard the rights of natural persons to data privacy; foster safe conduct for transactions involving the exchange of Personal Data; prevent manipulation of Personal Data; and ensure that Nigerian businesses remain competitive in international trade through the safe-guards afforded by a just, equitable, and legal. One of the reasons banks should protect

their data is to reduce incidence of crime. Fraud poses a strategic and operational threat to digital banking services. According to Uche Olowu, president and chairman of council, CIBN, breaches in data protection guidelines and laws have resulted in reputational damage and a higher risk of illicit activities such as money laundering and identity fraud. Additionally, McAfee, a global computer security software company, reports that 40 percent of people worldwide feel they lack control over their personal data – and rightly so.

Stanbic IBTC unveils campaign to drive financial literacy, retail proposition

n furtherance of its ongoing retail expansion strategy, Stanbic IBTC Holdings PLC, a member of Standard Bank Group, has commenced a nationwide enlightenment and awareness campaign tagged ‘Youth Leadership Series Campus Tour’ under the aegis of its Youth Leadership Series (YLS). The campaign is borne out of the financial institution’s determination to expand its retail value proposition and in appreciation of the pivotal role financial literacy plays in the development and growth of any forward thinking society. The objective of the initiative according to the company is to equip the unbanked and under-banked Nigerians across the country with the requisite knowledge and skills to make informed financial decisions and to educate them on the benefits of financial planning and a savings culture. The leading end-to-end financial services institution stated that the importance of acquiring relevant skills was for them to imbibe and inculcate financial discipline in the public to

“It is my personal belief that we - the banking community must display exemplary ethical conduct in the management of personal information and act as shining beacons to other industries”, said Olowu. Meanwhile, banks are saying that the deadline for the enforcement of the data audit is too short. Olalekan Asikhia, director, CIBN centre for financial studies, opined that before the implementation there should be pilot data audit and that was why the bankers were complaining. “The law in itself is sufficient enough but there must be a pilot, there must be stakeholders involvement for implementation to be easy and for the whole system to be improved upon”, Asikhia said. Adejube Olayinka, director, standard guidelines and framework, National Information Technology Development Agency (NITDA), Federal Ministry of Communications, said the agency would see what could be done, adding that the July deadline was not sacrosanct. He said it is not about apprehending and punishing people, rather it is about noting those who had already started doing something and encouraging them to do it. He also said anyone that already had in place a system that shows some level of compliance, they would not be punished, as understanding can come to bare.

Sterling Bank partners iCreate Africa for skills excellence in S’ East

ensure they are able to take charge of their own financial future in a world that is constantly increasing in its complexity. Yinka Sanni, Chief Executive, Stanbic IBTC Holdings PLC, stated that the importance of arming both the youth and the general public with the rudiments of financial literacy was key to personal and economic growth. “This is a project that is very dear to Stanbic IBTC Group. We clearly recognize the correlation between financial literacy and sound financial decision-making, on one hand, and the strategic role of qualitative education in stimulating socio-economic development, on the other,” Sanni stated. The tour, according to the Stanbic IBTC boss, will touch different states, cities and towns with campuses, malls and other places where people congregate. “Our expert financial coaches would be touring the country to places where we believe financial education is most needed while adopting an interactive and fun learning approach to ensure maximum impact and adoption,” he said.

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He noted that major companies such as Facebook have doused the fire of data breach scandals which put millions of personal records in the hands of criminals. On July 12, 2019, British Airways-Owner IAG was reported facing a record $230 million fine for the theft of data from 500,000 customers from its website last year under tough new data-protection rules policed by the UK’s Information Commissioner’s Office (ICO). “The banking and finance sector is not immune to these threats, particularly given the sensitivity of data this industry warehouses”, Olowu said. For instance, in 2014, JP Morgan Chase one of the largest banks in America in terms of assets reported a data breach which affected 7 million small businesses and 76 million households. Another issue of concern he said is that of consumer consent or rather “Consent Fatigue” where organizations seeking legitimate use of data serve customers with several consent notifications or forms. Customers, without taking the time to fully understand these forms or notifications indicate agreement. He said that by organizing this Session, they aimed to bring to the consciousness of all stakeholders, the importance of data privacy and management via a robust panel discussion, providing measures/best practices to be taken in implementing such standards.

ne of Nigeria commercial bank, Sterling Bank Plc, in partnership with iCreate Africa, organisers of the largest technical and vocational skills competition on the continent, held a skills competition for over 500 youths drawn from the South Eastern states of Abia, Anambra, Ebonyi, Enugu and Imo. The two-day festival which held in Enugu, included competition for honours in vocational and technical skills across categories such as cooking, website design, graphic design, art, leatherworks, garment making, make-up, plumbing, carpentry, tiling, among others. At the end of the competition, the organisers disclosed that winners in each category would represent the South Eastern region at the finals in Lagos where national skills champions would be selected to represent the country at the world skills competition later in the year. Speaking at the opening ceremony, Arinze Okeleke, retail business manager of Sterling Bank, Enugu branch described unemployment as one of the biggest economic challenges currently facing Nigeria, hence the desire and passion of the bank to sponsor youth empowerment programmes that would help to create wealth in the country.

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“In order to demonstrate our commitment to wealth creation, Sterling Bank has, over the years, invested in programmes that uplift startups as well as micro and small businesses which are the key drivers of growth in every economy. In Enugu, for instance, we have trained more than 1,000 youths as a prerequisite for accessing single digit loans from the Central Bank of Nigeria (CBN). Our support for iCreate Africa’s skills festival is part of a deliberate effort to correct the wrong notion that the only way to make it in life is through white collar jobs.” He added that the skills competition/festival is the bank’s way of tackling the increasing wave of unemployment by celebrating and promoting skill sets that include plumbing, tailoring, tiling, automobile engineering, catering, and hairdressing, among others. In his remarks, Bright Jaja, Chief Executive Officer and Founder of iCreate Africa, said the idea behind the project is to change the societal perception about vocational and technical skills. He said if people can struggle to take ‘selfies’ with popular musicians, they should also be willing to take ‘selfies’ with carpenters and other skilled workers who should embrace technology and new ways to add value to their work.

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Wednesday 24 July 2019

BUSINESS DAY

PENSION today

In Association With with contributions from

PenCom fine-tunes guidelines to accommodate diaspora Nigerians under the micro pension scheme

Aisha Dahir-Umar, acting director-general, PenCom

Registration, in the case of self-employed persons; from micro pension plan contributor. Other requirements according to the pension industry regulator include, the following means of identification – National Identity Card, International Passport, Driver’s License or Permanent Voters Card and additional documentation as may be specified from time to time by the Commission. PenCom urged PFAs to sight the original documents of the photocopies provided by the contributor to ensure that the photocopies are authentic. PFAs, were also mandated to ensure that all documents provided are stamped, signed, and dated by authorized PFA personnel. They were also enjoined to obtain one recent passport sized photograph of the applicant/RSA holder, taken against a white background, with the name of the employee written at the back and the passport photograph shall meet the required specifications. For finger-impaired individuals who cannot sign the RSA registration forms, PFAs shall provide the additional documents such as letter of indemnity from the PFA, duly signed by two authorized

‘

A prospective Micro Pension contributor is required to open a RSA by completing a physical or electronic registration form with a Pension Funds Administrator (PFA) of his/her choice, and the contributors may make contributions daily, weekly, monthly or as may be convenient to them

‘

ike every other Nigerian in the informal sector bracket, capturing the diaspora people is also important in ensuring that the contributory pension scheme, which guarantees regular income in retirement, achieves its overall success. To enable this, the industry regulator, the National Pension Commission (PenCom) has fine tuned the guidelines for registration of informal sector participants as well as diaspora citizens. The Commission in a recently released revised guideline for retirement saving account registration template, notes that Pension Fund Administrators (PFAs) shall obtain some documentations for the Retirement Saving Account (RSA) registration of Micro Pension Plan (MPP) and the cross border contributors. For cross border (diaspora) contributors, PFAs were mandated to obtain copy of a valid identification and such identification may be either be the National Identity, the National Driver’s License, the Permanent Voters Card (PVC), or the data page of the International Passport. Other document are, evidence of nationality, e.g. copy of data page of the International Passport (for non-Nigerians), copy of Staff Identity (where available) and copy of evidence of employment in host country. PFAs are to also obtain copy of evidence of remuneration (i.e. pay advice), where applicable; copy of evidence of work permit in host country; letter of undertaking to bear exchange rate fluctuations and other additional documentation as may be specified by the Commission from time to time. “PFAs shall accept notarized copies of the documents or copies attested by Nigerian Embassies abroad to ensure that the copies are authentic. “PFAs shall ensure that an authorized personnel of the PFA stamps, signs and dates the photocopies of all original documents sighted as required. “PFAs shall obtain one (1) recent passport sized photograph of the applicant/ RSA holder, taken against a white background, with the name of the employee written at the back. The passport photograph shall meet the required specifications,” PenCom stated. For participant living in Nigeria, PenCom mandates PFAs to obtain evidence of membership in a registered association or trade union or Certificate of Business

signatories, confirming that the individual is finger impaired. Photograph of the individual showing the missing finger(s) or hand(s), where the individual is an amputee and other additional documents as may be required by the Commission from time to time to support the fingerimpaired registration status. For finger-impaired individuals who cannot sign the RSA Registration Forms, PFAs were urged to shall provide additional documents such as letter of indemnity from the PFA, duly signed by two authorized signatories, confirming that the individual is finger impaired. Photograph of the individual showing the missing finger(s) or hand(s), where the individual is an amputee and other additional documents as may be required by the Commission from time to time to support the finger-impaired registration status. Aisha Dahir-Umar, acting directorgeneral, PenCom, had note that the micro pension product is flexible with respect to contribution amount and the channel of remittance of contributions to the respective pension accounts, stressing that access to accumulated contributions is also flexible, seamless and facilitated by technology through varied payment system platforms. She noted that PenCom had extensively engaged all relevant stakeholders and obtained their inputs before the product was developed to suit their requirements. According to her, a prospective Micro Pension contributor is required to open a RSA by completing a physical or electronic registration form with a Pension Funds Administrator (PFA) of his/her choice, and the contributors may make contributions daily, weekly, monthly or as may be convenient to them. She stated that every contribution shall be split into two, comprising 40 per cent for contingent withdrawal and 60 per cent for retirement benefits, adding that the contributor may, based on his/her needs, periodically withdraw the total or part of the balance of the contingent portion of his/her RSA, including all accrued investment income thereto. The contributor, she said may also choose to convert the contingent portion of the contributions to the retirement benefits portion and the remaining balance in the RSA shall be available to the contributor upon retirement or attaining the age of 50 years.

RC634453

Diamond Pension Fund Custodian Limited with contributions from

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

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

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Wednesday 24 July 2019

BUSINESS DAY

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Fidelity guaranty cover for pension opens new revenue opportunity for insurers Stories by Modestus Anaesoronye

nsurance companies in the country now have a new opportunity to increase their revenues through selling of Fidelity Guarantee policy to pension fund operators. This is following a new directive by the National Pension Commission (PenCom), mandating all Pension Fund Administrators (PFAs) and Pension Fund Custodians (PFCs) to procure a fidelity insurance policy to cover a minimum of two per cent of shareholders’ fund as annual insurance cover for their employees. Fidelity Insurance policy is an agreement whereby, for a designated sum of money, one party agrees to guarantee the loyalty and honesty of an agent, officer, or employee of an employer by promising to compensate the employer for losses incurred as a result of the disloyalty or dishonesty of such individuals. PenCom in a recent circular, referenced, PENCOM/INSP/CIR/SURV/19/167, entitled: Implementation of the requirement for the Provision of Fidelity Insurance Cover for Employees of PFAs/PFCs, dated, June 18, 2018, signed by the head, Surveillance Department, PenCom, Ehimeme Ohioma and sent to all pension fund administrators and custodians noted that Section 69 (F) of the Pension Reform Act PRA 2014, mandates PFAs and PFCs to provide annual fidelity insurance cover for all staff to the full value of the pension funds and assets managed or held by them or as may be determined by the commission. According to the Commission, the fidelity insurance cover will protect the

L-R: Abdullahi Muraina, national treasurer, Nigerian Institute of Management (Chartered) NIM; Pat. Anabor, deputy president, NIM; Akin Ogunbiyi, chairman, Mutual Benefits Assurance Plc; Sally Adukwu-Bolujoko, past president, NIM; Tony Fadaka, registrar/CE, NIM during the 2019 Distinguished Management Lecture with the theme “Nigeria’s Progress Principles And The New Metrics” delivered by Ogunbiyi in Lagos.

pension funds and assets from risks associated with actions or inactions of employees of PFAs and PFCs like dishonesty; negligence; fraud; forgeries and other fraudulent acts that may result in fraudulent losses. PenCom however stated that it is aware that based on the current value of the assets under management and custody in the industry, providing fidelity insurance cover

up to the full value of pension assets would have astronomical costs implications to the pension operators. The Commission also said it takes cognizance of the subsisting guarantees provided by the parent companies of the PFCs for the full value of pension funds and assets held in custody on behalf of the Retirement Saving Account (RSA) holders or their beneficiaries.

“In view of the foregoing, the commission has leveraged on the discretionary powers granted it by Section 69 (F) of the PRA 2014 with regards to the determination of an appropriate level of cover and has therefore, made the fidelity insurance cover to be a percentage of the shareholders’ fund of PFAs and PFCs. The circular has since become effective from the date of issuance.

STACO Insurance pays N1.6bn in 2018

‘The Making of Me – My Odyssey in Business’ - Fajemirokun

ladele Fajemirokun recently unveiled his autobiography titled “The Making of Me – My Odyssey in Business”. The event held in Lagos was graced by dignitaries and eminent personalities from the public and private sectors, the clergy, traditional leadership, family and friends from all walks of life who travelled from far and wide to honour him. The book is a personal account of Fajemirokun’s grass to grace story; which provided highlights on his humble beginnings and family background and his journey through life in business and his various accomplishments till date. He shed light on how he strove au-

nderwriting firm, STACO Insurance Plc during the 2018 financial year paid out claims in excess of N1.6 billion, stating that insurance as a strategic mechanism for business sustenance and asset protection can only become a reality and concrete when genuine Claims are made and paid. STACO Insurance Plc with specialization in general Insurance and special risks says it will continue to sustain the momentum of Claims payment to ensure that its customers are happy at all times. The claims payments were made across all classes of general Insurance business with Fire Insurance gulping the largest chunk of over N528.97 million claims. This is closely followed by Motor Insurance claim of over N392.91 million while Oil and Gas got over N348.35 million as claim payment amongst other classes of business. According to the Company Management the focal corporate strategy of the company in 2019 is to meet the needs of the insuring public as part of its value proposition and offering of beneficial Insurance products to fill in the already identified gaps with commitment to settlement of claims promptly. For the first half of the current year, the company has paid over N628 million claims

as to numerous customers. Bayo Fakorede, acting managing director/CEO said “we are poised and prepared to reassure all customers that prompt attention is given to all genuine claims. He added that we are very much in business and have built capacity to continually meet our customers’ obligations in terms of offering quality products and prompt claims settlement. Fakorede equally assured all stakeholders that STACO will continue to remain a reputable brand noted for exceptional and efficient customer service delivery and professional underwriting capacity. To underscore this, Fakorede stated that Management re-affirms its commitment to initiate a system whereby the brand remains a paramount player in the industry. The need to have more personalized products has necessitated the re-introduction of three customized Insurance products targeted at persons from all works of life. The products are STACO Travel Insurance which covers any traveler both locally and internationally, STACO Home Owners Insurance Policy which is for every tenant and home owners and STACO Personal Protection Plan with annual premium as low as N200 shows that the policy is targeted at all and sundry. www.businessday.ng

Dele Fajemirokun

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daciously to create opportunities and thrived against all odds to succeed. The launch was a remarkable experience with a display of splendour and magnificence, indicative of his success and laudable attainments in life. Personalities who took turns on the podium, including Alani Akinrinade, the chairman of the occasion), Williams and Pat Utomi, shared their experiences and relationships of many years with Dele Fajemirokun, the author, who has been a great inspiration on entrepreneurship and leadership. The delectable veteran actress, Joke Silva, read excerpts from the book at the occasion. Dignitaries in attendance include; Babatunde Fashola, former minister of Power, Works and Housing; Niyi Adebayo, former governor of Ondo State; Ernest Ebi, chairman of Fidelity Bank Plc; AigbojeAig-Imoukhuede, chairman, Coronation Capital Limited),Dele Fajemirokun, bishop; Francis Fajemirokun, Venerable; Tunde Bakare of the Latter Rain Assembly, Pius Akinyelure (political chieftain), and John Momoh, chairman & executive director of Channels Television among many others. Royal fathers who graced the occasion include AdesimboKiladejo, the paramount ruler of Ondo Kingdom; Hezekiah Owolola, the Adimula of Ifewara; Adeleke Basibo, the Alaperu of Iperu); Adewale Osiberu, the Elepe of Epe; and AbiolaDosunmu, the erelu.

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Wednesday 24 July 2019

BUSINESS DAY

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Royal Exchange General on the way to meeting new minimum capital requirement ….as InsuResilience Investment brings in N3.6b additional capital Stories by Modestus Anaesoronye

igeria’s first insurer, Royal Exchange General Insurance (REGIC), with history dating back over a century, is on the way to meeting the new minimum capital requirement recently set for insurance companies in Nigeria by the National Insurance Commission (NAICOM). The optimism is coming on the heels of an additional N3.6 billion capital newly injected into the general business underwriter, following successful acquisition of a 39.25 percent equity stake by InsuResilience Investment Fund (IIF), a firm established by the German Development Bank (KfW) and managed by Swiss based Impact Investment Manager, BlueOrchard Finance Investment Limited. With excess of N5 billion in its kitty ahead this investment, REGIC is a few inches away to meeting the N10 billion capital requirement for companies in its category. The National Insurance Commission (NAICOM) had in a circular issued on Monday May 20, 2019 announced increase in the

Benjamin Agili

paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion, to N20 billion. According to the Commission, the minimum paidup share capital requirement shall take effect from the commencement date of this circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020. Speaking on the importance of this strategic investment during a press conference in Lagos, Benjamin Agili, managing director,

Royal Exchange General Insurance said the acquisition, which results in a N3.6billion capital injection into the Royal Exchange General Insurance (REGIC) is in line with the National Insurance Commission’s (NAICOM) directive for insurance companies to increase their share capital in line with the new regulatory requirements recently introduced. Agili also said that “With this investment, REGIC will be able to achieve its key objective of reaching out to over 1million farmers within the next five (5) years, offering the best-of-bred agric-insurance services to enable them increase their productivity, make Nigeria more self-reliant in food production, which impacts the economy with growth of our GDP and the agro-allied economy”. Agili further added “Other strategic impacts this investment will bring to the company will be in the areas of Information Technology, Market Expansion, as well as helping the company meet its financial inclusion targets by enabling REGIC develop new products, as well as create alternative channels of distribution to reach our various clientele, especially those who are financially excluded as a result of ac-

5% of global premium ceded to reinsurers in 2018 - experts

wiss Re Institute has estimated that primary insurers ceded about $260 billion, or 5 percent of direct premiums written to the global reinsurance markets in 2018. More than three quarters of this total ($200 billion) were non-life premiums, which had a higher cession rate of around 8.4 percent. In contrast, only around 2 percent of life premiums were ceded to reinsurers, representing about $60 billion. Swiss Re attributed the difference to the dominance of savings premiums in life, which are typically not reinsured. In non-life, cession rates

among emerging regions – particularly emerging Asia (excluding China), the Middle East, Africa and Latin America – are higher than overall, indicating that these countries are of higher importance in the reinsurance sector than in the primary industry. The U.S and Canada continue to dominate the markets in reinsurance, representing a third of the global premiums ceded in non-life and 53 percent in life, although cession rates were found to vary considerably by line of business. For example, cession rates in motor are very low at around 4 percent, but much high in property (16 percent), liability (14 percent), and special lines such www.businessday.ng

as aviation, marine or engineering (over 30 percnt). Swiss Re believes that the reinsurance sector is better positioned with respect to the some of the major vulnerabilities facing primary insurers. Due to its relatively low involvement in motor, the reinsurance sector should experience fairly little impact from a reduction in motor premiums which may result from innovations in driver-assistance systems (ADAS) and a transition to self-driving cars. Similarly, on the life side reinsurers principally cover biometric risk, so are less likely to be affected by the downturn in traditional savings business.

cessibility, availability and knowledge of insurance and how insurance can improve their well-being.” Royal Exchange Plc, Nigeria’s foremost finance and insurance services group has announced the 39.25 percent acquisition in its general insurance subsidiary, Royal Exchange General Insurance Company (REGIC) by the InsuResilience Invest-

ment Fund (IIF), , a firm established by the German Development Bank (KfW) and managed by Swiss based Impact Investment Manager, BlueOrchard Finance Investment Limited (“BlueOrchard”). As one of the leading nonlife insurance companies operating in the insurance market in the country and having a strong presence in

the agric-insurance space through its partnerships with The Nigeria IncentiveBased Risk-Sharing System for Agricultural Lending (NIRSAL) and some State governments, this investment by the KfW is expected to have a huge impact on the company’s presence in the agric-insurance space to enable REGIC increase its presence even further.

L-R: Laide Osijo, chairman, Board of Fellows, Nigerian Council of Registered Insurance Brokers (NCRIB); Bola Onigbogi, deputy president, NCRIB; Gboyega Oyetola, Osun State governor; and Shola Tinubu, president, NCRIB, during a courtesy visit to Osun State Governor’s Office prior to his induction ceremony in Osogbo.

Osun pledges to priorities risk management through insurance

he Osun State government has pledged to priorities risks management practice through insurance in its policy decisions. The Governor of Osun State, Gboyega Oyetola who made the pledge assured that the enormous material and human assets of the state would be duly preserved and enhanced through effective management of risks which falls within the confines of the insurance industry. He also has pledged his support for the development of insurance profession and assured Insurance Brokers of patronage by the state. Speaking during his c o n f e r m e n t a s f e l l ow

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of the Nigerian Council of Registered Insurance Brokers(NCRIB) in Osogbo, the Governor noted that the importance of Insurance to the development of any nation cannot be undermined, affirming that Insurance business ensures continuity of other businesses, especially, after any form of calamity. According to him, the award of Fellowship by the Council would further spur him to work assiduously and would not disappoint the industry as a professional in politics. He noted that the recent judgment of the Supreme Court that validated his election as Osun State Governor has finally put to rest all disturbances against @Businessdayng

his determination to serve the people of Osun State diligently. Speaking ealier at the e v e n t , S h o l a Ti n u b u , president and chairman of council of the NCRIB enjoined the Governor to introduce Insurance education in all Secondary Schools across the state to further entrench the interest of insurance as a course in the minds of the teeming youths who are leaders of tomorrow. Tinubu commended the Governor for his diligent commitment to the Council and particularly, for personally writing the dissertation that partly qualified him for the award in consonance with the Council’s fellowship statutory requirement.

Wednesday 24 July 2019

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

Spotlight on White-Collar Crime: What I’ve Learned About White-Collar Crime MARY JO WHITE

A former top prosecutor shares her insights on what motivates perpetrators, how to prevent illicit conduct and what corporate compliance efforts get wrong. hen I began practicing law, in the 1970s, white-collar crime didn’t get much attention outside my old office, the U.S. Attorney’s Office for the Southern District of New York. Prosecutors cared much more about homicides, drug kingpins and the mob. Financial crimes weren’t considered very serious or interesting by most prosecutors. That’s changed for a variety of reasons. Over the past 30 years, we’ve had a large body of white-collar prosecutions, and they’ve shown us that deterrence really works. For instance, people on Wall Street pay a lot of attention to how prosecutors treat insidertrading cases. They say, “Gee, somebody just like me went to jail for a significant period of time.” There’s no bigger deterrent than a jail sentence. Most whitecollar defendants have nice lives, and they value their freedom and liberty. Prosecuting these crimes and getting judges to send whitecollar criminals to jail really does alter people’s conduct. As a prosecutor, I prioritized white-collar crime and helped make people more aware of the costs of crossing the line. I’ve also done a lot of defense work, and that’s given me a window into what motivates

people accused of white-collar crimes. As a prosecutor, you tend to stay at arm’s length from alleged perpetrators, but when you’re defending them, you wind up exploring their motivations in a very intimate way. Why do they do it? Part of it is that white-collar crime doesn’t seem to inspire the deep feelings of guilt caused by, say, a crime such as assault, where you’re doing tangible, significant harm to someone. Some of these crimes, like tax fraud, may be perceived as “victimless,” even though that’s not really true. Part of the motivation is greed, of course, but there’s more to it. The piece that the public underestimates is ego. Many of the people who commit these crimes have been successful, and they don’t want to fail. Very often the market has turned on them, but they need other people to still see them as successful. There’s often a financial motive, but in a highly charged business where there are temptations, you have to ac-

count for human nature and the need for status and continued success, too. When I do an investigation for a company that’s experienced an ethical or legal lapse — I’m doing a lot of that work right now — I’m not just trying to uncover what happened. A standard part of the process is to make recommendations about how to prevent future wrongdoing. Compliance programs are important, but what really matters is the culture and the tone that a leader sets for the organization — that’s often a more effective way to increase the odds that lapses won’t happen again. In the aftermath of a scandal, some leaders will claim they didn’t know what was going on. Sometimes that’s true. But when it is, you have to ask if the leader built a communication system that’s designed to bring bad news up to his or her level, or whether the system is designed to insulate leadership. Every company has hotlines for whistleblowers; only some of them directly reach

the board’s audit committee or the CEO’s office. In those systems, in which the most-senior leaders are actively seeking out complaints and allegations, the compliance culture is much stronger. In contrast, some hotlines seem designed to give leaders plausible deniability: We have a system for reporting complaints, and there haven’t been many. Leaders have to ask, Why is that? Are employees reluctant to come forward for fear of retaliation? The biggest mistake companies make in trying to prevent crime or misconduct is to ratchet up compliance simply by throwing more resources at it. They believe every extra dollar has the same incremental effect. That’s incorrect. Particularly when you’re dealing with potential violations of the Foreign Corrupt Practices Act (which targets bribery) or the Bank Secrecy Act (which focuses on money laundering), you need to be surgical and intelligent about where the biggest risks are. This is especially true

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in global organizations — very often problems are popping up far from headquarters, in overseas subsidiaries or with joint venture partners. Much of prevention really comes down to culture. If you’re a new leader in an organization, my advice is to let people get to know you — and your values. Let them know how serious you are about doing the right thing. Make it clear that if they see someone do something wrong, they must report it — and that by doing so, they’re supporting all the people in the organization. When someone strays, it diminishes the entire company, and employees can’t let that happen. That’s the message leaders need to deliver — and it’s how they must act, too. One vital marker of an ethical culture is whether there really is a zero-tolerance policy for wrongdoing. Many companies claim to have one, but when high producers or senior people break the rules, leaders may go easy on them, either for business reasons or out of loyalty. That undermines everything. You can’t rely just on compliance and audits; you have to be willing to punish people who cross the line. To build an ethical culture, you have no choice but to follow through on your no-tolerance promise. Don’t just talk the talk; walk the talk.

•Mary Jo White, currently the senior chair of the law firm Debevoise & Plimpton, is the former chair of the U.S. Securities and Exchange Commission and the former U.S. attorney for the Southern District of New York.

Wednesday 24 July 2019

Harvard Business Review

BUSINESS DAY

MANAGEMENTDIGEST

The 4 things resilient teams do riety of different situations, emphasizing the strengths and advantages of diverse teams, teaching them to leverage their diverse expertise to generate novel solutions, repeatedly and passionately discussing the culture of mutual trust and respect within the team, emphasizing inclusivity and speaking and acting appreciatively, and immediately and publicly reprimanding any disrespectful comments likely to deteriorate the team’s shared feeling of safety.

BRADLEY KIRKMAN, ADAM C. STOVERINK, SAL MISTRY AND BENSON ROSEN

R MONEY

esilience is often identified as one of the factors that helps individuals get ahead. But few of us work entirely alone, and how our teams persevere matters just as much as how individually resilient we are. But how do teams build resilience? We surveyed almost 2,000 NCAA coaches to get their perspective on how they build resilient teams and worked with hundreds of team leaders and members in a wide variety of industries to find out how teams become more resilient, and why it matters. We discovered that resilient teams — different from resilient people — have four things in common: 1. They believe they can effectively complete tasks together. 2. They share a common mental model of teamwork. 3. They are able to improvise. 4. They trust one another and feel safe. Team leaders and managers can increase their teams’ resilience by working to develop these four attributes. In our research we identified

— DURING AN ADVERSE EVENT: Leaders should remind their teams of their resilience. They should also provide teams with as much relevant information as possible, help them set a direction, coach members and boost their confidence as they move forward with a strategy, and reframe challenges as opportunities to learn and reflect.

three key moments to do this: — BEFORE ADVERSITY STRIKES: Leaders should build team confidence, clarify how team members’ roles fit together, strengthen improvisation ability and develop a culture of safety. This can be done

through activities such as establishing clear goals and processes, empowering teams with hypothetical training exercises and opportunities to master difficult challenges, training and cross-training, providing a general framework for crisis response that can be applied to a va-

— AFTER AN ADVERSE EVENT: Leaders should provide a forum for careful reflection and debriefing. These after-action reviews should focus on a balance of successes and failures. Leaders should encourage their team members to speak up and raise any relevant concerns they have about the adversity. They should also recognize and show appreciation

for those who do, and set boundaries by coordinating activities and relationships between their teams and other parts of their organization. Leaders will also need to be good buffers against outside pressure and be skilled at acquiring resources, so their teams are adequately prepared for future adversity. Resilient teams are just as important to businesses as resilient individuals, but while individual resilience is built independently, team resilience must be carefully cultivated by leadership. Our work with many team leaders and members demonstrates that the actions we describe here should help make team resilience a widespread team attribute. It’s hard work, but the payoff is organizations and teams that are built to last.

•Bradley Kirkman is a professor of leadership in the Poole College of Management at North Carolina State University. Adam C. Stoverink is an assistant professor of management in the Walton College of Business at the University of Arkansas. Sal Mistry is an assistant professor in the Lerner College of Business at the University of Delaware. Benson Rosen is professor emeritus at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.

Why employees don’t share knowledge with each other MARYLÈNE GAGNÉ, AMY WEI TIAN, CHRISTINE SOO, BO ZHANG, KHEE SENG BENJAMIN HO AND KATRINA HOSSZU CONNECTING ompanies want employees to share what they know. After all, research has found that this leads to greater creativity, more innovation and better performance, for individuals, teams and organizations. Yet many employees withhold what they know: They may play dumb, pretend not to know something, promise to share something but never do it or tell people they can’t share when in fact they could.

What leads to this behavior? Our research found that the way jobs are designed can affect whether employees share or hide knowledge from their colleagues. We conducted two studies, collecting data from samples of 394 knowledge workers in various organizations in Australia and 195 knowledge workers at a publishing company in China. Our analyses yielded three key findings: First, people share and hide knowledge for different reasons. Second, they are more motivated to share when they work in a cognitively demanding job and have a lot of autonomy. Third, they are more likely to hide knowledge if they think colleagues rely on them too much. When we analyzed the data on what motivates participants to

share or hide knowledge, we categorized their responses as being either “autonomous motivation” (doing something because it is meaningful or enjoyable) or “controlled motivation” (doing something to get a reward or avoid a punishment). Our results showed that knowledge sharing is more likely when employees are autonomously motivated (“It’s important to share what I know with colleagues”). In contrast, people are more likely to hide their knowledge www.businessday.ng

when their motivation is driven by external pressures (“I don’t want to be criticized”). In the Chinese sample, controlled motivation was associated with increased frequency of knowledge sharing but not with greater usefulness of what was shared. Because cognitively demanding work can be more stimulating, we expected that people would both enjoy sharing information more and see a greater need to share.

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Similarly, because having more autonomy in one’s work leads to finding it more meaningful, we’d expect to see the same propensity for sharing among people whose jobs involved high cognitive demands and autonomy. Our results supported these ideas.

Effective knowledge sharing is essential for all organizations, yet many struggle to get employees on board. Our results suggest that if managers want to encourage more sharing, they need to design work so that people want to discuss what they know.

We also asked respondents if their colleagues depended on them to get their work done. To our surprise, when people perceived that others depended on them, they felt pressured into sharing knowledge, and this in turn promoted knowledge hiding. This could be because frequent requests from colleagues created more demands on their time. People often chose to prioritize their own tasks over sharing knowledge.

• Amy Wei Tian is a senior lecturer at Curtin University. Christine Soo is a lecturer in strategic human resource management at the University of Western Australia Business School. Bo Zhang is an associate professor in human resources management at the school of economics and management, Beijing University of Chemical Technology. Khee Seng Benjamin Ho is an organizational development and personnel psychologist, and management consultant, at Great Place to Work in Singapore. Katrina Hosszu is a research officer at the Future of Work Institute at Curtin University.

As with all research, our study has limitations. First, we did not consider the nature of the knowledge shared by the participants. One could argue that if employees enjoy sharing their knowledge, this might result in their sharing more tacit knowledge (insider know-how) than explicit knowledge (clear-cut textbook information). Second, our data was limited to self-reports from employees. It would be good if future research could gather additional data, such as reports from colleagues on what is shared with them, how useful it is, when it is refused and why. @Businessdayng

Wednesday 24 July 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Renault to assemble affordable cars at Coscharis $50m plant … begining with Logan, Duster, KWID MIKE OCHONMA Transport Editor

enaultautomakersofFrance has returned back to Nigeria to commence local assembly of select models of costeffective vehicles in Nigeria after striking a deal with Coscharis MotorstouseitsfacilitylocatedatAwoyaya, Epe area of Lagos. The assembly plant built in 2014 with an investment in equipments and infrastructure valued at almost $50million Cosmas Maduka, president and chief executive of Coscharis Motors Limited said at the opening ceremony told BusinessDay that Coscharis as group has always been none for taking any product from a negative to positive position in the market and promised to replicate that reputation with the returnee Renault brand under its franchise. According to Maduka, ‘’this partnership is to showcase another initiative from our great organization through one of our subsidiaries, Coscharis Motors, to further create value as a key player in the automobile industry in Nigeria. We are glad to celebrate the confidence the renowned brand, Renault reposed in us to represent them in Nigeria’’. This milestone marks another step in the evolution of our organization towards remaining timeless in its relevance’’. Reacting on the new marriage of convenience between the Reanult France and Coscharis Motors, Fabrice Cambolive, chairman of Renault Group said he is excited to deal with a local partner with good pedigree in the automotive business. Taking a look at the brand’s performance, Cambolive said, ‘’The Renault brand is number one in Africa. In 2018, we reached a market share of 18% and I am proud to announce that in the first half of 2019 we have increased our share to 19.3 percent’’. The Renauly chief anchored the brand’s global leadership position is

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Cosmas Maduka (7th l), president/CEO,Coscharis Motors in a handshake with Fabrice Cambolive, chairman, Renault Group, at the event.

based on three levers. Among other things, he stated that, Renault will offer the Nigerian clients a unique, original range that is perfectly adapted to the conditions of use of the country. Renault has an offer that meets the expectations of the new African middle class in terms of attractivity, durability and equipment such as connectivity. Secondly is the automaker’s industrial basis especially when the brand has a strong presence in North- Africa with a production figure of over 500,000 vehicles in 3 plants and with an export capacity to the whole continent. Thirdly, Renauly has the commercial strength through importers who manage a strong sales network responding to the highest global standards of Groupe Renault in terms of customer satisfaction. Bouyed with the brand’s market exploits across the globe, the Reanult boss said, ‘’Not only do we want to

confirm this leadership, we also intend to increase this position by expanding our presence in sub-Saharan Africa’’. ‘’With a population of over 200 million, Nigeria is a strategic African country where Groupe Renault will extend its footprint. The Coscharis Group is a recognized player in car assembly and distribution. Thanks to their expertise and our products adapted to the local needs, we will be able to answer immediately to the customers’ demand in Nigeria’’. He stated. Cambolive expressed delight that, the Nigerian authorities have put in place specific regulations to encourage localization and local production of vehicles, noting that, this is the starting point of Renault’s decision to strike a deal with Coscharis Motors to assemble the brand in the country. This partnership aims to establish a strong position for the Renault brand and its products with a range of cars produced locally with Logan

and Duster, and cars imported from Brazil with Kwid and Oroch. He recalled that, Renault Logan for instance, went famous years ago expending its sales in Europe, Russia, and Brazil and offering our customers a unique combination of comfort, space and cost of maintenance. Renault Duster is our SUV blockbuster. We are selling more than 300,000 Duster per year. Our clients all over the world recognize its excellent off road capacities, its connectivity and re-sale value. There are plands to commence production of the Logan and Duster models next October. ‘’This whole range of attractive, robust and affordable cars will be distributed by Coscharis through a dedicated network in new showrooms which will be inaugurated soon. As you can see, Groupe Renault is serious about Africa, serious about Nigeria, serious about its partnership with Coscharis’’. Cambolive concluded.

Toyota leads training session for NAJA Workshop

oyota Nigeria Limited will be presenting a technical training session this week Friday at the 2019 Nigeria Auto Journalists Asociation Training/Capacity Building Workshop at the Golden Tulip Hotel, along Airport Road in Lagos. Among others expected to make presentation during the one day event which will have Aliyu Jelani, director-general, National Automotive Design & Development Council (NADDC) and Boboye Oyeyemi, Corp Marshal of the Federal Roads Safety Corps (FRSC) as special guests are Oscar Odiboh, an academic doctor with the Convenant University, Ota, Ogun State and Adenusi Patrick, executive director of Safety Beyond borders. Cornerstone Insurance is also providing more insight on Insurance matters as it relates to the automotive industry. While Oscar Odiboh will be beaming searchlight on ‘’Zero Patronage, Zero Tariff and the Redefi-

nition of Patriotism by Nigeria’s Automobile Industry’’, Adenusi Patrick on his part will be taking a critical look at ‘’Road User Attitude- Cost and Effect’’. The annual training workshop which is designed to boost human capacity for journalists reporting the automotive sector in the country is the fourth edition in the series. Apart from Toyota Nigeria Limited, CFAO, Weststar Associates, Mercedes Benz, Stallion Motors, www.businessday.ng

Mandilas, Pirelli and Cornestone Insurance. Chairman of Nigeria Auto Journalists Association (NAJA), Mike Ochonma said the training workshop which is in its fourth edition is aiming at refreshing the knowledge and competency of automotive journalists while on the job. The NAJA training workshop is an annual training programme organised to refresh the minds of practicing auto journalists on the

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trend of auto journalism worldwide. Members of the association are motoring journalists that cut across the newspapers, television and online media organisations including bloggers from across the country. “Journalism is wide and we must open ourselves to consistent training and retraining. It is important that journalists writing about the automotive sector are well informed; they must be well educated and empowered to write effectively’’. The NAJA Chairman said. On her part, Julie Chi-Nwaoha, chairperson of this year’s event, there is need for consistent training and retraining because of its benefit to the motoring journalists that are reporting the beat. She maintained that, the automotive industry is one fundamental industry in Nigeria that one cannot ignored because of the huge contributions to the nation’s economy. @Businessdayng

FRSC issues traffic advisory on Berger-Ogun River repair work

his motoring public has been advised that in view of the ongoing road rehabilitation work on the Lagos-Ibadan Expressway, the construction company, Julius Berger Nigeria plc has notified the Federal Roads Safety Corps (FRSC), Ogun State Command of extension of rehabilitation work on the Expressway from around Berger to Kara bridge (otherwise known as Ogun river bridge, around the Kara cattle market ) on the LagosIbadan section of the Expressway, covering 1.4 kilometers , commencing from next week Saturday. In a statement signed by Florence Okpe, a route commander and corp public education officer, Ogun state command, the rehabilitation work which would initially affect 600 meters of the corridor would cause the temporary closure of the inward Lagos traffic. This is to enable the construction company effect the rehabilitation of the road and temporary diversion of traffic that would transfer the Lagos inbound traffic to the same carriageway conveying traffic outward Lagos, there by making both the traffic inward and outward Lagos accommodated on the same section of the Expressway. Accordingly, motorists are to note this occurence and plan their trips by allowing more time to their traveling time, in view of the construction work that would narrow the carriage way which may impair motorisation. The general public, especially motorists are advised to use alternative Corridors like the Epe/ Ajah-Ijebu-Ode ; Lagos-Ota-ItoriAbeokuta, and Ikorodu-Sagamu as alternative routes to access Lagos. To this end, Clement Oladele, the Ogun state sector commander, has accordingly advised motorists to please bear with the travel inconveniences during this rehabilitation period of the aforementioned sections of the Expressway. Motorists are also enjoined to co-operate with the FRSC patrol teams and sister traffic and emergency agencies that will be strategically deployed to control the diverted traffic, around the rehabilitation sections. In addition to advising otorists to increase the time of their travelling period when using this corridor during this period of the rehabilitation, they are further reminded to drive within the maximum speed limit of 50km per hour, prescribed by the National Road Traffic Regulations, 2012, as the maximum speed at construction zones. The motoring public are also enjoined to observe lane discipline and avoid driving against traffic, as violators risk impoundment of their erring vehicles and liable to payment of fifty thousand (N50,000). Motorists observing traffic emergencies can contact the FRSC toll free number 122.

Wednesday 24 July 2019

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Toyota’s Sub-4 metre SUV to challenge Suzuki Jimny

Lagos-Badagry road infractions persist despite govt vacate order MIKE OCHONMA Transport Editor

ne week after the vacate order issued by the Lagos State government to illegal occupiers, traders and transport unions operating along the Lagos-Badagry road to pave for the commencement of the abandoned road project along the corridor, BusinessDay checks along the corridor reveals that, the directive is yet to be complied with by those concerned. As at the time of filing this report, our correspondent who drives through the axis everyday can authoritatively report that, there are no signs that, those affected are ready to leave the corridor, suggesting that, maximum compliance can only be achieved with the drastic use of force.

Only last week, Olufemi Salaam the Permanent Secretary, Ministry of Transportation had during a press conference on the planned removal of shanties, refuse, vegetal nuisance and enforcement of traffic laws on the Lagos-Badagry road which had for many years become travellers nightmare. A motorist who spoke to BusinessDay identified some criteria flashpoints on the corridor such the congested Alaba-Rago where there are all manner of trading activities as requiring very urgent attention. Interestingly, the dreaded Alaba-Rago market is overlooking the Lagos State University, Ojo littered with mountaineous refuse dumps that constitutes a nuisance with threatening health consequences for the University community. According to the permanent secretary, “It is disheartening to

say that the state of the road is that of total lawlessness through the activities of traders who have converted the road into trading centres. He lamented the Illegal activities of oil barons and gangs, especially at Eric Moore using the corridor as their base; indiscriminate dumping of refuse on the BRT corridors; traffic bottleneck due to activities of some transport unions domiciled on these corridors and total breakdown of the traffic laws of the state. “Thus, pursuant to the Executive Order, the public is hereby intimated of the plans of the State Government to clean up roads and recover the Rights of Way in these areas. Of equal importance is the environmental regeneration of the entire stretch of the road which has been taken over by shanties, refuse and vegetal nuisances,” he said.

oyota is readying an all-new sub-four-metre SUV that will see its world premier in November this year. It will be built by Toyota-owned Daihatsu, though the parent will have its own version of the car. In some foreign markets like India, the new compact SUV is expected to be a replacement to the popular Toyota Rush that is sold in multiple markets abroad such as Nigeria and will be a production version of the Daihatsu DN-Trec concept shown back in 2017. The production-spec compact SUV will carry over the concept’s overall length of 3.98m, it slots into the same size-bracket as the Tata Nexon, Mahindra XUV300 and Hyundai Venue and the rugged styling including the LED headlamps and LED fog lamps and black roof, along with black cladding on both bumpers and the sides. Meanwhile, there are talks that this new SUV could be the “new global” Toyota Rush and will be sold in more markets than the outgoing model. This new compact SUV will be based

on a version of Toyota’s TNGA platform that is called the Daihatsu New Global Architecture (DNGA). Interestingly, the new Toyota compact SUV will be powered by a 1.0-litre three cylinder petrol engine and will come with two and four-wheel drive options as well, according to sources. The yet-to-be-named sub-4m Toyota will rival the likes of the popular Suzuki Jimny in some international markets. In the near future, this partnership will also see Maruti Suzuki supplying its Vitara Brezza, Ciaz and Ertiga to Toyota. Both Japanese brands will also be working together to develop technology for electrified vehicle. There will be an all-new Csegment MPV as well that will be sold by Toyota as well as Maruti Suzuki in the Indian market.

Lessons for Nigeria as UK moves to eliminate diesel trains by 2040

n what appears to happen many years to come in the Nigeria railway industry, the final report by Britain’s Rail Industry Decarbonisation Task Force and railway safety authority RSSB confirms that Britain’s railway industry can eliminate dieselonly passenger trains by 2040 and contribute to the government’s net zero carbon target by 2050. Britain’s first hydrogen train received approval for mainline testing in June. HydroFlex has been developed by Porterbrook and the University of Birmingham’s Centre for Railway Research and Education (BCRRE) and involved fitting a hydrogen powerpack to a class 319 train. “We note that the most costeffective way to achieve net zero carbon may be to net off some residual rail emissions within the wider UK carbon reduction effort,” the task force says. “However, a number of key decisions have to be taken from this point on, with the clear target of net zero carbon by 2050 or before.” To achieve this, the task force has made five recommendations

in its final report: targets – the rail industry, including government, should support the target of net zero carbon by 2050 as proposed by the Committee on Climate Change (CCC). Policy.the whole rail industry has responsibility to contribute to net zero carbon in a cost-effective manner, and the government should set out clear, consistent and enabling policies. Industry structure.From the Williams Review we should have an industry structure which effectively www.businessday.ng

enables, incentivises, monitors and regulates the route to support delivery of net zero carbon. Delivery plan- Network rail, passenger and freight train operators, and rolling stock leasing companies should publish a longterm plan to achieve interim and long-term targets towards rail decarbonisation which will be reviewed, monitored and regulated by a central body, and Research and development. The industry should set out clear five-year research plans to reduce

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technical and implementation uncertainties. However, the task force warns that significant decarbonisation can only be achieved by 2050 with a balanced and judicious mix of cost-effective electrification, coupled with the deployment of targeted battery and hydrogen technology where these are the best solution. The task force says that more than 3000 vehicles used in diesel passenger trains will need to be replaced or converted in @Businessdayng

the years ahead, many of which are approaching the end of their life. Depending on the extent of electrification, up to 2400 coaches could be powered by low-carbon traction such as hydrogen and battery technology. Carbon reduction. The task force says carbon should be viewed as a form of waste which comes with a cost and so carbon reduction should not be regarded as an end in itself, but as good business practice. “Britain is leading the world on setting clear targets to reduce carbon, and so it’s critical that all industries play their part,” says Mr Malcolm Brown, the task force chairman. “Rail is ahead of the curve on the decarbonisation agenda, and our report shows that we can align with the government’s policy for the UK economy to be net carbon zero by 2050. We will need to fully exploit electrification, hydrogen and battery power to make this happen, but we also need all transport sectors to fully comprehend the challenge of decarbonisation’’.

Wednesday 24 July 2019

BUSINESS DAY

Insight BoI: What next after N1trn asset base? Bisi Daniels

lose watchers and some of the associates of Pastor Olukayode Pitan say when he speaks, the force comes in the weight of his words rather than the velocity or loudness. He is the current Managing Director of Nigeria’s oldest, largest and the most successful Development Finance Institution, the Bank of Industry which recently exceeded N1 trillion in asset base. But he may just have raised the bar of expectations for the bank. “Not given to frivolities, he is a serious-minded person and that is almost evident in his visage,” said one of his associates. “Long after he has spoken, you still have so much to chew on; you see, there is a vast difference between knowledge and wisdom, but he is rich in both.” Pitan is also noted for developing and growing people and organizations. One of the most recent cases is a parish of the Redeemed Christian Church of God of about 50 people, which he grew into over 1,000 - membership. Under his leadership, the parish which was using rented spaces for service, bought land and built the imposing House of Prayer for all Nations at Banana Island, Ikoyi. He is now the Pastor- in - Charge of Lagos Province 46, comprising over 89 parishes and membership of over 7,652, with headquarters in Ajah, Lagos. Today, the Olive Tree Parish is not only a landmark in Lagos, but a spiritual base of many faithful, who gather there for worship.

Olukayode Pitan, managing director, Bank of Industry

At the Bank of Industry which he currently heads, history has been made not only by championing the Federal Government’s Social Investment Programme to reduce poverty and unemployment, but also in the bank’s asset base. “For the first time in the history of the bank, we surpassed N1 trillion in asset base. The group’s profit was over N36 billion. For a bank that is owned basically by government, it is a very good result,” Mr. Pitan said at the bank’s annual General Meeting recently. The Bank’s Chairman, Alhaji Aliyu Abdulrahman Dikko detailed the achievements of the bank in the impressive year under review as follows: • A 30 per cent increase N36.7

Profile Pitan has corporate and banking experience spanning over 25 years. He graduated with a BSc (Hons) degree in Economics as a UAC scholar from the University of Ibadan in 1982 and obtained a Master’s degree in International Management as a Rotary International Scholar from the American Graduate School of International Management, Thunderbird Campus, Glendale, Arizona. He is an alumnus of Lagos Business School and London Business School, as well as an alumnus of the Haggai Institute in Singapore. He is an ordained senior pastor of the Redeemed Christian Church of God. Pitan started his banking career in 1986 at Citibank Nigeria. He subsequently joined Industrial Bank Limited (Merchant Bankers) as part of the pioneer team in the role of Head, Trade Finance. He left the Bank in 1991 to run Credit Lease Nigeria Limited, a company founded by him to pursue his dream in export business. He returned to the banking industry in 1996 by joining FSB International Bank Plc as AGM / Head of Middle Tier market and public sector. He later served as Group Head, Commercial and Consumer Banking Group. He also headed the Corporate Banking and Energy groups. He was promoted to Executive Director of the Bank and Managing Director of ENSEC (Energy division) in March 2001. In 2004, Pitan joined First Interstate Bank Plc as Managing Director/Chief Executive Officer. He led the Bank successfully through a merger with eight other Banks to form Unity Bank Plc. From January 2006 to February 2009 when he voluntarily retired, he served as Executive Director of Unity Bank Plc in charge of Corporate Banking and Treasury Management. The BoI CEO had participated in many innovative transactions in the Nigerian Capital Market. He also midwifed the formation of FUG Pensions Limited by serving as the Technical Chairman for the pooling together of the interests of Futureview Financial Services Ltd, Unity Bank Plc and Glanvill Enthoven & Co Ltd to form a viable and significant player in the Pensions management industry. He subsequently served as Chairman of FUG Pensions Ltd. Pitan has also served as the alternative Director of Kakawa Discount House Limited, Director Newdevco Investments & Securities Co. Limited, Director Banque International Du Benin (BIBE) and currently Chairman, Habitation of Hope, an NGO set up by Pastor (Mrs) Folu Adeboye to salvage, transform and empower the abandoned, hopeless and homeless street boys and girls in the society. www.businessday.ng

billion profit before tax, compared to the N26.4 billion made in 2017, representing; • Award of N2 billion dividend to shareholders • Growth of the Group’s total assets by 49 per cent to N1.07 trillion from N713.3 billion in 2017, as well as improvement in total equity which increased by 12.5 per cent year-on-year to N258.3 billion from N241 billion in the previous year, • Achievement of 130 per cent growth on a year-on-year basis with respect to disbursement of new loans of N259.6 billion in 2018 with N33.9 billion of the figure going to SMEs while the balance was deployed to support large enterprises. Pitan attributes these and other achievements to the collective efforts of the Board, management and staff of the company, as well as his predecessors and the parent ministry, the Ministry of Industry, Trade and Investment with which it has a harmonious relationship. Also key on the list of achievements is a strong industrial harmony in the company. One senior staff member of the company describes Pitan as “an engaging and peaceful man, traits which are the hallmarks of his management style.” In recognition of the bank’s achievements under Pitan, the International Bankers Magazine recently conferred on it the Best Development Bank Award. The award, presented at the Lon-

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don Stock Exchange, was in recognition of the bank’s efforts at widening the spectrum of financial support to the nation’s entrepreneurs, especially the micro, small and medium scale enterprises and the creative industry. Much more recently at the African Bankers’ Awards ceremony held in Malabo, Equatorial Guinea on June 14, 2019, the Bank of Industry won the Financial Inclusion Award for its role in implementing Federal Government’s Enterprise and Empowerment Programme (GEEP), which includes the popular TraderMoni programme. The awards event featured financial institutions and projects from all 54 countries in Africa, as well as the international community. GEEP, which is executed through the Bank of Industry, was described as the most impactful financial inclusion programme in Africa. Despite the political criticism of the programme, it remains popular across the country for its impact on living standards. GEEP, the ₦112billion fund, which is part of the ₦500billion National Social Investment Programme, commenced in 2016 and has continued to expand in scope and effectiveness. It is aimed at providing microcredit facilities to market women, traders, artisans, farmers and agricultural workers at zero per cent interest rate. It is estimated to reach 1million beneficiaries annually. Financing Interventions BoI’s financing intervention programmes are: Micro, Small and Medium Enterprises for food processing, agro processing, healthcare and petrochemicals, solid minerals, N-Power, creative industry, gender business. Youth Enterprise Support (YES) Programme: This is a ₦10billion fund that targets entrepreneurs between 18 – 35 years. The scheme was launched to develop the entrepreneurial capacity of youths and equip young people with the skills and knowledge to be self-employed by starting and managing their own businesses. Specifically, it provides discretionary funding for National Youth Service Corps (NYSC) members and entrepreneurs that are interested in starting business TraderMoni: The Bank introduced the TraderMoni product for micro-businesses across value chain clusters – motorcycle riders, food vendors and petty traders. The fund is expected to ease access to suitable

finance by these categories of businesses which in turn will enable them to grow their businesses. MarketMoni: This is a Government Enterprise and Empowerment Programme (GEEP) created to provide financial aid for the underbanked and unbanked. This objective is being achieved by providing easy and quick loans at no interest rate. Nigerian Content Intervention Fund: A $200million fund targeted at indigenous players in the Nigerian Oil and Gas Industry for the purpose of procuring fixed assets, funding working capital, refinancing existing loans, etc. BoI/State Matching Fund: A matching fund based on partnership between BOI and 25 state governments. In 2017 the Bank signed matching funds agreement with three states: Bayelsa ( ₦5bn), Borno ( ₦2bn) and Ebonyi ( ₦2bn) with interest rate between 5%- 10%pa. Micro, Small and Medium Enterprise Clinics: The Bank continues to participate in the MSME Clinics in collaboration with the Office of the Vice President. One-Local Government, One Product Programme: The programme is expected to generate over 4,900 new jobs; Industrial Development Centres: These centres are being upgraded through a grant from the African Development Bank (ADB) for conversion to MSMEs cluster parks. Funds Mobilisation To enhance its support to the industrial sector of the economy for growth, the BOI has improved its capital base through facilities from the following sources: • A $750 million syndicated loan transaction with AFREXIM as the lead arranger. The initial opening was $500 million but it was oversubscribed to the tune of $750 million. Sixteen international financial institutions, including four banks with Nigerian parents subscribed to the syndication. The loan will be made available to entrepreneurs in Nigeria for a period of between five and seven years at a single digit interest rate, thereby enabling BOI bridge the funding gap for MSMEs. The transaction has been adjudged the single largest facility of its kind to be done by a Development Finance Institution in Nigeria. • In September, 2018, the Bank signed a Memorandum of Understanding with the Export-Import Bank of China (CEXIM) for a $500 million line of finance. The tenor is expected to be for five to six years. • An MOU between BOI and the Nigerian Content Development & Monitoring Board for a $200m Nigerian Content Intervention Fund, for which BoI is the manager. Despite the bank’s achievements, unemployment and poverty levels require more from the country’s DFIs to achieve the dream all-inclusive growth. There is much to be done to sustain the momentum of recovery and growth; and from BoI as a key DFI, a lot more is expected of Kayode Pitan and his team. • Daniels, a journalist and author, is based in Lagos

@Businessdayng

Wednesday 24 July 2019

BUSINESS DAY

INTERVIEW ‘We currently serve 74% of the commercial banks in Nigeria and top companies’ Melanie Ayoola, executive director, sales and marketing, Tranter IT in this interview with BusinessDay’s Frank Eleanya explains the company’s position in providing IT support for corporate organisations across Nigeria and some of the collaborations it is using to deepen its presence in the IT segment. Tranter IT has been in the IT support service space in Nigeria much longer than any company, tell us what has kept you going? idely reputed as one of the longest thriving IT companies in Nigeria, the Tranter Brand was established in 1990. Our story is written by hundreds of people who have contributed to the growth of our company for more than two decades. People build relationships. Relationships build a reputation and our reputation precedes us. Our focus has always been to enhance the businesses of our clients. To do this, we used our combined management experience of over 120 years which empowers us to innovate at every level. We are problem solvers. Rising to every IT challenge keeps our clients’ satisfied. We do not underestimate the power of added value. Tranter IT Infrastructure Services Limited was founded in 2004 and has grown to have staﬀ strength of over 300 wonderful people among who over 250 are IT-Engineers. We have developed recruitment and training process that is second to none. It takes our support engineers through a tried and tested regime. We grow talents for excellent customer service. We instil a sheer determination to meet the client’s goals. The success of the client’s business is the number one goal of every support staff. At the end of the day, that is what support is. According to the 2019 Deloitte’s AI Survey, when it comes to talent in the tech sector, one thing is certain: the “shelf life” of skills is getting shorter and shorter. As a result, retraining has become crucial: companies should invest more in educating and training workforces for the digital era. “A bridge cannot stand if the support system is weak.” Over the years, we have been providing support to enterprise clients and recently to SMEs through the 10+ IT Support. We assist organizations in reducing the time and cost associated with managing their IT environments. The need for enterprise organizations to grow based on the demand of an economy that is growing exponentially, we have had a constant demand to continue supporting especially the financial industry, manufacturing, oil and gas and others. If there is downtime, a crisis in their infrastructure at some point, they have a team who has the required experience to diagnose, pinpoint and rectify from Helpdesk Support, to POS and E-channel Support, Regional Support, Application Support and so on. With the introduction of artificial intelligence, our solutions and support engineers have evolved our time to provide industry-standard required for supporting the end-user

Melanie Ayoola

by on machine learning and analysis and also having their human touch to understand the user and issue. This is a continuously evolving process. How have your services evolved over the years? The only thing constant is change. Almost every week, a new solution is created because a difficulty has been identified and proved viable. Endusers prefer to have access to information on their infrastructure on the go and be on top of every situation. For this, we provide cloud-based solutions and more recently, solutions with artificial intelligence integrated. Companies are currently undergoing digital transformation intending to attain seamless business operations. Now it has become more pertinent for a business to have their applications and infrastructure interact in a unified flow. As a company that has been in IT for over 15 years, we’ve had to ensure that the OEMs we partner with and the solutions we are bringing to the market are suitable to meet these needs whether they are enterprise or SMEs. Every organiza-

Our personal development plan (PDP) is designed to make sure our talents are on track to deliver great results in whatever position they currently hold

“

tion, no matter the size, recognizes that IT is critical to high business performance. For instance, in line of security, our products like SafeXS allows you to store and encrypt your data on a flash drive/hard drive. This was a big factor in the recent partnership as organizations aim to reduce their vulnerabilities. Better safe than sorry. Close up all loopholes as cyberattacks are becoming more frequent and more expensive to manage. As I quote Funke Amobi of Stanbic IBTC, Data is the new water, it cannot be stressed how important it is to facilitate the easy movement and protection of data. In terms of support and collaboration with the rest of industry, what is happening, bearing in mind that many businesses are still trying to get a hang of what digitalisation means to their bottom-line? We organise seminars for both end users and resellers with our OEMs to increase the awareness of the products and solutions we provide and understanding of how to integrate them to achieve digital

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transformation. Digital transformation does not happen overnight. According to Gartner, Digitalization means turning interactions, communications, business functions and business models into (more) digital ones. This spans across the whole organisation. Tranter IT is collaborating with corporate power houses who are currently leading the digital transformation in the country to increase the reach of digital approaches to business. Nowadays, you need to respond to issues and clients quickly, communicate with different departments at the same time. Digitalization helps us to optimize business processes to enable us work faster using digital tools such as the mobile devices, social collaboration and unified communication platforms. Our Zoho SME solutions are focused on the Digitization of Today’s Workplace from accounting, social media management, HR processes, to sending mails and so on. Our enterprise solutions are focused more on enabling Digital Transformation of their infrastructures. All year round, we are continually looking for affordable solutions that will add value to our clients, providing our clients access to latest technology from applications with artificial intelligence, machine learning and others. Today businesses want solutions that can solve more than one problem while driving down operational cost per return on investment which now includes internal and external customer satisfaction. One of your most notable partnerships is the sole-distributorship of ManageEngine. Tells us how that came about and what has been the milestones achieved? Tranter IT partners with top OEMs around the world. In 2013, Tranter IT became ManageEngine’s sole distributor in Nigeria. As a company driven by innovation, we consistently source and develop solutions to help small, medium and large-sized organizations utilize IT to achieve their business goals. We currently serve 74% of the commercial banks in Nigeria and top companies across the manufacturing, insurance, government, oil and gas and logistics industries. To our clients and partners, we are a technology partner performing IT Infrastructure Management and Optimization, Business Automation, Outsourced Technology Management and Support Services. ManageEngine is a successful product and affordable option when compared to the alternatives in the market. It has a great deal of support both from the OEM and the Tranter IT team in Nigeria. We offer local support across Nigeria for all our products and solutions. @Businessdayng

Since 2015, we started off with a series of seminars and the attendance increase as the demand for product demonstrations grew. We now offer onsite support personnel for the ManageEngine solution. The expansion of our ManageEngine team is another milestone for us. We are able to accommodate more industries and more sectors. What other expansion plans do you have and how are they likely to impact your operations going forward? We plan on expanding our reseller’s network across Nigeria for all our OEMs specifically for ManageEngine. We are currently receiving numerous requests for the reseller program with Tranter IT on our new products. We are also expanding our IT Support Engineer program to accommodate requests from clients. As technology trends change, we are continuously looking out for OEMs that would accommodate the change in the market. We are also investing in Internet of Things (IoT) and we will be providing IoT from homes, offices, warehouses, and so on. What makes your company attractive for IT talents? Tranter IT is attractive to IT talents because of the importance we give to Employee Value Proposition (EVP) which means we ensure it’s a partnership where our employees are rewarded and given unique benefits based on their performances. Maintaining a strong EVP which is integrated into all aspects of our business at Tranter IT, is what attracts and also helps us retain the best talents in the IT industry. In addition to this, the strength of our EVP lies in the great leaders we have who are supportive, inspirational and focused on development of talents. You have a talent grooming program, what is the criteria for selection and process of grooming? Tranter IT’s criteria for selection of talents involves testing of skills that when harnessed and developed, will reward our organisation in the future. Our talent grooming program is one that has been developed to carefully identify our future leaders through careful skills and behavioural matching analysis. Because we know the success of our company is directly linked to our ability to attract and retain the very best talents, a combination of our coaching, mentoring and learning plan helps to support and guide our talents through their development processes. Our personal development plan (PDP) is designed to make sure our talents are on track to deliver great results in whatever position they currently hold. This is ensured by continuous assessment and measurement of our talents to ensure they are on track in attaining the competencies required for them to be future leaders.

Wednesday 24 July 2019

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

Financial inclusion: Is CBN on track to meet deadline target? Stories by Endurance Okafor

ess than six m o nt h s t o t h e deadline set out by the Central Bank of Nigeria (CBN) to ensure it includes 80 percent of Nigerian adults into the financial cycle, many have raised the question on whether the apex bank is on track to achieve its goal. Analyst polled by BusinessDay expressed mixed feelings on whether the central bank can pull off the target, some expressed optimism while others questioned the lender’s methodology. On October 23, 2012, Nigeria’s apex bank in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion rate of adult population from 53 percent in 2008 to 20 percent by 2020. According to the most recent data by EFInA as analysed by BusinessDay, Nigeria has 36.8 percent of its adult population excluded from the financial cycle, this translates to a population of 36.6 million people who at the moment are not included in the financial net. Going by that figure, the apex bank is left with an inclusion gap of 16.8 percent, expected to be bridged at the end 2019 to enable CBN achieve the targeted 20 percent exclusion rate. “Despite the challenges, achieving the set financial Inclusion target is possible

and requires a strong will, sustained commitment and active collaboration of all stakeholders towards the removal of bottlenecks militating against financial inclusion in the country,” CBN assured Nigerians in its newsletter dated July 06, 2018. Since then, the industry regulator has implemented various initiatives geared towards achieving the set goal. “We believe financial inclusion is going to increase rapidly because of the focus of the CBN (through SANEF and other initiatives already in process) and because payment innovation is going to make payments much easier at lower cost, including for feature phones,” Andrew S. Nevin, Advisory Partner and Chief Economist at PwC said he believes the CBN is right to set this ambitious target. In furtherance of CBN’s mandate to promote a sound

financial system in Nigeria and the need to enhance access to financial services for low income earners and unbanked segments of the society, the industry regulator, the Nigeria Interbank Settlement System Plc., Chartered Institute of Bankers of Nigeria (CIBN), commercial banks and other operators in the payment system in 2018, developed a Shared Agent Network Expansion Facility (SANEF) initiative to offer basic financial services across the country. According to Yele Okeremi, MD/CEO, Precise Financial Systems (PFS), a Software company, financial disempowerment is the reason why financial exclusion rate is high in Nigeria. “ Pe ople w ill remain financially excluded because they are financially disempowered,”Okeremi said, adding that Nigeria still has a large number of its population living below

two dollars a day, “how do you want to include them financially?” Nigeria currently boost of over 201 million, with a population growth rate that has been above the economic expansion rate since 2015. According to the World Poverty Clock, Nigeria became the poverty capital of the world when it overtook India as the country with the most extreme poor people. The apex bank plans to intensify financial literacy and consumer protection programs such that current and eligible bank customers are fully aware of the financial services being offered to them as well as the cost of utilizing these services, “which will enable them to make well informed choices.” As a result, the central bank recently came up with a policy that will ensure Microfinance Banks (MFB) open new 64 accounts per

month. This was after to it planned to on-board 500,000 mobile money agents by the year 2020. So far, the apex bank has enrolled only 65,753 mobile agents, data obtained from the Nigeria Interbank Settlement System (NIBSS) showed. “The population is not stagnant, that is my problem. People who were not eligible for financial services are now joining the excluded adult, so the numbers are growing. What exactly is happening that they suddenly going to have 15 percent inclusion in five?” Yewande Adewusi, a Lagos-based financial inclusion consultant, queried. Recall that Godwin Emefiele, the governor of Nigeria’s central bank, said recently that over the next five years, through initiatives and policy measures such as SANE, the apex bank intend to broaden access to financial services to individuals in underserved parts of the country. “Our ultimate objective is to ensure that 95 percent of eligible Nigerians have access to financial services by 2024,” Emefiele said Checks by BusinessDay revealed that the Telco-led model in driving financial inclusion in Africa countries reported tremendous progress owing to the already existing large customer base of the Telcos. Kenya has about 60 percent mobile money service penetration, while Ghana has about 40 percent service penetration, and Nigeria with a lot more higher population, remains at 1 percent.

Ghana’s decision to have a Telco-led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to World bank data, and has helped lift financial inclusion rates in Ghana to 58 percent in 2017 from 41 percent in 2014. This was not different for Ivory Coast who has experienced a mobile money revolution. As a result, there are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent. Nigeria has a bank-led financial inclusion model; this is argued by industry players as one of the reasons for the lag in the country’s inclusion rate. Thus, International Monetary Fund (IMF) and other industry stakeholders applauded the apex bank when it revealed its plans to give Payment Service Bank (PSB) license to Telcos and among other industry players to participate in the country’s financial inclusion space. It’s almost one year since it proposed the license in October 2018, yet no license has been issued to any of the applicants. To achieve any real financial inclusion impact, Mastercard said people also need to become active users of financial products. “Simply providing access to financial services is not enough. To achieve any real impact, people also need to become active users of financial products,” Ann Cairns, Vice Chairman of Mastercard said.

BUA Group emerges with a hybrid app to spur financial inclusion Church, Mosque to receive

ith the aim to provide Nigerians with easy and fun means of carrying out financial transactions, Hollaport Technologies Limited, a Nigerian financial technology company, backed by BUA Group has launched Hollaport, a hybrid mobile money app with social media features. According to the company, the multi-layered messaging and financial technology platform on which people can send and receive money using their phone is poised to spur financial inclusion. Speaking during the launch, Kabiru Rabiu, founder and managing director,

Hollaport and group executive director, BUA Group, explained that the App would create the opportunity for Nigerians in remote communities to partake in the various banking transactions. “Our focus is to boost financial inclusion of the unbanked and to also increase the possibilities and convenience of chatting, sending and receiving money without leaving the chat platform,” Rabiu said. The MD added, saying the Hollaport App was solely an indigenous platform designed to meet the needs and yearnings of Nigerians while also addressing the issue of financial inclusion as over half of the adult population was unbanked

with only a fraction of the banked using technology in their processes The app which is available on the Google Playstore and the iOS Appstore has features like; airtime topup; cable, electricity, data subscription; and paycode system that enables recipients to withdraw cash from the ATM without the need to have a card or bank account. The Hollaport CEO said new features will make it exciting and extremely convenient to transfer money and make payments not only in Nigeria but also throughout the African continent. He said financial inclusion is a major issue in Nigeria, with about half of the adult population being

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unbanked and only a fraction of the banked citizens using technology in their transactions. “Despite the simple interface, Hollaport is packed with features such as media functionalities where you can send photos, videos and documents. Users can request or send money within the chat area for a seamless experience and can also pay bills, utilities and make subscriptions,” Rabiu added. Commenting on the App, Michael Olowojesiku, the General Manager of the technology company said the company will work assiduously towards making the app available to Nigerian telephone users in all parts of the country.

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financial literacy message

n a bid to boost financial inclusion, the Central Bank of Nigeria (CBN) said it will partner with churches and mosques to improve financial literacy in a country that has one of the highest numbers of excluded people in Africa. Recall that financial inclusion is one the agenda of Godwin Emefiele, the governor of the central bank, and to this effect, various industry stakeholders; Deposit Money Banks, Insurance companies, Capital Market Operators and Pension Fund Operators in country are involved in spreading the word. Kofo Salam-Alada, CBN’s @Businessdayng

director for consumer protection recently told newsmen that the financial regulator settled for a religious approach in achieving the set goal because of the spiritual and religious nature of most Nigerians. He also said the apex bank has organised outreach programmes with faith-based organisations. “We are developing a lot of materials on this and we have also trained a lot of master trainers on this project,” Alada said, adding that “financial literacy is important because it helps individuals to make investment decisions and equally help in planning for retirement.”

Wednesday 24 July 2019

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

PRIVATE EQUITY DEALS IN 2019 MONTH

ACQUIRER/FUND MANAGER

ACQUIREE

SECTOR

JAN

ACCESS BANK

DIAMOND BANK

BANKING

STAKE

AMOUNT ($ Million) 200

JAN

CARLYE GROUP

WAKANOW

AVIATION

JAN

VecIs and AGL

LEVENTIS

CONSUMER GOODS

JAN

ADVANCED FINANCE and INVESTMENT GROUP (AFIG)

NEM INSURANCE

INSURANCE

29%

JAN

COCA-‐COLA

CHI LIMITED

CONSUMER GOODS

100%

500

JAN

CDC Group plc

CCAGF

FMCG/AGRIC

JAN

GeneraIon Investment Management (GeneraIon IM)

ANDELA

TECH

100

JAN

ABRAAJ GROUP

ABRAAJ group

FIN SERVICES

MARCH

SIEMENS LIMITED

DRESSER-‐RAND

AUTOMATION

600

MARCH

VEROD CAPITAL MANAGEMENT

DAYSTAR POWER

ENERGY/POWER

MARCH

COX VENTURES ET AL

FARMCROWDY

AGRIC

MARCH

LENDABLES

ONE FINANCE (OneFI)

FIN SERVICES

MARCH

QUANTUM CAPITAL

TEAMAPT

FINTECH

MARCH May

THEMIS Rise Capital, Adventure Capital, IC Global Partners, First MidWest

KINGLINE GoKada

POWER TRANSPORTATION

5.3

June

NORTFUND and FINNDUND

STARSIGHT POWER UTILITY LTD

POWER

June

BREAKTHROUGH ENERGY VENTURES, NORTFUND

ARNERGY

ENERGY/POWER

June

IGNITE INVESTMENTS and COMMODITIES

FORTE OIL

OIL

235.8

JULY

IDG Capital, Sequoia China, Source Code Capital

OPAY

TECH

InsuResilience Investment Fund

Royal Exchange General Insurance

INSURANCE

JULY

InsuResilience Investment Fund acquires 39% stake in Royal Exchange General Insurance O

50 39

Opay raises $50m to expand African operations

Stories by MICHAEL ANI

uxembourg-based InsuResilience Investment Fund has agreed to acquire a 39.25 percent stake in Royal Exchange General Insurance Company, one of the largest non-life insurance companies in Nigeria. The deal is coming few months after the National Insurance Commission (NAICOM) raised up the minimum paid –up capital of insurance companies in the country. The proceeds of the investment will help Royal Exchange General Insurance Company to spur growth by increasing the company’s risk capital and supporting its underwriting capacity in agriculture, hereby extending its outreach to low income farmers. Through its activities, the company is expected to reach out to more than 1 million farmers by 2025. The InsuResilience Investment Fund has been set up by KfW, the German Development Bank, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), and is managed by Swiss based Impact Investment Manager BlueOrchard Finance. Ernesto Costa, Senior VicePresident Private Equity at BlueOrchard, said: “The history, team and commitment of Royal Exchange General Insurance

Company (REGIC) to agriculture insurance make it a great addition to our portfolio. The company is uniquely positioned to capture the opportunity presented by 30 million under-insured smallscale farmers in Nigeria. In the midst of Nigerian economy rebalancing its major economic sectors, REGIC has repositioned itself to meet the ever-changing needs of their clients to take full advantage of the opportunities that arise in the agriculture space.” “Agriculture insurance is one of the new growth areas for the Company, and will definitely be one of the core areas of growth going forward. We are thrilled to partner with and support REGIC with capital, technical assistance and our international network in the agriculture insurance space, with the objective to increase the resilience of small-scale farmers to climate change,“ he added. The insurance sector regulator had earlier, jerked up the minimum paid-up capital in other to recapitalize the industry. According to NAICOM, insurance firms who want to remain in Life Business must have a minimum paid up capital base of N8 billion from N2 billion; General Insurance Companies from N3 billion to N10 billion, Composite Insurance Companies from N5 billion to N18 billion, while Re-Insurance Companies would be required to have a Paid Up capital base of N20 billion from N10 billion.

Royal Exchange General Insurance Company, subsidiary of Royal Exchange Plc, is a leading player in agriculture insurance. Investment in Royal Exchange General Insurance Company aligns with the vision and principles of the InsuResilience Global Partnership, which was launched at the 2017 UN Climate Conference COP23 in Bonn by Germany. The vision of the Partnership is to strengthen the resilience of developing countries and to protect the lives and livelihoods of poor and vulnerable people against the impacts of natural disasters. The Partnership’s objective would also enable more timely and reliable post-disaster response through use of climate and disaster risk finance and insurance solutions to reduce impacts and help poor and vulnerable people recover more quickly. Kenneth Ezenwani Odogwu, Chairman of Royal Exchange, said that the company has entered into strategic alliances with various stakeholders in the agricultural space to foster insurance in this sector of the economy. “Agriculture and insurance are huge opportunities. We will continue to develop products and services to strengthen our leading position in this space. Royal Exchange General Insurance is determined to take advantage of growth opportunities in the sector, while leveraging technology to expand its revenue base and bottom-line.”

Pay, a provider of a rapidly growing mobile payment service and consumer platform has raised $50 million from a consortium of investors led by IDG Capital, Sequoia China, Source Code Capital, Meituan-Dianping and GSR Ventures. OPay plans to use the new capital to strengthen the company’s position in Nigeria, expand to additional African markets and leverage its brand and app into adjacent verticals, including motorbike ridesharing and food delivery services. Incubated by Opera, OPay launched its mobile payment service in August 2018, creating an infrastructure on which the company is now also adding new services. The agent-centric mobile payment operation focused on reaching the massive unbanked population of Nigeria. Within less than a year, by June 2019, OPay had more than 40,000 active agents and saw daily transaction volumes in excess of $5m, propelling the company to become the largest mobile transaction provider in the country. Recently, OPay has expanded its ecosystem to new verticals, including the motorbike ridesharing service ORide and food delivery service OFood. OPay is already experiencing demand far in excess of its capacity and is rapidly adding to its motorbike fleet, ensuring a highly visible physical presence in its core market, Nigeria. “By incubating OPay and supporting the company through its rapid acceleration, Opera has also demonstrated its ability to leverage its brand and consumer reach to create attractive, fast-growing businesses on the African continent. We are highly pleased by the

team’s results and are excited to continue supporting OPay as the journey continues,” Yahui Zhou, Chairman and CEO of Opera said “We are thrilled that IDG Capital, Sequoia China, Source Code Capital and others are coming onboard as investors in OPay. The additional capital will allow OPay to accelerate its growth in mobile payment services and the growth into new verticals, such as motorbike ridesharing and food delivery,” he added. “Further, the strength of Opera’s brand and OPay’s emerging position will benefit both companies’ and their visions to lead many internet verticals across Africa.” Opera currently has significant reach in Africa. At the end of the first quarter of 2019, there were nearly 120 million people across Africa and more than 350 million worldwide using Opera products, including browsers, the standalone news app and fintech offerings. This represented a fast double digit growth for the company in the African region in comparison with the prior year. The increase is due to Opera launching new products, the addition of new mobile browser features, and its partnerships with smartphone manufacturers across Africa. Further, this scale enabled Opera to incubate OPay into a strong company that has significant ambitions beyond its current offerings and geographical footprint. “OPay has successfully built a leading mobile payment business in Nigeria in a short period of time. We are excited to be part of its continued growth, as it provides access to better mobile banking services for Nigeria’s 200 million population, and expands into new areas,” said Qingsheng Zheng, Partner of Sequoia China.

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

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

Wednesay 24 July 2019

BUSINESS DAY

Live @ The Exchanges Stock investors record N163bn gain as market halts loss trend Stories by Iheanyi Nwachukwu

igerian stock investors on Tuesday July 23 recouped about N163billion from the previous losses which had pushed the market to record lows. The record positive at the Lagos Bourse was driven by activities of value hunters who rushed to take positions in equities like Nestle Nigeria Plc, Dangote Cement Plc, Lafarge Africa Plc, MTNN Plc and Cement Company of Northern Nigeria. Twenty-one (21) stocks gained against 15 losers. Nestle led the advancers after its share price moved from N1260 to N1327, adding N67 or 5.32percent; followed by Dangote Cement Plc which rallied from N170 to N174, adding N4 or 2.35percent. On the loser table, Forte Oil Plc declined most, from N20.15 to N18.15, losing N2 or 9.93percent; followed by International Breweries Plc which dipped from N15.3 to N13.8, losing N1.5 or

L–R: Ige Olorunsogo, Nigerian Interbank Settlement System (NIBSS); Charles I. Ojo, Central Securities Clearing System (CSCS) Plc; Ugochi Obi, Head, X-Academy, The Nigerian Stock Exchange (NSE) and Akin Oyegoke, managing consultant, Johan Consults Ltd during an X-Academy & Johan Consults training on GDPR & NDPR Masterclass, which held at the Exchange in Lagos.

9.80percent. At the sound of trade closing gong, the Nigerian Stock Exchange (NSE) All Share Index (ASI) increased by 1.21percent, while the Year-to-Date return stood at -10.45percent. The All Share Index closed at 28,144.87 points as against the preceding day close of 27,808.69points. The value of listed stocks –the Market Capitalisation closed at N13.716 trillion against preceding day close of N13.553trillion, up

by N163billion. The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) after its meeting on July 22 and 23, 2019 resolved to: retain the Monetary Policy Rate (MPR) at 13.50 percent; retain the Cash Reserves Ratio (CRR) at 22.5 percent; and retain the Liquidity Ratio at 30 percent. Also, the asymmetric window was retained at +200 basis point and -500 basis points, around the MPR.

At the stock market, the volume of stocks traded decreased by 52.69percent, from 285.76million to 135.18million, while the total value of stocks traded decreased by 6.76percent, from N2.244 billion to N2.093billion in 3,358 deals. The Financial Services sector led the activity chart with 80.21million shares exchanged for N915 million, followed by Industrial Goods with 15.201million shares traded for N506million.

Seplat appoints Delapalme as non-Executive Director

he Board of Directors of SEPLAT Petroleum Development Company Plc on Tuesday announced the appointment of Madame Nathalie Delapalme as a NonExecutive Director of the Company with effect from July 18, 2019. The announcement was made in accordance with Rule 4 of the Nigerian Stock Exchange Amended Listing Rules and Rule 9.6.11 of the UKLA Listing Rules. Madame Delapalme is an Independent Director on the Board of Directors of Maurel et Prom and has acted as an alternate to Maurel et Prom’s nominee, Michel Hochard since 30th June 2014. She is also an Executive Director of the Mo

Agusto upgrades rating of FSDH Merchant Bank to ‘A’

gusto & Co Limited has just assigned an “A” rating to FSDH Merchant Bank

Limited. The rating assigned to FSDH Merchant Bank Limited (FSDH) is underpinned by good capitalisation, good liquidity, good profitability and an experienced management team. The rating which expires on June 30, 2020 is however constrained by a concen-

tration in the loan book, inflexible funding and the fragile state of the Nigerian economy. The Nigeria’s first credit Rating Agency is a pan African leader in credit reports. Its strong credibility presence and ratings are globally accepted in Nigeria, and across the globe. During the 2018 financial year, FSDH’s profitability strengthened considerably on account of lower funding costs, improvements in asset

ADDITION OF NAME CHANGE OF NAME I, formerly known and addressed as Nwachukwu Ruth now wish to be known and addressed as Nwachukwu Okwuchi Ruth. All former documents remain valid. Diamond Bank and general Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Ruth Nkechi Justine now wish to be known and addressed as Miss Patience Chinonso Justine. All former documents remain valid. General Public please take note.

I, formerly known and addressed as Miss Rebecca Idhove now wish to be known and addressed as Mrs Ndukwo Ulemuvieru Rebeccah. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Nobore Kennedy now wish to be known and addressed as Nobore Kennedy Osaretin. All former documents remain valid. General Public please take note. www.businessday.ng

quality which led to writebacks of loan provisions and moderated operating expenses despite inflationary pressures. Profit before taxation increased by 34.4percent to N5.2 billion, the highest in the Bank’s history. Pre-tax return on average assets (ROA) and pre-tax return on average equity (ROE) also strengthened to 3.5percent (2.7percent) and 17.8percent (FY 2017: 14.9percent) re-

CHANGE OF NAME

I, formerly known and addressed as Akwu Emmanuel Okebe now wish to be known and addressed as Ogilegwu Ate Isaac. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Emeka Ofagbe now wish to be known and addressed as Chukwuemeka Wilson Ofagbe. All former documents remain valid. General Public please take note.

spectively. These profitability ratios are also the best the Bank has recorded since its transition to a merchant bank and were at the upper end of its peer group. On account of improvement in asset quality and profitability, while maintaining sufficient levels of capitalisation, we hereby upgrade the rating assigned to FSDH Merchant Bank Limited to “A”.

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I, formerly known and addressed as Henrietta Awele Ochugbua now wish to be known and addressed as Henrietta Awele Obijuru. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Miss Adikhai Mabel now wish to be known and addressed as Mrs Irunokha Mabel. All former documents remain valid. General Public please take note.

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Ibrahim Foundation. Madame Delapalme served the French Government as an Inspector of Finance at the Ministry of Economy and Finance, an advisor for the Finance and Budgetary Commission in the French Senate, and an advisor for Africa and Development in the offices of various Foreign Affairs Ministers. She remains deeply involved in governance and leadership in Africa and continues to provide strong support to the Company’s CSR Board Committee. The SEPLAT Board of Directors is indeed privileged to have her on board and looks forward to her unparalleled contribution to the continued growth and success of the Board and Company.

Wednesday 24 July 2019

BUSINESS DAY

Analysis

Nigeria/Siemens deal could unravel power sector privatisation ISAAC ANYAOGU

•Continues online at www.businessday.ng

43 Sadiya Umar Faru

Female

Zamfara N/W

IMF lowers its global growth forecast ‘downside’ Investors laud Lafarge restructuring as stock hits 8-month high again as risks remain totractedtheincrease in risk averMARKETS

David Ibidapo & Gbemi Faminu

…YTD returns jump to +15.66%

ENDURANCE OKAFOR

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@Businessdayng

•Continues online at www.businessday.ng

Wednesday 24 July 2019

BUSINESS DAY

news CBN to begin monthly check of LDR of banks... Continued from page 1

governor of the apex bank, said while announcing a hold on the benchmark interest rate after the two-day Monetary Policy Committee (MPC) meeting in Abuja. The CBN had given the banks a September 30 deadline for the commencement of a minimum of 60 percent loan to deposit ratio, which was targeted at increasing credit to the real sector of the economy. According to the CBN, a failure to meet the minimum LDR of 60 percent by the specified date will result in a levy of additional Cash Reserve Requirement (a specified minimum fraction of the total deposits of customers which commercial banks have to hold as reserves with the central bank) equal to 50 percent of the lending shortfall of the target LDR. The LDR is a ratio between a bank’s total loans and total deposits, and is generally expressed in percentage terms. A high loan to deposits ratio means that the bank is issuing out more of its deposits in loans and vice-versa. The 11 MPC members present also voted to retain the monetary policy rate (MPR) at 13.5 percent, Cash Reserve Ratio (CRR) at 22.5 percent, Liquidity Ratio at 30 percent as well as the Asymmetric Corridor around the MPR at +200/-500 basis points. “The decision was informed by the conviction of all members that key macroeconomic indicators were trending in the right direction and because of the lag effect of policy actions on output,” Emefiele said. The committee observed that CBN had begun the prescription of using benchmark loan to deposit ratio to redirect banks to focus on lending. To mitigate the credit risk, the committee enjoined the management of the bank to de-risk the financial market via the creation of viable credit scoring system similar to what applies in the developed countries as this would encourage DMBs to safely grow their credit portfolio. “We need support to achieve growth in Nigeria and it is important that when the MPC raised a concern about the flat loan to deposit ratio, it was just about 57 percent which is too low whereas in other climes, loan to deposit ratio is more than 100 percent,” Emefiele said. For instance, he said loan to deposit ratio in Brazil is 70 percent, China 71.2 percent, India 75 percent, United States 75 percent, South Africa 91 percent, Kenya 76 percent, and Japan over 70 percent. “We need banks to play their role of financial intermediation, therefore we will continue to prescribe the ratios to give directions on the policy,” he said. The MPC called on the fiscal authorities to take action

on expanding the tax base of the economy to improve government revenue and stem the growth of public borrowing. It further urged the fiscal authorities to put fiscal buffers in place to avert macroeconomic downturn in the event of a decline in oil prices. Ay o d e l e A k i n w u n m i , head, research, FSDH Merchant Bank Limited, said it is clear that the CBN will continue to implement measures that will lower the interest rate on private sector lending and reduce the yield on the fixed income securities. He said the CBN wants to ensure that its directive to increase lending to the private sector is carried out. This is in fulfilment of its goal of accelerating economic growth to create jobs and integrate key sectors of the economy. “Now that the ministers list has been sent to the National Assembly, it is expected that the fiscal authority will provide the necessary incentives that will complement the policy of the CBN so that increased banks loans don’t lead to an increase in nonperforming loan in the country,” Akinwunmi said. The committee also called on the bank to intensify effort to encourage Nigerians in the Diaspora to use the official sources for home remittances, noting the effort to curb delay or considerations geared towards improving the current account balance of the nation. It enjoined the banks to use incentives such as the reduction of charges in Diaspora home remittances into Nigeria. Also concerning the possibility of creating subprime loans, Bismarck Rewane, managing director/CEO, Financial Derivatives Company Limited, said there is a tradeoff to the economy. “Banking institutions are financial intermediaries as opposed to taking surplus funds to where there is deficit within the context of risk architecture,” he said. Meanwhile, Emefiele refuted insinuations that the apex bank was considering banning banks from participating in the weekly Open Market Operations (OMO)/ Treasury Bill Auctions. “If banks cannot play their roles as financial intermediators, there is real problem,” Emefiele said. “To show that we are serious, last week, we did an auction, one to signal that we are still on a tightening mode, but insisted that we do not want proprietary auctions by the banks but rather auction demand from their customers. We don’t want them to invest their money in treasury bills,” he said. He, however, added that “from time to time, the CBN will provide special auctions to really direct the focus of actors in the money market”.

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

Buhari picks politics over policy with ministerial list Continued from page 1

the names were read on the floor by Senate President Ahmad Lawan after a closed-door session.

Following the submission of the list, the Senate postponed its annual recess for one week in order to screen nominees, Dayo Adeyeye, chairman, Senate Ad-hoc Committee on Media and Public Affairs, told journalists after plenary on Tuesday. The annual recess was earlier billed to start on Thursday with resumption scheduled for September. But analysts who spoke to BusinessDay after the list was released said it is full of recycled politicians, expressing doubts that this set of ministers would take Nigeria to greater heights in Buhari’s second term. “The economy cannot grow if we continue with the same template that has made us poor over the years,” Henry Boyo, a veteran economist and columnist, said. In the first four years of President Buhari, the Nigerian economy was confronted with low growth, high unemployment rate and a widening inequality gap and thus requires targeted reforms of various sectors to achieve higher growth rates, analysts say. Lagos-based CSL Stockbrokers said that from an economic development point of view, the list suggests there might not be a fundamental change in strategy and policy framework of the government in addressing the critical challenges facing the country. They noted that the former Minister of State for Petroleum Resources, Ibe Kachikwu, was excluded from the published list. “The President seems to not be in touch with reality of running a modern economy. And I think that is affecting the entire decision he is making. I am not sure he has a wide network of professionals he can pull from. So in a bid to get people he trusts, he has this narrow network that is not very optimum for what we need to do as a country,” Jude Ohanele, executive director, Development Dynamics, told BusinessDay in a phone interview on Tuesday. “I am not sure these guys will do any better because with the old names I am seeing there, it means it is going to be business as usual. As you can see, he has recycled the old names. I don’t know what else these old men and women will do,” Ohanele said. The list contains 43 names, an excess of five from the 38 names appointed to work with the president during his first tenure. Of this figure, seven are females and the rest are male. The average age of the 43 nominees is 60 years, checks by BusinessDay show, a development that has made analysts question the ability of the nominees to function actively. Yinka Odumakin, spokesperson of Afenifere, a panYoruba socio-cultural group, said with the names on the list, Nigeria is heading into deeper

crisis than it has ever imagined. “I read through the list expecting to see reliable hands willing to serve and with an in-depth knowledge of the economy, that would have at least justified the long wait, but I was largely disappointed,” he said. Odumakin told BusinessDay on the phone that the list could have been put together by one of the party stalwarts at a campaign rally because he couldn’t see much merit on it “beyond the mere political patronage and spoils of sharing political victory”. Auwal Ibrahim, executive director, Civil Society and Legislative Advocacy Centre (CISLAC), said the list has exposed President Buhari’s lack of commitment to the anti-corruption fight. “We are shocked and many Nigerians are also surprised that the President can go ahead and nominate those who are under investigation by the Economic and Financial Crimes Commission,” Ibrahim said. Timipre Sylva, a former governor of Bayelsa State, whose name is on the ministerial list, for instance, was docked alongside his co-accused in July 2014 for allegedly using three companies (Marlin Maritime Limited, Eat Catering Services Limited, and Haloween-Blue Construction and Logistics Limited) to siphon funds from Bayelsa State treasury between 2009 and 2012. Godswill Akpabio, a senator in the last administration, who also made the list, has been assailed with corruption allegations since he left Akwa Ibom Government House for the senate in 2015. He entered the EFCC’s books for allegedly looting the sum of N108.1 billion from the coffers of Akwa Ibom during his eight years as governor. Earlier in 2019, Governor Samuel Ortom of Benue State had called on the EFCC to prosecute George Akume, a former governor of the state and another Buhari ministerial nominee, for allegedly fleecing the state of N2 billion in 2007. Ibrahim of CISLAC also berated the nomination of some members of the previous cabinet whom he said failed to perform to expectations in Buhari’s first term. “Many of them ought not to have come back. So, we are worried that nothing good will come out of this cabinet just like the previous one,” he said.

“Apart from lacking inclusiveness, Nigerians are also not impressed because the cabinet has less number of technocrats and experts to help restructure the economy,” he added. The Nigerian constitution requires the President to appoint at least one minister from each state of the federation. And so, the list contains at least one nominee from each state (36 nominees) as well as one from each geopolitical zone (six nominees). BusinessDay analysis also revealed that 13 of the ministers that were appointed in 2015 were returned, meaning that a total of 30 new names have been added in the new list. The returning ministers on the list are Lai Mohammed (Kwara), Babatunde Fashola (Lagos), Chris Ngige (Anambra), Suleiman Adamu (Jigawa), Zainab Ahmed (Kaduna), Rotimi Amaechi (Rivers), Mohammed Musa Bello (Adamawa), Adamu Adamu (Bauchi), Mustapha Baba Shehuri (Borno), Ogbonnaya Onu (Ebonyi), Osagie Enanieri (Edo), Geoffrey Onyeama (Enugu), and Abubakar Malami (Kebbi). Those coming for the first time include Uchechukwu Ogah (Abia), Godswill Akpabio (Akwa Ibom), Sharon Ikeazu (Anambra), Maryam Katagun (Bauchi), Timipre Sylva (Bayelsa), George Akume (Benue), Bodi Agba (Cross River), Festus Keyamo (Delta), Clement Ike Agba (Edo), Richard Adeniyi Adebayo (Ekiti), Ali Pantami (Gombe), Emeka Nwajuba (Imo), Muhammad Mahmud (Kaduna), and Sabo Sanono (Kano). Others are Bashir Sani (Kano), Rahmatu Tijjani (Kogi), Gbemisola Saraki (Kwara), Adeleke Mamora (Lagos), Mohammed H. Abdullahi (Nasarawa), Zubair Dada (Niger), Olamilekan Adegbite (Ogun), Tayo Alasoadura (Ondo), Rauf Aregbesola (Osun), Sunday Dare (Oyo), Paulen Talen (Plateau), Muhammadu Ngiadi (Sokoto), Sale Mamman (Taraba), Abubakar Aliyu (Yobe), and Sadiya Umar Faru (Zamfara). Suleiman Lamorde, who described himself as a loyal party member of the All Progressives Congress (APC), decried the return of former education minister, Adamu Adamu, wondering why the President nominated him for a second term after “failing woefully during his first tenure”. “Apart from Rotimi Amae-

chi, Raji Fashola and to some extent Chris Ngige, others who returned do not deserve their reappointment,” Lamorde said. “I do not have much information about the new ones but the President ought to have searched for better hands to help him achieve his next level agenda,” he said. Also in a quick reaction on Tuesday, the main opposition People’s Democratic Party (PDP) described the ministerial list as colourless, stagnant, and uninspiring. The party believed the list did not convey any sense of hope or purposeful governance under the All Progressives Congress (APC). A statement by PDP National Publicity Secretary, Kola Olognondiyan, emphasised that the list is replete with incompetent individuals who failed in their erstwhile ministerial assignments and left their ministries in a shambles. “Indeed, such a ministerial list can only come from a leadership that does not have mandate of the people. It is a complete waste of time and cannot fulfill the expectation of Nigerians,” the PDP said. “The list has further shown President Buhari and APC’s insensitivity and disdain for Nigerians and it does not in any way reflect their hope and eagerness for a better Nigeria. Furthermore, in recycling failed yesterday’s men for today’s assignment, President Buhari and the APC have left no one in doubt that they have no vision to move our nation out of the economic and security predicaments into which they have plunged us in the last four years,” it said. The PDP said a committed and responsive leadership would have widely consulted with Nigerians before compiling a ministerial list, given the current situation in the country. “If, indeed, President Buhari and the APC mean well for Nigerians and are interested in revamping our critical sectors, they would not have ended up with a list of those who will help conceal the huge corruption in the Buhari administration in the last four years, as well as those who will assist in channeling funds to individuals and groups used by the APC to rig the 2019 presidential election,” it said. The Nigerian stock market, however, gained 1.21 percent following the news showing that investors have largely anticipated the formation of a cabinet.

L-R: Mutiu Bakare, chief finance officer, Transnational Corporation of Nigeria (Transcorp) plc; Kalyana Sundaram, managing director/CEO, Transcorp Power Limited; Valentine Ozigbo, president/CEO, Transcorp plc; Owen Omogiafo, managing director/CEO, Transcorp Hotels plc, and Christopher Ezeafulukwe, executive director, business development and legal services, during the Transcorp Half Year Analyst Parley held in Lagos, yesterday.

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Wednesday 24 July 2019

BUSINESS DAY

news UBA’s REDTV to Light Up #UBAmarketplace 2019 with creative panel sessions, fashion shows, cinema, concert

ouths and adults alike are in for a great time at the #UBAMarketplace2019 as UBA’s award winning online network, REDTV has lined up a number of exciting acts to keep visitors and participants entertained during the two-day event which will take place on July 26 – 27, 2019. The UBAMarketplace2019 will be held on the sidelines of the Tony Elumelu Entrepreneurship Forum - the largest gathering of the entrepreneurship ecosystem in Africa. The over 20,000 expected guests will be treated to a lot of entertainment, panel sessions, fashion, fun, comedy, relaxation and will have the unique opportunity to meet with some of their favourite stars and celebrities. Africa’s star boy Wizkid will sit with UBA’s GMD, Kennedy Uzoka, in a fireside chat with the theme ‘Stars & Suits: Afropop meets High Finance’ as Richard Mofe Damijo, the top Nollywood icon, will sit in a movie panel session with Cynthia Nassardine, Cote D’ivoire’s darling; top Movie producer/director, Tunde Kelani to discuss the theme ‘The Big Picture: Business of film making’ and how entrepreneurs from Africa can benefit from the enterprise. The panel will be moderated by REDTV’s executive producer and group director for communications at UBA, Bola Atta. The music industry will not be left out at the UBA marketplace as Dj Cuppy, Dj Neptune and Pheelz the Producer will discuss on the theme ‘Booth to

Bank: How the beat becomes the profit’. Uzoka, who spoke about the event, stated ‘UBA has always been at the forefront of entrepreneurship across Africa, undertaking many projects aimed at contributing to and supporting Africa’s growth and economic integration. The birth of the UBA marketplace and this entrepreneurial fair is a testament to our commitment to African SMEs.’ Uzoka added that with the fair, UBA seeks to touch base with small business owners and to continue to positively affect the lives of entrepreneurs doing business in its countries of operations and beyond’. “I think everyone realises that we need to prioritise the private sector. We need to encourage entrepreneurship and the youths. This is the driving factor and the major reason why we are organising an event of this magnitude,” he said. Other side attractions at the Redzone will be the screening of the Lion King Movie and Bling Lagosians; fashion shows; treasure hunts, Kiddies corner as well as a Founder’s Day pitch event, where beneficiaries of the Tony Elumelu Foundation will be presented a platform to pitch their businesses with a grand prize of a grant, courtesy of UBA. REDTV is UBA’s dynamic online lifestyle channel that puts the spotlight on Africa with a distinct global appeal. Its award winning series, The Men’s Club Season 2, is currently airing on YouTube.

Edo Assembly: ‘Endorsement of Reps’ takeover order by Oshiomhole’s faction confirms party’s national chairman is behind crisis’

pecial adviser to the Edo State Governor on Media and Communication Strategy, Crusoe Osagie, says the recent statements from the publicity secretary of All Progressives Congress (APC), Lanre Issa-Onilu, on the disagreement over the inauguration of the Edo State House of Assembly, has confirmed that the party’s national chairman, Adams Oshiomhole, is sponsoring the crisis. In a statement, Osagie said, “The government’s attention has been drawn to the widely reported comments of the National Publicity Secretary of All Progressives Congress (APC) Mallam Lanre Issa-Onilu, with the headline: ‘APC endorses NASS takeover of Edo Assembly,’ which is not only hasty, but a slap on the face of the country’s judiciary.” According to Osagie, “Issa-Onilu’s hasty comment is coming before the Senate Committee’s report of its investigation into the issues at the Edo State House of Assembly and clearly pre-empts the much-awaited joint position of both chambers of the National Assembly as stipulated in the Nigerian 1999 Constitution, as amended.”

The governor’s aide described the endorsement by the APC National Publicity Secretary as a slap on the face of the nation’s judiciary, which has restrained the APC NWC from interfering in the affairs of the Edo House of Assembly, adding, “The endorsement is sufficient proof that the Comrade Adams Oshiomhole-led faction of the APC NWC is behind the crisis in the Edo State House of Assembly and has been teleguiding the House of Representatives Committee to carry out illegality in Edo State.” Osagie noted: “The APC Publicity Secretary has consistently proven to be the mouthpiece of the Oshiomhole-led faction of the APC National Working Committee and not the entire NWC of the party, so when Issa-Onilu speaks, Oshiomhole is always within prompting range.” He added, “Edo people have expressed their unflinching respect for the Rule of Law with regard to the situation at the Edo State House of Assembly, and will resist any form of illegality, no matter how highly placed the perpetrators of such illegality.” www.businessday.ng

NNPC secures $3.15bn financing for OML 13 to spike crude reserve T

HARRISON EDEH, Abuja

he quest by the Nigerian National Petroleum Corporation (NNPC) to increase the nation’s crude oil reserves and daily oil production to 3 million barrels per day (mbpd) has received a major boost with the signing of a $3.15 billion Financing and Technical Services Agreement between Sterling Oil Exploration and Energy Production Company Limited (SEEPCO), and the exploration and production arm of NNPC, the Nigerian Petroleum Development Company (NPDC), for the development of Oil Mining Lease (OML) 13. This was contained in a press statement released by the NNPC Tuesday. The OML 13 is 100 per-

cent owned by the NPDC and is located in the eastern axis of the Niger Delta covering a total area of 1987km². Ndu Ughammadu, group general manager, group public affairs division, NNPC, quoting the Group Managing Director of NNPC, Mele Kyari, as describing the funding arrangement as “a game changer to oil and gas project financing in Nigeria”. The GMD, who was represented by the Chief Operating Officer, Upstream, Roland Ewubare, expressed gratitude to President Muhammadu Buhari, for approving the transaction, adding that OML 13 held strong potentials both for the petroleum industry and the nation’s economy. He disclosed that the Federal Government was

expected to earn over $10.2 billion in royalties and taxes from the project over the next 15 years, while NNPC would earn over $5 billion after payment of the entire financing obligation. He advised the management of NPDC to develop a strong community engagement strategy to forestall any crisis that could hinder operations. The GMD disclosed that the acreage boasts of over 926 million stock tank barrels (mmstb) and 5.24 trillion cubic feet (tcf ), respectively, of oil and gas reserves, adding that the Financing and Technical Services Agreement was for a period of 15 years while the $3.15 billion ceiling funding would be provided by SEEPCO with a 10-year capital investment

period and five years for cost recovery. First oil of about 7,900bpd is expected from the project by April 1, 2020, while production is expected to peak at 94,000bpd and 542mmscfd within four years. On local content, the project is expected to enhance participation by indigenous companies in the industry by providing over 2,000 direct and indirect job opportunities. Also speaking in the release, chairman of Sterling Oil Exploration and Energy Production Company Limited, Tony Chukwueke, expressed delight at the opportunity offered the company to support the production and reserves growth aspiration of the Federal Government.

L-R: Segilola Adeola, project manager, Policy Innovation Unit, Accenture/facilitator; Barnabas Suleiman, lecturer, faculty of management and social sciences, Baze University; Uzoma Nwagba, chief operating officer, Government Enterprise and Empowerment Programme (GEEP); Olumuyiwa Alaba, trade policy lead, Policy Development Facility II, and Nnenna Okoye, engagement director, Busara Centre for Behavioral Economics, after a panel discussion at the Nigerian Policy Innovation Unit (PIU) Dissemination Meeting on ‘embedding behavioral interventions in design and management of social welfare programmes’ organised by Nigeria Economic Summit Group (NESG) in Lagos, yesterday. Pic by David Apara

Lagos rolls out bulldozers on Lagos-Badagry road JOSHUA BASSEY

gainst the May 30 Executive Order issued by the Lagos State governor, Babajide Sanwo-Olu, on zero tolerance for environmental and traffic nuisances across Lagos, operatives of the state task force, as well as officials from the ministry of transportation and others, have begun demolition of shanties and illegal structures on the Lagos-Badagry Expressway. The state government is planning to kick-start full-scale rehabilitation of the international road, which links Lagos (Nigeria) with other countries within the West African sub region. The demolition exercise, therefore, is partly to allow the contractors engaged by the government unhindered access to the road. Apart from the Lagos-Badgary road, the demolition will also be extended to the Lagos-

Abeokuta Expressway and other parts of the state. The inter-ministerial committee constituted by the governor in the wake of the executive order, had during a news conference last week, given owners of such structures and operators of illegal motor parks on major roads in the state, up till Monday, July 22, to remove them or face the wrath of the law. The exercise, which began from the Eric Moore end of the Lagos-Badagry expressway in the early hours of Tuesday, saw to the arrest of 26 persons, who may be charged to court in accordance with the environmental and traffic laws of the state. Taiwo Salaam, permanent secretary, Ministry of Transportation, and Olayinka Egbeyemi, chairman of the state task force on environmental offences, who led the demolition exercise, explained that the government had earlier issued a ‘Removal Order’ to all owners of illegal

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structures, which include shanties, kiosks and makeshift shops along Okokomaiko to Badagry and Iba-LASU road on the need to relocate from the road. “The governor was touched by the discomfort being experienced on daily basis along the axis as a result of these bad roads and vowed to ameliorate the sufferings of residents and commuters plying the Badagry Express-way by rehabilitating the road. “Therefore, we have to embark on general demolition exercise of all the shanties, kiosks and makeshift shops within these areas starting from today (Tuesday).” Also, Egbeyemi lamented that criminals seized opportunity to hide in some of the kiosks and shanties to carry out nefarious acts, especially at night, hence, the need to clear the structures with immediate effect. He said there were several complaints and reports of @Businessdayng

armed banditry along the axis where motorists and commuters were being attacked and dispossessed of their valuables, as well as maimed in the process. The taskforce arrived the area at about 11am, and started the demolition while traders and owners of the structures watched helplessly as cranes and forklifts brought down their shops and abodes. Some of the displaced traders and shop owners were seen struggling to salvage their property, as the cranes brought them down. Salaam said that the governor was worried over the overgrown weeds; health risk and gridlock the structures and activities posed to the lives of residents. According to Salaam, the cleaning exercise has no time frame, adding that it would be a continuous exercise until the area has been cleared of all illegal structures.

Wednesday 24 July 2019

BUSINESS DAY

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Wednesday 24 July 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

GEORGE PARKER AND JIM PICKARD IN LONDON

o r i s Jo h n s o n wa s crowned leader of the Conservative party on Tuesday and is set to become prime minister, facing perhaps the most daunting challenge of any British politician in peacetime. Mr Johnson beat Jeremy Hunt in the race to succeed Theresa May as head of the Tory party, securing 92,153 votes to the foreign secretary’s 46,656. The 2:1 margin of victory gives Mr Johnson a strong mandate to pursue his own version of Brexit in the coming weeks. In a bullish victory address to fellow MPs and Tory activists at the QE2 conference centre in Westminster, the Eurosceptic former cabinet minister vowed to “deliver Brexit, unite the country and defeat [Labour leader] Jeremy Corbyn”. He also pledged to energise the gridlocked negotiations with the EU, promising to “get Brexit done” and take advantage of what he said were the opportunities presented by leaving the bloc. “The campaign is over and the work begins,” he declared. Donald Trump tweeted his approval almost immediately after Mr Johnson’s victory. “Congratulations to Boris Johnson on becoming the new Prime Minister of the United Kingdom. He will be great!,” Mr Trump said. The former London mayor will enter Downing Street at about 4pm on Wednesday and will immediately be confronted by the

Boris Johnson wins Tory contest to become UK prime minister

Eurosceptic former minister faces huge challenge to unite his party and deliver Brexit

Boris Johnson gives his victory speech after winning the Tory party leadership contest, which will see him become the UK’s next prime minister © PA

challenge of uniting his divided party and charting a course out of the Brexit impasse. Mr Johnson, one of the leading figures in the 2016 referendum campaign to leave the EU, has

promised to deliver Brexit “do or die” on October 31 — Britain’s scheduled departure date. But Brussels has signalled it will not accept his proposed changes to Mrs May’s EU withdrawal deal while

senior Tory cabinet ministers are leading resistance to a no-deal exit. In a sign of the challenges ahead, Michel Barnier, the chief EU Brexit negotiator, immediately piled the pressure on Mr Johnson,

tweeting: “We look forward to working constructively w/ PM @ BorisJohnson when he takes office, to facilitate the ratification of the Withdrawal Agreement and achieve an orderly #Brexit.” He added: “We are ready also to rework the agreed Declaration on a new partnership in line with #EUCO guidelines.” To compound Mr Johnson’s problems, his government’s House of Commons majority — which relies on the support of 10 Democratic Unionist party MPs — is expected to shrivel to just one next month if the Conservatives lose the Brecon and Radnorshire by-election. Faced with Brexit deadlock at Westminster and the possibility that he could soon lose his majority, Mr Johnson is taking a team of seasoned Brexit campaigners into Downing Street with a view to holding an election within months. Tory MPs are braced for a possible snap election in the autumn, in a scenario where Mr Johnson would seek a new public mandate for his Brexit strategy — possibly accompanied by a non-aggression pact with Nigel Farage’s Brexit party.

South Korea fires warning shots at No-deal Brexit poses threat to Russian military aircraft world economy, IMF warns Seoul confirms its air force scrambled fighter jets after what it called an ‘unprecedented’ violation of airspace EDWARD WHITE AND KANG BUSEONG IN SEOUL AND HENRY FOY IN MOSCOW

outh Korea fighter jets fired hundreds of warning shots at a Russian military aircraft after what officials in Seoul described as an “unprecedented” violation of the country’s airspace. Seoul’s defence ministry confirmed its jets had on Tuesday fired about 360 shots at a surveillance aircraft accompanying two Russian nuclear-capable bombers after it twice flew into South Korean airspace above the Sea of Japan. “We are taking the incident very seriously. If such an act is repeated, [South Korea] will take a far stronger measure,” said Chung Eui-yong, director of national security at the presidential office in Seoul. The incident marked a serious intensification of tensions over Russian military aviation operations in the region after its aircraft violated South Korea’s air defence identification zone in May and June, military experts said. Moscow denied that two Tu-

95MS bombers had also violated a South Korean air defence identification zone but made no mention of the A-50 surveillance aircraft. Russia said it did not recognise the country’s claim over the territory where the incident took place near the disputed Dokdo islands and accused South Korean fighter jets of “creating a threat” to the Russian planes. “It was not the first time that South Korean pilots tried unsuccessfully to prevent Russian aircraft from flying over the neutral waters of the Sea of Japan,” the Russian defence ministry said in a statement. “Such areas are not envisioned by international rules and are not recognised by the Russian Federation, which has more than once informed the South Korean side of that.” South Korea’s defence ministry said the surveillance aircraft, an A-50, twice flew into South Korean airspace off its east coast. The incidents occurred after two Russian bombers and two Chinese H-16 aircraft entered South Korea’s air defence identification zone, officials in Seoul said. www.businessday.ng

Worst global growth in a decade as tariffs and political tensions weigh on sentiment DELPHINE STRAUSS IN LONDON

no-deal Brexit ranks alongside US trade policy as one of the chief threats to the world economy, according to the IMF’s latest assessment of the outlook for global growth. In an update of its World Economic Outlook, published on Tuesday, the fund was slightly more pessimistic than it had been in April on prospects for this year and next, forecasting that global growth would slow to 3.2 per cent in 2019 — the weakest rate of expansion for a decade — before picking up to 3.5 per cent in 2020. The projected pick-up was “precarious”, the IMF said, relying on progress in resolving differences over trade policy, as well as a stabilisation in troubled economies such as Turkey and Argentina. It listed a no-deal Brexit as one of the main events that could throw the global economy offcourse.

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This is seen as an increasingly plausible outcome, as Boris Johnson, who is set to become Britain’s new prime minister on Wednesday, has ruled out compromise on the terms of withdrawal, and pledged to leave the EU on October 31 “deal or no deal”. “The principal risk factor to the global economy is that adverse developments — including further US-China tariffs, US auto tariffs or a no-deal Brexit — sap confidence, weaken investment, dislocate local supply chains and severely slow global growth below the baseline,” the IMF said. To place growth on a stronger footing, it would be vital to resolve uncertainty around trade agreements, the fund added — including between the UK and EU, as well as the free trade area encompassing Canada, Mexico and the US. Policy mis-steps and the associated uncertainty would have a “severely debilitating effect” on sentiment, growth and jobs, it said, adding in an unmistakable reference to the US presi@Businessdayng

dent’s trade policy, that “countries should not use tariffs to target bilateral trade balances”. It also underlined concerns that a sudden outbreak of risk aversion in global markets “could expose financial vulnerabilities accumulated during years of low interest rates”, putting strain on highly leveraged borrowers and indebted governments. Another worry is the persistence of lower inflation in both developed and emerging economies. The fund said this could make it harder for borrowers to service debts, make companies more reluctant to invest and leave central banks less able to counter any shock to growth by cutting interest rates. In some rich economies, notably the US, growth in the first quarter of 2019 proved stronger than the IMF expected when it published its full forecasts in April. However, the fund warned that since then the immediate outlook had weakened markedly in China, India and much of Latin America.

Wednesday 24 July 2019

BUSINESS DAY

NATIONAL NEWS

Why work events are becoming a sober experience The boozy corporate party may be endangered after #MeToo and the rise of non-drinkers EMMA JACOBS

ulia Phillips, a corporate events organiser, has noticed a change in clients’ requests for their pre-dinner activities: alcohol-free drinks. Previously, a typical teambuilding session would involve a series of alcohol-based challenges. In a twist on the TV series The Great British Bake Off, for example, colleagues make a signature cocktail and compete in a technical round. But while clients still like drinksbased events, they increasingly want to offer employees the opportunity to shake a mocktail too. “We [might] do something where the cocktail we’re creating is very lime heavy — [with the option] to include vodka,” says Ms Phillips, managing director at events agency Crescendo. Such requests have risen from about 10 per cent to 50 per cent of clients over the past 18 months, she adds. In the past, employees would express a reason for not drinking, she says — for example, a drive at the end of a train commute, religious grounds or pregnancy. But younger workers tend not to bother. “Millennials just want to have something where they don’t drink — they don’t give a reason. It’s a generational difference.” While there is no desire to ditch the cocktail shaker altogether, employees want more options. “People want to learn,” says Ms Phillips, “they like the experience of, say, learning about the history of rum.” There are parallels between this trend and flexitarians — people who are largely vegetarian but eat the odd piece of meat. “People will mix it up,” she adds. Drinks companies have seized on such tastes — variously described as “sober curious” or “mindful drinkers”. Diageo, for example, has invested in Seedlip, a British company that makes non-alcoholic distilled drinks, while Anheuser-Busch InBev and Heineken have created no- and low-alcohol beers in recent years. Greater health awareness is one driver, though other factors include changes in leisure, such as gaming. Social media, which can become a public forum to shame drunken mishaps, is another factor. The #MeToo movement has also forced many companies to review their alcohol policies. Earlier this year, Lloyd’s of London, the insurance marketplace, announced that it would bar people who have been drinking or are under the influence of drugs from the premises. It followed sexual harassment complaints and a previous ban on daytime drinking. But corporate entertainment — after-work drinks, networking events, award ceremonies and even incentives — are still dominated by alcohol. One public relations executive observes that it is impossible to get the “old guard to realise that giving out a bottle of cheap wine as a reward for good work needed not to be the norm any longer — that

it was really ‘othering’ folks who didn’t drink.” A focus on alcohol is not confined to large legacy organisations. The bro-culture of tech companies has also been criticised. In 2014, Kara Sowles, who works at Puppet Labs, a tech company in the US, wrote: “Without a culture of drinking, would the start-up world still be the hip bastion of partying that sets it apart from its corporate twin?” The alcohol culture means people feel pressured to drink, says Stephen Pereira, a psychiatrist whose private clients are largely City workers. “Given the choice, many people might not drink but there’s an expectation that if others are drinking they should too. People don’t want to feel left out.” Simon Eastwood, a corporate trainer and coach, agrees. Work events are “so alcohol-centric that it often makes non-drinkers feel they are not part of the ‘club’,” he says. Some 35 per cent of employees do not want to drink at corporate events, but of those, 15.8 per cent do anyway, according to research from Niznik Behavioural Health, a US organisation that treats alcoholics. On a sunny lunchtime outside a pub in the City of London, three twenty-something recruiters, each with an alcoholic drink in hand, say they would not go to a work function and not drink. Their employer organises inclusive non-alcohol activities, such as a sports day, but then “we go to the pub”, says one. Lauren Booker, a consultant at Alcohol Change UK, says this feeling of being excluded tends to affect older professionals more. “This is an ingrained pattern as you go further up the management ladder. Younger people are less inclined to drink.” Post-work drinks can be challenging for young Muslims who do not drink, says Shelina Janmohamed author of Generation M: Young Muslims Changing the World. “They want to hang out with senior people.” She does believe things are slowly changing: “It’s not a wild thing to say you don’t want to go for a drink.” Laura Willoughby, co-founder of Club Soda, a mindful drinking movement, says that corporate events are a hard nut to crack. “Caterers have to fulfil a healthy catering policy, offering salad as well as burgers at lunchtimes. They don’t extend this to the evening . . . Corporate entertaining is behind,” she says. Last year, in a blog post, Ms Booker described attending a swanky corporate reception with vast quantities of champagne and craft beers: there was apple juice and orange juice served with green and white straws for non-drinkers. It is not just the small choice of sugary alcohol-free drinks that is old-fashioned, Ms Willoughby says, but also the way they are typically served. Waiters top up glasses with alcohol, but non-drinkers are expected to serve themselves. www.businessday.ng

Steven Mnuchin, Treasury secretary, is negotiating a deal to raise the debt ceiling on behalf of the White House, although any agreement will require Donald Trump’s signoff © AP

White House and Congress reach deal on US debt ceiling

Two-year agreement announced by Trump would raise federal spending significantly JAMES POLITI AND LAUREN FEDOR IN WASHINGTON

he White House has struck a two-year deal with Democratic party leaders in Congress to raise America’s $22tn borrowing limit, removing the threat of a US debt default and significantly raising federal spending. The deal — crafted by Democrat Nancy Pelosi, speaker of the House of Representatives, and Steven Mnuchin, the Treasury secretary — increases the so-called debt ceiling until the middle of 2021, meaning the next big budgetary stand-off would occur after next year’s presidential election. However, the budget increases, on top of sweeping tax cuts enacted by President Donald Trump in 2017, raised new concerns about a lack of fiscal discipline in the world’s largest economy. In a joint statement, Ms Pelosi and Senate Democratic leader Chuck Schumer said the agreement “permanently” ended the threat of sequestration, or automatic cuts to federal spending passed under Barack Obama’s presidency in 2011. It is expected

to pass both houses of Congress and be signed by Mr Trump in a matter of days. Mr Trump wrote on Twitter: “This was a real compromise in order to give another big victory to our Great Military and Vets!” Ms Pelosi and Mr Schumer said the agreement would “enhance our national security and invest in middle class priorities that advance the health, financial security and wellbeing of the American people”. Mr Mnuchin had warned this month that the US government was at risk of running out of money to pay its bills as soon as September, triggering a rush to strike a compromise before lawmakers head home for their August recess. Many economists, as well as officials at the Federal Reserve, had pointed to the threat of a US debt default as a key “downside” risk hanging over the American and global economies. “If this deal gets passed into law, it’s unquestionably a good thing that the debt ceiling has been addressed,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center thinktank wrote on Twitter. “But the irresponsibility of fully unwinding

the Budget Control Act of 2011 with no fiscal restraint in its stead is astounding.” People familiar with the deal said it would raise spending levels in both defence and non-defence areas by a total of $320bn, while cutting spending by much less than the $150bn in offsetting reductions sought by the Trump administration. “While the bipartisan deal represents a compromise, I am proud that this agreement . . . thoroughly rejects the president’s reckless slash-and-burn budget proposal,” said Democrat Nita Lowey, chair of the powerful House appropriations committee. For decades US lawmakers had routinely raised America’s borrowing limit without much debate over the need for the government to meet payments it had already signed off on. But starting in 2011, when Mr Obama was faced with a new batch of Tea Party Republicans in Congress, the US borrowing limit became a source of hand-wringing and brinkmanship, occasionally leading America to the edge of default — and on one occasion triggering a debt downgrade.

The Mueller Show finally comes to Capitol Hill Democrats hope testimony will increase public pressure for impeachment of Donald Trump LAUREN FEDOR IN WASHINGTON

n the more than two years since Robert Mueller was appointed as special counsel for the US Department of Justice, he has only spoken in public once. The notoriously tight-lipped former FBI director gave no interviews or news conferences during his 22-month investigation into allegations of Russian interference in the 2016 presidential election, and only spoke briefly to reporters in May of this year, one month after a redacted

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version of his 448-page report was published. At the time, Mr Mueller said he hoped it would be the last time he would speak publicly about his probe, and warned he would not go beyond his written report in any congressional testimony. But on Wednesday, following a congressional subpoena, Mr Mueller will face five hours of grilling from members of Congress, with Democrats keen to use his testimony to focus public attention on US President Donald Trump’s conduct and Republicans attempting to redirect the spotlight on the investigators themselves. @Businessdayng

Starting at 8:30am eastern standard time, Mr Mueller — who is no stranger to congressional hearings, having testified repeatedly during his 12 years as FBI director — will face three hours of questioning from the House judiciary committee, followed by a two-hour appearance before the House intelligence committee. Democrats believe the hearings — which will air uninterrupted on America’s three major broadcast networks, as well as cable news channels — will make more of an impact with voters than Mr Mueller’s dense written report.

Wednesday 24 July 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Microsoft invests $1bn in OpenAI effort to replicate human brain Silicon Valley giant keen to catch up in advanced AI race RICHARD WATERS IN SAN FRANCISCO

icrosoft has pumped $1bn into Silicon Valley’s most ambitious artificial intelligence research group in pursuit of the ultimate AI dream: a vast, artificial human brain that can run on Microsoft’s globe-spanning cloud computing system. The cash infusion spells a new lease of life for OpenAI, which was set up four years ago by tech luminaries including Elon Musk and Peter Thiel out of a concern that AI would end up destroying the human race. They wanted to win the race to full artificial general intelligence (AGI) — a system that can match, and eventually surpass, humans — in order to make sure it was used for good. The project has been through a reorganisation this year, with Mr Musk no longer involved and Reid Hoffman, the venture capitalist and founder of LinkedIn, stepping in to become the biggest individual backer. With Microsoft’s money and Azure computing platform at its disposal, OpenAI hopes to have a shot at the goal it was set up for. “We’re testing a hypothesis

that has been there since the beginning of the field: that a neural network close to the size of the human brain can be trained to be an AGI,” said Greg Brockman, OpenAI’s chairman and co-founder. “If the hypothesis is true, the upside for humanity will be remarkable.” Microsoft’s move to align itself with OpenAI echoes Google’s 2014 acquisition of DeepMind, the London-based AI research company that was also pursuing the human-level AI. But Microsoft, though it is supplying cash and a computing platform, will be kept more at arm’s length. OpenAI’s board will continue to take all decisions about the research agenda and how its work is used. Microsoft will only have the right to appoint one director, the group said. OpenAI will tap into Microsoft’s data centres to run its experiments, using the company’s Azure cloud platform, and Microsoft will get the first shot at commercialising early results from the research. That could reinforce the software company’s efforts to become one of the leading AI companies, at a time when Google has become the acknowledged leader in advanced AI among the big tech companies.

Robert Morgenthau, Manhattan district attorney, 1919-2019 He became the scourge of the Mob and white-collar crime in New York ORTENCA ALIAJ AND ROBIN WIGGLESWORTH IN NEW YORK

o be a federal or state prosecuting attorney in New York is to play in the major league of US criminal law. Robert Morgenthau, who has died just shy of his 100th birthday, was for nearly 50 years the heaviest hitter around. He went after the Mob, the politically connected and white collar financial crime with equal fervour. And even if he lost about a quarter of his cases, those he convicted included some pretty illustrious names. Robert Morris Morgenthau was born in Manhattan on July 31 1919 into a patrician family with impeccable political connections. His grandfather was President Woodrow Wilson’s US Ambassador to the Ottoman Empire, while his father served as Franklin D Roosevelt’s Treasury secretary for nine years. He once cooked hot dogs for George VI at Roosevelt’s country estate. Knowing everybody who was anybody in Democratic party circles Morgenthau cultivated a close relationship with John F Kennedy, with whom, as a young man, he used to sail off Cape Cod. He married his first wife in 1943 and she died in 1972 after giving

birth to five children. He had two more with his second wife, the writer Lucinda Franks, all of whom survive him. The ultimate straight arrow, his one known vice until recently was two Cuban cigars a day. After wartime Navy service, including three hours in the sea off Algiers when his ship was sunk, he practised law in New York in the 1950s. This period was notable for his defence of those caught up in Senator Joseph McCarthy’s anti-communist witch-hunts, among them the film star Edward G Robinson. He did not hesitate when newly elected Kennedy tapped him to become US attorney for the Southern District of New York, the legal jurisdiction which today strikes fear into the hearts of President Donald Trump and his associates. He served there until 1970, interrupted only by a disastrous run for New York governor against Nelson Rockefeller in 1962. A notable early conviction was of Anthony “Tony Ducks” Corallo, the best known of about 150 indictments he brought against the Mob. He also set up the first department in his office to investigate financial malfeasance on Wall Street, resulting in a string of prosecutions. www.businessday.ng

Greg Brockman, OpenAI co-founder and chairman

The former Rio Tinto adviser who became mining’s Big Short Henry Steel has made big profits for Odey by betting against his ex-employer’s Oyu Tolgoi mine HENRY SANDERSON AND NEIL HUME

t was only after his acrimonious exit from Rio Tinto that Henry Steel finally visited the giant copper mine beneath the Gobi desert. Gatecrashing an investor trip to Mongolia in late 2016, Mr Steel braved minus 20 degree temperatures before descending 1.3km underground to the Oyu Tolgoi copper mine, one of Rio’s hottest prospects and most expensive projects. Mr Steel, a fast-talking Englishman who was educated at Eton College and Oxford university, did not make a positive impression on all his fellow travellers. At one point in the trip he was chastised by Robert Friedland, the Canadian mining billionaire, for asking too many questions. “It’s like chewing on tin foil

listening to him,” said Mr Friedland, who discovered Oyu Tolgoi in 2001 and later sold it to Rio. Although he had never laid eyes on the mine before, Mr Steel, who is now 30, had spent a lot of time thinking about it. Employed as a “special adviser” to Rio in 2013, he wrote a thesis on Oyu Tolgoi, as part of a PhD sponsored by the company. The dissertation did not turn out as Rio had expected. According to a copy seen by the Financial Times, it concluded that the Mongolian government’s 34 per cent stake in the project was essentially worthless. Mr Steel argued that the country would not receive any benefits until it had first paid off a loan from Rio to finance its share of the construction expenses — which would take at least 20 years. The paper suggested that

Mongolia would be better off having an equity share not in the project-level entity but in Rio Tinto itself, enabling the country to receive dividends immediately. Not only had Rio paid for a paper that criticised its own project, the document was widely circulated, including to competitors such as Glencore and Sir Mick Davis, the former head of Xstrata. Mr Steel never received his PhD from France’s EDHEC Business School and the paper was never published. Instead, he left the company soon after. Mr Steel declined to comment on the paper. “He had ideas above his station,” one person close to the company said. “He trucks himself as being ex-Rio and having insights but that seems slightly unethical to me.”

Summer time and the thinking is not easy Mike Mackenzie’s daily analysis of what’s moving global markets MICHAEL MACKENZIE

welcome relief from the usual sardine-packed commute can only mean one thing: summer holidays have arrived. I bid adieu to my two Americans this morning as they flew back to New York to see family and friends. Meanwhile, for markets there’s plenty of fodder for deeper contemplation until August vacations end. Asset prices have risen handsomely so far this year, leaving many portfolios looking a lot healthier from their late-2018 score. That said, the FTSE All-World index is only up 1.9 per cent over the past 12 months. Lower bond yields and expectations for a lot more central bank easing only goes so far, and at the back of investors’ minds is

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the nagging feeling that there’s not much more upside left. A look at bond yields and currencies shows they’re stuck in narrow ranges. But what really sticks out in this environment is how flows are tilting in favour of corporate credit and also higher yielding currencies, a strategy known as the “carry trade”. Borrowing for next to nothing in one currency and ploughing the proceeds into assets that pay a lot more on paper is great when central banks are keeping a lid on volatility. And this backdrop is likely to continue. Both the European Central Bank and the Federal Reserve hold policy meetings this month, where their message should be so soothing as to keep carry and credit-risk trades humming along. @Businessdayng

The Bloomberg Carry Trade index for eight emerging market currencies has bounced nearly 5 per cent from its low in May, leaving this measure sitting at a 14-month high. Low market volatility leaves the index with a lot more room to rally, although its January 2017 peak still requires a further 7 per cent rise. But don’t rule that out. In a world where interest rates are perceived to being stuck in a “lower for longer” trend, credit risk and carry trades stand out as attractive strategies. These work unless there is a shock such as a recession, which remains a low probability at the moment. Katie Nixon at Northern Trust says “dovish central banks around the world” represent “a constructive backdrop for risk assets”.

Wednesday 24 July 2019

BUSINESS DAY

ANALYSIS

For all his tough talk, can Donald Trump lower drug prices?

President’s efforts to reduce high cost of pharmaceuticals for patients have so far failed HANNAH KUCHLER IN NEW YORK AND KIRAN STACEY IN WASHINGTON

S politicians’ tough talk on drug prices has moved markets but made no real difference in how much patients pay at the pharmacy. After two high-profile reforms recently flopped, pressure is on the Trump administration and Congress to reach a deal that will lower voters’ drug costs before the next election. In the coming weeks, Donald Trump has promised an executive order on drug prices, while the Senate finance committee is working on a bill that could be a collage of measures from negotiating for government-backed plans to capping prices at or near inflation. The small chance of a bipartisan deal makes it more likely that Mr Trump will take executive action to force through changes before the election, say analysts. Whichever Democrat he faces is likely to have a radical plan to disrupt the pharmaceutical industry. “The president is desperate to have tangible results for his re-election campaign, having talked about it so much in 2016,” says Brandon Barford, a partner at Beacon Policy

Advisers, a Washington-based political consultancy. Why are drug prices a political issue in the US? Republicans and Democrats have condemned soaring drug prices as more Americans struggle to afford their medications. The US spent a record $360bn on prescription drugs in 2018, according to the Centers for Medicare and Medicaid Services. More than 43 per cent of adults are on high deductible insurance plans that make them responsible for more of the cost of their own care. Why did rebate reform fail? The Trump administration this month backed out of changes that were designed to ensure patients, not middlemen or insurers, reaped the rebates — or discounts — offered by drugmakers. The pharmaceutical companies supported the reform because they feel forced to offer discounts in order to ensure their drugs are covered by insurers. Their shares fell when it was withdrawn because it was one of the only measures that would not have cost them money. Katherine Gudiksen, a senior health policy researcher at the UC Hastings College of Law, said the proposal would have addressed “fundamental flaws” in the system.

US jobs growth bypasses railway workers Once reliable source of blue-collar employment cuts back as wider labour market booms GREGORY MEYER IN NEW YORK

S employment growth has bypassed the railroad industry, a provider of good wages for blue-collar workers across the country. Headcount at the largest US freight railroads was down 4 per cent on year to 141,000 in June, a lower number than in the financial crisis, government data show. The sum is set to fall further this year as managers streamline operations under pressure from investors. Last week Union Pacific Railroad, the largest listed US railroad, said it intended to cut payrolls by 10 per cent in 2019 as it reported a record second-quarter profit of $1.6bn. At CSX, whose web of tracks lies east of the Mississippi river, employee counts were down 5 per cent on the year in June after a 14 per cent reduction last year. Executives seek another 2.5 per cent reduction between now and 2020. The Norfolk Southern Railway, which reports results this week, has outlined plans to eliminate more than 500 positions this year. The prolonged cuts stand in contrast to robust hiring in the US labour market, where non-farm payrolls rose by 224,000 in June. Railroad jobs are becoming

more scarce as managers try to boost profit margins, in some cases to placate activist shareholders. Most operators have in the past two years embraced principles known as “precision scheduled railroading,” which entail rigid timetables, longer trains, thousands of idled locomotives and less labour. Driving trains, maintaining right-of-way and dispatching cars are largely unionised jobs that do not require a university degree. The average employee at a large freight railroad earned $87,100 in wages and $38,300 of fringe benefits in 2017, according to the Association of American Railroads. The slackening rail employment picture has drawn scrutiny from Congress. A House transport subcommittee last month conducted a hearing on the state of the workforce. Lawmakers questioned the consequences of lower staffing. “While worker productivity has never been better and Class 1 railroads have enjoyed multibillion-dollar profits for many years, employment levels are headed in the other direction with thousands of rail employees furloughed,” Dennis Pierce, president of the Brotherhood of Locomotive Engineers and Trainmen union, told the subcommittee. www.businessday.ng

The painful path to curing Japan of its cash addiction Up to $15bn a year could be saved if Japan switched to electronic payments but an ageing population and mistrust are hindering change LEO LEWIS AND KANA INAGAKI IN TOKYO

n early July, the 61-year-old chief executive of 7pay appeared on TV to apologise after the launch of one of Japan’s most hotly anticipated mobile payment services had turned into a catastrophe. After struggling to explain why his cashless system — rolled out across the company’s 21,000-strong network of 7-Eleven stores to 1.5m users — had been hacked and defrauded within hours of going live, Tsuyoshi Kobayashi was asked about the standard safeguard of “twostep authentication”. In response, Mr Kobayashi slowly repeated the phrase in the befuddled tones of someone hearing it for the first time, telling the nation all it needed to know. The incident has become part of a grand parable of modern Japan: a country in a permanent tension between its high-tech image and the realities of ageing consumers and squandered opportunities. Japan invented two of the key cashless technologies that other countries have deployed to leap ahead of it. And while its ambition of turning one of the world’s most cash-obsessed societies into one of the least by June 2027 may be real, so too are the management ineptitudes, extreme market overcrowding, structural obstacles and demographics that stand in their way. Over the past couple of years, both the Japanese government and its corporations have laid out plans for this revolution — one that could fundamentally reshape and revitalise the world’s third-largest economy and even, say some, help Japan’s decadeslong battle with deflation. Foremost among these plans is the government’s “cashless vision” of doubling the ratio of card and e-money transactions from their

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current low levels within the next eight years, to create a $1tn-plus cashless market. Heading the drive is Prime Minister Shinzo Abe as his government looks to capitalise on an expected surge in tourists ahead of the 2020 Tokyo Olympics and a sales tax increase in October that they hope will encourage retailers to replace labour-intensive cash transactions with more efficient digital payment systems. A significant factor behind the push is Japan’s shrinking working-age population — a limited resource that can no longer be wasted on labour intensive processes involved in the handling of cash. Another is raw economics: Nomura Research Institute estimates that it costs the country about $15bn every year to handle the cash it uses: expenditure that could be better deployed elsewhere. Analysts at UBS, who believe that around 40 per cent of payments in the country will be non-cash by 2026, say Japan is approaching a tipping point. Banks have begun to sharply reduce their networks of ATMs to cut costs. Although seen in other countries, it is a phenomenon more pronounced in Japan, say analysts, due to a chronic labour shortage that is already reverberating through the retail and restaurant sectors. “Digitalisation is spreading at an incredible pace so it’s important that we do not remain satisfied with the status quo and take active steps to address these structural changes,” says Tatsufumi Sakai, chief executive of Mizuho Financial Group, which recently launched a digital currency service and laid out plans to shut about 20 per cent of its 500-branch network. One byproduct, says Hiromichi Shirakawa, a strategist at Credit Suisse, is that greater use of digital settlements should @Businessdayng

reduce “menu costs” — achieving a long-hoped-for ambition of the Bank of Japan, the central bank, to make prices less rigid and boost inflation. Mr Shirakawa cites the strange tyranny of the ¥1,000 note which has anchored the price of lunch deals in Japan for years despite fluctuations in input prices. “Increased adoption of cashless settlement technologies should enable retailers to adjust their output prices more frequently . . . rather than remaining ‘constrained’ by the ¥1,000 unit,” wrote Mr Shirakawa. This shift is happening against a backdrop of acute concern over national prestige. When Japan hosted the Olympics in 1964, it wowed the world with its technology; it wants to do the same next year and fears the humiliation of visitors discovering that Japan still has large food retailers, medical clinics, restaurants and hotels that only accept cash. “It was my first time so I was very nervous but what a relief that it was so easy,” Mr Abe wrote on Twitter in February with a photo of him awkwardly holding an iPad to scan a QR code to pay for flowers. “We hope to dramatically expand cashless in Japan . . . in preparation for an era with 40m foreign tourists [up from 31m in 2018].” Despite such ambitions, the amount of cash in circulation in Japan has actually risen over the past 20 years. And, according to figures released by the Ministry of Economy, Trade and Industry in 2018, Japan’s ratio of cashless transactions to total household consumption was far below that of other big economies at 18 per cent. South Korea was close to 90 per cent, the UK was more than 55 per cent and the US more than 45 per cent. Only Germany among the major economies has a lower ratio of cashless transactions at 15 per cent.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 24 July 2019

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@Businessdayng

BUSINESS DAY

Kunle Odusola-Stevenson, PR Strategist for SPE Nigeria/NAICE2019; Francis Nwaochei, Council Member of SPE Nigeria; Debo Fagbami, Chairman of SPE Nigeria Council, and Onyebuchi Okereke, Public Secretary of SPE Nigeria, during Society of Petroleum Engineers press conference preparatory to the Nigeria Annual International Conference(SPENAICE2019) in Lagos recently.

OIL

Debrief

Ghana: AFC provides $100m for Ghana oil project Page 46

Crude oil prices amidst gathering storms FRANK UZUEGBUNAM

GAS

Africa: Africa leads in LNG investments for 2019 Page 47 OPEC weekly basket price DAY

PRICE

19/7/19

62.93

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63.1

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64.6

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66.13

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66.79

he geopolitical storms are gathering leaving the crude oil prices shaky. US sanctions on Venezuela and Iran removed more than 1.5 million barrels of daily supply from the market, the Organisation of Petroleum Exporting Countries (OPEC) extended a supply-cut deal into 2020 and tensions between the United States and Iran are rising. The Iranian capture of the British-flagged ship in the global oil trade’s most important waterway, the Strait of Hormuz, escalated the confrontation with the West that began when new, tighter US sanctions on Iran

took effect at the start of May. Iran’s Revolutionary Guards said they captured the British-flagged oil tanker in the Gulf in response to Britain’s seizure of an Iranian tanker earlier this month. A senior Trump administration official said the United States will destroy any Iranian drones that fly too close to its ships. The move has increased the fear of potential supply disruptions in the Strait of Hormuz at the mouth of the Gulf, through which flows about one-fifth of the world’s oil supplies. The incidents highlight increasing tensions in the world’s busiest oil shipping artery, raising concerns over global energy security. Developments in the Middle East remained a “potential upside risk for prices,” ANZ

analysts wrote in a note. Oil prices rose more than 2 percent on concerns that Iran’s seizure of a British tanker may lead to supply disruptions in the energyrich Gulf. Brent crude futures climbed $1.41, or 2.26 percent, to $63.88 a barrel while West Texas Intermediate (WTI) crude futures were up $1.13, or 2.03 percent, at $56.76 a barrel. Amidst the gunboat diplomacy, Iran is proposing a new nuclear deal, offering a deal with the US. The new deal will include permanent enhanced nuclear inspections in return for the US lifting sanctions. Javad Zarif, Iran’s foreign minister said it was “a substantial move.” The offer comes shortly after the US downed an Iranian drone in the Persian Gulf. It is un-

clear how the Trump administration will respond, in light of the 12 conditions it laid out last year, many of which are unrelated to the nuclear program. Meanwhile, Libya’s Sharara oilfield, the country’s biggest, had resumed production at half capacity after being shut, which caused an output loss of about 290,000 barrels per day (bpd). Libya’s state-owned National Oil Corporation (NOC) had declared force majeure on Sharara crude loaded at Zawiya port due to an unlawful closure of a valve. Libya is currently embroiled in a protracted civil war as the self-styled Libyan National Army, forces loyal to the UN-backed government and other militia groups have clashed regularly in the past three months.

Wednesday 24 July 2019

BUSINESS DAY

oil

WEST AFRICA

Outlook

Ghana: AFC provides $100m for Ghana oil project

Brief Angola: Foreign companies produced 97 percent of Angola’s oil output

frica Finance Corporation (AFC) announced that it had financed Aker Energy, a subsidiary of Aker ASA, by investing in $100-million of convertible bond notes. The funds will be used by Aker Energy to finance the development of the Deepwater Tano Cape Three Points (DWTCTP) block, which contains multiple oilfields, offshore Ghana. The AFC in a statement said the investment aligned with the AFC’s overall natural resources strategy, which entailed building a portfolio of valueadded assets across the energy value chain. “By taking an early equity financier role in operational or near-operational upstream assets, the AFC can enhance the revenue potential of African states to generate revenue required for investment in infrastructure and social services for its growing populations,” it said. The asset is owned by Aker Energy (50 percent) in a joint venture with Lukoil (38 percent) and Fueltrade (2 percent). State-owned Ghana National Petroleum Corporation holds a 10 percent shareholding. The Pecan field, which is the most appraised in the DWTCTP block and the field to be developed in the first phase, is an oilfield estimated to contain reserves of about 334-million barrels of oil equivalent. This investment is aligned with AFC’s overall natural resources strategy, which entails building a portfolio of value-added assets across the energy value chain. By taking an early equity financier role in operational or near-operational

upstream assets, AFC can enhance the revenue potential of African States to generate revenue required for investment in infrastructure and social services for its growing populations. This investment also marks the beginning of AFC and Aker’s mutually beneficial relationship in the exploration and production sector across the African continent. Ghana became a sovereign shareholder in the AFC last year, having acceded to membership in 2011, hence

its eligibility to access funding from the corporation. The government will also benefit from the Aker project through increased revenue and government royalty and taxation income. Ghana is currently reeling under shortfalls in domestic revenue mobilisation and needs to increase its tax efforts. The DWTCTP field is one of Ghana’s principal hydrocarbon assets and is expected to contribute to near-term target of an annual production volume of 500,000 barrels of oil equivalent per day.

oreign companies have produced 97.6 percent of oil pumped last year in Angola, according to a report posted on the National Fuel Society (Sonangol) website. The group was led by France’s Total E&P Angola, with 38.3 percent of total gross production, followed by Chevron (21.2 percent), Esso (15.9 percent), BP (13 percent), ENI (9.2 percent) and Pluspetrol (0.1 percent), according to the Sonangol Management and Consolidated Accounts Report in 2018. The local Sonangol Pesquisa y Production and Somoil (0.4 percent) accounted for the remaining 2.4 percent. In terms of gross production, oil drilling dropped by 9.0 percentage in relation to 2017, closing with 539 813 065 oil barrels against 595 810 124 of previous calendar. The daily average was 1.4 million tons against 1.6 million in 2017. Regarding oil rights, Sonangol as a national concessionaire received 135 663 170 barrels of crude oil, an average of 371 000 barrels daily. Angola, Africa’s second-largest oil

Mauritania: Expro to Supply IRS Offshore Mauritania

ilfield services company Expro said it has been awarded a contract by Pacific Drilling subsidiary Pacific Santa Ana for the provision of an Intervention Riser System (IRS) for PETRONAS’s Chinguetti Field Phase II plug and abandonment

(P&A) contract, offshore Mauritania. The contract, valued at $20 million, will see Expro provide its IRS system with associated surface support equipment, to be deployed from Pacific Drilling’s drillship, Pacific Santa Ana. The contracted work will take place for an estimated 360 days. Worldwide Oilfield Machine (WOM) will support Expro with the provision of the subsea well access system and technical support team. The IRS safely establishes and maintains well access throughout riser to surface operations, replicating the functionality of the blow-out preventer and providing a safe and reliable means of well control, connected directly to the production tree. With increased coiled tubing cutting and disconnect capability, the IRS system provides an alternative dual barrier, through-tubing system. The award includes supplying a range of services, including the subsea well

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access system, lubricator valve, surface flowhead, umbilicals, topsides control equipment and IWOCS (installation and workover control system) package. Expro will also provide an onshore project management team to support Pacific Drilling throughout the project planning and execution phases, based in Expro’s office in Kuala Lumpur and then locally onshore in Mauritania. Expro recently expanded its subsea intervention capabilities with the introduction of the IRS system and a Riserless Well Intervention (RWI) system, which provides a through-water integrated solution for carrying out cost effective intervention and abandonment operations on all types of subsea wells. Colin Mackenzie, Subsea Vice President at Expro said, “Following the recent news that we have expanded our subsea intervention capabilities with two new well access solutions, we are delighted to announce this significant contract award.

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producer, is among the continent’s most oil-dependent nations. Some 95 per cent of its export revenues and 70 per cent of tax come from petroleum. Angola’s oil blocks are being quickly depleted as new investment has dried up. After years of double-digit growth, the third-largest economy in sub-Saharan Africa has failed to grow for four years.

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Wednesday 24 July 2019

BUSINESS DAY

gas Brief

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ENERGY intelligence

Africa: Africa leads in LNG investments for 2019

Global LNG: Asian prices slip but traders expect demand to pick up for winter

sian spot prices for liquefied natural gas (LNG) slipped, tracking a fall in European gas prices though traders anticipate prices to bottom out soon ahead of peak winter demand. Spot prices for September delivery to Northeast Asia LNG-AS are estimated to be about $4.60 per million British thermal units (mmBtu), down 10 cents, trade sources said. Prices for cargoes delivered in August are estimated to be $4.20 per mmBtu, down 20 cents. Traders are likely waiting for the European gas prices to come down before taking a position on LNG, a Singaporebased industry source said. “The LNG market is quiet but the gas market is not and many LNG buyers are just waiting on the sidelines for the gas market to cool down before they come in to buy,” the source added. Both the Dutch month-ahead and British month-ahead contracts have fallen 20 percent in the past week after a two-week long period of rises on expected supply flows due to outages in Norway and short-covering. September contracts, which are not front-month yet, have also fallen to around $4.10 per mmBtu for the British price and $3.85 for the Dutch, widening the spread between spot Asian LNG and the European hubs considerably. Despite that, many traders say the spread is not wide enough and nor is there the kind of Asian demand to kickstart arbitrage from the Atlantic to the Pacific Basin. Angola LNG offered a cargo for August to September delivery to as far as Singapore in a tender while Russia’s Novatek has offered a cargo for mid-September loading from Rotterdam’s Gate terminal in the GLX platform, industry sources said. In term contracts, four companies are vying for a massive LNG tender by Pakistan to buy 240 cargoes for a period of 10 years, sources said. Indonesia’s Tangguh LNG plant may have offered two cargoes a month for loading or delivery over October to December into Northeast Asia earlier this month though it was not immediately clear if it had sold the cargoes.

frica is leading the way with LNG Greenfield investments expected to reach near $103 billion in 2019, which is set to shatter previous records for the oil and gas industry, according to energy research firm Rystad Energy. With some LNG megaprojects in the works, Africa has become the dominant LNG investment destination for 2019 and has almost one-third of total Greenfield investment. “The final investment decision by Anadarko for its Area 1 LNG project marks the beginning of a new phase for not only Mozambique and the African continent, but for the industry as a whole,” Pranav Joshi, analyst on Rystad’s upstream team, said in a note. “Area 1 is the largest LNG project that has been sanctioned in Africa to date and will also kick start the wave of sanctioning activity of other bigger LNG projects this year.” The Area 1 project’s Greenfield CAPEX is estimated at $15.6 billion, which is in the same league as major LNG developments in the US, Russia and Australia. Also if Mozambique’s Area 4 LNG project receives a final investment decision (FID) from operator ExxonMobil Corp. this year, it will be account for an-

other $14.7 billion in Greenfield expenditure in Africa. That will bring the yearly total to 28 percent of the global tally for

approved investments in newly sanctioned LNG projects, according to Rystad.

Outlook: Global gas market to be oversupplied to at least mid-2020

he Royal Bank of Canada (RBC) expects the current oversupply on global gas markets to continue at least into mid-2020 and has cut its European gas price forecast for next year as a result. In a report entitled “European Gas Strategy -- Tug of War”, the bank said it saw few bullish signals over the remainder of the summer. “We see the market as clearly over-

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supplied in 2019 and more moderately oversupplied in 2020, with really only China able to re-balance the market through continued demand growth,” RBC said. RBC said any spikes in demand, which could push up prices, were likely to be weather-dependent and therefore “difficult to forecast.” The oversupply, on the back of a mild winter and a ramp-up in LNG supplies,

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has also seen regional gas hub pricing differentials narrow “sharply,” RBC said. “Hub pricing in Europe and Asia has fallen well below our expectations, and with European gas storage filling at levels ahead of historical norms, it paints a pretty ugly picture for gas markets,” RBC said. “We do not expect many positive data points until we get through the summer, and we expect some of these headwinds to continue into 2020.” European gas storages finished last winter well stocked after the mild winter, and have started filling at the fastest rate in many years “further compounding the issue of oversupply.” “In the short term, high storage means the potential for materially higher pricing seems unlikely, however given the shape of the demand curve through the year, we would look to October-November for gas storage to begin drawing,” RBC said. Another sign of an oversupplied global market is high LNG deliveries to Europe. LNG has grown to become a key source of supply to Europe, RBC said, accounting for 10-15 percent of Europe’s gas consumption so far in 2019, well up on previous years. The “call” on LNG to meet European demand is set to grow to 2030 as domestic production declines, it said.

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Wednesday 17 July 2019

BUSINESS DAY

power

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ENERGY intelligence

Kenya: Africa’s largest wind power project opens in northern Kenya

Senegal: ENGIE, Meridiam achieve financial close for two solar photovoltaic projects in Senegal But one in four Kenyans - mostly in rural areas - does not have access to electricity. Those with power face high costs and frequent blackouts due to unreliable supplies. “Today, we again raised the bar for the continent as we unveil Africa’s single largest wind farm,” said Kenyatta. “Kenya is without doubt on course to be a global leader in renewable energy.” Kenyatta, who has announced plans to move the country to 100 percent green energy by 2020, said power from the $775-million wind farm would help the government reach its goals of ensuring housing, health care, jobs and food security to all citizens. “It marks an important milestone in the country’s steady march towards achieving self-sufficiency in power production,” said Mugo Kibati, chairman of the Lake Turkana Wind Power, a private consortium that runs the plant.

enya unveiled Africa’s largest wind power plant, a project aimed at reducing electricity costs and dependence on fossil fuels and moving the nation to meet its ambitious goal of 100 percent green energy next year. The sprawling wind farm of 365 turbines on the shores of Lake Turkana in northern Kenya was designed to boost the nation’s electricity supply by 13 percent, giving more Kenyans access at a lower cost, President Uhuru Kenyatta said at its launch. Kenya has made great strides in renewable energy in recent years and is considered to be one of the few African nations making progress toward clean power. About 70 percent of the nation’s electricity comes from renewable sources such as hydropower and geothermal more than three times the global average.

Nigeria: NLNG, LCCI promote breakthrough in electric power in Nigeria

igeria LNG Limited and the Lagos Chamber of Commerce and Industry (LCCI) has called for more efforts in finding solutions to the crippling power challenges in the country as well as exploring other energy sources and cashing in on new ideas that will help Nigeria become energy efficient. The call was made at the Business Interactive Session on Innovation in Electric Power Solutions in Lagos which featured the 2018 winner of The Nigeria Prize for Science, Peter Ngene. The 2018 winner of the Nigeria Prize for Science clinched the prize based on his work, “Nanostructured metal hydrides for the storage of electric power from renewable energy sources and for explosion prevention in high voltage power transformers”. The Nigeria Prize for Science is a $100,000 award sponsored by NLNG to promote innovations in science and technology that will solve age-long problems

and drive development in Nigeria. Eyono Fatayi-Williams, NLNG General Manager, External Relations and Sustainable Development, in her remarks said the interaction session was as a result of The Nigeria Prize for Science which is increasingly shedding light on solutions to some of the nation’s problems which include electricity shortage. She stated that in recognition of the need to encourage more work in finding solutions to electric power generation in the country, NLNG used the science prize competition in 2018 to encourage research works on the theme of that year’s competition - Innovations in Electric Power Solutions. She remarked further that a renewed focus on electric power generation and conservation is definitely one area which can offer huge business opportunities in the country, calling on the industry to focus on renewable sources of energy to improve the Nigerian situation, promote better energy output as well as align

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the country with the global clamour for cleaner energy sources, as the world fights global warming. Paul Ruwase, President of Lagos Chambers of Commerce and Industry (LCCI), said “reforming the power sector in Nigeria must align with the global energy direction of increasing renewables in the energy mix. Ngene’s award-winning work further presents an opportunity for Nigeria to harness new discoveries in solving her power supply challenges. His invention has positive implications on renewable energy development that the country can benefit from. It is believed that Ngene’s work will expand the energy market in Nigeria with efficient energy storage.” Ngene, in his presentation, titled “Nanomaterials for Energy and Power Application”, highlighted the potential of his work in the area of storing hydrogen, storage battery for renewable energy and detection of hydrogen leaks in transformers to prevent explosion. He said explosion in transformers was one of the major causes of power outages in Nigeria, adding that through Nanotechnology, a cheap way of detecting hydrogen to eliminate such explosions is possible. Ngene, is an assistant professor in the Inorganic Chemistry and Catalysis group of the Debye Institute for Nanomaterials Science, Utrecht University in The Netherlands. He is the recipient of the prestigious KNCV (The Royal Dutch Chemical Association) Van Arkel best PhD thesis (2012/2013) award, and the chair of the 2013 Gordon Research Seminar (GRS) on Metal-Hydrogen system in Italy. He was also recently recognised as one of African leading young scientists by the award of the prestigious NEF (Next Einstein Forum) fellowship by the Chairman of the African Union (President Paul Kagame).

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NGIE and partners Meridiam and FONSIS have signed the EPC, Operation & Maintenance and Finance contracts for two solar PV projects of 60 MW. The total investment cost for the projects amounts to 47.5million euros and debt is provided by the following development finance institutions; the European Investment Bank (EIB), the International Finance Corporation (IFC) and Proparco. The solar PV plants are part of the Scaling Solar initiative in Senegal, conducted jointly by the Senegalese authorities and IFC. ENGIE was selected as preferred bidder by Senegal’s Electricity Sector Regulation Commission (CRSE) in a tender launched in October 2017. ENGIE and Meridiam hold a 40 percent shareholding in the project company. FONSIS, the Senegalese sovereign fund, is a shareholder with a 20 percent equity stake. The projects are located in Kahone, in the Kaolack region, and in Touba-Kaël, in the Diourbel region; construction and operation of the plants will be managed and executed by ENGIE. “In an extremely competitive context, ENGIE reaffirms its commitment to be a long term player in Senegal and to bring clean and affordable energy to the country while creating sustainable jobs. These projects are perfectly in line with the strategy of the Group to become a leader in the zero carbon transition “as

a service” for our customers in Africa,” Yoven Moorooven, chief executive, ENGIE Africa, said. In Senegal, ENGIE is already involved in the Senergy project, a 30 MW solar photovoltaic plant in the town of Santhiou Mekhé and in Ten Merina, a 29.5 MW solar photovoltaic plant in the region of Thiès, near Dakar. Both projects are currently in operation. In 2017, ENGIE signed a partnership with ANER, Senegal’s National Renewable Energy Agency which focuses on accelerating the development of renewable energy in the country. The Group is also implementing solar energy solutions for rural households in Côte d’Ivoire and in Senegal through partnership agreement signed with L’Agence Sénégalaise d’Electrification Rurale (ASER). ENGIE through its West African operating entities, brings innovative solutions to industrial and large tertiary customers in Senegal.

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Wednesday 24 July 2019

BUSINESS DAY

POLICY

WEST AFRICA

ENERGY intelligence

Nigeria remains docile as Colombia prepare for second bid rounds DIPO OLADEHINDE

olombia’s hydrocarbons regulator is gearing up for a second oil and gas bid round that includes 50 blocks up for grabs while Africa’s biggest oil producing country remains silent and still unable to finalise bid round plans started since 2016. Early this year, Columbia kicked off its first oil and gas bid rounds to boost reserves as well as take advantage of favorable oil prices which will lead to increasing oil revenue while Nigeria still have over 186 marginal fields lying fallow because bid rounds have not been conducted leading to loss of billions of naira in revenue. According to Colombia’s National Hydrocarbons Agency (ANH), at the end of September the state corporation will offer 50 new blocks of which 23 will be selected by the agency while an additional 27 will be nominated by companies. Only four of the 50 blocks to be offered are offshore, while the rest are onshore. Companies had initially submitted requests to add 38 areas in total, but Columbia’s ANH chose only 27 of those areas to offer in the second round, the agency confirmed. None of the companies nominated an offshore block. “The second round is expected to launch on 23 September, with bids due on 31 October and contracts being awarded beginning on 20 November,” Columbia’s state-owned ANH said in a statement. Columbia’s election of a pro-business government in 2018 re-established some of the sector’s optimism. In February 2019 the ANH announced a series of reforms to rules regarding its Exploration and Production (E&P) contracts, including the designation of an arbitration tribunal to respond to disputes over

offshore projects. Additionally, the reforms include the chance for operators to extend contracts and the option for Colombia to increase its participation in offshore projects by 5percent when extensions are requested. The change could see as many as nine existing offshore technical evalua-

Snapshot

Oil remains the heartbeat and chief source of income for Africa’s biggest economy, accounting for a whopping 85 percent of export revenue, however in the last twelve years, Nigeria’s oil reserves and daily production had remained almost stagnant hovering in the region of 37 billion barrels and two million barrel production day (bpd) respectively www.businessday.ng

tion agreements (TEAs) – owned by ExxonMobil, Shell, Ecopetrol and Anadarko – be converted into E&P contracts. At the same time, the ANH issued 20 new blocks for E&P in early 2019 within its newly passed permanent process for area allocation, including two offshore blocks. Although with a relative lower oil production of 0.9 million barrels per day, Columbia seems to positioning itself to take over a void filled by the much publicized declining Venezuela’s oil industry while Nigeria oil and gas sector has remained quiet. According to BusinessDay’s Feb. 12 report, the Department of Petroleum Resources, the oil sector regulator, charged with the responsibility of conducting the bid rounds was not ready to conduct the bid rounds slated for the first quarter of 2019. “The DPR is not anywhere close to concluding preparations for the next bid rounds, in fact from all indications, it does not seem it will happen any time soon, because the guidance notes for the bid rounds are not even prepared yet. It does not even look like it could happen this year,” said a source that preferred anonymity. Ibe Kachikwu, immediate past Minister of state, Petroleum Resources said

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in an interactive session with journalists that “this government has not given out any oil blocks for the four years it lasted. We did not even do marginal fields. The Presidents belief was that we should first clean up the sector, before we start dishing out political patronages.” Nigeria has the second largest proven reserves in Africa, with an estimated 37.5 billion barrels of crude oil deposits at the end of 2017, representing 2.2 per cent of the global total, according to the BP Statistical Review of World Energy 2018. Oil remains the heartbeat and chief source of income for Africa’s biggest economy, accounting for a whopping 85 percent of export revenue, however in the last twelve years, Nigeria’s oil reserves and daily production had remained almost stagnant hovering in the region of 37 billion barrels and two million barrel production day (bpd) respectively, data from Organization of Petroleum Exporting Countries (OPEC) showed. A 10-year target set by the Federal Government to boost crude oil reserves to 40 billion barrels and daily production to 4 million barrels by 2020 is becoming unrealistic as analysts say corruption and government shenanigans have decreased growth in the sector.

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Wednesday 24 July 2019

BUSINESS DAY

finance people appointments

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ENERGYintelligence

Schlumberger names new CEO

Brief

Five bid on 12 blocks offshore Israel

ive companies submitted proposals to explore for oil and gas on 12 blocks among 19 offered in Israel’s second offshore licensing round. This was the second Israeli offshore licensing round. “A few years after the gas outline, we are getting more international groups which will explore for and develop the State of Israel’s oil and gas resources. The proposals that we received will increase significantly the number of oil and gas exploration licenses in Israel’s Exclusive Economic Zone, from 8 to 20,” a government press release quoted Yuval Steinitz, minister of energy. “The arrival of additional European companies to Israel, combined with the fact that the Leviathan platform will soon be connected to the shore and the ongoing work on the development of the Karish field, will lead to the breakup of the monopoly and enhance com-

petition in this sector. We are continuing to work towards transforming Israel into a regional energy power”. Five international and Israeli companies have submitted proposals to explore for oil and gas in 12 new blocks in Israel’s EEZ, out of 19 blocks tendered. In the second bidding round, the Ministry of Energy had tendered 19 exploration licenses (blocks), each one up to 400 km² in size. The 19 licenses were grouped into five zones, each up to 1,600 km² in size. To encourage international companies to participate in the competitive process, Yuval Steinitz, Minister of Energy, and Udi Adiri, Director General of the Ministry, together with other officials in the Ministry held multiple meetings with international energy companies. In addition, professional teams from the Ministry took part in a number of international conferences to market Israel’s offshore exploration areas.

chlumberger NV said Chief Operating Officer Olivier Le Peuch will replace longtime Chief Executive Officer Paal Kibsgaard, as the company looks to shore up its position as a leader in drilling technology. The world’s largest oilfield services provider also reported better-than-expected quarterly revenue, as demand in international markets countered weakness in North America, sending its shares up more than 1 percent before the bell. The change of guard comes when the oilfield services industry is buffeted by moderating demand as oil producers cut spending to mollify investors seeking higher returns and efficiency gains are enabling companies to extract more oil with fewer resources. A veteran who has been with the company for more than three decades, Le Peuch was being groomed as a successor and was in February named the chief operating officer, a role Kibsgaard held before his elevation to the top role in August 2011. Le Peuch, 55, was part of the teams that drove Schlumberger’s purchase of software maker Technoguide in 2002, according to former colleagues, and later acquisitions of two wellcompletions businesses, and pursued a joint venture with offshore firm Subsea 7. He will start in his new role in August, when Kibsgaard, 52, will retire. Mark Papa, a current non-independent director, will become non-executive chair-

man, Schlumberger said. Schlumberger, an industry bellwether, has benefited from an uptick in activity in international markets since 2018 after a prolonged four-year slump. International revenue rose 8 percent to $5.46 billion in the second quarter, while it fell 11 percent to $2.8 billion in North America. “These results reflect the normalization in global E&P spend that we were anticipating as international investment increases in response to the accelerating decline in the mature

production base, and North America land investment decreases due to E&P operator cash flow constraints,” Kibsgaard said in a statement. Net income rose about 14 percent to $492 million in the second quarter ended June 30. Excluding items, the company earned 35 cents per share, in line with analysts’ estimate, according to IBES estimates from Refinitiv. The Houston-based company reported revenue of $8.27 billion, beating estimates of $8.11 billion.

Geothermal exploration underway in Zambia

Zambian geothermal exploration company, Kalahari GeoEnergy, announced the completion of the drilling of eight temperature gradient holes and the commencement of drilling slim wells at the Bweengwa River Geothermal Resource Area. The project forms part of the company’s resource delineation drill and well testing programme, which if successful will lead to a full technical and commercial feasibility study commencing late 2019. Bweengwa River is situated in the Kafue Trough, a sedimentary basin filled by the Permian-aged Karoo sequence, overlying metamorphic basement rocks; it is located to the west of Lusaka and extends westward into the Barotse Basin.

The company has to date identified six geothermal energy targets including Bweengwa River, on all of which it is conducting geothermal exploration. Peter Vivian-Neal, the CEO, commented: “Results obtained to-date continue to provide confidence that Bweengwa River has the characteristics of a viable geothermal resource for power production”. “The current model of a 10MW or greater, power project, to be generated using binary technology, represents a significant step towards the company’s objective of producing geothermal power. “Ultimately, geothermal power may provide a valuable component in Zambia’s drive to diversify sources of energy, increase generation capacity and the distribution of productive power as well as the ‘power to www.businessday.ng

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empower’ the community.” The surface manifestations of the Bweengwa River Geothermal Resource Area include three groups of geothermal springs that extend over 9km and lie on the southern bounding fault of the Kafue Trough. The resource area is 35km north of the Southern Province town of Monze and 200km from Lusaka. Ongoing exploration has to date included geology, hydrochemistry and the drilling of 14 temperature gradient holes totalling 3,500m, eight of which have been drilled in 2019. Results confirm a geologic setting conducive for geothermal hydrothermal systems and also give a strong probability of a medium-low enthalpy geothermal resource that can support a power generation project of at least 10MW.

Wednesday 24 July 2019

BUSINESS DAY

marketinsight

WEST AFRICA

ENERGY intelligence

Oil rises more than 2 percent after Iran seizes British tanker

il prices rose more than 2 percent on concerns that Iran’s seizure of a British tanker may lead to supply disruptions in the energyrich Gulf. Brent crude futures climbed $1.41, or 2.26 percent, to $63.88 a barrel while West Texas Intermediate (WTI) crude futures were up $1.13, or 2.03 percent, at $56.76 a barrel. Tensions surrounding Iran “have likely added to the already strong geopolitical risk premium”, JBC Energy said in a note. Iran’s Revolutionary Guards said they had captured a Britishflagged oil tanker in the Gulf in response to Britain’s seizure of an Iranian tanker earlier this month. The move has increased the fear of potential supply disruptions in the Strait of Hormuz at the mouth of the Gulf, through which flows about one-fifth of the world’s oil supplies. Britain was weighing its next moves, with few good options apparent as a recording emerged showing the Iranian military defied a British warship when it boarded and seized the ship. Capping gains was news that Libya’s Sharara oilfield, the country’s biggest, had resumed production at half capacity after being shut, which caused an output loss of about 290,000 barrels per day (bpd).

Meanwhile, data showed shipments of crude oil from Saudi Arabia, the world’s top oil exporter, fell to a 1-1/2-year low in May. Speculative money is flowing back into the oil markets in response to the escalating dispute between Iran, the United States and other Western nations playing out in Gulf waters, along with the signs of falling supply. The Iranian capture of the ship in the global oil trade’s most important waterway was the latest escalation in three months of confrontation with the West

that began when new, tighter US sanctions on Iran took effect at the start of May. Hedge funds and other money managers raised their combined futures and options positions on US crude for a second week and increased their positions in Brent crude as well, according to data from the US Commodity Futures Trading Commission and the Intercontinental Exchange. Goldman Sachs lowered its forecast of growth in oil demand for 2019 to 1.275 million bpd, citing disappointing global economic activity.

US oil exports reach new all-time high

S crude oil exports reached a new alltime high of 3.3 million barrels per day (MMbpd) in June, according to the American Petroleum Institute’s (API) latest monthly statistical report which highlighted that the record exports helped

reduce US net petroleum imports to 1.3MMbpd. Total US petroleum exports for the month were at 8.4MMbpd, according to the report, which noted that this was a record for June. This was said to be an increase of 3.6 percent from May and 7.9 percent from

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June last year. Record US crude oil production of 12.2 MMbpd was sustained in June “despite less drilling”, according to the report. “The US appears to be making substantive progress towards becoming a net energy exporter in 2020, as projected by the EIA, with production continuing to sustain its upward climb despite oil prices having declined 10 percent between May and June,” Dean Foreman, API Chief Economist said in an organization statement. “This trend has been driven in part by increasingly low breakeven prices, strong productivity gains in key production regions and the incremental additions of new pipeline infrastructure needed to bring these resources to market,” he added. The API describes itself as the only national trade association representing all facets of the natural gas and oil industry. The organization, which was formed in 1919, has more than 600 members.

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OPEC Flakes Russian oil output back to OPEC deal levels

ussia has restored its oil output to levels agreed under a deal between OPEC and non-OPEC oil exporters and production in the last half of July will rise from the first half, Alexander Novak, Energy Minister said. Russia’s production plunged to almost a threeyear low in early July due high organic chloride content found in oil in April, which disrupted pipeline exports. “Our production has been restored in line with plans and schedules. There were several days when output was reduced with over-compliance. It was related to a technological process,” Novak said. Russia’s largest producer, Rosneft, said that pipeline monopoly Transneft curbed oil intake from Yuganskneftegaz, Rosneft’s main upstream unit, hurting production that had already been hit by the contamination crisis.

Russia has agreed to reduce its oil production by 228,000 barrels per day (bpd) from the 11.41 million bpd it pumped in October 2018, the baseline for the current global deal. Under that formula, its output should be around 11.17 million-11.18 million bpd. Industry sources said oil output fell to 10.79 million barrels per day (bpd) in early July.

IEA does not expect “huge increase” in crude prices

he International Energy Agency (IEA) does not expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets, Fatih Birol, its executive director said. “Prices are determined by the markets. If we see the market today we see that the demand is slowing down considerably,” said IEA’s Fatih Birol, in public comments made during a two-day energy conference in New Delhi. The IEA is revising its 2019 global oil demand growth forecast down to 1.1 million barrels per day (bpd) and may cut it again if the global economy and especially China shows further weakness, Birol said. Last year, the IEA predicted that 2019 oil demand would grow by 1.5 million bpd. But in June this year it cut the growth forecast to 1.2 million bpd. “Substantial amount of oil is coming from the United States, about 1.8 million barrels per day, plus oil from Iraq, @Businessdayng

Brazil and Libya,” Birol said. Under normal circumstances, he said, he does not expect a “huge increase” in crude oil prices. But Birol warned serious political tensions could yet impact market dynamics. Crude oil prices rose nearly 2 percent after a US Navy ship destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows.

Wednesday 24 July 2019

BUSINESS DAY

WEST AFRICA

talking points

ENERGY intelligence

Nigeria’s gas flare commercialisation programme scales to next stage STEPHEN ONYEKWELU

wo hundred and five applications have been deemed qualified for participations in the next stage of Nigeria’s drive to eliminate gas flaring by licensing companies to operate on the countries flare sites identified in the Niger Delta. One hundred and seventy eight sites across the Niger Delta currently flare about 888 million cubic feet per day of gas, a volume that could generate 5,000 megawatts of electricity, doubling Nigeria’s power supply and at $3 per million British thermal units, generating revenues of $800 million annually. The Nigerian Gas Flare Commercialisation Programme (NGFCP) is organising the exercise, conducted under the auspices of the Ministry of Petroleum Resources, seeking to inspire 80 separate projects to tap the 888 million cubic feet a day of gas currently wasted. A standard letter, seen by Upstream, a global oil and gas news platform, went out July 18 to 205 applicants whose Statements of Qualification (SOQs) were deemed adequate for participation in the next stage. “AN NGCFP Qualified Applicants’ Workshop has been scheduled for 19

August to impart awareness of the regulatory frameworks, incentives and best practices demanded by the government and to test “the appetites” of qualified applicants, according to Andrew Agi, NGFCP director. BusinessDay on February 12 reported that the Nigerian Gas Flare Commercialisation Programme (NGFCP) had attracted over 700 applications based on submissions from Justice Derefaka, programme manager at the NGFCP. Approved in 2016 by the Federal Government, the NGFCP seeks to achieve the government’s target of eliminating gas flaring in the Niger Delta by 2020. The Petroleum Act of 1969 and the Flare Gas (Prevention of Waste and Pollution) Regulations 2018, signed in July 2018, provide the basis for the NGFCP. The Petroleum Act provides for the Federal Government to take gas at the flare-free of cost. Derefaka had also said that the first bid round will be concluded on February 28 after which all the applications would be evaluated to prequalify competent investors in March but this was later postponed. Interested applicants started with a Request for Qualification (RFQ). Those who submit Statements of Qualification (SOQs) and are deemed qualified by the programme were then invited to respond to the Request for Proposals

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(RFP) that will be subsequently issued by the government. Applicants who were invited to re-

Snapshot

Nigeria will need $3.5 billion worth of inward investments into gas capture technologies to achieve its flare gas commercialisation targets by 2020

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spond to a Request for Proposals were to pay $2,000 to the Department of Petroleum Resources (DPR), the upstream regulator, to gain access to gas flare data and an additional $1,000 as data leasing fee before they can download details of any flare site. According to the NGFCP, Nigeria loses approximately $1 billion of revenue through gas flaring due to its inability to capture and sell flared gas in the country. So, the programme seeks to stop this waste while creating value to the local economy by creating new 300,000 jobs, producing 600,000 MT of liquefied petroleum gas (LPG) per year and generating 2.5GW of power from new and existing Independent Power Plants (IPPs). But Nigeria will need $3.5 billion worth of inward investments into gas capture technologies to achieve its flare gas commercialisation targets by 2020. One investor who submitted an application told BusinessDay that he is talking to investors about setting up a small gas plant to serve the community in the field he is interested in. Under the programme, investors reach an agreement with the producer of the field, build a one-meter flare connector which traps the gas and is used for various purposes either as a fertiliser plant or to generate power for the community.

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Wednesday 24 July 2019

BUSINESS DAY

POLITICS & POLICY Ministerial list: Where are the technocrats? Zebulon Agomuo

v e nt u a l l y , t h e long-awaited ministerial list was sent to the Senate yesterday by President Muhammadu Buhari, following what appeared a subtle threat that should it failed to reach the National Assembly before Thursday this week, it would have to wait till after the legislators’ recess. Close to two months after his inauguration, President Buhari had kept Nigerians in suspense over the list, a delay that had allowed varied speculations to fester. Many Nigerians had begun to think that history was on play back; that the President may want to reenact the six-month delay that featured in his first term. Recently, the President had said he was under pressure to announce the list, adding that unlike in his first term when strange people were forced on him, he had determined to select only those he knew. He has indeed, selected those he “knows”. The list that was released y e s t e rd a y l o o k e d v e r y strange to many Nigerians. Many observers say there is nothing exciting looking at the constituents of the list. It is also their belief that

nothing fantastic should be expected from a cabinet that will be constituted by those on the list. The major criticism against the Buhari administration has been the perceived absence of vibrant economic team, which has also impacted the country negatively. It is left to be seen how the names on the list would eventually move the nation forward, economy wise. An observer said, “Expect no surprises. In fact, there

will not be anything striking. It is a lack-lustre list and anti-climax.” It appears that what Nigerians are going to have this time around are angry ministers, who are going to approach their duties on the basis of “I will show them. They thought I would not get there, but here I am now.” Some of the nominees contested for governorship, senatorial and other positions during the last election but lost. Some of

them are still having their cases at the election tribunals. They are seething with anger and bitterness over their losses. If anything, they would be more interested in flaunting their ego and recouping the money they spent during their ill-fated electoral outing, than in pursuing the duty of their offices. Although they are to represent their states, to be the eye of the President in their individual states, but because they are not in

L-R: Abimbola Jakande, wife of the celebrant; Lateef Jakande, celebrant and first civilian Governor of Lagos State; Mudashiru Obasa, speaker, Lagos State House of Assembly; Babajide Sanwo-Olu, Lagos State Governor, his wife, Ibijoke; Obafemi Hamzat, deputy governor and his wife, Oluremi during the 90th birthday of Alhaji Lateef Jakande at the Haven Event Centre, G.R.A, Ikeja, on Tuesday, July 23, 2019.

the same party with their state governors (in some cases), they are likely going to work at cross purposes with such governors, albeit to the overall detriment of their states. They are likely going to build a parallel government within a state government to show their importance. They would establish their own power base and indigenes of their states are likely going to see a serious rivalry between state governors and ministers on a scale that has never been seen before. The thinking in some quarters is that a number of the returnees had no basis making the list, if the target was great performance and development of the Nigerian nation. Some of them came back on the basis of their perceived contributions to the President’s re-election. A cursory look at the activities of some of the returnees in the first stanza shows that their utterances did a terrible damage to the corporate existence of Nigeria. The question now is, is it what Nigerians are going to see again at a time they are hoping to see men whose words are seasoned with grace, and people with the balm that can soothe the too many wounds already being inflicted on the people?

A look at the list, at the face value, does not show names that are capable of taking the country to the ‘Next Level’, economy wise. There may be a few on the list who have been successful in their individual line of businesses, but they are largely unknown when it comes to playing at a level that can breathe life into the nation’s ailing economy. For the nominees to make the needed impact and record appreciable success in their endeavours, they have to be weaned off animosity that has enslaved many politicians, and making it difficult for them to see the larger picture. If they are to make the desired mark, they should shun the rhetoric that had killed the spirit of brotherhood in Nigeria, by looking at their service, not just to the members of their party, but to all Nigerians, irrespective of party affiliation. Again, despite the promise of giving the youth more opportunity this time around, it appears there are no youths there, in the real sense of the word. The list is, at best, a compendium of the geriatric. Where then is the justification for the much-vaunted #NotTooYoungToRun (lead/serve) law that came into being in June 2018?

Sanwo-Olu honours Jakande at 90

North has failed despite opportunities of office - Shehu Sani

…As Osinbanjo, Tinubu, Osoba eulogise his virtues …Seek national honour for the nonagenarian

Abdulwaheed Olayinka Adubi, Kaduna

Joshua Bassey and Iniobong Iwok

abajide Sanwo-Olu, governor of Lagos State, has charged today’s leaders to learn from the exemplary leadership qualities of Lateef Jakande, who was the first civilian governor of the state. The governor noted that Jakande’s legacy in leadership and governance remained a reference point in contemporary history, despite leaving government for more than three decades ago. Sanwo-Olu made the observation yesterday on the occasion of 90th birthday of Jakande which was held at Havens Event Centre in GRA Ikeja. He described Jakande’s personal life as “selfless and exemplary”, stressing that the ex-governor’s achievements became the pathway for progressive governance in the country. According to him, “Lagos, under the Baba Jakande, became a pillar of support not only to neighbouring states, but also to faraway states, in-

cluding Borno State, where he made landmark contribution. This goes to show that the progressive mind of Jakande has been with him ever since. “It’s something that all of us needs to copy. I wish today’s leaders could borrow from this example, which shows us how states can collaborate for greater development and opportunities. Jakande did it 40 years ago as governor of Lagos State and scored several firsts.” According to him, “Jakande is a national name that is synonymous with development, either in provision of potable water, quality education and housing.” The governor further announced the naming of its 496-flat Igando Garden Estate after the octogenarian. Vice President, Yemi Osinbajo felicitating with the former Lagos governor, thanked God for sparing his life. In his tribute, Bola Tinubu, national leader of the All Progressives Congress (APC), described Jakande as a foremost progressive in Africa, stressing that his loyalty to the cause of progressive politics and his leader, the late Obafemi www.businessday.ng

Awolowo, earned him unparalleled respect. According to him, “Papa Jakande had many firsts at a time it was extremely difficult to govern. One of the key qualities of Jakande is his unshakable, non-negotiable loyalty to his leader, Obafemi Awolowo go blessed memory.” According to Tinubu, “Ideologically, Jakande has never departed from the progressive path. One record we must accept here, which is the best gift to Jakande is that, progressive governance has never failed in Lagos.” Olusegun Osoba, who was chairman of the occasion, said that Jakande was an accomplished Nigerian by all standards, saying he was already a global brand as a journalist and editor before he delved into public service. “Our celebrant does not have a deserved national honour when people of lesser contributions strut around the country with national honours. It is my recommendation that Jakande be decorated with nothing less than the Commander of the Federal Republic,” Osoba said.

orried about the problem of insecurity, high rate of poverty and educational backwardness in the north, Senator Shehu Sani has declared that northern leaders have failed despite opportunities of office to develop the region and its people. He also blamed the problems of insecurity, poverty and tensions stirred up across the country on failure of leadership, with northerners not criticising President Buhari because he is from the north. Sani, who spoke in Zaria yesterday, expressed dismay over failure on the side of the northerners to hold Buhari accountable despite the unabated killings and destruction of properties in the region. “It is high time the President came up with sound policies to address high-level of poverty and educational challenge in the North and other parts of Nigeria,” he said. According to the lawmaker who represented Kaduna Central Senatorial district in

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the 8th National Assembly, President Buhari needs to show concern now and look at the north with emphasis on investment in infrastructure, education, tackling issues of ethnicity and religious sentiments as well as investing in young people and children of the poor. Sani, who stated this during a conference on ‘Preparing Emerging Leaders’ held at Ahmadu Bello University, Zaria, Kaduna, Northwest Nigeria, stressed that “If we have leadership that cannot tackle poverty using the best of models, whether Chinese or welfarist, then we have serious problems.” While asking a rhetorical question on how to solve problem of poverty when 80percent of industries in the country have closed down, he noted, “In the past, there are more industries than banks, but the reverse is the case now. So, we must invest in research to develop”. He however, urged President Buhari to do something urgent to tackle the issues of poverty and educational backwardness now, as the region is under time bomb. He further stated: “The @Businessdayng

North is tolerant of bad government because Buhari is in government and he is from the north. “When powers move to the south, the north is good in holding leaders to account and when it moves to the North, we keep silent. We are shy, we are cautious, we are afraid of telling our own that the road in the north is bad. We are more courageous to tell the truth to power when the president doesn’t come from our region. “Northern leaders have failed to use the opportunity of office to upgrade the north and the country, to industrialise the region and to build a foundation for the generation of people like you. How do you solve the problem of poverty when the three most industrialised states in the northKaduna, Plateau and Kano- 80 percent of their industries are closed down? “For this country to survive, President Buhari must listen to the voices of reason. You may not like the face of Wole Soyinka, Balarabe Musa, and Obasanjo but read through the content of what they have written and see where adjustment can be made.

Wednesay 24 July 2019

BUSINESS DAY

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Wednesday 24 July 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 23 July 2019

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 232,821.23 6.55 0.77 115 4,380,815 UNITED BANK FOR AFRICA PLC 193,226.73 5.70 -4.20 166 6,215,736 ZENITH BANK PLC 579,265.31 18.50 0.54 277 12,570,630 558 23,167,181 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 204,603.17 5.70 0.88 154 3,060,057 154 3,060,057 712 26,227,238 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,585,023.16 127.00 0.79 78 700,531 78 700,531 78 700,531 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 174.00 2.35 97 1,872,029 LAFARGE AFRICA PLC. 231,952.26 14.40 9.92 290 12,158,045 387 14,030,074 387 14,030,074 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 282,453.39 480.00 - 5 419 5 419 5 419 1,182 40,958,262 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 53,228.18 55.80 - 24 32,954 PRESCO PLC 44,800.00 44.80 - 5 32,534 29 65,488 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,440.00 0.48 - 1 4,000 1 4,000 30 69,488 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 847.13 0.32 - 0 0 JOHN HOLT PLC. 179.01 0.46 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 39,835.03 0.98 3.16 92 5,900,277 U A C N PLC. 16,999.65 5.90 5.36 63 1,199,294 155 7,099,571 155 7,099,571 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 23,760.00 18.00 - 7 22,200 ROADS NIG PLC. 165.00 6.60 - 0 0 7 22,200 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 3,092.09 1.19 - 3 12,218 3 12,218 10 34,418 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 - 1 50 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 2 41,600 GUINNESS NIG PLC 100,757.61 46.00 - 20 27,244 INTERNATIONAL BREWERIES PLC. 118,622.89 13.80 -9.80 28 1,272,230 NIGERIAN BREW. PLC. 448,626.21 56.10 - 96 3,836,223 147 5,177,347 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 89,250.00 17.85 - 281 854,706 DANGOTE SUGAR REFINERY PLC 129,600.00 10.80 -4.00 42 270,137 FLOUR MILLS NIG. PLC. 57,405.31 14.00 - 105 3,254,631 HONEYWELL FLOUR MILL PLC 7,692.29 0.97 1.04 20 2,294,434 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 35,767.42 13.50 - 18 198,967 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 466 6,872,875 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 21,317.59 11.35 5.09 24 241,290 NESTLE NIGERIA PLC. 1,051,854.85 1,327.00 5.32 74 97,740 98 339,030 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 3 81 VITAFOAM NIG PLC. 4,628.12 3.70 - 6 109,500 9 109,581 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 23,822.86 6.00 - 25 149,257 UNILEVER NIGERIA PLC. 183,840.17 32.00 - 21 117,095 46 266,352 766 12,765,185 BANKING ECOBANK TRANSNATIONAL INCORPORATED 165,145.96 9.00 -7.78 39 679,849 FIDELITY BANK PLC 45,490.43 1.57 1.95 26 713,174 GUARANTY TRUST BANK PLC. 853,504.20 29.00 -0.17 212 15,654,165 JAIZ BANK PLC 12,964.27 0.44 - 7 79,500 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 69,960.72 2.43 3.85 25 11,991,079 UNION BANK NIG.PLC. 199,477.16 6.85 6.20 33 246,478 7,481.18 0.64 - 12 263,376 UNITY BANK PLC WEMA BANK PLC. 23,916.17 0.62 3.33 18 453,818 372 30,081,439 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 1 700 AIICO INSURANCE PLC. 4,366.03 0.63 1.61 16 901,432 AXAMANSARD INSURANCE PLC 17,325.00 1.65 - 3 2,948 CONSOLIDATED HALLMARK INSURANCE PLC 2,276.40 0.28 - 1 2,000 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 2 5,050 CORNERSTONE INSURANCE PLC 2,945.90 0.20 -9.09 11 444,970 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 2,489.97 0.34 - 15 1,925,600 LAW UNION AND ROCK INS. PLC. 2,019.28 0.47 - 0 0 LINKAGE ASSURANCE PLC 4,240.00 0.53 -8.62 7 338,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 13 58,229 NEM INSURANCE PLC 10,983.45 2.08 - 12 213,573 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,583.62 0.48 - 2 3,816 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 4,000 SOVEREIGN TRUST INSURANCE PLC 1,751.57 0.21 -4.55 8 536,300 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 5,085.44 0.38 5.56 42 7,434,339 134 11,870,957

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,583.90 1.13 - 2 34,450 2 34,450 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,158.00 0.99 - 0 0 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,000.00 3.50 -5.41 48 804,445 CUSTODIAN INVESTMENT PLC 35,879.37 6.10 - 0 0 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,288.28 1.58 -1.25 39 2,763,151 1,131.98 0.22 - 0 0 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 390,165.07 38.10 0.26 35 2,280,998 UNITED CAPITAL PLC 12,300.00 2.05 -2.38 77 6,151,829 199 12,000,423 707 53,987,269 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 781.69 0.22 - 3 102,700 3 102,700 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 544.04 0.55 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 8,554.08 4.10 - 6 20,500 9,567.01 8.00 -3.61 7 252,328 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 4,140.56 2.40 - 4 23,560 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,044.54 0.55 10.00 10 222,560 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 27 518,948 30 621,648 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 12 4,924,500 12 4,924,500 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 3 650 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 6 1,045 9 1,695 PROCESSING SYSTEMS CHAMS PLC 1,174.02 0.25 -7.41 8 2,493,000 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 0 0 8 2,493,000 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,215,762.01 323.50 - 15 32,783 15 32,783 44 7,451,978 BUILDING MATERIALS BERGER PAINTS PLC 1,825.89 6.30 - 7 104,000 CAP PLC 17,325.00 24.75 - 25 34,043 CEMENT CO. OF NORTH.NIG. PLC 164,950.94 12.55 4.58 38 836,150 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 3 33,422 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 73 1,007,615 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,624.37 1.49 - 11 155,500 11 155,500 PACKAGING/CONTAINERS BETA GLASS PLC. 33,173.14 66.35 - 4 7,500 GREIF NIGERIA PLC 388.02 9.10 - 1 10 5 7,510 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 89 1,170,625 CHEMICALS B.O.C. GASES PLC. 1,918.89 4.61 - 1 100 1 100 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 0 0 0 0 1 100 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 -4.76 28 2,415,054 28 2,415,054 INTEGRATED OIL AND GAS SERVICES OANDO PLC 49,725.65 4.00 -2.50 54 1,333,261 54 1,333,261 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 56,974.05 158.00 - 20 14,832 CONOIL PLC 14,052.53 20.25 - 29 64,078 ETERNA PLC. 4,368.88 3.35 - 18 180,259 FORTE OIL PLC. 23,640.03 18.15 -9.93 82 5,305,381 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 4 251 TOTAL NIGERIA PLC. 44,103.89 129.90 - 19 23,005 172 5,587,806 254 9,336,121 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,112.54 5.28 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 328.19 0.70 - 0 0 0 0 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 7 7,520 7 7,520 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 0 0 IKEJA HOTEL PLC 2,785.59 1.34 -8.22 9 163,495 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 4 131 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 13 163,626 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 241.92 0.40 - 5 70,875 LEARN AFRICA PLC 1,080.03 1.40 - 6 23,347 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 776.54 1.80 - 5 7,871 16 102,093

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Wednesday 24 July 2019

BUSINESS DAY

NEWS

Kwara’s budget review holds in special needs school … governor insists budget must reflect people’s needs TEMITAYO AYETOTO

wara State Governor AbdulRahman AbdulRazaq on Tuesday directed top civil servants to meet him at the state’s school of special needs for their budget review meeting. In what was a first in the state’s history, AbdulRazaq said he purposely scheduled the meeting for the school to let the top bureaucrats and government functionaries appreciate the need to allocate resources in manners that directly benefit the downtrodden in the society. The governor had earlier visited the school a few weeks ago to listen to the teachers and inspect the facilities there, apologising to the children and promising to quickly attend to their needs. “Work has started, in line with ourIseyamantra.I’msorrytodrag youhere;itissymbolic.Thisisnecessary for you to understand that there are other people who have needs that we should meet. I want (the budget) to be more inclusive going forward,” he told the civil servants at the mid-year budget review session in Apata Yakuba suburb of Ilorin, the state capital. The meeting was attended by the Head of Service Mrs Susan Modupe Oluwole; Chairman of the Kwara State Internal Revenue Service (KW-IRS); permanent secretaries; directors and heads of variousgovernmentdepartments and parastatals. AbdulRazaq told the bureaucrats that bringing them to the school was to ensure that budgets are made to reflect the condition

of the people, and not a show of executive powers. “I’ve been here before and I know they have needs. The pupils here don’t have access to very basic needs. They don’t have light. They can’t read. This is a trend across the state. Our schools are in bad states. This is why we emphasise the need to get basic things running first,” he said. “The budget should be realistic. We should bring thingsbackto standard. So, bringing you here is to encourage you to feel the situation here. It is not impunity. It is for us to understand the terrible state ofthings.Itistomakeyouappreciate the situation here. I want you to appreciate the environment in which you work. “Wewanttoputbasicthingsin place first before we move into big budget (projects). We will eventually embark on those (big) things but we want to put basic things in place first.” He urged the top civil servants and wealthy members of the society to help the needy such as the special needs children and other disadvantaged members of the society. The meeting was the second time the governor would pull top civil servants to the hinterland to have a feel of the condition of the people. In June, the governor summoned permanent secretaries and other officials to Patigi, in Kwara North, following his visittosomeschoolsandhospitals whose conditions he said were unacceptable to him.

Obaseki: We are tackling insecurity, human trafficking with quality education

he Edo State governor, Godwin Obaseki, says the state government is tackling insecurity and human trafficking by prioritising and investing in quality education and ensuring good governance to engender peace and development. The governor said this Tuesday in his lecture at the Department of State Services’ Institute of Security Studies, in Bwari, Abuja, themed: “Transhumance and International Migration: Challenges of Good Governance, Peace and Sustainable Development in Sub-Saharan Africa,” organised for participants in Executive Intelligence Management (EIM) Course 12, drawn from the State Security Services (SSS) and other sister security agencies from Nigeria and other West African countries. He said the training will enable them acquire the necessary skills that prepare them for the ever-changing security space and the enormous responsibilities that go with it, noting that the discourse will help in enriching participants’ thought and decision-making processes in tackling security challenges that Nigeria, the Lake Chad Basin and subSaharan Africa face. Noting that there was an imperative to prioritise good governance to engender de-

velopment, Obaseki said, “Any nation-state in SubSaharan Africa including our great country Nigeria that is committed to having and maintaining sustainable peace and achieving a developmental pedestal, such a state needs to put in place a system of good governance. “By good governance I mean a system of values, policies, and institutions by which a society manages its economic, political and social affairs through interactions within and among states, civil society, and private sector.” On the state government’s efforts at tackling insecurity and human trafficking, he said, “We have opened the flood gates of our three (3) Technical Colleges in the three senatorial districts; Government Science and Technical College (formerly Benin Technical College), Benin City (Edo South), Government Science and Technical College, Egua-Eholor (Edo Central) and Government Science and Technical College, Igarra (Edo North) to victims of human trafficking and international migration (Returnees) from Edo State who are interested in the acquisition of technologybased knowledge that will empower them and help build a technology-based Edo of our dream. www.businessday.ng

L-R: Hamda Ambah, managing director, FSDH Merchant Limited; Dolapo Osinbajo, wife of the Vice President; Pat Oniha, director-general, Debt Management Office ( DMO), and Bismark Rewane, managing director/chief executive officer, Financial Derivatives Company Limited, at the FSDH Merchant Bank Wealth management women’s event.

Work begins on implementation of National Tax Policy SEGUN ADAMS n line with the Federal Government’s determination to reform Nigeria’s tax system towards effective economic growth, a team of tax experts charged with the responsibility for implementation of the National Tax Policy has been inaugurated at the Kano Hall of the Transcorp Hilton in Abuja on Tuesday. Chairman of the Committee who is also the executive chairman of the Federal Inland Revenue Service (FIRS) and chairman of the Joint Tax Board (JTB), Tunde Fowler, also inaugurated a Technical Tax

Policy Drafting Committee that began a workshop on National Tax Policy Implementation same day. Fowler said he inaugurated the Technical Tax Policy Drafting Committee same day following the importance and urgency of its assignment to national economy. Fowler charged the Technical Committee to work harmoniously and assiduously in order come up, within a few weeks, with a tax policy document that will address achieving sustainability in revenue generation, identifying new and enhancing the enforcement of existing revenue streams and achieving co-

N-Power delists 2,525 beneficiaries for absconding … as 18,674 voluntarily resign Tony Ailemen, Abuja

-Power on Tuesday announced that it had so far disengaged 2,525 beneficiaries over various offenses, including absconding from Places of Primary Assignment (PPA). This is as 18,674 beneficiaries have also voluntarily resigned, having secured permanent employment. In a statement by the communications manager, National Social Investment Office, Justice Bibiye, the NPower office said the action followed reports from its team of monitors and whistle blowers According to the statement, “The Federal team has continued to encourage feedback from the States from existing monitors, whistleblowers and members of the public (through it’s existing call centre), and has acted swiftly by initially placing such beneficiaries on suspension for a period of 45 days.” The statement warns that unless “such beneficiaries are able to provide proof from their primary place of assignment and the State focal person that they were actually

present, or absent with reason, their participation in the programme is terminated after the period of suspension.” The programme, introduced in 2016 by President Muhammmadu Buhari as a job enhancement scheme, is aimed at imbibing the learn-work-entrepreneurship culture in Nigerian youth between 18 and 35 for graduates, as well as for non-graduates. So far, about 500,000 youth, spread across the 774 LGAs of the country are currently enrolled in the programme and deployed to teach in public schools, act as health workers in primary health centres, as agricultural extension advisors to small holder farmers in the communities and also as community tax liaison officers. Each of the beneficiary under the graduate category is paid a stipend of N30,000 monthly for their services. “It had earlier come to the notice of the Federal team that some of the N-Power beneficiaries had either absconded from their primary places of assignment, or gained permanent employment subsequent to their commencement on the programme.

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hesion in the revenue ecosystem. Fowler said: “To support work of the reconstituted National Tax Policy Implementation Committee (NTPIC) Imam inaugurating a Technical Tax Policy Drafting Committee comprising. I am charging the Chairman and members of the Technical Committee with the responsibility of accelerating the drafting and submission of a draft Finance Bill (and if deemed necessary, any draft Executive Order(s), to harmonise the various tax and excise law reform efforts. “It is our expectation that the Technical Committee will work assiduously over the next few weeks to produce a singular

set of fiscal measures that will be considered and approved by the reconstituted NTPIC. Once agreed, these fiscal measures are to be submitted to the Economic Management Team and the Federal Executive Council for approval and ultimate transmission to the National Assembly, for passage into law as part of the efforts to support the 2020 Executive Budget Proposal.” The chairman of the Technical Committee, Adeyemi Dipeolu, said he understood the magnitude of the assignment given to him and his committee members and promised that they would work hard to achieve a good result.

Nigcomsat trains over 200 satellite installers on refresher’ programme to grow capacity HARRISON EDEH, ABUJA

n its bid to sustain its mission as a leading indigenous satellite company in Nigeria, the Nigerian Communications Satellite Limited (Nigcomsat) has trained over 200 satellite installers, mainly engineers and technicians to build their capacity on modern techniques. The training is expected to grow the capacity of the installers with modern app techniques that will help them forestall concerns of poor network service provision to consumers. Speaking at the training programme for over 200 installers on Tuesday in Abuja, Samson Osagie, executive director, Business Development at Nigcomsat, said the installers were engaged to improve capacity and address some service delivery concerns and complaints of consumers. “We have observed over time that most of customers’ complaints is as a result of poor and inaccurate installation of the equipment hence the need for this training,” Osagie said. According to Osagie, “Installers in the course of the training will be opportune to gain more knowledge about NIGCOMSAT Limited, its footprints and products it offers. They would further learn how to reduce installation time through various installation @Businessdayng

techniques as well as international certification in the VSAT industry.” He said, “You know fully well that Nigcomsat is a satellite communications service provider. By virtue of that our services and its deployment to ultimate customers are mostly very technical in nature.” Kazeem Kolawale, executive director, Technical Services Nigcomsat, informed also that the major reason why we were training installers was to build their capacity. “If they are not appropriately trained, they wouldn’t know the appropriate pointing of the satellites. Like I said in my earlier speech, we have even gone beyond physical stuff, but we could work with our point and play App of our satellite of 42.5 degrees east. “I want to see this training opportunities as providing direct and indirect jobs for Nigerians. Nigcomsat wants to bring in lots of Nigerians into this so that they could participate in this and key into the vision of government on employment generation,” he said. “This is a good development and the training would help me improve my profession and I would take the experience to improve my profession,”‎ Faith Sam Amaga, a trained installer, told BusinessDay.

Wednesday 24 July 2019

BUSINESS DAY

tax issues Still on Tax Appeal Tribunal ruling on taxing excess dividend … Andersen Tax sees implications Iheanyi Nwachukwu

he Tax Appeal Tribunal (TAT) on July 5, 2019 held that where a company pays out dividends that exceed its taxable profits in a given year of assessment, such dividends would be subject to Companies Income Tax (CIT) at 30percent. This is regardless of whether the earnings from which the dividends are paid have been previously taxed. The decision was reached in the case between Actis Africa (Nigeria) Limited (Actis) versus Federal Inland Revenue Service (FIRS). How it started? Actis recorded no taxable profits during its 2014 financial year (FY). However, in 2014, Actis paid out dividends to its shareholders from its prior year (2013) profits, which had already been subjected to tax. Subsequently, the Federal Inland Revenue Service (FIRS), relying on Section 19 of the CIT Act, issued a notice of assessment to the Company, subjecting the dividends paid out in 2014 to CIT at 30percent. The Company objected to the said assessment and subsequently appealed to the TAT. The determined issue The main issue for determination

before the Tribunal was whether Actis was liable to CIT on dividends paid out in the 2014 FY based on the provisions of Section 19 of the CIT Act. What does Companies Income Tax Act say? According to Section 19 of the CIT Act, where a Nigerian Company distributes dividends out of profits on which no tax is payable due to no total profit or total profits less than the dividends distributed, such Company would be liable to pay CIT at 30percent on the amount by which the dividends exceed its taxable profits for the year.

What both partied contended The FIRS contended that the Company was liable to CIT based on Section 19 because it distributed dividends, which exceeded its total profits in 2014. Thus, it argued that the dividends in 2014 FY should be subjected to CIT at 30percent. On the other hand, the Company posited that having paid tax on its profits in 2013, any dividends distributed from its after-tax profit of 2013 should not be subjected to further tax as this would amount to double taxation. How TAT arrived at its decisions The TAT, however, ruled in favour of the FIRS, holding that Actis was li-

able to CIT on the dividends paid out in 2014 by virtue of Section 19 of the CIT Act. In reaching its decision, the TAT relied on the previous decisions of the Federal High Court and Court of Appeal in Oando versus FIRS and Oando versus Federal Board of Inland Revenue (FBIR). Specifically, the TAT stated that Section 19 of the CIT Act provides for when and how a company becomes liable to pay CIT on dividends paid out and has no regard to the source of the dividends paid. The TAT further held that the absence of taxable profit or the existence of taxable profit less than dividend paid is a justification

for the FIRS to deem the dividends paid out as the company’s taxable profit for the relevant year. Andersen Tax sees implication of the TAT decision While looking at the implication of the TAT decision, the tax experts noted that the issue of Excess Dividends Tax (EDT) has been a lingering problem in Nigerian taxation. Not only does it subject retained earnings to further tax, it also discourages companies to retain profits in Nigeria. It noted that, “Given the impact of education tax (EDT) on holding company structures, and capital retention in the Nigerian financial system, it had been expected that the issue would have been addressed by legislative amendments or more purposive judicial interpretations,” “Although there is currently a proposed amendment of Section 19 of the CIT Act by the National Assembly, its passage into law in the near future is uncertain given the persistent delay”, Andersen Tax noted. The tax experts hope that the proposed amendments would be passed into law soon “to address the issue of the applicability of Section 19 of the CIT Act. Until then, it is imperative for taxpayers to obtain professional guidance from their tax consultants, particularly with respect to payment of dividends, to avoid undue tax liabilities.”

KPMG Tax Insight

Tax Appeal Tribunal affirms the exemption of gratuities from tax

he Tax Appeal Tribunal (TAT) sitting in Enugu recently delivered judgment in the case of Nigerian Breweries Plc (the Appellant) and Abia State Board of Internal Revenue (the Respondent) to the effect that gratuities are wholly tax-exempt under the Personal Income Tax (PIT) Act 2004 (as amended). Section 3 of PIT Decree 104 of 1993 (now PIT Act, Cap. P8, Laws of the Federation of Nigeria (LFN), 2004), included gratuities as an income chargeable to Pay-As-You-Earn (PAYE) tax. However, Paragraph 18 of its Third Schedule exempts gratuity up to only N100,000 from tax, and thereby makes gratuity above N100,000 liable to PAYE tax. Following amendments introduced by the Finance (Miscellaneous Taxation Provisions) (No. 3) Decree 1996 (“the 1996 Decree”), the term “gratuities” was deleted from the list of chargeable incomes under Section 3 of the PIT Decree. This was reflected in the PIT Act LFN 2004 and retained in the PIT Act 2011 (as amended). Nonetheless, the provision of Paragraph 18 of the Third Schedule to the PIT Act remained unchanged. Facts of the case The Respondent imposed additional PAYE tax liabilities, inclusive of interest and penalties, on the Appellant following a tax audit conducted for the 2014 and 2015 tax years. The

additional PAYE tax liabilities arose because the Respondent subjected gratuities paid by the Appellant to its retired employees to tax. The Appellant objected to the Respondent’s revised assessment, after which the Respondent issued a Notice of Refusal to Amend the alleged liabilities. Dissatisfied with the Respondent’s action, the Appellant filed an appeal at the TAT arguing that gratuity is no longer taxable under the PIT Act since the1996 Decree deleted it from the list of chargeable incomes and introduced a new exemption for all compensation for loss of office, thereby, rendering the provisions of Paragraph 18 of the Third Schedule to PIT Act redundant. The Appellant

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further argued that where there is a conflict between a section of a statute and a schedule thereto, the section will override the schedule. On its part, the Respondent argued that the 1996 Decree is not part of the LFN 2004 and that only gratuities paid to serving employees through approved schemes, are exempt from tax in accordance with Paragraph 2 of the Sixth Schedule to the PIT Act. The Respondent further contended that gratuities paid to retired employees are regarded as income on the last day of employment and taxable where it exceeds N100,000. Issues for determination The issues for determination aris-

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ing from the submissions of both parties included: whether the Appellant is liable to pay penalty and interest in the circumstances of this appeal; and whether gratuities are wholly tax exempt under the PIT Act, 2004 (as amended). TAT’s decision After considering the arguments of both parties, the TAT entered judgment in favour of the Appellant to the effect that: penalty and interest are not applicable as the Appellant objected and appealed against the assessment within the statutory period; gratuities are wholly tax-exempt under PIT Act as it has been deleted from Section 3 which is the charging section of the Act, and the provisions of a schedule to a statute cannot override the plain words in a section of the statute. Consequently, the TAT discharged the Respondent’s revised assessment notice issued to the Appellant. Comments i. The failure of the legislative arm of the Government to delete the restriction on tax-exempt gratuities under Paragraph 18 of the Third Schedule to the PIT Act is an obvious omission given that the subject was deleted in the charging section of the PIT Act in 1996. ii. Hence, the TAT’s decision that gratuities are wholly tax exempt under the PIT Act is a step in the right direction which should put paid to the @Businessdayng

controversy on the matter. The judgment conforms with the provisions of Paragraph 2(e) of the Sixth Schedule to the PIT Act 2011 (as amended) which grants unqualified tax exemption to gratuities paid to employees. iii. The TAT’s affirmation that the provisions of schedules in a statute cannot override the plain words in the body of the statute, has effectively eliminated the gap in the law that some tax authorities often capitalize on to impose income tax on gratuities paid by employers. For instance, the judgment effectively addresses taxpayers’ concerns arising from the Lagos State Internal Revenue Service (LIRS)’ Public Notice on “Exemption of compensation for loss of employment” wherein the LIRS posited that gratuity payments are only tax- deductible subject to the limitation imposed in Paragraph 18 of the Third Schedule to the PIT Act. iv. The judgment further reinforces the position of the Joint Tax Board that any end-of-service benefit paid to employees and described as “gratuity” will qualify for full tax exemption under the PIT Act. Barring any contrary decision of a higher court, it is expected that concerned tax authorities, who held divergent views on the tax treatment of gratuities before this TAT judgment, would align with the judgment of the Tribunal.

Thebigread

BUSINESS DAY Wednesday 24 July 2019 www.businessday.ng

Naspers: ‘Africa’s SoftBank’ looks beyond its Tencent stake

By floating some of its online assets it will create Europe’s biggest consumer internet company. But will that lift its share price?

Joseph Cotterill in Johannesburg

t is Africa’s SoftBank: the continent’s most valuable company by virtue of owning a significant piece of one of Asia’s tech giants. Naspers — a publisher once condemned as a mouthpiece of the apartheid regime in South Africa — has quietly become one of the world’s biggest internet investors thanks to a stake in China’s Tencent that it originally paid $32m for in 2001. Its near 30 per cent stake in the Hong Kong-listed gaming and WeChat giant, is now worth $133bn. Few other bets come close in the investing hall of fame. The one it most resembles is the initial $20m gamble Masayoshi Son, the SoftBank founder, took on Alibaba, the Chinese ecommerce group, in 2000. That stake is now worth close to $132bn and has turned SoftBank into one of the most powerful tech investors in the world. Yet Naspers is worth just $100bn — enough to make it the largest company in Africa by market capitalisation but more than $30bn short of the value of its Tencent stake. It is a valuation gap driven largely by the overwhelming dominance of the Chinese group. It has overshadowed fast-growing food delivery apps in Latin America, Indian online payment groups, Russian social networking outfits and even South Africa’s answer to Amazon — all part of Naspers’ internet empire. A former chairman of the group described Tencent as “the big, winged stallion in Naspers’ stable”. It is similar to the role played by Naspers in South Africa’s stock market over the past decade, propping it up as Jacob Zuma’s presidency trashed the economy and corruption scandals scared off foreign investors. Naspers is now on the brink of another corporate transformation. It has effectively become too big for Johannesburg’s bourse, where it represents just under a quarter of a share-weighted index of the biggest 40 companies. In September it plans to list its Tencent stake and its global internet assets on the Amsterdam bourse, rolling them into a separate company known as Prosus, forward in Latin. It will overnight become Europe’s biggest consumer internet company ahead of groups such as Spotify. “We have been historically low profile, especially in Europe, and that is going to change,” says Bob van Dijk, who succeeded Koos Bekker, the person behind the original Tencent deal, as chief executive in 2014. “We’ve really been surprised at the interest.” Prosus is a bid to fix Naspers’ huge share price discount, which the company believes is largely structural. As it became an ever bigger part of the local market, South African investors had to offload its shares to keep portfolios diversified. But the company also hopes European institutional investors, starved of technology stocks, will be attracted to Prosus — automatically in the case of index trackers — and that this will help narrow the discount and create a new market for the shares. Others argue, however, that the discount reflects fundamental concerns that will not be resolved when Prosus lists. “South African investors had concentration reasons to

sell down Naspers as it dominated the JSE,” says Ken Rumph, a Jefferies analyst. “That didn’t explain why the rest of the world refused to buy [the shares] at 60 cents on the dollar.” This argument is not about size. It is about influence. The concern, hinted at by Mr Rumph, surrounds who ultimately controls the fate of Naspers, where an elite class of supervoting shareholders has reigned since the company listed in 1994. These shares have 1,000 votes each — 100 times more power than the ones Mark Zuckerberg uses to control Facebook. Prosus will replicate this arrangement if Naspers’ stake ever falls below 50 per cent. The fear, Mr Rumph says, is that this “anti-activist control structure” ultimately prevents shareholders applying the brakes if Naspers makes poor investment choices with its cash-pile. Naspers insists that the structure is used only to guarantee to regulators that it will not succumb to a hostile takeover. “We believe that this assurance of independence and continuity is critical for our entry into, and operation in, many markets,” it says. In practice, say people familiar with the structure, it is about reassuring Beijing that one-third of Tencent will stay in safe hands. Some South African investors had urged Naspers to sell its Tencent stake as long ago as 2004, when the Chinese company first listed and the South African group had already doubled its money. It didn’t and Naspers has subsequently made billions out of the stake. Many investors might view control issues as an acceptable trade-off

for exposure to further Tencent gains. But some don’t, instead arguing that keeping the Tencent stake as it is restricts more radical options. “Their strategy is flawed,” says Albert Saporta, a Geneva-based investor who has urged a separation of the Tencent stake. “The Dutch company will be at a discount and is going to suffer from the same issues as the South African one.” Naspers is unlikely to parcel out the Tencent stake to shareholders because of the sensitivities surrounding control of such a large stake. There might also be expensive tax bills from a separation. Yet Mr van Dijk has ruffled feathers. In 2018 he sold Tencent shares for the first time, raising $10bn from a 2 per cent stake. This year Naspers has spun off MultiChoice, an African pay-TV business which began life in 1985 as the group’s original pivot from newspapers. The discount in Naspers’ share price has subsequently narrowed from 50 per cent to about 35 per cent. “We understand that the discount is a source of frustration for all stakeholders,” says Basil Sgourdos, the chief financial officer. “We are working tirelessly to identify the best options to address it.” If you have ever ordered an online takeaway in Brazil, posted an online classified ad in Russia, or made a payment on India’s internet without using a credit card, there is a good chance that the service you used came via a Naspers company. It owns the leader in each of these markets. Their names, iFood, Avito and PayU,

might draw blanks in Silicon Valley — certainly next to the likes of WeWork, Uber and Slack. Yet PayU has backed Facebook’s Libra cryptocurrency project and it invested in Remitly, a global remittances business backed by Jeff Bezos, the Amazon founder. Since 2008 Naspers has invested just under $15bn in businesses outside Tencent. These assets, some of which were subsequently sold, are now valued at over $28bn by markets or analysts, according to the company. When Walmart bought India’s Flipkart last year, Naspers sold off its 12 per cent stake for $2.2bn. The internal rate of return on Flikpkart, about 29 per cent is similar to that enjoyed by private equity groups. At the same time Naspers can point to businesses that are, or are on the verge of, making money. The classified advertising business recently turned a profit. Ecommerce and internet segments — including the dividend from Tencent — increased Naspers’ free cash flow to $673m in the year ending in March, from $217m in 2016. But the payments, classifieds and food delivery segments that will shape Naspers’ future are all classic winner-takes-all businesses. The company controls market leaders, but that still does not rule out a challenge from deep-pocketed rivals, particularly in food delivery. Mr van Dijk’s pitch to investors is that Naspers is an experienced operator, not just a moneybags investor. “We think that we can make these businesses into large, multibillion-dollar operations,” he says. Naspers is the epitome of a 21st century ecommerce business. Yet for most of the 20th century it made its money in a very different way. The company dates back to 1915 in Stellenbosch, where the founders of the National party, the movement that would create apartheid decades later, wanted a mouthpiece to spread its message. The De Burger newspaper was launched at what its first editorial called Afrikaner nationalism’s “darkest hour”. A rebellion by Boers against South Africa’s British masters had just failed. The National party would grow into a political force, and De Nasionale Pers — Naspers’ original name — was an inseparable part of its rise. The author of that editorial, DF Malan, became prime minister when the party took power in 1948. In the decades that followed, the group’s publications often posed as enlightened critics of the regime as it oppressed the black majority. But its criticisms were often more about shoring up white dominance. Anton Harber, a journalism professor at Johannesburg’s Wits university and a former editor of South Africa’s Mail & Guardian, wrote last year that “the gravest sin of the Afrikaans media was not what it said but what it systematically hid from its public: the forced removals, the prison torture, the slave working conditions, the censorship, the petty segregation, the daily humiliations — all the conditions that defined apartheid and made it so horrifying to the rest of the world.”

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