BusinessDay 25 Jul 2018 by BusinessDay

CBN embraces QE, may buy CPs from corporates to push down rates … Holds MPR at 14% on rising liquidity from FAAC, elections … To release result of ChineseYuan FX auction Friday HOPE MOSES-ASHIKE, Onyinye Nwachukwu, ENDURANCE OKAFOR, BUNMI BAILEY, OLUWATOSIN DOKUNMU & ABDULLATEEF ENIOLA-GIWA

he Central Bank of Nigeria (CBN ) on Tuesday retained the Monetary Policy Rate (MPR) at 14 percent to

curb inflationary pressures anticipated with election spending but seemed to embrace a new form of quantitative easing (QE) by urging large corporates to issue commer-

news you can trust I **WEDNESDAY 25 JULY 2018 I vol. 15, no 103 I N300

cial paper notes, which the CBN may then buy to boost credit to the real economy at lower rates. Quantitative easing (QE) is an unconventional monetary policy

in which a central bank purchases government securities or other securities from the market in order to lower interest rates, increase the money supply and ultimately stimulate the economy. Commercial papers are unse-

cured, debt instruments issued by firms, for not more than 275 days, specifically to raise funds to meet short-term obligations. “In order to achieve the obContinues on page 38

Oil companies under labour strike siege, count losses

…15 strikes, 30 work days, billions in oil income lost ISAAC ANYAOGU

Truck, trailer drivers siege on Apapa continues as Ijora Olapa and Ijora Bridges (inward Apapa) were completely blocked yesterday.

Pic by Olawale Amoo.

Risk to economy soars as 2019 politics takes stage APC loses Senate majority to PDP

nalyst’s project that N i g e r i a’s p o l i t i cal uncertainty will negatively affect its economy, from the

markets to the purchasing power of its citizens. After months of intrigues, suspense, horse trading and speculation, 13 members of the All Progressives Congress (APC) defected to the People’s Demo-

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ANALYSIS

Three years on, Apapa is rocket science for an APC government CHUKA UROKO

Don’t treat Saraki, Ekweremadu like criminals - Atiku warns OWEDE AGBAJILEKE & KEHINDE AKINTOLA

ince January this year, the operations of six International Oil Companies (IOCs) and two indigenous oil companies have been disrupted on fifteen oc-

cratic Party (PDP) on Tuesday, leading to Nigeria’s ruling party losing its majority in the Senate. Some 37 APC members of Nigeria’s lower chamber, the House Continues on page 38

Inside Keystone Bank emerges Best Innovative P. 37 Bank in Africa

hen the then opposition All Progressives Party (APC) was desperately looking for the votes of Nigerians to win the 2015 general election, it went to town with all manner of promises, many of which remains unfulfilled till date, three years after coming

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businessday market monitor Commodities

NSE

Bitcoin

Brent Oil

Biggest Gainer

$73.89

NESTLE N1,450.00

Cocoa

US $2,253.00

1.40pc 36,455.24

Biggest Loser FO N72.90

-10.00pc

₦2,825,026.17

Everdon Bureau De Change +5.27pc

2 BUSINESS DAY NEWS PZ Cussons sees challenging year as profit drops on weak Nigeria sales ... pre-tax profits down 21.5% Cynthia Ikwuetoghu & Jonathan Aderoju

oaps and Cosmetics maker, PZ Cussons Plc posted a double-digit drop of 21.5 percent in annual pre-tax profit, on Tuesday and expects another tough year ahead, hit by lower sales in Nigeria and weak consumer spending in the UK. Very tough trading conditions in Nigeria accounted for the majority of the reduction in adjusted operating profit, which was 18.2 percent lower. After higher interest charges for the year, the group’s adjusted profit before tax (PBT) was £80.1million, a 21.5 percent decline from its prior year result of £102 million. According to Caroline Silver, PZ Cussons’s Chairperson, “Macroconditions in Nigeria have resulted in a sharp decline in Africa profits for the year and hence a disappointing result for the Group as a whole.” However, a sustained lack of liquidity at both consumer and trade level has resulted in a significant contraction in the size of the market, resulting in lower volumes, prices and margins across most areas of its portfolio in Nigeria. PZ Cussons stated that as higher oil prices have contributed to increased foreign exchange reserves for the country and a relatively stable exchange rate regime, liquidity has not flowed down into the economy. In addition, wage inflation has continued to remain well behind the

significant cost inflation of recent years, resulting in consumer disposable income under pressure with subdued buying levels. Africa generates the highest revenue in PZ of 36 percent out of which Nigeria represents about 90 percent of the revenue. Among its products, personal care represents about 57 percent of revenue generated; home care about 16 percent, food & nutrition about 17 percent, Electricals is 9 percent and others which is 1 percent. Africa’s results showed a decline in reported revenue of 9.8 percent to £275.6 million from £305 million and on a constant currency basis of 2.0 percent. Adjusted operating profit was 77.7 percent lower on a reported basis from £28.3 million in May 31 2017 to £6.3 million in the corresponding period in 2018 and 76.1 percent lower on a constant currency basis. The sharp decline in adjusted operating profit was caused by a significant market contraction in Nigeria resulting in competitive trading conditions and lower volumes, prices and margins. Whilst the Nutricima milk business was hardest hit by these conditions, resulting in an operating loss for the year, profits were also lower across the rest of the portfolio. PZ Cussons expect macro conditions to remain challenging in most of the markets of their operations with general elections in Nigeria falling in the second half of their financial year.

n the 7th of August 2018 the First bank Holdings (FBH) largest subsidiary First bank of Nigeria limited (FBN) is set to exercise its call option rights to redeem the US$300 million fixed rate subordinated note at 8.25 percent from the international debt markets, 2 years before the maturity date in 2020. The bank seeks to call and prepay its bondholders earlier than the initial maturity date. The $300 million Eurobond issued in August 2013 in London following a roadshow, was part of the bank’s desire to tap into the global market. It is a seven year callable subordinated instrument with a yield of 8.5 percent and callable after 5 years. A callable bond is a debt instrument in which the issuer reserves the right to return the investor’s principal and stop interest payments before the bond’s maturity date. As stated by the bank, “this liquidity management exercise demonstrates the strength of the bank’s foreign currency liquidity and the resilience of its balance sheet.” The bank also believed that “being

Sell

$-N 357.00 360.00 £-N 471.00 479.00 €-N 411.00 419.00

Foreign Exchange

Treasury Bills

Spot $/N Market I&E FX Window 361.68 CBN Official Rate 305.90

3M -0.08 10.96

6M -0.10 12.08

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fgn bonds 5 Years

10 Years

20 Years

0.04% 13.91%

0.10% 14.21%

-0.05% 14.16%

Wednesday 25 July 2018

Divided private sector puts FG in dilemma over AfCFTA ODINAKA ANUDU

ur position is that our dear country should sign the Africa Continental Free Trade Agreement AfCFTA. While we continue to address the issues around it, and work on a strategy for implementation to tackle the problems, we should sign the agreement now.” These were the words of Iyalode Alaba Lawson, national president of Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), on Monday in Lagos. Lawson’s position is a reflection of the views of the majority of private sector players, who see more upsides on AfCFTA than downsides. The Lagos Chamber of Commerce and Industry (LCCI) in late May backed the trade deal, stating that if smaller African countries are not afraid of it, Nigeria with 198 mil-

…. deadline fixed for August 30 lion people and humongous $430 billion GDP, has no business shying away from inking it. “I don’t see anything to be afraid of,” Babatunde Paul Ruwase, president of LCCI, said at a stakeholders’ consultative forum on AfCFTA in Lagos in late May. “If smaller countries are not afraid of it, we should have no fear to be there,” Ruwase added. However, the position of NACCIMA and the LCCI is contrary to that of the Manufacturers Association of Nigeria (MAN), which believes that the AfCFTA is shrouded in secrecy and that Nigeria will be worse for it if the country signs the agreement in its current form. “Right from the period preceding the Kigali Summit and up until now, the content of the Nigerian offer has remained unknown to manufacturers who are the number one

stakeholders to be positively and or negatively impacted by the proposition,” Frank Jacobs, president of MAN, said recently in Lagos. The labour unions are also clearly in sync with manufacturers, stressing that signing the deal is akin to signing away Nigerian jobs and making Africa’s most populous country a dumping ground. However, the impact of this disagreement among the private sector is that the federal government is struggling to take a position on the trade treaty. During the visit of Cyril Ramaphosa, South African president, President Muhammadu Buhari promised to sign the trade treaty soon, adding that the delay in inking it was basically to protect the national interest. Continues on wwwbusinessday online.com

Continues on wwwbusinessday online.com

FBN to exercise call rights on $300m Eurobond Sobechukwu Eze & Cynthia Ikwuetoghu

Buy

FMDQ Close

able to redeem the subordinate tier 2 instrument without any impact on its capital ratios confirms its robust capital base.” In a move to ensure that this action is done smoothly, first bank has attempted to build up its internal liquidity on the back of a strong franchise and its deep market access in the course of 2018. The bank has seen its foreign currency deposits increase by 11.9 percent year to date and 6.9 percent year on year. This exercise would make it the second time the bank will call and prepay its bondholders, following its debut in 2007 with a 9.75 percent US $175 million Eurobond which was called in 2012. The bank will also be able to save about $24 .75 million annual interest it would have to pay in subsequent years to bondholders as the callable bond pays 8.25 percent annual interest. In its statement, the bank revealed that it will not be reissuing any foreign currency (FX) debt in the near term, as it has sufficient local and foreign funds at its disposals. However it would continue to maintain sufficient market access to raise additional funds, if required.

L-R: Wale Olokodana, director, enterprise commercial, Microsoft Nigeria; Akin Banuso, country general manager, Microsoft Nigeria; Onyinye Ikenna-Emeka, general manager, enterprise marketing, MTN Nigeria, and Akinbulejo Onabolu, senior manager, partnerships, MTN Nigeria, during the MoU signing recently at Microsoft’s office in Lagos.

EXPLAINER

How climate change affects Nigeria’s food security Josephine Okojie

he recent report on torrential rainfall in Ogun and Katsina, which claimed lives and destroyed properties, is capable of affecting Nigeria’s food security quest. Aggravated flooding remains a recurring phenomenon in Nigeria and it is usually caused by climate change. According to experts, rainfall patterns in Nigeria are getting more intense with fewer rainy days. This implies that more rains are falling on the days there are rainfall, and storms are also getting more intense, increasing the threat of flooding in the country. “Climate change is a major threat to food security in Nigeria and across the globe and it’s now glaring for everybody to see. If you look around the world, you will see various phenomena such as mudslides and hurricane, among

others,” Newton Jibunoh, an environmentalist and migration expert, said. “When we talk of climate change, we talk about how the rain is falling more intense than ever, when it is hot how it’s getting hotter and this is what is bringing about the shift,” Jibunoh said. What is Climate Change? Climate change, also called global warming, refers to the rise in average surface temperatures on earth. An overwhelming scientific consensus maintains that climate change is due primarily to the human use of fossil fuels, which releases carbon dioxide and other greenhouse gases into the air. “Climate change is now recognised and acknowledged as the most pressing and serious issue mankind has ever faced and this climate change is brought about by man’s activities causing global warming,” said Desmond Majekodunmi, an environmentalist,

farmer and chief executive officer of Lufasi Nature Park. What are the causes of climate change? The major cause of climate change is the burning of fossil fuels, such as oil and coal, which emits greenhouse gases into the atmosphere—primarily carbon dioxide. Nigeria’s vulnerability to climate change is closely linked to the country’s low adaptive capacity and increasing dependence on resources sensitive to changes in climate. In the rural areas, major activities that contribute to climate change include bush burning and illegal felling of trees, a means of livelihood for the production of fuel wood and charcoal. This has reduced the country’s forest cover, which serves as a big buffer against climate change, from about 45 percent in the 1960s to less than 5 percent today.

Continues on wwwbusinessday online.com

Wednesday 25 July 2018

BUSINESS DAY

Wednesday 25 July 2018

BUSINESS DAY

6 BUSINESS DAY NEWS

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FRC bars CEOs from transiting into companies’ chairmen ENDURANCE OKAFOR

ompanies are not to allow a managing director (MD)/chief executive officer (CEO) or an executive director (ED) to go on becoming chairman of the same company, this is unlike before when a CEO may not just become the chairman but sometimes occupies both positions at the same time. This was disclosed by the Financial Reporting Council (FRC) of Nigeria, a Federal Government parastatal under the supervision of the Federal Ministry of Industry, Trade and Investment in Lagos, during the public hearing/sensitisation of the Nigeria Code of Corporate Governance. The new guidelines were unveiled by the team led by the executive secretary of FRC/CEO, Daniel Asapokhai, when the council rounded off its nationwide draft presentation of a consultation that

was carried out in all the geopolitical zones. Tomi Adepoju, partner at KPMG and a member of the Nigeria Corporate Code Committee, said, “A CEO not becoming a chairman of the same company is one of the best practiced standards around the world.” This is because while a person occupied the position of a CEO, there would have been many policies and decision laid down in the organisation and when the CEO moves to the position of a chairman and a new one comes in and is reviewing things based on the current circumstances the former CEO may feel he or she is being reviewed, and this may start a friction in the company, Adepoju said. “In a case of a domineering chairman, he may expect the new CEO to come to him to be granted permission before taking decision, and as such the CEO position may become hijacked by a person

who is also playing the role of an executive. As a result, there could also be a situation where other members of the organisation will be undermining the new CEO,” he said. Although the new guideline in Nigeria’s code of corporate governance also cited an exception “if in very exceptional circumstances the Board decides that a former MD/CEO or an ED should become chairman, a cool-off period of three years should be adopted,” as compiled from the code. The need for a new and better corporate governance code for Africa’s largest economy was born out of the suspension placed on the previous code in October 28, 2016, by the Federal Government as a result of the nationwide uproar it caused during the period. A fifteen-man technical committee was therefore set up in January 18, 2018, comprising representatives from

regulatory agencies, industry professionals and experienced individuals constituted by the board of the FRC to review and come up with new code such as the drafted. Speaking at the event in Lagos, Asapokhai said, “it is our belief that this Code will promote ease of doing business, attract local and foreign investments and enhance the integrity of the Nigerian capital market, by entrenching a culture of disclosure, transparency and accountability. In addition, this Code will raise public awareness of good corporate governance practices.” Meanwhile, the government agency also disclosed that there was no punitive measure for non-compliance but rather the market would punish companies that failed to operate by the new codes, because such companies would not be regarded as standard firms and would hardly pass due diligence tests.

Wednesday 25 July 2018

NECA decries policy flip flop in downstream oil sector

... says FG not transparent with subsidy funding

JOSHUA BASSEY

igeria Employers’ Consultative Association (NECA) is insisting the Federal Government fully deregulate the downstream oil sector, and allow market forces determine the prices of petroleum products, saying unclear policy is unhealthy for the economy. NECA has also restated the compelling need for the government to privatise the four public refineries, again, dubbing them a drain and liability on the national economy rather than an asset. The association notes that the seemingly lack of political will to take a decisive action on the refineries was bleeding the economy, as public funds regularly injected in the refineries were not yielding the desired value. The employers’ body, which is also a key member of the Organised Private Sector (OPS), has also taken up the government on what it termed “an unending saga of fuel subsidy regime,” accusing the Federal Government of lack of transparency in the subsidy funding mechanism.

Larry Ettah, out-gone president of NECA, at the association’s 61st annual general meeting held in Lagos, last week, decried government’s policy flip flop with regard to the deregulation of the downstream sector. Ettah said: “Following government’s policy declaration in 2016 of the enthronement of deregulation in the oil and gas downstream sector of the economy, which was commended, the stakeholders had thought that at last the market dynamics would henceforth be allowed to dictate the prices and supply of petroleum products in the economy. “In the light of the current circumstance of monopoly of the supply of fuel products by the Nigerian National Petroleum Corporation (NNPC) and the negative price variance between pump price and landing price of Premium Motor Spirit (PMS), which has resulted in NNPC’s ‘under recovery of cost’ amounting to almost N1.7 trillion, it is very evident that government has not been faithful to its policy and the subsidy regime is back in a far more vicious form.”

Lassa fever: Edo urges residents to sustain prevention efforts as resurgence threat looms

L-R: Krishnamurthy Ravi, head , customer care, international operations, Mahindra Limited; Murli Valecha, group managing director, Geepee Industries Limited; Prasad Sane, MD, Mahindra West Africa Limited, and Kishore Vaswani of Geepee Group , during the official inauguration of Mahindra 3wheeler mobility solutions for Nigeria in Lagos yesterday . Pic by Pius Okeosisi

Shoprite Nigeria opens its 25th store Organisers unveil key partners in BONIE2018

hoprite Nigeria recently opened its 25th store in Novare Central, the newly launched shopping mall in Wuse, Abuja. Shoprite says its Wuse outlet will continue to be a destination of choice for shoppers in Abuja. In addition to offering consumers the lowest prices on everyday grocery items, the new store also has an extensive range of quality products and a number of in-store fresh food departments including a meat market, bakery and fresh fruit and vegetables. Customers can save time by making use of the wide range of services available at the in-store kiosk, including settling monthly payments with Quickteller. Branch manager, Musa Usman, invites the local community to visit Shoprite Wuse for a pleasant and hassle-free shopping experience. Shoprite launched in Nigeria just a little over 10 years ago with the opening of its first

store in Lagos in December 2005. The retailer is committed to supporting local enterprise, and as a result more than 80% of products sold are procured locally. Shoprite is the leading retailer across Africa and it is the brand of choice for many consumers across the African continent. Shoprite’s large following of loyal customers can be attributed to its ability to offer the widest range of products and the highest standards of freshness and quality whilst always maintaining the lowest prices. Shoprite first entered Nigeria in December 2005, when they opened a store in The Palms shopping centre in Victoria Island, Lagos. Shoprite has since opened stores in Surulere, Apapa, Ikeja, Maryland, Sangotedo, IbejuLekki and Festac in Lagos; and other stores in Enugu, Ilorin, Ibadan, Kano, Akure, Abuja, Delta, Imo, Abia and Ogun State.

OBINNA EMELIKE

s a prelude to the Best of Nigeria Investment E x h i b i t i o n ( B O NIE2018) to be held in London this October, Nigeria Investment Gateway (NIG), in conjunction with CODUB Group of Companies and British International Institute for Leadership and Management (BIILM), will officially unveil some of its key investors, strategic partners, sponsors and exhibitors at an international symposium tagged: Investment Destination Nigeria. The event, which takes place tomorrow at the Banquet Hall, NAF Conference Centre, Kado, Abuja, is targeted at public and private organisations eager to showcase their products and services to the global market and gain insight on how to penetrate the international market. According to Chidi Umeano, chairman, Nigeria

Investment Gateway, BONIE2018 functions as an important platform for potential investments and business opportunities and facilitates substantial increase in Foreign Direct Investment into the Nigerian economy. The organisers, according to him, are working closely with the Federal Government to facilitate Sovereign Guarantees including; BG, SBLC and similar instruments by the Federal Government of Nigeria. “The objective of BONIE2018 is to promote the new Ease of Business policies, especially as Nigeria scaled up 24 spots in the Ease of Doing Business Index, moving from 169th (out of 190) to 145th on the rankings in 2017. The expo is targeting Nigeria’s top 15 trade partners of the world: USA, UK, China, Netherlands, India, Spain, France, Brazil, Belgium, Turkey, South Africa, Italy, Germany, Indonesia and Japan,” Umeano said.

do State commissioner for health, David Osifo, has called on residents of the state to redouble their effort against the resurgence of Lassa fever disease, as experts have identified occurrence of suspected cases of the disease in the endemic areas. The commissioner, who made the call while addressing journalists in Benin City, the state capital, said, “We have observed that after the intervention by Governor Godwin Obaseki to halt the spread of Lassa fever, it appears that residents in the state are slowing down on preventive measures against the spread of the disease.” He disclosed, “Medical experts with the health ministry have identified the resurgence of the disease with records of new cases in endemic areas such as: Esan North-East, Esan Central, Etsako East and other areas.” He advised, “It is important for residents in the state to continue to take steps to

prevent the disease. “People should protect their foodstuffs and water from rats through storage in well covered containers. Avoid bush burning that can drive rats into people’s homes from the surrounding bush. The environment and homes where people live should be clean always.” He called on residents to ensure that they report suspected cases of the disease by calling the following numbers: 08033380188; 08023345987, and 08084096723. “People should ensure that they wash their hands frequently in addition to avoiding contact with infected persons. Any person with fever should go the hospital promptly. Eliminate rats from your homes and communities. Cook your food thoroughly. “Residents in the state should avoid eating raw food that are not properly stored in covered containers. If possible, people should suspend the drinking of garri,” he said.

FMDQ OTC appoints Diamond Bank to its board

i a m o n d Ba n k p l c has been appointed as a member of the Board of FMDQ OTC plc, Nigeria’s foremost debt capital, currencies securities exchange and derivatives over-the-counter securities exchange. According to the letter of appointment, Diamond Bank’s selection as a member to the board is because of its leadership in the financial space, which has been adjudged by stakeholders in FMDQ as relevant to FMDQ markets, as well as recognitions as a Financial Market Active Bank (FMAB) and a Systemically Important Bank (SIB).

Commenting on the appointment, head, corporate communications, Diamond Bank, Chioma Afe, said, “This appointment is great news for us at Diamond as it not only validates our strategy, we also have an opportunity to develop the nation’s financial industry through the securities exchange.” Diamond Bank will work in collaboration with other board members in setting out the broad operational and governance architecture designed to drive the OTC Securities Exchange. The appointment and induction is effective from July 27, 2018.

Wednesday 25 July 2018

Nigeria now retains $5bn of total oil, gas annual expenditure … targets $14bn in 10 years OLUSOLA BELLO

igeria now retains $5 billion of the $20 billion of in-country expenditure spent in the oil and gas industry. This is a clear departure from what was obtained before the establishment of the Nigeria Oil and Gas Industry Content Development Act (NOGICD) in 2010. What was retained incountry despite spending on the average of about $20 billion since 1960s was less than 1 percent, while some $19 billion was always carted away through capital flight annually. After the NOGICD Act was created the trend started changing as some level of work in the oil and gas industry became domesticated, and since then the volume of money retained has been in upward movement. Simbi Wabote, executive secretary, Nigerian Content Development and Monitoring Board (NCDMB), disclosed this at a capacity building workshop for media practitioners in Lagos, recently, saying the plan of the agency was to ensure that about $14 billion of the $20 billion was retained in the country by 2027. “Our target is that if the

7 NEWS Lagos hosts Fintech week to acknowledge economic growth through innovation C002D5556

average spend is $20 billion, and after working with the KPMG, the organisation said the country has the ability to increase what is retained incountry to $10 billion, which is about 56 percent. “We decided that we would increase the target of what can be retained in-country to 70 percent of the $20 billion, which would be $14 billion that would be achieved in the 10 years strategic plan of NCDMB,” Wabote said. After the coming in to play of the NOGICD Act 2010, the retention gradually increased to about 25, 26, 27 percent to what it is now, which is 5 percent of the $20 billion spent annually in the country, meaning that 5 percent went to local companies, he said, and “this is why you see major spike in the industry.” On the Nigeria content fund meant to help local companies develop and execute jobs in the industry, he said, the fund is a collection of 1 percent of all contracts that have been awarded by upstream companies from which 1 percent of it is transferred to NCDMB at the point when the contract is being awarded. He said $200 million had

been set aside from the fund so that indigenous companies could be supported through the Nigerian Content Intervention Fund (NCIF), which attracts an interest rate of 8 percent. Part of the NCIF, he said was what was used to support the necessary intervention in projects, such as the modular refinery project that was recently signed with WalterSmith Petroleum Company. He said more products that would benefit from NCIF were going to be developed as the major focus and trust of the agency was to try developing local capacity of Nigerian companies. “In various currencies, we have about $450 million, which is available outside of the $200 million. It is important that part of this is tied to partial guarantee of contingent liabilities that are already executed with some stakeholders under the former arrangement, which have their projects still running,” he said. Giving a breakdown of what has come to the fund between January and April this year, he said the total in-flow that had come to the Nigerian Content Development Fund was about $45 million.

JUMOKE AKIYODE-LAWANSON

ocelebratefinancialtechnology(Fintech)achievements, its contribution to economic development and the opportunities involved in it, with focus on funds and payments, capital markets, insurance innovations, block chainandcybersecurity,Lagoshas decided to host a Fintech week in October 2018. With the ongoing digital transformation, the added value of technology and innovation to the financial sector that has in-turn boostedNigeria’seconomycannot be overemphasised. To this end, the Lagos Fintech Week, which will include a series of conferences, exhibitions, workshops, hackathons, meetings and awards, is being organised to attract Fintech start-ups, technologycompanies,investors,financial institutions,researchinstitutesand innovationprofessionalstoengage the ecosystem in a stimulating discussions, demos and insightful debates. A statement signed by Yele Okeremi,chairmanoftheorganisingcommittee,said,“Therewould

BUSINESS DAY

be an investor summit that aims to enhance access to funding for start-ups and improve the quality andquantityofFintechinvestment deals in Nigeria.” Since Lagos is now an innovations hub where diverse financial technologysolutionsandopportunitiesarebeingcreateddaily,Okeremi says that, ‘it is imperative that the city host Lagos Fintech Week, which has as its theme, Fintech: ExploringtheHugeOpportunities.’ Citing reason for the hosting of the event in Lagos, Okeremi said the city boasts a huge network of customers with an abundance of local and international talents in finance and entrepreneurship. “Lagos has the ideal ecosystem for Fintech enterprises to succeed. Lagos has seen a vast increase in number of incubator and accelerator programs over the past six years. The city also offers many advantages for Fintech business as this regional financial hub features a dynamic business culture, a growing technological infrastructure, a huge network of customers,regulatorysupportand a world-class talent pool. “Alongside this, an increasing

number of Fintech events have turned the industry into a bustling community, opening the door to greater expertise and increased support for enterprises, and providing countless opportunities for innovatorstoshowcaseideas,meet industry experts, and access training and funding opportunities,’ Okeremi said. The summit will create opportunitiesforthestartupscommunity toparticipateintheHackceleration, learn from industry leaders and experts at the conferences, submit implemented solutions for the Fintech awards and network with the Fintech ecosystem. Explaining what the participants would benefits at the Master Class for Open Banking at the LagosFintechWeek,whichisacollaboration between Fintech 1000+ and Open Technology Foundation, Adedeji Olowe said through the Master class, ‘participants will get an in-depth understanding on openbankingsystem,architecture and design, as well as firsthand experience that demonstrates the collaboration between Fintech to deliver real world applications swiftly to delight customers.’

Poor weather forces Delta Airlines to cancel Nigeria-US flight twice

IFEOMA OKEKE

oor weather in the United States has compelled Delta Airlines from the United States to cancel its Atlanta-Lagos flight in the past 48 hours. The cancellation of the flight has however led to some of the passengers who went to the Murtala Muhammed International Airport (MMIA), Lagos, with the hope of flying out of the country to be stranded in Lagos. Delta Airlines operates four weekly flights to Lagos from its base in Atlanta Georgia, while another three weekly flights is operated to Lagos from New York. On Monday, some of its Atlanta bound passengers were seen at the MMIA and claimed that they were not informed of the flight cancellation by the airline. A source close to the airline in Lagos Airport, confirmed the flight cancellation to our correspondent, but insisted that the airline’s management had already sent out circular to the affected passengers. The airline source also em-

phasised that two flights, rather than one are expected from U.S today (Wednesday) to airlift the affected passengers who ought to have travelled on Monday. According to the source, the first flight would arrive Nigeria at 3am while the other is being expected at 2:35pm same day. The two flights it was gathered would then depart Nigeria at 11pm on Wednesday for Atlanta. The source said: “The management of Delta Air Lines already sent out weather and travel advises to the affected passengers. that is why you don’t have most of the passengers on ground at the Lagos Airport. “Delta has a standard, which it can’t compromise. It is not possible for it to airlift passengers in bad weather.” In all, it was gathered that over 500 passengers were affected by the disruption in flights. Besides, the disruption affected the planned symposium organised by the National Transportation Safety Board (NTSB) and hosted by Accident

Investigation Bureau (AIB). The three-day symposium was expected to commence on Tuesday, but it was postponed, as some of the resource persons from NTSB could not depart US as planned due to the bad weather. AIB in a statement by Tunji Oketunbi, its spokesperson said the symposium had been postponed. He said: “Accident and Investigation Bureau (AIB) sincerely regrets to announce that the Aviation Safety Symposium organised by National Transportation Safety Board (NTSB) and hosted by Accident Investigation Bureau (AIB) has been postponed. “The National Transportation Safety Board (NTSB) facilitators are held up in Atlanta USA due to their flights being cancelled twice by the airline and all efforts made to get on another flight were not successful. “AIB sincerely apologises for the inconvenience. NTSB and AIB are working on a new date and will communicate same shortly.”

Abiru charges new Skye Bank employees on integrity, professionalism

kye Bank CEO, Tokunbo Abiru, has charged the bank’s newly hired employees on the need to embrace integrity and professionalism as key ingredients for a successful banking career in the era of openness and internet of things. Abiru gave this charge while speaking at the graduation ceremony of Skye Graduate Intensive Training (SGIT), which held at the Skye Business School, Ibadan at the weekend Addressing the new staff who emerged through the bank’s popular ‘Skye Graduate Intensive Training (SGIT) the bank group managing director, advised that their professionalism would ultimately impact positively the financial sector. “In addition to exuding the qualities of the ideal Skye Persona, you must embrace the attitude of openness, demonstrate knowledge of the policies

of the bank, respect constituted authorities; as well as treat the customers with utmost regard. Most importantly, you must set targets and goals for your selves at all times,” the CEO admonished. Abiru, who was represented by Ayo Abina, directorate head, Southern Business, said, “The bank places a high premium on staff training and manpower development as a way of building an informed and competent work force to enable the employees excel in their assigned tasks. “You have been trained to be professionals and leaders, who will make the difference in any area of the bank you are deployed to. You are undergoing today’s graduation not because we sought to do you a favour, but because you emerged successful from amongst thousands of Nigerians that sat for

the same examination.” The Skye Bank boss advised the newly inducted employees to continue to seek new knowledge in order to become knowledge based employees, charging them to commit their time in the bank to problem solving, rather than being willing wailers in the face of challenges. Earlier, Skye Bank’s Head of Human Capital Management, Mr. Taiwo Olupeka, said the 53 graduands were the successful lot among the over 2,000 candidates who sat for the bank’s recruitment test. Olupeka described them as the ‘best of the best’ after a very rigorous and thorough exercise, charging them to do their best to make the bank the first and leading commercial bank in the country. A Mathematics graduate from Anambra State University, Pamela Chikezie, was the

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

few weeks ago, we began a discussion of the nature and impact of bad loans on lending institutions and their clients, especially when requisite action is not taken, or taken belatedly. We are not done with the topic but something has intervened and we shall deal with the intruding event and later come back to the issue of delinquent loans. Enquiries into the efficacy of microfinance in dealing with its core objective of poverty reduction come in different frames. But whatever form they may take, they boil down to the simple matter of whether microfinance is still the king of all poverty reduction policy prescriptions. Thus, the question always is this: Is the buzz of microfinance waning? This question has been asked in a number of fora that I attended, over the past several months, not only in Nigeria but also abroad. It resurfaced over the past weekend, while I was in Kenya. My first reaction used to be to wonder why anyone would ask such a question, given all the evidence of what microfinance is doing for the poor all over the world, including Nigeria. I

FBNQUEST FBNQuest is a Merchant banking and Asset Management business of FBN Holdings Plc

here is a common misconception that Estate Planningis only for the rich. This perceptionholds many peopleback from putting a plan in place toensure thattheir wishes are executed in the way they want during or after their lifetime. The fact however, is that it is necessaryto have a plan in place especially onethat could guarantee the financial needs of loved onesor beneficiaries are met; or that the survival ofa business is planned for the future. In developed countries, trusteeship is an important part of moneymanagement and financial planning. A lot of effort goes into

Wednesday 25 July 2018

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A one-sided fight against poverty concluded that it was out of ignorance, not only of the impact of microfinance on living conditions of poor people around the world, but also of the enormity of the challenge of poverty in many countries today, and Nigeria in particular. Overtime I have been studying the situation in Nigeria to have a better response to such questions if and when they pop up. I am currently attending an Africa-wide conversation on the economic Integration of the continent, focusing on Intra-African trade and Competitiveness. By dint of some hard luck or something close to it, someone who said he reads this column called me aside, and after speaking very kind words that I felt were like fresh oil in my lamp for the nest mile of this column, he then dropped the bomb: “But sir, I sometimes wonder if our poverty reduction efforts are being adequately rewarded in terms of victory over the scourge”. I smiled in a way that neither betrayed my emotions nor indicated my approval of his question. The gentleman must have thought I missed the point of his question and so went on to amplify it. “Sir I mean to say that it does not appear that microfinance is reducing poverty as expected”. When I continued to smile, without addressing his topic, he joined me to smile. I think the poor man was unsure of what was going on and thought that we could at least share one thing together, even if it was an “unfounded smile”. So He too delivered a broad lingering smile. It was at this point that I began to speak in a manner he described as “elevated conversation on microfinance and its problems”. I drew an analogy between

...poverty and flood share a number of pathological commonalities and ... it is only when we are at home with the genealogical affinity and underpinnings of these two kindred evils spirits that we can sustainably deal with them poverty and flood water. I said to him that poverty and flood share a number of pathological commonalities and that it is only when we are at home with the genealogicalaffinity and underpinnings of these two kindred evils spirits that we can sustainably deal with them. Poverty is like a flood in many respects. First, poverty and flood are both disasters.They both have sources and follow a direction. The source of a flood may be a river that overflows its banks. Once it does, water escapes and begins a journey that may end up in people’s homes, farms or other human establishments. A flood may also be part of rain water flowing from higher groundsto the low lands. In all cases, there is a source or cause, effect and victim. I told him the story of a sad

flooding experience, which happened years ago in Nigeria’s South-west, which is still fresh on my mind - the Ogunpa Flood Disaster in Ogun State. It was so bad that the whole nation was touched and joined to mourn with that state, in addition to providing material support. I suppose that was when we still had our humanity in tack. With the way we shrug off the news of the massive killing of moms and their babies by “unidentifiable herdsmen” these days, some could validly say that Ogunpawould not have made the headlines if it happened today. But that was a flood disaster that was traced to a river by that name. Every flood has a source. Similarly, every poverty attack can be traced to a cause, its source, from where, like a flowing river, takes its source. The poverty in Nigeria is a derivative of the many years of visionless leadership by people whose only interest is either their personal estates or the supremacy of their kit and kin over other people – a sad combination of evils unexpected of anybody privileged to lead a nation. These twin bads have led to policy decisions that either were deliberately intended to deprive one group and thus impoverish them or inadvertently brought harm to citizens. Nigeria, according to the Department of Petroleum Resources website, had proven gas reserves of about 198.7 trillion cubic feet. Its unproven or potential gas reserves is 600 trillion cubic feet, according to the Nigeria LNG. In fact, Nigeria is described as a Gas Province “with some oil”. What a waste! If any other country in Africa was so rich and so described, Africa would have been better today. So poverty in Nigeria is a creation of its leadership. If that is settled, I said to him, then fix the

leadership and leave poverty to fix itself. I then turned to the issue of effectiveness of microfinance. Nigeria is not among the microfinance nations of the world even though it needs it more than others. Unknown fact! Of the top 100 microfinance providers in the world, none is domiciled in Nigeria. Only Egypt and Morocco are featured in that list, yet their poverty needs are a microcosm of Nigeria’s. Ecuador with a population of about 17million people has about 9 MFI in that list. Relative to its population and the number of those abjectly poor, Nigeria is actually not in the microfinance business. Again, not only are our MFIs very small and weak, they are very few in number.I had once compared our MFI industry with South Africa’s, when it was at the stage we are now. They were over 3500 MFIs compared to our 1000. The share size of the poor dwarfs the effort of the MFIs in Nigeria. Finally, I told the man that one big reason that guarantees the ineffectiveness of our microfinance effort is the activities of herdsmen. For as long as they continue to attack, overrun and occupy farming villages unchallenged, microfinance as an instrument of poverty alleviation will be like adrop in the ocean. As one village is “captured” in this raging undeclared war, the peasants in the next stay off their farms. When they do, their only hope is to die in the streets or IDP camps. By now the young man’s jaws had dropped so low that one could count his teeth. He turns to walks away but said “we are fighting poverty without looking at its causes. A onesided fight against poverty will surely fail”. Send reactions to: comment@businessdayonline.com

Trusts, wills, and a world of untapped opportunities the proper education of individuals and corporate organisations on the importance of setting up and managingtrusts, wills and other estate planning vehicles. In India for example, trusteeship is used as a tool to address rural development, land use and the regulation of ecosystem processes. In Nigeria, however, this area of financial planning remains largelyunexploiteddue to inadequate understanding of estate and financial planning as an integral part of life. The value of a properly executed estate plan,such as an improved standard of living, a more secure future for generationsthrough the seamless transfer of assets,or ultimately thesocioeconomic growth of the country are not effectively communicated. According to Adekunle Awojobi, MD/CEO, FBNQuest Trustees, “the opportunities for effective

management of wealth to be enjoyed in Nigeria are enormous, but many people still do not realise the farreaching benefits of having estate plansthrough wills or trusts. They also do not realise the possibilities that professional executorship and estate administration services offer. While it is important to secure one’s assets it is also necessary to ensure that theassets or property are in the right hands, and entrusting these to a reliablepartner can ensure the smooth transfer to beneficiaries”. “At FBNQuest Trustees, we have a strong track record for acting in a fiduciary capacity for individuals and families, andwe hold a solid market position as a leading trust services provider. We offer expertise required for the establishment of well-crafted estate plans to ensure our clients’assets are properly managed in accordance with theirwishes

-whether now or in the future. We have a team of experts who have in-depth industry knowledge, local awareness, and relevant experience, having helped develop wealth and generational transfer plans for families and businesses over several decades,” Awojobi stated. FBNQuest Trustees believes that the more people become aware of the benefits of estate planning and understand how it should form part of their life and financial planning even at an early age, more individuals and families will pay attention and take active steps to preserve their legacy. If people understood how trusteeship works and what it can do for them, theywouldmake better financial decisions. In order to help with this, FBNQuest Trustees commenced “The Legacy Series”, an enlightenmentcampaign which draws on real

life experiences and scenarios to educatepeople on how Trusts and Wills can be used to help preserve their financial future and create a lasting legacy for their loved ones or chosen beneficiaries. Now in its fifth season, the Legacy Series focuses on how trusts can enable one plan towards medium-term financial goals like children’s education or caring for aged parents, as well as longer-term financial goals like business succession planning and assets distribution. Covering Trusts,Wills, Executorship and Estate Administration, the Legacy Series enables individuals understand theiroptions tohelp them achievewealth preservation, wealth transfer, and by that, true legacy creation. Send reactions to: comment@businessdayonline.com

Wednesday 25 July 2018

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UK – Africa trade: Now is an exciting time!

EMMA WADE-SMITH Emma Wade Smith OBE is the newly appointed HM Trade Commissioner for Africa.

wo years on from the referendum decision to leave the European Union, the UK is actively redefining its trading relationships with the world. We have a unique opportunity to champion free trade and build new business partnerships that will create sustainable jobs and wealth for more people. Nowhere is this vision more relevant than in Africa. My appointment as Her Majesty’s Trade Commissioner for Africa – one of nine such roles globally – reflects the UK’s determination to enhance our business ambition and activity in Africa. With more than £28bn of trade and £21bn of investment between the UK and Africa last year, we already have strong foundations to build from. I know we can do more to bring African and British business leaders and entrepreneurs together to learn from one another and grow their companies faster. The UK’s International Trade SecABDULHAKEEM ABDULATEEF Dr. Abdul-Lateef is the Lagos State Commissioner for Home Affairs

xactly 16 days after the commemoration of the 3rd year in office of his innovative and aggressively modernizing administration on May 29, 2018, the Lagos State governor, Mr. Akinwunmi Ambode celebrated his 55th birthday on June 14. As expected, there was widespread commendation and approbation from within and beyond Lagos State of the remarkable strides his administration had taken in three short years to make indelible imprints on the developmental landscape of Lagos. Stepping into the shoes of his illustrious predecessors since 1999, Asiwaju Bola Ahmed Tinubu, who envisioned and laid the foundation for the resurgence of the new Lagos and Mr. Babatunde Raji Fashola (SAN) who actualized the consolidation of the vision, Ambode hasraised the pedestal of governance in the Centre of Excellence to unanticipated heights by accelerating the pace and expanding the scope of the state’s infrastructural modernization and service delivery programmes. Of course, the fact that Mr. Ambode hit the ground running and almost instantaneously began to make an impact on diverse sectors of the state is not surprising. Just like Fashola before him, the incumbent governor had been part of Asiwaju’s team between 1999 and 2007 and played

retary, Dr Liam Fox, is committed to a UK that champions free trade, breaks down trade barriers and trades its way to prosperity, stability and security. In his recent visits to Africa and meetings with African political and business leaders, he has seen for himself the exhilarating talent and drive of individuals and businesses across the continent. He knows – as I do – that this is an exciting time to be promoting stronger business links between Africa and the UK. I see boundless opportunities for us to pursue together, to grow quality industry, build skills and create jobs. UK consumers and companies want to buy more of what Africa produces, from food and clothing through to technology and services. And UK companies have deep experience and expertise to offer Africa’s growing consumer class and business community. Business partnerships that bring together the best we each have to offer will secure the new jobs and more inclusive growth we all want to see. I believe there are three core areas in which to explore such opportunities. The first is around innovation, entrepreneurial drive and creativity. As the digital capital of Europe, the UK has one of the world’s greatest technology ecosystems. A new digital tech job is created there every 50 minutes and London is the number one city in the world for start-ups and scale-ups. Since 2008, UKAID has supported Nigeria’s motivation for financial inclusion and worked through several innovative engines like EFinA; the recent visit from the

I am confident that the UK has the skills and the know-how to accelerate the growth of African businesses and the realisation of government infrastructure and industrialisation plans. This, coupled with access to UK governmentbacked trade financing through UK Export Finance means that government and project owners can benefit from and trust in a complete offer, underpinned by quality and transparency Lord Mayor of London to Lagos and Abuja was certainly in recognition and admiration of Nigeria’s great strides in innovation and technologymeeting with several innovators in tech and finance, at a roundtable co-hosted by techpreneur incubators CChub. Imagine the creative power that would be unleashed by bringing our entrepreneurs together. We could match world-class technology and innovations to revolutionise our economies, including in the delivery

of healthcare, education and agricultural production. By mobilising an unrivalled blend of development and commercial capital across Her Majesty’s Government, we have been able to scale best-in-class technology to deliver cost-effective and quality solutions to many challenging and complex problems. For example, the UK Government’s development investment arm, CDC, invested $55m in African Internet Group, owner of Nigeria’s biggest and fastest growing e-commerce platforms, Jumia. This has boosted its growth across Africa, helping Jumia to connect over 50,000 small businesses to consumers. The second opportunity lies in driving more investment into Africa; something I know is a priority for Nigeria. The UK is already the second largest cumulative investor in the continent. I know we can mobilise more UK investment into Nigeria if our governments work together to showcase specific investment opportunities and, in line with Nigeria’s Economic Recovery and Growth Plan (ERGP), maintain a stable business environment that encourages new investors. Thirdly, to support and accelerate Nigeria’s growth and industrialisation strategies, the UK has world class expertise and experience that can help achieve these goals faster and more sustainably. As the 8th largest manufacturing exporter in the world, UK companies – often working in a consortium to build the best all-round offer - have an established history of delivering high quality infrastructure projects with a

focus on long-term value, up-skilling and sustainability. I am confident that the UK has the skills and the know-how to accelerate the growth of African businesses and the realisation of government infrastructure and industrialisation plans. This, coupled with access to UK government-backed trade financing through UK Export Finance means that government and project owners can benefit from and trust in a complete offer, underpinned by quality and transparency. Like the N2.5bn deal agreed to earlier this year with a UK company partnering with the state government of Lagos to construct 10,000 LED streetlights spanning 300 kilometres. This is an exciting time to redefine our trading relationships with Africa and I am committed to building ambitious partnerships, anchored in reciprocity. This means working to enhance access to our respective markets for the products and services we each create. We are working hard to ensure continuity in our trading arrangements in Africa, to give our business people the confidence they need to invest in the continent and to give African business leaders and Governments a clear reason to buy British. Ultimately, the real and lasting value of our partnerships will be measured not just in profits but in job creation, skills-building and patents for innovative new products and services that transform lives and livelihoods in Africa and in the UK.

Send reactions to: comment@businessdayonline.com

Akinwumi Ambode: Visionary midwife of an emergent smart city a key role in the conceptualization and implementation of aspects of the long term vision being systematically actualized and constantly improved upon in the ongoing transformation of Lagos State over the last 19 years. Indeed, Ambode occupies a unique place in the leadership annals of Lagos State as the first full- fledged civil servant to be elected as the chief helmsman of the state having risen from the lower rungs of the Lagos State public service to the apex of his career over a period of two and a half decades when he became a Permanent Secretary and Accountant General of the state. Governor Ambode’s sterling performance, publicly acknowledged even by many of those who belong to opposition parties in the state, has drastically altered the widespread but obviously mistaken perception of civil servants as laid back, rigidly committed to familiar routine and prone to carrying out directives rather than initiating policies and demonstrating innovative, bold and creative leadership. The governor’s knack for dynamic, pathbreaking leadership was already on display when he was the Permanent Secretary, Ministry of Finance and Accountant General of Lagos State. During this period, according to his biographer, Mrs. Marina Osoba, not only did he spearhead the creation of the State Treasury Office (STO), but under him “Lagos State has become the first State in the Nigerian Federation to convert from the

cumbersome and antiquated paper based systems to the more modern, internationally practiced e-based systems. Not to mention that this new e-based system has been shown to vastly cut down on the incidence of corruption in the collection of taxes”. In the words of Mrs. Osoba, “In a popular business newspaper, BusinessDay, of Tuesday, 2nd July, 2013, it was reported that Fiscal Management in Lagos State had surpassed that of the Federal Government and internally generated revenue from taxes has touched the 75% mark in stark contrast to the Federal Government’s 20%. Also, the paper stated that Lagos makes up to 20% of total Nigerian GDP and 40% of non oil GDP. All these gains from the smallest state geographically (that is in terms of size) showing that Lagos State, which is without any of the rich mineral resources that other states have in abundance, can think outside the box and create wealth using what little she has and building on its commercial base. These great strides are particularly noted to have happened in the last six years (2006-2012) during which Akin headed the STO.” One unique advantage that Ambode has is his understanding of the workings of the bureaucracy and his ability to optimize its strengths to ensure due process and accountability in the implementation of public policy while at the same time utilizing his multi-tasking and hands-on management skills to ensure that bureaucratic delays and bottlenecks do not ob-

struct the efficiency, timeliness and meticulousness of policy. In addition to his B.Sc and M.Sc degrees in Accounting as well as his being a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN) and a Hubert Humphrey Fellow in Accounting and Finance from Boston University, Boston, Massachusetts, Ambode on retirement from the Lagos State Public Service decided to attend specialized management courses in four of the best IVY League Business Schools in the world. These are the Wharton Business School Advance Management Programme, Cranfield School of Management, Cranfield, England, the Institute of Management Development, Lausanne, Switzerland, INSEAD, Singapore and the Harvard Kennedy School of Government, Boston, USA. All of these had no doubt grounded the governor for his ongoing historic task of mid-wiving the transformation of Lagos from Africa’s emergent model megacity to a regional Smart City in every sense of the word. The concept of Smart City implies not just the provision of qualitative infrastructure and services to cater for the expansive population of a megacity. It entails the deployment and utilization of the latest technologies, including Information and Communications Technology (ICT). This is to enhance the efficiency and quality of life in diverse areas such as electricity supply through smart off-grid technology, efficient transportation services, enhanced security, improved public

sector governance as well as continuous up-scaling of the aesthetic appeal of the city to boost economic growth through the multiplier effects of a 24hour economy that generates wealth and jobs through tourism, entertainment, arts and culture. A major step towards the creation of Smart City hubs that will be intensive prosperity enhancing international hubs of boisterous commercial and economic activities was taken when the Ambode administration signed a Memorandum of Understanding (MOU) between Lagos State and the City of Dubai for the establishment of the Lagos Smart City reminiscent of Smart City, Dubai, the Smart City, Malta and the Smart City, Kochi (India). The objective, according to the governor, is to establish a strong nexus between technology, economic development and governance with a view to “developing sustainable, smart, globally connected knowledge-based communities that drive a knowledge economy”. This initiative is projected to attract billions of dollars worth of investments to the state as well as create thousands of jobs while boosting wealth generation in the Ibeju-Lekki axis especially and Lagos as a whole.

Note: the rest of this article continues in the online edition of Business Day @https://businessdayonline.com/ Send reactions to: comment@businessdayonline.com

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EDITORIAL PUBLISHER/CEO

Frank Aigbogun

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

Bashir Ibrahim Hassan

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

As Nigeria marches into another debt peonage?

hree months ago the International Monetary Fund, IMF, in its presentation of the Global Financial Stability Report warned that Nigeria and other emerging economies’ debt level was creating some form of vulnerabilities and if not checked, could undermine financial stability. Although Nigeria always retorts that its debt to GDP ratio is low in comparison to even developed countries, the real danger is in the area of debt sustainability and revenue to debt service ratio. The Debt Management Office put Nigeria’s total national debt stock at N22.73 trillion ($66.70 billion), of which the external dollar denominated component is in excess of US$17 billion. With a GDP of almost $500 billion, Nigeria’s debt remains with 13 percent of GDP. That is why finance minister Kemi Adeosun, always respond to these warnings that Nigeria’s debt are sustainable and under control. The real problem however is in the area of debt service to revenue. The Bretton Woods institution – and some recent calculations, put Nigeria’s debt servicing at 66 percent of rev-

enue – surely anyone who spends 66 percent of his/her income to service debt monthly has some serious issues and may sooner or later run into difficulties. It is clear Nigeria has a problem of debt sustainability. But the government will never acknowledge it. Reality is, the government is caught between declining revenues and rising expenditures all at once. But there are more sustainable solutions than plunging the nation into unsustainable debt. Nigeria’s tax to GDP ratio is one of the lowest in the world, meaning tax-collection rate is very poor and can be grown exponentially. Additionally, the government could sell public assets, intensify its public private partnership drive to finance capital projects and infrastructure and or outright concessioning of commercially viable government assets. But the government isn’t considering these avenues and is only looking towards borrowing. There’s also the problem of external borrowings at ridiculous interest rates that is hurting the country. The government has explained its penchant for external borrowing on the need to balance its loan portfolio and reduce the pressure on domestic borrowing.

But why is the government borrowing so much of late? Government argues its heavy borrowing pattern is necessitated by the need to invest in infrastructure. But even the sources of the debts are a source of concern. The government could have easily approached the International Monetary Fund for cheap loans which come in at less than one percent interest rate instead of the significantly more expensive commercial loans which it is building up. Obviously, the government is avoiding the IMF because it is not a politically popular decision. Nigerians are not particularly in love with the IMF because of the conditionalities that the fund will force the country to implement in return for its cheap money. So the fear of the IMF has pushed the Nigerian government into the arms of shylock lenders who will demand for their pound of flesh if Nigeria at any point in time is unable to repay the loans. Sadly, unlike the IMF, investors giving Nigeria money through the Eurobond and other such means will not border to see whether the country really spends it on infrastructure as promised. All they are interested in is that the country does not default in its payment sched-

ule. This is unlike the IMF that will put in place a monitoring programme and ensure that the funds are used as stated and future funds released only when the stated spending plan and in many cases cost plans are met. While money raised from bonds or commercially can be spent in a way and manner that suits the government, an IMF or a World Bank loan cannot be spent in a similar manner. Sadly, Nigeria does not have a track record of judicious utilisation of loans and an IMF loan, accountability-wise, may have been the best for the country. Currently, no Nigerian can say exactly what the borrowed funds are being spent on. For all practical purposes, it may be used to service recurrent expenditure. That is why we would have preferred a loan whose spending will be effectively monitored and supervised. Now that Nigeria has taken the decision to procure expensive loans just to escape supervision, we expect the National Assembly to strengthen its oversight and supervising capacity to ensure that the loans procured are used strictly for infrastructure projects as stated in the request sent to them.

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Wednesday 25 July 2018

BUSINESS

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Niger Insurance advances discussion with new investors

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C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

African Continental Free Trade Area offers $2.5trn opportunity to Nigerian economy ODINAKA ANUDU

he Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has said that the African Continental Free Trade Area (AfCFTA) treaty offers Nigeria a $2.5 trillion opportunity in the African market, urging the federal government to sign the trade treaty immediately. Speaking at a press conference in Lagos on Monday, Iyalode Alaba Lawson, national president of NACCIMA, said the country cannot afford to be excluded from a common African market as it is a veritable strategy to raise the competitiveness of African economies in the global economy. “NACCIMA’s position is that our dear country should sign the AfCFTA,” said Lawson. She pointed out that Nigeria has been closely and long involved with the vision of an African Free Trade Area right from the establishment of the Organisation of African Unity (OAU), counselling that government should step up policies that will ensure that local products and services

are market-ready for the African continent in the shortest possible time. The AfCFTA is a trade treaty that seeks to unify the African economy by reducing all trade barriers. Over 45 countries, including South Africa, have already signed up, but Nigeria is yet to do so, as the federal government, in line with the position of local manufacturers, says it is not yet ready to endorse any agreement that will jeopardise Nigerian industries. According to Lawson, in order to take full advantage of the AfCFTA, government needs to intensify current efforts to eradicate non-tariff and regulatory barriers to international trade such as border delays, burdensome customs and inspection procedures, as well as ensure that multiple licensing and taxes are eliminated. “A situation where it is easier to import than to export will defeat the purpose of signing the AfCFTA,” she cautioned. She stated that a consensus has emerged, after stakeholders’ consultations, that Nigeria must be part of the AFCTA for numerous reasons, which include the fact that it is a platform for our SMEs to

be integrated into the regional economy and a means of acceleration of women’s trade and economic empowerment. “While we continue to address the issues around the AfCFTA, and work on a strategy for implementation to tackle the problems, we should sign the agreement now and set up an all-embracing implementation committee in readiness for when it will finally take off,” she added. On the national carrier launched last week, the NACCIMA president said against the background of the country’s past experience with the defunct Nigeria Airways and Virgin Nigeria, which still leaves sad memories and a bitter taste in the mouths of citizens, the issue of the ownership structure and management of the new National Air are of significance. “There must be transparency in the process of the choice of those being considered as strategic partnership, and due consideration should be given to the Nigerian private sector in the offer of equity and the controlling share,” she further said. According to her, the new Airline must be protected from government interven-

L-R: Fidelis Ayebae, managing director, Fidson Healthcare Plc ; Monica Eimunjeze, director, registration and regulatory, National Agency for Food and Drug Administration and Control (NAFDAC), Moji Adeyeye, director general- NAFDAC, and Ijeoma Nwankwo ,director, Drug Evaluation and Research, during the NAFDAC DG’s visit to Fidson’s Factory in Sango Ota, Ogun State recently.

tion so that it does not suffer the same fate like the defunct Nigeria Airways. “But overall, as we gear up for the new national carrier, we must also work to create a conducive environment to ensure existing private sector airlines also survive.

“The situation in which we have more individually-owned private jets than airlines is not encouraging and a situation in which the private airlines collapse regularly is not good. Something is wrong in such a trend. We must create the environment

Greenov8 Global gives Nigerians currency exchange platform MICHEAL ANI

fintech firm, Greenov8 Global Platforms Limited, has announce d the launch of an online currency exchange and settlement platform – kaara.io, to enable investors sell, buy and close out discrete transactions in a secure and safe environment. Built to serve buyers and sellers in the Nigeria’s open forex market, Kaara.io is an innovative product that provides customers, online access to executable foreign exchange rates across a wide range of currency pairs, enabling players securely carry out their regular currency exchanges with increased efficiency, convenience and transparency. Femi Ekwuyasi, managing director/CEO, Greenov8 Global Limited, described

the platform as a timely innovation that is coming at a time when there is a huge need for a transparent and viable currency exchange market where stakeholders’ interests are well protected. “We are focusing on serving buyers and sellers in the Nigeria open market for currency exchange, our intent is to eliminate trust issues around foreign exchange activities by consummating and settling both FX and non FX transactions on the Kaara platform using the secured and transparent Escrow platform. Kaara essentially provides a platform where players securely carry out their regular currency exchanges with increased convenience, safety and speed. With Kaara, you can finally curb the diversion of funds or other inefficiencies that are prevalent with currency exchange processes,” Ekwuyasi said.

Commenting on the uniqueness of the platform, he said, “Kaara is built around a Bank Denominated Multicurrency (BDM) wallet system which allows users access to main multiple wallets in multiple banks and in multiple currencies. “Each Kaara transactions is sufficiently secured using a Multi-factor authentication (MFA) were authorization is only granted after successful presentation of 2 or more pieces of evidence across two or more channels.” Explaining how the platform works chief technical officer, Greenov8 Global Limited, Godson Nkeokelonye, said, “We simplified the engagement into three simple steps to create extra convenience for players, “To benefit from the platform users should visit www.kaara. io to register or download the kaara mobile application, After registration, verifica-

tion of account is next, this is done by providing additional validation and authentication information, then you can start selling, buying and closing discrete transactions in a secure and safe environment.” Speaking on the relevance of the platform to the currency exchange market, Frank Alarapo, business development manager, Wema Bank, described the Kaara platform as a timely intervention that will kick-start a genuine market place for all stakeholders in the FX money market. “This is a timely innovation that will organise the open FX market currently ridden with huge risks and uncertainties. If transactions can be closed online and in almost real time, I am sure the market would warmly embrace this platform. “Becoming a platform for settling exchange transactions within and outside Nigeria is what makes the

platform more interesting and I am confident that users will find the services valuable” Alarapo said. Kaara can be accessed with ease from multiple platforms (Windows, Android & IoS and devices (Web, Mobile and Tablets. Players automatically gain access to a marketplace with a pool of potential buyers and sellers and are instantly notified of activities and transactions statuses through multiple channels, which includes InApp, SMS and E-mail notifications. With several new user accounts added every month, Kaara.io is emerging as Nigeria’s fastest growing platform for online currency exchange and settlement. The platform also presents a highly visual, simple and interactive user interface that helps players exchange currency with seamless convenience and transparency.

for private airlines to thrive. Attention must therefore improve the aviation value chain, airport infrastructure concession arrangements in running the airport, under PPP, security, maintenance, repair and overhaul facilities, among others,” she added.

Mandilas Group Appoints First African CEO

andilas Group of Companies has appointed O la DebayoDoherty, an African as the group chief executive officer, the first in the Group’s over 70 years history in Nigeria. The Group, one of the longest thriving business conglomerates in the country, recently made the announcement at its corporate headquarters, Lagos Island. Debayo-Doherty joined the Mandilas Group from IBILE Oil and Gas Corporation where she was the pioneer managing director/CEO. Prior to this role, she was at Shell Petroleum Development Company of Nigeria Limited, Shell International, United Kingdom and Arthur Anderson where she served in Finance, Management Consulting, Strategic Business Development and Project/Process Management functions at senior and management levels in and outside Nigeria.

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COMPANIES & MARKETS Niger Insurance advances discussion with new investors

Business Event

…targets fresh capital, technical capacity Modestus Anaesoronye

nderwriting firm, Niger Insurance Plc has reached advanced stage with new investors that are eying for equity stake in the company, which is expected will reposition it for growth and better reward to shareholders. Yusuf Hamisu Abubakar, chairman of Niger Insurance who disclosed this at its 48th Annual General Meeting in Lagos said, the arrangement will bring in capital as well as technical expertise that will put the company on the path of growth and higher profitability. “I am pleased to report to you that the Board has reached advanced stages of discussion with investors who will add to capital and bring technical expertise to your company.

We believe that at these challenging times, this is a welcome development.” Abubakar while urging for the support of shareholders, stated that the board is convinced that the future of the company remains very bright, as it will continue to leverage its market positioning, age, advantage, and brand equity to achieve its financial objectives. In the financial year ended 31st December 2017, the group result shows that gross premium earned increased by N2.6 billion or 44 percent above N5.962 billion earned in 2016. Its underwriting profit closed at N1.1 billion, from N888.9 million in 2016, showing that the company was able to effectively match its revenue on insured risks with the liability. Niger’s total asset as at the end of the year under review stood at N22.83 billion, while its

shareholders fund was N7.84 billion. Kola Adedeji, managing director/CEO of the company said to move forward and reposition the company for growth, the management has doubled its efforts and formulated a more specific strategy, capable of returning it to a sustainable path of good performance. “We have carried out a comprehensive audit of our human resources with a view to engendering renewed vigour as a prerequisite for returning us to a good performance path that is sustainable and hinged on efficiency”. “We have revamped our retail products to carter for all cadres of insurance public, increased our presence in all social network platforms and made ourselves more accessible to our esteemed customers”.

L-R: Busayo Adedijo, company lawyer, Kaara; Femi Ekwuyasi, CEO/founder, Kaara; Adedamola Otuyalo, director operations, Kaara, and Godson Nkeokelonye, chief technical officer/co-founder, Kaara, during the media launch of currency exchange platform kaara.io in Lagos. Pic by Olawale Amoo

Huawei calls for entry for ‘seeds for the future’ program for Nigerian university students

uawei Nigeria, recently announced the call for entry from Nigerian university students to participate in this year’s ‘seeds for the future’ programme, a corporate social responsibility (CSR) initiative of the company initiated in 2008. It seeks to develop local ICT talent, enhance knowledge transfer, promote a greater understanding of and interest in the ICT sector, improve and encourage regional building and participation in the digital community. The Seeds for the Future Program was created by Huawei Technologies to proactively support the development of

future leaders and innovators across the world. Huawei is committed to promoting ICT industry development in the countries it operates, and aims to drive long-term economic, social, and environmental sustainability. Li Frank, managing director in a statement said, talent is crucial for the growth and development of any industry, the rapidly growing ICT industry has greatly changed business models. “As a result, across the ICT ecosystem there is an urgent need for large numbers of technical staff who can address the challenges posed by this transformation. For true and lasting development in Nigeria, we

must look in the area of human capital development with a huge focus on youths. “Over the years, Huawei has been investing in ICT skills and knowledge in Nigeria in an effort to boost employment, foster the development of knowledgeintensive products and services, and enhance the ICT skills of the future generations. Huawei has done this successfully by implementing and supporting a number of schemes such as the Growing Girls and Women in Nigeria (G-Win), 1000 Girls in Training, scholarships for The African University of Science and Technology (AUST), engineers training programs,” said Frank.

Shipping losses continue to fall but new cyber, climate risks still major concern, says Allianz

arge shipping losses have declined by more than a third (38 percent) over the past decade, according to Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2018, with this downward trend continuing in 2017. Yet recent events such as the collision of the oil tanker “Sanchi” and the impact of the NotPetya malware on harbor logistics underline that the shipping sector is being tested by a number of traditional and emerging risk challenges. There was a total of 94 shipping losses reported around the world in 2017, down 4 percent year-on-year (98) – the second lowest in 10 years after 2014. Bad weather, such as typhoons

in Asia and hurricanes in the US, contributed to the loss of more than 20 vessels, according to the annual review, which analyzes reported shipping losses over 100 gross tons (GT). “The decline in frequency and severity of total losses over the past year continues the positive trend of the past decade. Insurance claims have been relatively benign, reflecting improved ship design and the positive effects of risk management policy and safety regulation over time,” says Baptiste Ossena, global product leader, Hull & Marine Liabilities, AGCS. “However, as the use of new technologies on board vessels grows, we expect to see changes in the maritime loss environment

in future. The number of more technical claims will grow – such as cyber incidents or technological defects – in addition to traditional losses, such as collisions or groundings.” There are multiple new risk exposures for the shipping sector: Ever-larger container ships – longer than the Empire State Building is high – pose fire containment and salvage issues. The changing climate brings new route risks, with fast-changing conditions in Arctic and North Atlantic waters posing new hazards. Environmental scrutiny is growing as the industry seeks to cut emissions, bringing new technical risks and the threat of machinery damage incidents at the same time.

Faisal Jarmakani, (3rd right )MD, Doculand and Aramax ; Remi Willoughby, ( right)CEO, Roboglobal Educational Consulting , and cross section of the students at the World Robotics media briefing in Lagos. Pic by Pius Okeosisi

L-R : Adekunle Adeniji, sales and distribution executive MTN Nigeria; Richard Iweanoge, general manager ,brands and communications, MTN Nigeria; Ferdinand Moolman, chief executive officer, MTN Nigeria, and Amina Usman, general manager regional operations North, MTN Nigeria , during the final of the maiden edition of MTN’s CEO’s Cup between Lagos 3 and Abuja .

L-R: Akintayo Oloko, managing director, SafeTrust Mortgage Bank; Ayodele Arogbo, chairman, board of directors, SafeTrust Mortgage Bank; Aderonke Desalu, company secretary, The New Practice, and Yinka Odeleye, director, SafeTrust Mortgage Bank, during the 2018 SafeTrust Mortgage Bank Annual General Meeting held recently at the Eko Hotels and Suites, Lagos

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CityFile

Group seeks transparency in governors’ security votes SIKIRAT SHEHU, Ilorin

ivil Society Legislative Advocacy Centre (CISLAC) has urged the federal state, and international agencies to partner on the establishment of security trust fund as part of measures to ensure an effective utilisation of governors’ security votes in the interest of the public. The non-governmental agency which focuses on research, information sharing and capacity building recently launched its report on issues surrounding security votes. It recommended in the report, monitoring, confidential security spending, educating officials, security leaders and the general public about risks and drawbacks of careless application of security votes. In the report titled “camouflaged cash - how ‘security votes’ fuel corruption in Nigeria”, the NGO unveiled quiet issues of serious concern about security votes. Salaudeen Hashim, the conflict advisor to CISLAC, said: “What we have currently is an increase spending, incremental spending that is leading to incremental insecurity and need to find a way to address it. “We are working closely with most of the security

institutions to put up an internal mechanism, to get integrity action plan that would help security agencies to manage resources and processes internally. “So, it is like a reform process that we think they should undertake and that reform process was meant to change behaviour because the only issue around here is behaviour of personnel who are given possibilities and completely compromised.” Hashim said it was wrong to allow the political class to take what was meant for the contemporary security agencies, adding that security is everybody’s business. “As we know that they are currently underfunded and that adversely affected the country’s policy component in their own work, they are not able to deploy effectively, because they lack resources. “Other challenges include; personnel, welfare, and even the issue of logistics for community environment are also problems. “So, if they take the monies that are currently being spent on security vote and place it in the hands of those who have the mandate to do security work, then it means it will sharpen their effectiveness and enable them achieve a lot in terms of security in our country,” he said.

Ooni wants S/West to prioritise cultural tourism

oni of Ife, Adeyeye Enitan Ogunwusi says governments of the Southwest states need to prioritise cultural tourism as a veritable tool for economic growth, as “tradition is the root of Yoruba’s heritage.” Ogunwusi said this at the 2018 edition of the annual Osun festival which held at the Osun Shrine, in Ile-Ife, Osun State. “Tradition is the root of Yoruba’s heritage, Nigerian government and all the states in Yorubaland must invest in cultural tourism to drive economic growth as this is the case in Israel, Saudi-Arabia, Brazil and other tourist destinations in the world,” the Ooni said The co-chairman of the National Council of Traditional Rulers of Nigeria also used the occasion to preach peaceful coexistence among Nigerians saying Nigeria can survive its challenging times if the people embraced among themselves irrespective of religion and ethnicity. According to the monarch, Nigerians must uphold their cultural heritage and traditions by showcasing deities like Osun, saying water is an essential commodity necessary and compulsory for

humanity. “No one can be enemy to water; we should therefore celebrate and always remember this deity that has to do with productivity and multiplication. We are not idol worshippers as people think of us, but we are promoting our cultural heritage as being done all over the world because any stream that forget the source will surely dry”. I am therefore pleading with our governments at all levels especially in Yorubaland to support and prioritise the tradition and culture of Yoruba for economic gains.” Muyiwa Oladipo, the commissioner for culture and tourism, Ogun State, commended the monarch upholding the ancient tradition and culture of the Yorubas. “We are celebrating Osun festival by reviving and sustaining our culture, adding that the festival was necessary to keep the people’s culture and tradition alive. “We need to proudly acknowledge our own Ooni of Ife, who is trying his best to ensure the sustainability of our cultural heritage. This why the Ogun State governor, bikunle Amosun has always taken part in all the cultural events organised by the Arole Oodua.

L-R: Dimeji Olona, general manager, LASACO; Funmilayo Balogun, permanent secretary finance; Folashade Adesoye, head of service, Lagos State; Sangosanya Seliat Adefowora, beneficiary, and Rasaq Abiodun, deputy managing director, LASACO Assurance plc, at the presentation of Insurance Death benefit Cheques to families of Deceased Public Servants in Lagos State.

A’Ibom hospital falls under regular attacks by hoodlums, thieves ANIEFIOK UDONQUAK, Uyo

he management of Leprosy Hospital in Etinan, Akwa Ibom State ha s c r i e d o u t against recurring attacks by hoodlums and thieves, saying valuable items belonging to the hospital including water pump and other facilities have been lost to the thefts. The hospital built in 1932 spread across four communities of Ekpene Ebom, Ndon Eyo, Edem Ekpat and Ikot Osung in Etinan local government area of the state. Afia Afia, a medical doctor and the superintendent in charge of the health facility said insecurity has been a major challenge of the institution in recent times. According to him, a water pump and thunder protector were stolen from the hospital, while three sign

posts donated to the hospital had been removed from their positions while the corps members lodge and administrative block had been burgled with window fittings all removed. “Insecurity is our concern here. We have problem with the parameter fencing and we have not been able to engage enough hands and security men. Recently, they came in and harassed us. Three of our signposts have been forcefully taken. Our water pump has been stolen. “They burgled the lodge, the administrative block was robbed last year, and this year, the thunder protector was removed and taken away. They smashed the windows and packed the frames. We have this experience from time to time. “In the area of medical care for patients, these things cannot be recycled. For example, the bandag-

es, the dressing materials, wheel chair, clutches cannot be recycled so we need money regularly to refill our store as they go. “Drugs are given to them free even if they have malaria or they are going for a surgery. Everything we do is free as long as it is leprosy. For leprosy patients, once it is established that you have leprosy, whatever you come for is free, whether you are coming for hepatitis or operation, anything is free but if you are not a leprosy patient, you pay for your services,” he said. Also speaking, the hospital secretary, Abraham Okpon said some community members entered the facility and forcefully harvested nine bunches of plantain and pea fruits (that filled almost two bags of rice) that were planted by the inmates. He noted that the facility has been burgled many times and the inmates

and staff members were helpless because the invaders claim the land belonged to them. He, however, said that the hospital pays rent annually to the communities, besides the money earlier paid for the land to the landowners, adding that three quarters of the hospital employees were indigenes of the host communities. He revealed that the management of the institution had to permanently shut the main gate of the hospital to reduce the frequency of theft but that the thieves were undeterred. Afia and Okpon who stated that since The Leprosy Mission (TLM), a nongovernmental organisation withdrew their support from the hospital in 2010, the facility had fallen into neglect but that the current administration had been of great assistance to them.

Collapsed road: Residents send SOS to Abia goverment GODFREY OFURUM, Aba

esidents of Umueze, in Osisioma Ngwa local government area of Abia State, have decried the deplorable condition of Udeagbala–Umueze road, and appealed for the immediate inter vention of the state government, to save lives. Among major institutions on the collapsed road are the Abia State University Teaching Hospital, (ABSU TH) in Aba, Abia Oil Palm Nursery, in Ahiaba Umueze, as well as an in-

dustrial estate. Some respondents, who spoke with BusinessDay noted that the deplorable state of the road hampered quick response in emergency cases to and from the hospital. Obi Uchechukwu, a medical practitioner explained that the road failed since 2013 and had posed serious danger to patients, workers and residents of the area. “In its present condition, it will be very hard for vehicles conveying emergency cases to the hospital to access it on time before the victims die in traffic.

The doctor, therefore, pleaded with the state government to stop using palliative measures on the road but reconstruct it in order to save lives of citizens. “The government should fully rehabilitate the road, because in times of emergenc y, like an accident, there is no way an ambulance can enter the hospital freely without hindrances,” he said. Mercy Kalu, a resident, said that the road had been reportedly awarded for rehabilitation regretting that since then, nothing had been done by the contractor. She said that the strate-

gic position of the road as the only route leading to the teaching hospital deserved urgent and proper attention to avoid unnecessary loss of lives. Kalu advised government to ensure that drains were built on the road for its durability. Emmanuel Chidi, a staff of the hospital also joined in the call for the rehabilitation of the road saying that some workers were always late to work, due to the bad road. “We experience horrible traffic on the road and by the time one gets to the hospital, he/she is already tired and worn out,” he said.

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Politics & Policy Wednesday 25 July 2018

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Moghalu announces leadership team for his presidential campaign INNOCENT ODOH, Abuja

he Presidential aspirant for the Young Progressive Party (YPP) and former Deputy Governor of the Central Bank of Nigeria (CBN) Kingsley Moghalu, has appointed Abubakar Abdullahi, a professional political consultant, as the Chief Operating Officer (COO) of his 2019 Presidential campaign. In a statement issued on Monday by Jide Akintunde, the official Spokesman for presidential aspirant and his “To Build A Nation (TBAN) movement,”Moghalu, a professor of economics and international development, also announced Ebere Samuel as the National Coordinator for the Kingsley Moghalu Support Organisation (KIMSO). Moghalu also announced the appointment of zonal coordinators of KIMSO to provide direction for the campaign activities across the six geo-political zones of the country. The zonal leaders are Suleiman Yusuf (North East); Muhammad Kabir (North West); Jennifer Igoh (North Central); Uduma Nnate (South East); Adewole Akinpelu (South West) and Josef Anndotan (South South), the statement said. Abubakar Abdullahi will coordinate the operations of the campaign including logistics, personnel, fundraising and political operations across the 36 States of Nigeria. This will involve oversee-

Moghalu

ing the work of the nationwide KIMSO and the Kingsley Moghalu Volunteer Force, the statement added. KIMSO and the Kingsley Moghalu Volunteers form the grassroots ‘ground army’ of the campaign. They are currently present and active in 27 states down to local government areas and ward levels and will cover all of the 36 states and the Federal Capital Territory. Both

2019: Aremu declares governorship ambition ...Promises to build new Kwara

ssa Aremu, General Secretary of Textile Workers Union has formally declared to run for 2019 Governorship election in Kwara State. The labour leader, who is contesting under the Labour Party of Nigeria, said he was motivated to join the governorship race because Kwara State needs “a radical change from underdevelopment, mass hunger and poverty”. He made the declaration on Thursday in an interactive session with journalists on his plans for Kwarans if given the opportunity to serve the state, even as he promised to empower farmers to ensure adequate food security in the state. According to him, Kwara in recent times is poorly governed through what he described as “exclusivist unaccountable governance” adding that it was time Kwarans organized and enthroned inclusive governance for mass prosperity for all. He recalled that at creation, Kwara State was the “fastest grow-

ing” state with bold Development Plans which laid solid foundations for accelerated economic growth, increased productivity in agriculture, industrial development and improved quality of life of the people through the provision of necessary infrastructure. “We will offer leadership, Kwara must return to development planning and regain the wealth of the state,” he said. He lamented that Kwara state ranks 28th on the ranking of states by states GDP stressing that the state has been “beaten by newest” states like, Imo, Edo and Oyo, adding that his governorship governance, will bring back productivity through reindustrialization. Aremu had while stressing the need for Kwarans to vote for original and new thinking candidate capable to rebuild Kwara, assured them of compulsory health insurance, cash transfer, and to rebuild public schools to compete with private schools among other things.

the support and volunteer groups are expected to grow rapidly as the 2019 general elections draw nearer. “I am pleased to welcome Abubakar, Ebere and the zonal coordinators of KIMSO to our ‘To Build a Nation’ (TBAN) movement and our campaign for the Office of the President on the platform of the YPP. We must release Nigerians from the bondage of poverty and unemployment in which our

failed and recycled politicians have kept us, and take our country into a new future of prosperity,” Moghalu said. The political economist and founder of the Institute for Governance and Economic Transformation said further “We need solid structures in place to win the elections and bring this vision into reality. The appointment of Abubakar, Ebere and zonal lead-

ers of KIMSO brings on board energetic men and women who are passionate about the vision and know how to get things done.” Reacting to his appointment as the COO, Abubakar said “I believe in Kingsley Moghalu’s vision for Nigeria. He is the best candidate standing today to become President of Nigeria based on his economic management, nation building, diplomatic and other credentials, and the relevance of his vision and experience to the needs of our country at this juncture in our national history. I am honoured to have been invited to join this historic movement to build a new Nigeria. We will leave no stone unturned to usher in a victory for the people and a new era for Nigeria in 2019”. Abubakar is the Chief Executive Officer of Machinations Ltd, a political consulting firm. He has lived and worked in 31 states in Nigeria and is also an alumnus of the Institute of Politics, a centre founded in Chicago by David Axelrod, the political consultant that masterminded former United States President, Barack Obama’s successful Presidential campaigns in 2008 and 2012 respectively. The activities of KIMSO have been clearly visible in the ongoing ‘To Build a Nation’ town-hall meetings that have been taking place across the country. These meetings have served and continue to serve as a forum for Prof. Moghalu to unveil his plans for a better Nigeria.

Osun guber: SDP candidate, Omisore, maps out strategy for victory INNOCENT ODOH, Abuja

he candidate of the Social Democratic Party (SDP) in the September 22 Governorship Election in Osun State, Iyiola Omisore, has disclosed that the agenda of his party is the restoration of good governance and human dignity, which shall be driven by three strategic imperatives; namely accountability, equity and professionalism. The former Deputy Governor of the state made this known during his acceptance speech after he clinched the party’s tickect for the election, saying “our approach to governance shall not only be inclusive but shall harness local capacity to bring the much needed hope for tomorrow to our citizens. “We shall ensure fiscal responsibility, promote public sector performance, establish citizens driven platforms for accountability, improve procurement processes to

ensure that they do not leave local contractors and vendors behind and above all we shall ensure that pensioners and the aged are not left out of our robust restoration agenda. He added the SDP will formulate a robust policy for the young people stressing that Osun state young persons are key to the res-

Omisore

toration agenda because they are the future of the state adding that the SPD manifesto shall restore the hope of a bright tomorrow to young leaders. “The process of developing the SDP manifesto of restoration shall engage everyone. We shall not fail in our effort to ensure that our programmes are not only visible but they reverse the current trend of irresponsible governance and fiscal recklessness of the past year,” he said. Omisore won the SDP ticket with 123,485 votes to beat his two other challengers: Otunba Yemisi Oladeji, who polled 1,802 votes; and Barrister Munrudeen Atanda, with 1,637 votes. The primary election was conducted in all the wards of the state and the results were collated in Osogbo by the Professor Rufus Alkali-chaired electoral panel. The process was observed also by the Independent National Electoral Commission (INEC).

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Politics & Policy

2019: Ortom, Akume flex muscles over 2019 guber ticket As the 2019 general election draws nearer, political gladiators in Benue State including Governor Samuel Ortom and Senator George Akumeare in a fierce battle to weed off one another. In this piece, GEORGE KAJO examines the unfolding interest and intrigues.

t is a well -known fact that the late senator Joseph Saawuan Tarka popularly called JS Tarka of blessed memory was a political icon not just in Benue state but in the north central Nigeria. He was Mbakorman from Tarka Local Government Area in the Benue North West senatorial district. He commanded respect within the party hierarchy especially in Tiv land. Whether by commission or commission, nobody dare opposed his views on any matter in Tiv land. He weighed so much influence and authority. It was during his reign that he was electedinto the senate with his son Mbakorkaa Tarka in the lower chambers of the National Assembly. This revered politician was so fierce that he brought a politician from Borno state who was denied a National Assembly ticket from that state to Benue and Tiv land in particular and changed his name to ‘WarwarGatie’ and got him elected into the National Assembly. For the fear of what may befall a person JS Tarka marched, the victim quickly said ‘doom adoo’ meaning I’m rather very very happy. Tarka later died some times in the 1980s in a London hospital after a battle with ill health. Since the demised of JS Tarka, no living Tiv politician commands his likewise posture except another Mbakorborn politician, senator George Akume, the current senator representing Benue north west district at the National Assembly, Abuja. Akume who retired as a permanent secretary in the Benue state civil service join politics in 1999 when the then national chairman of the people’s Democratic Party (PDP), Chief Barnabas Gemade denied Mike Mku the governorship ticket in 1999 in preference to Akume who won the governorship election on that platform from 1999 to 2007. Akumelater handed over the mantle of leadership to his prede-

Ortom

cessor, GabrielSuswam and since then has been in the senate from 2007 to date. In the forgoing, senator Akume like his kinsman Tarka, has assumed absolute political control in Tiv land such that even a councillorshipposition in the fourteen local government areas in Tiv land, himself or wife Regina would be consulted for final recommendation. He had fallen out with Gemade soon after oath of office. In a bid to ensure political control in Tiv land, he allegedly spearheaded the removal of Barnabas Gemade, the then national chairman of the PDP and was replaced by Audu Ogbeh. Akume also felled out with his predecessor, the then Governor Gabriel Suswam over sharing formula of the state resources and ensured the defeat of Suswam in his senatorial ambition during the 2015 general election. Senator Akume defected to the APC when it became clear to him that the then Governor Suswam would frustrate his senatorial ambition on the platform of the PDP. He won election and became the senate Minority leader. Current governor Samuel Ortom who was the Minister of State for Trade and Industries and supervising minister of Aviation was contesting governorship in Benue state on the platform of the PDP

Akume

but defected to APC after disagreement with the party primaries that produced Terhemen Tarzoo as its candidate during the 2015 general election. Senator Akume offered the APC platform which Ortom realised his governorship ambition in 2015. Checks revealed that Governor Samuel Ortom and senator Akume had agreed on a sharing formula both in appointments and state resources should he (Ortom) emerge successful at the polls as governor. Senator Akume it was gathered produced the Secretary to the State Government; seven out of thirteen commissioners; more than fifteen Special Advisers; head of boards and parastatals and is allegedly receiving about 13% percent of the total revenue accruing to the state treasury. The relationship of the duo were said to have gone wary when the Tor Tiv and the church reconciled governor Ortom and his predecessor Suswam at the dismay of senator Akume. The Senator, it was further learnt, disagreed with the decision of his godson, Ortom to withdraw cases instituted against Suswam in courts and reconciliation with Abubakar Tsav as directed by the Tor Tiv, Prof. James Ayatse. The main reasons that break the relationship was the fact that the people of Benue north west

Group calls for action against votes buying, wants electoral law enforced INNOCENT ODOH, Abuja

he Integrity Friends for Truth and Peace Initiative (The Integrity Group) has called for concerted efforts by all Nigerians to stop the menace of votes buying and selling, warning of the danger it poses to the Nigerian democracy. Founder of the group, Livingstone Wechie, gave this warning in a statement he signed, which was made available to BusinessDay on Sunday. He said that the absurdity of votes buying violates the Electoral Act even as he charged the political parties to lead the fight against the scourge. “The menace of vote buying has become a dangerous trend in our electioneering processes and must be stopped now as it poses a great danger to our Democracy. Sections 124 and 130 of the Electoral Act

2010 respectively criminalizes vote trading, which is now known as vote buying and selling and prescribes punishment. “Unfortunately in 1993 this trend which was branded “Naira-burger” was used to induce voters by putting Naira notes inside bread slices under the guise of feeding delegates or voters. Today from Edo, Anambra, Ekiti to Osun elections and party primaries, this crime has laced the exercises allegedly as attested to by both Local and Foreign Observers and it poses a great threat to the integrity of our elections if it is not arrested now and the law criminalizing it fully enforced,” he said. Wechie therefore called for a national action to end vote buying and selling and demanded for the full enforcement of the Laws/Electoral Act against Vote Buying and selling; describing the menace as a shame to Nigeria’s fast evolving polity.

“Whilst we commend the efforts by concerned bodies to expose this evil that seeks to undermine our national heritage, our organization contends that the Independent National Electoral Commission (INEC) must not be left to shoulder this responsibility alone as it a collective responsibility for stakeholders. “Thus, the smaller political parties under the aegis of the Interparty Advisory Council (IPAC) must wake up with mainstream civil society organizations and community based organizations to form a strong alliance and team up against this absurdity. This strategy will enable them to stamp out this virus from our electioneering processes so they too can have a space to win elections on the merits beyond money politics to save Nigeria from this embarrassment and show of shame.

endorsed the aspiration of House Committee chairman on Rules and Business, Representative Emmanuel Orker Jev to succeed him (Akume) as senator in 2019, in which he said the position of governor Ortom was not clear whether he was for or against it. Following this development, in recent times, senator Akume openly casts aspersions on Governor Ortom accusing him of attributing his alleged failure in office to him (Akume) for receiving the state funds which salaries and other infrastructural demands could not be met and vowed to dislodge him by giving the APC governorship ticket to Emmanuel Jime in 2019. To match words with action, several meetings were said to have been held at senator Akume’s Gboko and Abuja residences with his political colony to perfect the act. It was further gathered that, to elicit sympathy and support, the senator had told the presidency that he advised governor Ortom against the encampment and implementation of the anti -open grazing law in the state but to no avail and that only Emmanuel Jime could repeal the law if he eventually become the governor next year. But in a swift reaction, governor Ortom last week took a swipe on the senator’s men by partially dissolving the State Executive Coun-

cil where nine Commissioners; Special Advisers and some Head of Parastatals recommended by senator Akume were dropped in the shakeup. Prominent among those affected were Commissioners for Agriculture, James Anbua; that of Trade and Industries, Tersoo Kperai; that of Works and Transport, Emmanuel Manger; Special Advisers on Bureau for Local Government and Chieftaincy Affairs, Titus Zam ; Cooperatives and Rural Development, Dr. Adzer Abya; chairman of Benue State Internal Revenue Service (BIRS), Mimi Adzape Orubibi; General Manager of Urban Development Board, Richard Agwa among others. In a chat with Newsmen at the Benue people’s House Makurdi, Governor Samuel Ortom said the partial dissolution of the cabinet was not targeted at anybody but aimed at strengthening the cabinet as agitated by Benue people. “Even my close political associate and friend, James Anbua was dropped in the shake up as commissioner for agriculture. I’m not bordered about 2019 because I am standing with Benue people. I won’t repeal the anti- open grazing law as canvassed by some people,” he assured. In the just concluded state congresses of the APC, governor Ortom was endorsed as a sole candidate of the party ahead 2019 polls while the wards and local government chairmen of APC in the Benue East and south all endorsed him for a second term owing to his track record of achievements which they listed to include ensuring the graduation of150 medical doctors at the Benue state university teaching hospital; giving face lift to over 700 primary schools in the state as well as the enactment and implementation of the Anti- open grazing establishment bill to curtail herders/ farmers clashes in the state among other achievements.

Atiku commiserates with families of late Commassie, Kaita over their demise INNOCENT ODOH, Abuja

ormer Vice President of Nigeria and frontline aspirant for the presidential ticket of the People’s Democratic Party Atiku Abubakar on Sunday, visited the families of the late former Inspector General of Police, Alhaji Ibrahim Coomassie and the late former Governor of old Kaduna State, Alhaji Lawal Kaita to pay his condolences to the two families. A statement issued by the Atiku Campaign Organisation made available to BusinessDay, noted that the presidential aspirant, who paid the visit a day after he formally declared his bid for the 2019 presidential contest remarked that he enjoyed the wise counsel from both Coomassie and Kaita adding that they can never be forgotten

in a hurry. “I have decided to pay this visit today because of the special bond that I shared with these departed souls. Beyond being associates, I tapped tremendously from their tap of wisdom and my prayer is that the Almighty Allah accepts their good deeds and forgives their shortcomings. “I also pray that the bereaved families continue to have the comfort and strength to bear the loss,” Atiku said. Atiku similarly led a delegation of associates including the Director General of his campaign organization and former Governor of Ogun State, Otunba Gbenga Daniel to the palace of Emir of Katsina, Alhaji Abdulmumini Kabir Usman to condole with him over the loss of his illustrious subjects.

Wednesday 25 July 2018

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BUSINESS DAY

Politics & Policy

2019 Presidency: Buhari is our only choice - Gaya The Senator representing Kano South under the platform of the All Progressives Congress (APC) Kabiru Gaya has said that President Muhammadu Buhari remains the best choice for the party in the 2019 Presidential election. Gaya, who is the Chairman Senate Committee on Works, was recently at the National Secretariat of the APC in Abuja where he spoke with journalists on topical issues in the party, National Assembly and the polity generally. James Kwen was there. What is your mission to the National Secretariat? was invited to the Secretariat for the inauguration of our committee which is to re-conduct the local government, ward and State congresses in Imo state. I believe we have to go by what the court has directed and I think we will continue in that line. Hence, we are going for the congresses and we intend to do it peacefully and carry everybody along. We hope to have peace and stability in Imo state. Therefore my essence is to go and represent my party, so that we can enhance the position of our party in that state.

we do justice to it.

How do you intend to balance the controversy between Imo state Governor Rochas Okorocha and Osita Izunaso groups regarding the last congresses? Well, I hope and believe that by the time we are through, there wouldn’t be serious complaints from both factions. I have been in politics for years. I left government house 27 years ago as a governor. Therefore, with the little experience God has given me, we will try, with the members of the team, to do our best. We

How do you see at the direct primary election option in Osun state? You know we passed the Electoral Act in the last Senate with some few amendments to it. We had some heated debate in the National Assembly on which way is better. But the court clearly says that the party has the right to choose direct or indirect primaries. So it’s left for the party to decide. Initially we wanted to make it a law that it should be direct because most of us are supporting direct primaries. I went through direct primaries in 1991. At the time when you are going for campaign for members to vote for you, you are already selling yourself to the people easily. I think it’s a good gesture. Gaya

hope by the end of the day, we’ll be successful. Nothing in life will have 100% perfection but we will do our utmost best to get more praises than accusations. What is your position on President Muhammadu Buhari’s Transmission to National As-

sembly on 2019 Elections budget? Let me clearly state that budget comes from the presidency as a draft. So we amend the act and take it back to Mr President. In all the areas raised by Mr President, the National Assembly will do its best. I think the committees will look at that. We’ll look at it and make sure

Are you a member of the contentious R-APC; and what is your take on them? I can’t be here if I am on the other side. I am in the main party. There is nothing like a carve out. Even those who are in that place, they will soon come back; may be most of them will come back because we are seeing more progress than those who defected. I am confident that

President Buhari will win election. Therefore they should return. They are in power now, why be in the opposition? Let them come back. I believe the Senate will have majority like we had before. They should stay in the system and reform it. You cannot be out of a system and be talking of reform. I appeal to them to come back on board so that we will work in the interest of the party and the country. Don’t you think if Rabiu Kwankwaso defects from APC, the party will suffer in Kano state and beyond? In politics we try to accommodate as much people as possible. We don’t leave room for any member to leave but if one member leaves it is a loss because you cannot win election with one vote. So we are doing our utmost best to work together as a team. But if the interest of the person staying with us is to run as a president, there is no vacancy for that. Our vacancy is President Muhammadu Buhari. No vacancy else. But if he(Kwankwaso) is coming to run for something else, he is welcome. We don’t want to eliminate anybody but we do not want to have any presidential candidate from Kano State.

CUPP and Nigeria’s elusive search for politics of ideology INNOCENT ODOH, Abuja

ew months to the 2019 general elections, a grand coalition of about 40 political parties under the aegis of the Coalition of United Political Parties (CUPP) was launched in Abuja recently to unseat President Muhammadu Buhari and his All Progressives Congress (APC). The CUPP includes the main opposition party in the country, the People’s Democratic Party (PDP), The National Conscience Party (NCP) the National Unity Party (NUP), the African Democratic Congress (ADC), the Labour Party (LP), the Social Democratic Party(SDP), the Reformed All Progressives Congress (R-APC), which is the breakaway faction of the ruling All Progressives Congress (APC) among others. The parties signed a Memorandum of Understanding (MoU) to mobilise their resources even as they expressed determination to wrestle power from President Muhammadu Buhari and the ruling All Progressives Congress (APC), which they accused of poor, nepotistic and visionless leadership that has brought nothing but hardship and hopelessness to the Nigerian people in the last three years. Nigeria is not new to alliance of political parties towards major elections. Towards the 1964 federal elections, the United Progressives Grand Alliance (UPGA) and the

Nigerian National Alliance (NNA) were the major alliances of groups of political parties that stood for elections in those days. However, the parties lacked ideological leanings and seemingly betrayed the trust of Nigerians as the politicians embarked on brigandage and violent politics, which eventually destroyed democratic governance and introduced military rule by January 1966. Then in 2014, the ruling APC emerged as a merger of some political parties, which included the then All Nigeria Peoples Party (ANPP), the Action Congress of Nigeria ( A.C.N), the Congress for Progressive Change (CPC), the breakaway faction of the PDP called new PDP(nPDP) and a faction of the All Progressives Grand Alliance (APGA), which defeated PDP in the 2015 presidential election and also won majority in the National Assembly. But three years down the line, the APC appears to have lost its initial verve and the much expected ideological drive to progress and prosperity has turned out to be a mirage. Discontent arising from economic and social crisis compounded by the government’s lukewarm attitude to the increasing insecurity in the land questions the integrity of the ruling party. However, Nigerians are in dire need of a new direction, new elite that will propound the ideology that will extricate the country from the abyss of poverty, violence, official

corruption and all manner of vices that bedeviled the country and hindered its development in the last 58 years of independence. An ideology according to Wikipedia is a “system of ideas and ideals, especially one which forms the basis of economic or political theory and policy.” It is within the framework of well -nurtured ideology that a clear policy direction is couched for a nation and its path of progress made discernible by the ruling class and its economic potentials are harnessed for the good of the greatest number of people. China for instance, after many years of political crisis, following its bitter history of occupation and colonialism, was led by men such as Sun Yat Sen, Chao Enlai, Mao Tse Tung among others, in a succession of leadership that produced the Communist Party of China (CPC). The CPC molded and shaped a new national thinking, norms and values for the country and the political process gave birth to a new economic order that transformed the once backward and humiliated China into a productive economy that is second only to the United States today. Reacting to the formation of the CUPP and ideological gap in the country, a public intellectual and former Chairman of the Nigeria Electricity Regulatory Commission (NERC), Sam Amadi, told BusinessDay that what is driving the CUPP is not ideology but the urgency and

determination to remove President Muhammadu Buhari from power in 2019 because of what they considered as his failed leadership. Many of them he pointed out are actually among those that brought Buhari to power in 2015. While some of them have been traumatized by the Buhari government, like Bukola Saraki, many others have become disillusioned like former Olusegun Obasanjo, who feel that under Buhari’s leadership the country is in a mess. “The coalition is a mixture of those who have lost their jobs and the poor management of the APC government has somehow disenfranchised some members of the party, so they are coming together with those who have individual concerns. “This is not ideological reformation of the country, this is at best a rescue mission and at worse a collection of individuals, who have been brutalized by Buhari’s divisive and parochial politics. It is not beyond taking Buhari out of power,” Amadi said. And so it appears that those clamouring to unseat the President don’t do so on the basis of principled position but on primordial self-serving goals and objectives that hardly envisions any broadbased initiatives that will create the redemptive agenda for the country. Research has shown that Nigeria is bereft of ideological leanings because of the nature and character of the political elite, whose main aim

in politics is not productivity but the quest to appropriate and consume the resources of the country. So, politics is focused on capturing state resources and funds to satisfy narrow personal or group interests. It becomes even inherently destructive if the institutions of the state are built to sustain poor ideas, corrupts privileges and conspicuous consumption as is the case with Nigeria today. There appears no more courage for progressive politics and I am afraid we may not have that opportunity even after 2019 because the socio-political environment that breeds unprincipled politics and appropriation of the state resources without productive capacity has strengthened itself. Another challenge to the ideological void is the fractious ethnic and religious-based ill-fated cognitive process in a profoundly diverse country like Nigeria, which has allowed these base sentiments to remain prominent in the political choices and attitudes. Sherriff Ghali Ibrahim, a senior lecturer with the Department of Political Science and International Relations University of Abuja, dismissed the CUPP as a group of disgruntled politicians. He said there could be a point in history where the elite may be driven by righteous indignation to move a change based on sound ideology framework. He however, noted that in the case of the CUPP it a coalition of bitter but ill-motivated elite.

20 BUSINESS DAY Financial Inclusion

& INNOVATION

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Wednesday 25 July 2018

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BusinessDay Radio programme; Financial Inclusion Today Aired yesterday by 11:30am on Rhythm 93.7 FM ENDURANCE OKAFOR Theme: World bank report; understanding the decline of financial inclusion since 2011 ith special guest, Dolapo Ashiru, a financial analyst and BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor. Anchored by Lehle Balde Speaking on the reasons why there has been decline in Nigeria’s financial inclusion since the year 2014, Dolapo Ashiru, a Lagos-based financial analysts said during the period of 2014 to 2017, due to the fact that CBN mandated everyone to have a Bank Verification Number (BVN) for their bank accounts, a lot of people were temporarily disenfranchised and the number of bank accounts significantly reduced therefore as a result, a lot of people were financially excluded. “Apart from the BVN issue, access to the financial service has been a major problem for Nigerians and as banking strengthens digitally, we should embrace mobile money as a means of banking more of the unbanked citizens,” the guest said. While addressing the key statistics like the male to female ratio and other percentages that affect Nigeria in terms of financial inclusion, BusinessDay’s analyst explained that despite the global rise in financial inclusion, Nigeria was left behind amongst the progressive countries that had elevated levels of financial inclusion. The Global Findex Database report by the World Bank revealed Nigerian adults who were 25 years and above with bank accounts declined by 5 percent from 49 percent in 2014 to 44 percent in 2017. This was also not different with account holders less than 15 years as the number fell from 44 percent in 2014 to 40percent in 2017. The report also revealed that there was a big gap between the female and male banked individuals, there was a 24 percent gap in this current report in 2017. Whaen the guest was asked to share his thoughts on the World Bank report and what it meant for Nigeria, he said the report was really damning, as it seems to suggest that Nigeria is sliding back especially when compared to some of our peers like Kenya, Ghana and even South Africa. “I think the regulators really have a lot to do and

the influencers. We have the Central Bank of Nigeria, the Nigerian Communication Commission, the Securities and Exchange Commission and other capital market regulators and then you have the Banks, the Fintech companies and other stakeholders that provide services for the ease of use and access to financial services to the consumers. There should be a deeper sense of urgency between these regulators like we said before because if you are left out of the financial services sector of your country then you are basically left behind and you cannot do anything and I think the regulators, the government and the influencers should come together and design a framework that works for Nigeria. I do not think the status quo is acceptable,” he said. On the effects of declining financial inclusion on rural women, BusinesDay’s analyst said for the women that are in the rural areas, there is a need for sensitization and education. There is a need to encourage them and give credit to a lot of these women for them to see the need to come into the financial circle. “I will also add that there is a need for data gathering, Nigeria is so big and has so many regions, what might work in Lagos and the South west might not necessarily work in the North West, the North East and even in a place like Enugu. There is a need for a little bit more data, more research into what really works, what the people want from their banks,” “I think one big area is also transaction costs, if these costs are high, people that are saving N10,000 under the mattress when told to bring the money into the bank there are service charges or access fees of N100 or whatever, they may feel like there is no point as they already have so little so why do you want to take it away from them, they may feel like there is no point in taking their money to the bank. The access charges and service fees for the bottom of the pyramid is also an issue that may discourage people from saving or putting their money in the formal financial services,” another analyt added. On the biggest barriers to financial inclusion in Africa’s largest economy the guest on the rdio show explained that one of the biggest barriers to financial inclusion is the access to the financial services, as in the rural areas, there are no banks and so the big idea is to bring the banks to them, create apps and bring these services to them. As analysis

also hows that women spend a lot of their income on their family unlike men, about 90 percent of a woman’s income is dedicated to the family unlike men who tend to drink, take the boys out and spend for his personal satisfaction. “Products could be created for women to include micro insurance or maybe advance loans for school fees and household consumption. There are also people that are unbanked for religious reasons and lack of trust in the financial service sectors, for example, a lot of Muslims prefer non interest banking and insurance companies have come up with Takaful insurance which are specific to a demography of people,” One of BusinessDay’s analysts on the show explained that in South Africa, most of the people who do non interest banking which is sometimes called Islamic Banking are not Muslims so all these kinds of products are necessary and effective when one get data and analyse to make specific products for people and he thinks that is the way forward. “The whole idea is centered on the making banking digital, promoting ease of access and use, and creating specific products to include more people,” The analyst said. On who should drive the seat of financial inclusion in Nigeria, Ashiru, the guest on the show said “let us use mPesa which is mobile banking in Kenya an example, the reason it was such a success is that telcos drove the movement. In Nigeria, the banks are in the driver’s seat and that is why it is not making as much wave as it did in places like Kenya

and Rwanda. NCC and CBN need to sit down and create a framework and after that, the telcos, the banks and all other stakeholders need to come together and collaborate to ensure the digitisation of all financial products because the future of the market is digital.” “I think we need innovative ways to address the financial exclusion that we have in Nigeria, still looking at Kenya, as they are the poster child for success in mobile money and all of that, they also have a platform that helps the public to lend the government money by purchasing government bonds through their mobile devices. A very innovative simple solution that just makes sure that every Kenyan that has a mobile phone is able to invest in M-Akiba, which is the mobile only government bond,” he added. Another of BusinessDay’s analyst at the radio show said “let me give another example of financial inclusion, sometime last year when interest rates were very high for treasury bills, a lot of retail earners could not benefit from the high interest yield. As it stands, to buy treasury bills you will need a minimum of N 50 million and if you are monthly income earner with a N 50,000 take home, you cannot afford to buy treasury bills. So the Nigerian government came up with what we call the Federal Government Savings Bond which the Kenyans have has the National Savings Bond. The Kenya’s M-Akiba product was designed to give low income earners access to buy government securities and take advantage of the high yield interest environment

which they could not have done if the only opportunity to buy government securities was through treasury bills.” He however concluded by saying “the M-Akiba is basically a platform where you can buy government securities and the minimum requirement was about N5,000 in Nigeria’s currency and so everyone could buy. Nigeria’s Savings Bond is also N5,000 and you could get a higher yield over having your money in a savings account that gives you between 3 to 4 percent. If you opt in for FGN Savings Bond, especially if they have an online trading platform like M-Akiba in Nigeria, you could get a yield between 10 to 11 percent which is better off having your money in a savings account. The M-Akiba platform is a very good example of getting the low income earners to enjoy what the high income earners have access to and improve financial inclusion.” Responding to why the loan income earners in Nigeria seem ignored in respect to financial inclusion one of the anlaysts on ths radio show said “it is because it is a mass market, and a mass market is scattered, unlike having a Dangote that wants to get a loan of N 20 billion which is quite easy because of his track record. If Dangote wants to get the loan, all the banks will line up to give him the loan because of his credit worthiness, but if a layman on the street without a credit history, the bank will request him to bring all sort to be used as collateral because the risk embedded,” “But then the best way to do that is what we are doing

now, which is to have a credit bill to avoid people from taking loans from multiple banks and defaulting. Also creating a BVN structure where you can easily trace people and providing a platform where they can easily access credit. In a nutshell, the best way to tackle a mass market is through technology and data as they work hand-in-hand. Having a data bank and profiling people, creating a credit bureau to be able to track people’s credit worthiness to ascertain who is highly risky and who is best to give credit to.” On whether there are any recommendations for decision makers and stakeholders to improve Financial Inclusion in Nigeria. Th Lagos-based analyst said the need of the woman in the North East is quite different from the needs of the rural women in the South. so therefore if one is going to use the mobile app for the old generation it should be in their local language and very easy to use. “This has been said by the guest and other analysts in the house but it is paramount that Nigerian telecommunication companies and the banks come together and work together to bring in mobile money, improve sensitisation and access to credit, and improve the benefits of being included in the financial net by a more extensive range of value added services,” Ashiru said. On why the telco-led push for financial inclusion is not being done in Nigeria and what do we do to incorporate it into the country’s Financial Inclusion strategy, considering almost everyone of its citizens have a phone number and not everyone has a bank account, one of the analysts said “it happening in Nigeria but at a slower pace compared to our peers. In Kenya for example there was a company called SafariCon which drove it and other Telcos jumped into the fray. In Nigeria, CBN said “No” that they want a bank led system. There is a bank in Nigeria which has our first digital bank where you can open an account without any paperwork online or on your mobile phone and many banks are already utilizing the USSD codes,” “This year, I have not gone to any bank as I prefer using my phone and that is becoming the story everywhere and even with text messages I can transfer money to people’s accounts. I cannot remember the last time I bought a scratch card to top up my phone, I do everything online,” the anlayst concluded.

Wednesday 25 July 2018

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Financial Inclusion

BUSINESS DAY

& INNOVATION Social inclusion is why we bother about financial inclusion Supported by:

OGHO OKITI

or a variety of reasons, many are cynical about the role of international institutions - such as the World Bank - and international nongovernmental organisations in poverty reduction. This cynicism extends to their activities on measures they believe will reduce poverty. Some of the cynicism is borne out of the misunderstanding of the terms they use, and the complexities of their approaches. But often times, all the work and activities they carry out are underpinned by economic research, and the focus on certain measures is underlined by the economic and social linkages identified in these researches. The promotion of financial inclusion in developing and emerging economies is one of these areas - the benefits of financial inclusion translate beyond the opening of bank accounts to the provision of a platform for long term linkages between economic well being and social relevance, and the tracking of such changes. It is in this context that the promotion of financial inclusion has become a key global priority and topical issue in the last decade, and why virtually all key global economic meetings in the last decade have sought to

address financial inclusion. The G-20 economies spearheaded the debate in 2009 with the creation of its Financial Inclusion Experts Group (FIEG) and the endorsement and launch of the Financial Inclusion Action Plan (FIAP) in 2010. In the same year, it created the Global Partnership for Financial Inclusion which has provided the platform for the extensive policy advocacy and coordination we have today. The major international progress from this point was the review conducted in 2014 that led to the incorporation of financial inclusion in the United Nations Sustainable Development Goals

(SDGs) 2030 agenda. In itself, the agenda was unique because it “integrates in a balanced manner the three dimensions of sustainable development – economic, social and environmental. The 2030 agenda is also indivisible in a sense that it must be implemented as a whole, in an integrated, rather than a fragmented manner, recognising that different goals and targets are closely interlinked.” Though the UN 2030 Agenda for SDGs does not include a stand-alone SDG on financial inclusion, it views financial inclusion as a key enabler for achieving sustainable development worldwide As such, it is fea-

tured in seven of its 17 goals. Now, for the purposes of review, monitoring, and update, the greatest contribution to the growth of financial inclusion is the World Bank’s Global Financial Inclusion Database Index. Launched in 2011, and released every three years, the latest being 2017, the report provides systematic and comparable data on the growth of financial inclusion in the world. The report indicates that the most important reason for financial exclusion is “not enough money”. The absence of enough money goes to the root of why people are excluded financially but this also explains why

those who are financially excluded are often socially excluded as well. The common denominator of both is poverty. In many cases, “not enough money” means that those concerned have no jobs, do not receive social income support, do not engage in any serious form of economic interaction and exchange, and in extreme case, the society does not have, nor record, or monitor their economic engagement, relevance or existence. Therefore, they are often the less privileged in the society, low income earners, uneducated, semi-skilled and unskilled labour force, operating in the informal sector. A typical financially excluded person is most likely to be poor, unemployed, uneducated beyond the primary level, from the poorest 20% household, have poor housing and living in the rural areas. Where such persons are employed, they are most likely to be selfemployed, involved in subsistent agriculture or such other person-to-person menial services. These classes of people constitute a larger percentage of the population of most developing countries and regions that make up the world’s financial exclusion population .. The work on social exclusion is focused on combating poverty. For social inclusion to occur, the material abilities, opportunities and dignity of the socially excluded

must be improved for them to reasonably take part in society and become central to it as well. In so far as financial inclusion provides the financial enablement to the excluded to combat poverty and better their lives, the direct linkage to enabling social inclusion is unmistakable, and become very critical. As such, while the mere opening of accounts does not immediately solve these problems, it is usually symptomatic of the concrete steps being taken towards and the progress being made in tackling social exclusion, which runs deeper than financial exclusion. So, the focus on financial inclusion is not an end in itself. Just as money is an enabler, so is financial inclusion. Within our immediate Nigerian landscape and in sub-Saharan Africa in general, the progress and the tracking of financial inclusion is increasingly showing the concrete links between financial exclusion and social exclusion. This makes tackling financial inclusion even more crucial. While financial inclusion cannot directly lift people out of poverty, the tracking of financial inclusion and the associated progress highlights the deep effects on the lives of the excluded and the data helps to further understand the links between it and social exclusion and provides a platform to effectively deal with it.

Ways Nigeria can realize mobile technology’s potential for the unbanked-world bank ENDURANCE OKAFOR

igeria seems to be missing out on Africa’s most exciting financial innovation-mobile money; this is despite being the region’s largest economy. Meanwhile, according to the recent Global Findex Databse report by the World Bank, twenty-one percent of adults in Sub-Saharan Africa have mobile money account in 2017, nearly double the share from 2014. By contrast, Nigeria lags in the same period under review: just 6 percent of its adults have a mobile money account, a number virtually unchanged from 2014 The World Bank has therefore outlined ways Africa’s most populous nation can realize mobile technology’s potential for the unbanked, in what will help spur financial inclusion in the country by bringing the excluded into

the financial cycle, as compiled from the Apex bank’s publication. The measures include; reform of regulatory framework, expand of agent network, strengthening of consumer protection, digitization of routine cash payments and women should be the main target. The low uptake in Africa’s most populous nation means that people may be missing opportunities to participate in the economy and improve prosperity. Nigeria’s financial inclusion rates have also stagnated since 2014; only 40 percent of adults have a formal account, as compiled from world bank. The Washington-based lender however sees the following strategies as the key to realizing mobile technology’s potential for Africa’s largest economy; Reform of the regulatory framework which will allow

subsidiaries of mobile network operators (MNOs) to apply for mobile money operators’ license, Digitize routine cash payments Countries with strong mobile money growth have benefitted from engaged MNOs. By contrast, Nigeria’s mobile money market is dominated by banks and technology companies. While they play an important role, they alone are not enough to unlock Nigeria’s massive potential. Allowing MNO subsidiaries to operate mobile money services could invite private investment and help Nigeria tailor and apply the models that have succeeded elsewhere. Ghana is a good example. It initially opted for the bankled model, resulting in limited mobile money use. The country changed its policy in 2015, and allowed telecommunication companies to apply directly for a license from the central bank, rather

than through their partner banks. The regulatory changes yielded exceptional growth in use of mobile money, contributing significantly to financial inclusion and the rise in electronic payments, as illustrated below: Another way to help spur financial inclusion as cited by the World Bank is through expansion of the agent network, as gents are small shops that offer basic services to mobile money users, like deposits, withdrawals and transfers. “For mobile money to reach a critical mass, Nigeria needs a dense network of mobile agents. Allowing MNOs to issue mobile money could help expand mobile networks in parts of the country typically ignored by financial services providers,” The lender said. For this to work, the apex bank said MNOs need incentives to do this; as the Ghana data showed how things took off when a clear regulatory

framework was in place and providers had impetus to invest. Good infrastructure - such as reliable mobile network coverage – is also vital. Digitization of routine cash payments was another way pointed at spurring financial inclusion in Nigeria, this is following the fact that many unbanked Nigerians are paid in cash. Therefore moving them into accounts could drive up both mobile money adoption and financial inclusion. Nearly one in 10 unbanked adults in Nigeria work in the private sector and receive wages in cash, including roughly four million who have a mobile phone. Also, 15 million unbanked adults are paid in cash for the sale of agricultural goods, including some 10 million mobile phone owners. “By contrast, in Kenya and Uganda - where MNOs are mobile money providers almost one in six adults are

farmers whose agricultural sales are paid directly into an account,” the bank said in its publication. The World Bank also advised the Nigerian government to digitize all transfer, wage and pension payments, as doing this, payments can deepen financial inclusion, increase security and efficiency, and reduce leakage and potential corruption. South African Social Security Agency for example wasa able to cut fess by 54 percent after migrating social grant recipients to e-payments while in Nigeria, 20 million unbanked adults receive agricultural payments in cash, 62 percent of whom have a mobile phone, as disclosed by the bank. Strengthening of consumer protection was another areas addressed by the bank as a way to help include more Nigerians into the financial cycle.

BUSINESS DAY

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Wednesday 25 July 2018

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How insurgency causes setback to Nigeria’s food security Stories by JOSEPHINE OKOJIE

he spate of insurgency in the war-torn NorthEastern states of Adamawa, Borno and Yobe has caused a serious setback in the country’s quest to boost food production as farmers abandon their fields to seek refuge in IDPs, with some running to relatively peaceful states such as Kano, Kaduna and Sokoto states. As a result, the Federal Government renewed efforts to boost farmers’ production has yielded little or no result with population rising rapidly, sparking fears of food security in Africa’s most populous country. “The insurgency in the NorthEastern region is a major setback to our efforts in increasing food production. Before the Boko Haram conflicts, Borno alone contributes 30 percent to the country’s total output for wheat production but with the insecurity there, the country is getting zero wheat from the state,” Saleh Mohammed, president, Wheat Growers Association of Nigeria. “This is the case also with other crops. The insurgency is a threat to government efforts of achieving food security. “Farmers have fled their farmlands in those regions for safety but the government is making arrangement to provide security for farmers in those regions that wants to return to farming,” Mohammed added. Similarly, the Food and Agricultural Organisation (FAO) in its recent country briefs for Nigeria

Robo Adhuze, chief operating officer, Centre for Cocoa Development Initiative; Elena Adhuze, lecturer, Adeyemi College of Education; Godwin Okwu, national vice president, CAN-Ikom chapter; Anna Muyiwa, plant biotechnologist, Cocoa Research Institute of Nigeria (CRIN) and Sayina Rima, national president, Cocoa Association of Nigeria (CAN) at a training on the rehabilitation of old cocoa tree organised by CAN in Ikom, Cross River state recently.

said, “Boko Haram conflict has had a huge impact on agriculture as a result of the large‑scale population displacement and restrictions imposed on agriculture activities, leading to a sharp drop in planted areas in some states, notably in Borno State.” Abdurahaman Modibbo Girei, President, Adamawa Chamber of Commerce and Industry told BusinessDay that most farmers have abandoned their farms and fled, while major borders have been shut owing to high insecurity in the state.

“Farmers have deserted their farms and fled to from hostile parts of the state, to less volatile areas,” Girei said. Apart from the Boko Haram insurgency, decades of prolong violent conflicts in the middle belt region of the country between farmers and herders is a threat to the country’s food security agenda. Nigeria loses about $2.3 million (N828 million) annually due to the conflict between farmers and herders, according to a Mercy Crops 2015 report, and states where these

conflicts take place lose an average of 47 percent of tax generated internally. “The crisis has implication for the agricultural sector and employment generation. It is a major risk to the growth of the sector,” Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI) said. “This is also a threat to raw materials for industries. The agricultural sector provides the raw materials that feed on industries especially the food and beverage industries. Farmers income will be affected due to the conflicts and

when there is no income, there is poverty,” Yusuf said. The disputes have often degenerated into violence in which scores of houses have been burnt, cattle slaughtered, farmlands destroyed and people killed, all of which constitute economic loss to the country. In 2016, 55 hectares of cassava farmland belonging to Oamsal Nigeria Limited were destroyed by herdsmen. The firm lost N23 million, yet no arrests were made and no compensation was given. I n A d a m aw a , t h e t e n s i o n occasioned by recent reprisal attacks has emptied neighbouring villages, such as Imburu, Pullum and Kwapuke, as many villagers have abandoned their homes, seeking safety elsewhere due to rumours of an impending attack by herdsmen. The few who are left behind appear braced for a reprisal. In Benue, Nigeria’s largest foodproducing state, over 5,000 deaths have been recorded in four years, affecting communities such as Agatu, Tom-Atar, Umenge, Akor, Guma, Ayilamo, Turan and Ngambe-Tiev. Other states such as Ekiti, Nasarawa, Kogi, Enugu, Delta, Taraba and Imo have also suffered from numerous attacks. An accurate account of the death toll resulting from herderfarmer violence in Nigeria is difficult to come by due to the lack of a dedicated database in the country, but Global Terrorism Index rated the herdsmen in Nigeria the fourth deadliest terrorist group in the world in 2014.

Innovative agriculture is key to Nigeria’s food sufficiency, says Lokpobiri FUNAAB urges farmers to keep records

eineken Lokpobiri, Minister of State, Federal Ministry of Agriculture has said emphasised the need for farmers in the country to embrace innovative agric to boost food production and achieve food security for Nigeria. Lokpobiri made the assertion when he received a delegation from the Africa-Asia Rural Development Organisation (AARDO) led by Wassfi Hassan El Sreihin, secretary general of the Organisation in his office recently. The minister of state said that the country’s food production gap has continued to exist owing to smallholder farmers traditional methods of farming. “The only way we can feed ourselves is for us to develop our capacity, embrace modern farming technology and technics so that we will continue to enjoy high productivity, not the subsistent farming we are used to,” Lokpobiri said in a statement made available to BusinessDay. He expressed delight that the Federal Government has embarked on efforts to redress the situation

through policies and infrastructural development of rural communities. “Nigeria is a country where we are basically being fed by the rural dwellers. If rural development is not given priority, and already studies have shown that there is urban migration because of lack of development in the rural areas, the cities would soon be over crowded,” he said. “Land to farm is in the rural areas and if those people in the rural areas are empowered through capacity building, through technology transfer to be able to stay there and

Heineken Lokpobiri

continue to cultivate in agriculture, poverty would be reduced, there will be less crime, and there will be less pressure on the limited amenities that we find in the urban areas,” he further said. According to him, the only difference between the agricultural system in Africa and those of the advanced economies of the world is the use and deployment of technologically advanced equipment by the advanced economies. While comparing between the Nigeria climate and that of the Latin American countries, which he noted are basically the same, the minister said “because sometimes we do not want to be relevant in techniques, the yield over there could be 20 tons while here it could be 2 tons. This is basically because of the way we plan and the way we manage our cropping system.” He noted that Nigeria is at the verge of transiting from subsistent agriculture to sustainable agro economy, saying that Nigeria is currently striving to diversify from oil-based based economy to an agricbased one through emphasis on technology and modernised farming.

orcas Adegbite, director, Agricultural Media Resources and Extension Centre (AMREC), Federal University of Agriculture, Abeokuta (FUNAAB), has urged farmers on the need to imbibe the culture of effective record keeping and information management if they are to run productive farms, break even and record profit. Speaking at a training workshop organised by the Planning, Monitoring, Evaluation and Information C o m m u n i c a t i o n Te c h n o l o g y programme of AMREC, Adegbite disclosed that in Nigeria, most farmers do not attach importance to record keeping in their farming operations but rather depend on their intuition. The director attributed the deficiency mainly to the subsistent nature of production and the educational background of the farming communities who erroneously feel that record keeping activities are time consuming and that they can commit to memory important information from year to year. Adegbite who is also a professor enumerated the importance of effective record keeping by organisations and

farmers, saying it help them respond to planned and unplanned events as well as protect the interest and rights of present and future stakeholders, employees, clients, government, policy makers and farmers. According to her, proper farm record also provides extension agencies with accurate record needed to give good technical advice to farmers and provide financial institution and other lenders good record on the farms income and expenditure needed to give loan facilities to the farmers. Highlighting other benefits of record keeping, Adegbite said it helps farmers to plan as well as do a realistic forecast and budgeting, provides valuable information on the methods that work best and why others do not, helps farmers predict price changes, expenditure and sales record kept from previous seasons. She stressed that farmers can also determine how much is required for farm expansion, keep record on rain fall incidents, determine when to plant and carry out other activities on the farm as well keep record on seed germination rates which will help they determine where to source for better seeds for the next seasons.

Wednesday 25 July 2018

C002D5556

BUSINESS DAY

ag@businessdayonline.com

How to establish an integrated rice processing plant rice will later be processed in the factory. R ice pro cessing includes parboiling, drying, de-stoning, dehauling, winnowing, polishing, and packaging.

OLUMAKINDE ONI

ith the ban on the importation of rice across Nigeria’s land b o a rd e r s a n d the renew commitment of the Federal Government to boost rice production, shows a huge investment potential in the milling aspect of rice. Rice can be grown conveniently in Nigeria, the climate is good. It can be grown both in the forest and Savannah areas of Nigeria. The project is, therefore, technically feasible. The project is highly profitable. Price of rice in the market is very good for the producers, hence the project’s economic viability. The potentials in investment in rice production in Nigeria cannot be over-estimated. This is why both indigenous and foreign investors are seriously going into it. It has also been found out that out local rice has more nutritional value than the imported varieties. Currently, to meet our requirements, we must produce

Financial Implication The project has been estimated to cost N100 million broken known as follows: Fa r m l a n d a c q u i s i t i o n & cultivation: N50, 000,000 Establishment of factor y/ equipment/utilities: N50, 000,000 Total N100, 000,000 ===========

a minimum of 10 million metric tonnes of paddy. However, local paddy production has increased from about two million metric tonnes to about 4 million metric tonnes and still growing. This means that getting paddy for the rice mill would not be a problem for potential investors.

Production technology The whole idea about this project is to make it an integrated one. The raw materials rice paddy will be grown and processed by the prospective investors. The target is to produce 4,000 metric tonnes of finished (polished) rice per annum. Requirements are

land plant and machinery, Buildings, farm inputs (seeds, fertilizer, herbicides and insecticides) and packaging materials. Rice cultivation process includes land preparation, planting/ distribution, herbicides and fertilizer application, harvesting and threshing. The harvested

Profitability Estimated revenue realizable by the project is about N400 million annually. Annual production costs have been put at N270 million. Annual profit of N130 million is guaranteed. This project is therefore re c o m m e n d e d f o r f u n d i n g . Serious minded investors can be assisted in terms in packaging to attract bank financing, project establishment and management, author’s contact: 08023058045, olumakindeoni2@yahoo.com.

Nigeria’s coffee consumption rising on growing middle class population JOSEPHINE OKOJIE

i g e r i a’s c o f f e e consumption has been on a steady rise and is expected to grow by 23 percent within the next three years, owing to its large middle class and the well travelled population. Euromonitor International in 2016 predicts that Nigerians will drink more than 1,000 tons of coffee in 2020, which is 23 percent higher than previous projections for the country. Nigeria, Africa’s most populous nations spends millions of dollars importing coffee products for local consumption annually, as most of the coffee found on streets and retail stores are of imported brands. “A l ot of p e ople are now consuming coffee. I make about N1, 500 to N3,000 daily from the sale of instant hot coffee drink at

N50 per cup,” said Dusi Abayomi, a push-cart instant coffee retailer at Ojuelegba market. “We sell more during raining season because people consume more coffee drinks. My sales have continued to increase daily since I started this business in 2014,” Abayomi said. Nigeria’s sophisticated growing middle-class and young population constitute about 40 percent of the country’s 190 million people, who are developing huge taste for tea and coffee products. Currently, there are a lot of coffee products in the Nigerian market ranging from instant hot coffee drinks to sweets and biscuits with coffee flavours. “Consumption of coffee has been on the rise in recent years because of our growing middle class and young population but there is still no market for coffee

in Nigeria because the country’s coffee is of low quality and that is why the local industries using it as raw materials are not buying from farmers,” Hassan Usman, secretary general, National Coffee and Tea Association of Nigeria and a coffee farmer at Mambila Plateau in Taraba State told BusinessDay in a telephone interview. “Our method of harvesting coffee is very poor. Farmers need a lot of training on good farming practices. There is no value chain for coffee and tea production in the country and majority of our coffee trees are old,” Usman said. He stated that the country can generate huge revenue from coffee production when adequate support is provided to farmers in terms of inputs and training, saying that coffee remains the second most sought after commodity besides oil globally.

Nigeria will be food sufficient by 2020 - Oloruntoba VICTORIA NNAKIAIKE, Lokoja

ehinde Oloruntoba, Kogi State Commissioner for Agriculture has said that the country will be food sufficient by 2020 owing to the Federal Government renewed commitment to agriculture and its food security target. Oloruntoba stated this over the weekend during a one day summit organised by International Youth Empowerment Summit (IYES) at Federal University Lokoja with the theme ‘Identifying and Maximising Entrepreneurial Opportunity in a Recovery Economy’. The commissioner explained that Yahaya Bello, Governor of Kogi State, has made it clear that he will diversify the economy of the state through agriculture, stressing the need for mechanised farming in the country. He equally stated that Kogi state government has purchased tractors that have been distributed to the three senatorial districts to drive mechanised farming in the state. Oloruntoba lamented that for

so many years agriculture was abandoned and farmers continued to farm with old techniques resulting in low productivity and gaps in food production. He c o m m e n d e d P re s i d e nt Mohammadu Buhari for his giant stride in giving agriculture a great lift since his assumption of office, while stressing on the need for the government to maintain such momentum. He urged the participants at the IYES to make agriculture their ponzi scheme, adding that Nigerians for a long time abandoned agriculture which is the real profitable business and were chasing shadows. The commissioner disclosed to the participants that the ministry of agriculture is doing a lot of empowerment programme for youths in the state, adding that the ministry is looking at collaborating with IYES management. He also advised students to seek further trainings upon graduation, adding that the ministry now sells seedlings to farmers, saying all this are geared towards bridging the seed gap in the state.

BUSINESS DAY

Wednesday 25 July 2018

In Association with

Of weak credit growth in banking, expansionary policy seems appropriate Stories by Hope Moses-Ashike

n the face of declining credit to the private sector of the economy, expansionary policy is said to be appropriate according to FSDH Research. Credit to the private sector contracted by 0.16 per cent in April 2018, compared to the provisional annual growth benchmark of 5.64 percent. “Bank lending rates also remained significantly high – all indicative that the banking industry requires more impetus to substantially reflect the benefits of the on-going recovery. Thus, the monetary authority must work with the relevant financial institutions to entrench innovative measures to safely increase credit to the real sector”, Aishah Ahmad, deputy governor of the Central Bank of Nigeria (CBN) said in May MPC. According to data from the Central Bank of Nigeria (CBN), net domestic credit

decreased marginally by 0.57 percent to N25.72 trillion in May 2018, from N25.86 trillion in December 2017. The net credit to the private sector shrank marginally by 0.37 percent to N22.21 trillion during the same period. The weak economic recovery and rising crises in some parts of the country are responsible for the weak credit growth. “An expansionary policy may be appropriate to expand credit if the social crises are resolved”, said analysts at FSDH Research, a subsidiary of FSDH Merchant Bank limited. The Monetary Policy Committee (MPC) is scheduled to hold July 23 and 24 in Abuja. From the views of most analysts, the MPC would retain the interest rate at 14 percent. “We expect the MPC to maintain the benchmark interest rate at the current level due to the anticipated expansionary impact of fiscal spending following the signing of

the 2018 budget”, the Economic Intelligence Unit of Access Bank Plc said in a report. In its last meeting in May, the MPC noted that the economy needed a new impetus of increased lending by the banking system and would work with the Bank to adopt innovative ways to encourage the deposit money banks (DMBs) to adopt innovative ways to accelerate credit growth, including a reduction. Adenikinju, Adeola, member of the MPC, said in his personal statement at the May MPC that it is clear that banks are more eager to strengthen their balance sheet than commit to new credits. The continuous preference of banks for relatively safer fixed income assets rather than direct lending to the real sector of the economy remains a critical challenge to current policy stance. “Simply tinkering with the Monetary Policy Rate (MPR) at this current state of the banking sector may not

simply translate into more credit for the economy unless there is a way to creatively ‘de-risk’ the targeted real sectors of the economy”, he said. In general the banking system witnessed growth

in aggregate deposits in the first quarter of 2018, however, there was no corresponding increase in credit. This implies that more liquidity in the system may not mean more credit as is widely believed in the short

term. The high operating expenses in the banking system need to be carefully addressed to reduce the high cost environment which in my view impacts more on lending rates than even the MPR.

Godwin Ehigiamusoe, MD/CEO, LAPO MfB, Osa Emokpae, chairman, Osaretin Demuren & Ede Osayande (non-executive directors) at the recent Annual General Meeting of LAPO Microfinance Bank.

Stanbic IBTC reaffirmed as leading employer brand

Heritage Bank supports business investments in Africa

tanbic IBTC’s status as a leading employer brand has again been reaffirmed as the financial institution won an unprecedented five of nine awards at the HR People Magazine Awards 2018 held recently in Lagos. The five awards won by Stanbic IBTC are: Best Training, Learning and Development Strategy 2017; Outstanding Employee Engagement Strategy 2017; Employer of Choice 2017 (large corporates category); HR Manager of the Year 2017; and HR Champion of the Year 2017 (awarded to the Group Chief Executive for outstanding commitment to growing people at the organization). HR People Magazine, organisers of the awards, is the foremost magazine dedicated to the human resources and

eritage Bank Plc, has signed a partnership agreement with Feet ‘N’ Tricks International Limited to make the premier edition of Africa Freestyle Football Championship a resounding success. The premier edition of the tournament which is scheduled to hold from September 13 to 15, 2018 in Lagos is being planned as a perfect fusion of freestyle football and entertainment that would feature top musical and dance artistes. Fela Ibidapo, divisional head, corporate communications, who disclosed this at a media launch in Lagos recently said the bank is excited to be part of an initiative that would provide bountiful entertainment to Nigerians and others across the African

people development profession in Nigeria and Africa at large. According to the organisers, the awards are evidencebased, and the criteria used to select winners include: a demonstrable and effective strategy to drive the HR touchpoints in all the award categories, ability to show consistent best practice implementation within the organization, evidence based programs and the impact of these programs on the organization. Specific emphasis on; employee retention, client testimonials and organization’s reputation throughout the business and wider community, employee engagement and productivity levels; among other criteria. Performance was judged over the period covering

January 2017 through to December 2017. Yinka Sanni, Chief Executive, Stanbic IBTC Holdings PLC, stated that winning five awards is testament to Stanbic IBTC’s strategy of growing a responsible, disciplined, and highly productive workforce. It also reinforces the company’s strong management, systems and its leadership in the financial services industry. According to Sanni, the awards are a testament to Stanbic IBTC’s continuous investments in its human capital and the establishment of people-friendly procedures and practices, as well as a professional but friendly work environment and a support structure that helps to motivate the employees to give their best while exhibiting their talents.

continent. Also speaking, Chairman of Feet ‘N’ Tricks International Limited, Valentine Ozigbo, said registration for the tournament is open to male and female freestylers of African descent and will close on 15 August 2018, adding that the registration is available on the company’s website for interested individuals. He explained that after the final rounds, the best 16 male and eight female freestyle athletes on the continent would battle it out at the grand finale on 15 September 2018 when the first African male and female Freestyle Football champions would be crowned. The chairman said the 2018 Africa Football Championship will also host international freestyle professionals, Guinness world record holder, Iya Traore and female freestyler,

Raquel Benetti from Brazil. Ozigbo said Feet ‘N’ Tricks International is excited to chart a new direction for freestyle football in Africa. He said the company expects at least 20 African countries to be represented at the championship, adding that contestants from more than half of the number had already registered. He said Feet ‘N’ Tricks International would promote the development of African freestyle talent and continually exploit all available resources to create more awareness for the sport. The chairman said winners would go home with mouth-watering prizes worth more than $50,000, including a brand new salon car as well as qualification and sponsorship for the global championship.

Wednesday 25 July 2018

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Pension Today

BUSINESS DAY

In Association with

Keeping faith with the pension industry The Nigerian pension industry has come of age with a checkered history of having moved from a real bad time, to now when we can say we are headed for good. Here, expert in the pension industry and managing director/CEO, IEI-Anchor Pension Managers Limited Glory Etaduovie looks at where we are coming from, and where the industry is headed.

L – R: Chinedu Ekeocha, PenOp treasurer and managing director, Diamond PFC; Tinuade Awe, NSE executive director, Regulations; Aderonke Adedeji, PenOp president and managing director, Leadway Pensure Ltd; Akeeb Akinola, PenOp vice president and managing director, Shell CPFA; Susan Oranye, executive secretary, PenOp and Dapo Akisanya, head, PenOp Technical Committee and managing director AXAMansard Pensions Ltd, during the ring of Closing Gong on the trading floor of the NSE by members of PenOp recently.

Historical Development he Nigerian Pension Industry has come a long way, from a checked history through to its present position. From military decrees establishing different but not harmonized pensions for the public and private sectors, down to the Pension Reform Act of 2014; It predates the times of National Providence Fund; the Udoji commission recommendations; and the National Insurance Trust Fund. Before the enactments of the 2004 Pension Reform Act, there were gaps and increasing challenges as the Nigerian working class population grew in size and in sophistication. With a population edging towards Two Hundred Million, a sizeable number of which are in the Working Class and a bulging funding gap in the exiting pension schemes and the swings in oil price and supply, there seemed no option but for the government to seek ways to unburden itself from avoidable financial

weights, yet not fail in its obligations. It was even a belated response because the world had since abandoned ‘free lunch in Freetown ‘. The public private partnership had become vogue to induce efficiency, financial responsibility and unburden the world Governments to face more pressing challenges. The Pension Reform Act in 2004 became a good marriage of all divergent factors. Success since then has seen the ‘elimination’ of the very corrupt syndicates stealing the pension funds massively, as well as gradual decimation of unnecessary bureaucracies in accessing retirement benefits. Also, it provided an efficient platform for establishing and creating a definition for private sector pension which several organizations evaded previously. This sector is a large labor employer. There appears to be a dislike by some civil servants for the contributory pension scheme because, it is thought that it pays lower than the defined benefits scheme. This

leads to attempts by some to frustrate it in many states. This is not true as the individual contributors’ funds would grow as the number of years a person is working increases and the investment returns are applied on a compound interest basis. They forget quickly that the governments can no longer carry such weights directly as it did in the past. Presently, it is difficult for many state Governments to meet up salary payments. This is the new reality. The fears of delayed retirement benefit payments also exist. This has been misunderstood to be a deficiency of the CPS. No, rather, it is transitional. It is the effects of delays in funding of the past accrued pension liabilities into the Contributory Pension fund by the Government. The delays would have been worse anyway, had the contributory pension scheme not taken place. The CPS is reducing upfront the Government’s liability. Quickly forgotten also was the tedious bureaucracy that bedeviled the pursuit of retirement benefits in the recent

RC634453

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

past. These are the same delays and uncertainties that CPS is bringing a stop to an end. Thus, the transition is like a difficult delivery of a baby into a new world. Those who have benefited or hope to benefit from the past scheme will be clog in the progress wheel Only recently, the fund survived being cannibalized from various agitations from various quarters for own control of their pensions. It took the will of the CBN, FMF and other strong bodies to disintegrate the seeming ‘coalition’ to unbundle the success story so far. The PRA pension model Stimulates individual and national savings culture and helping the people to not only take their destinies in their hands but be responsible for it. To illustrate, children are expected to rise to take their destinies in their hands after a certain level of training by their parents. The PRA model of the contributory pension scheme harmonized the public and private sectors in pension management. The private

sector pensions became harnessed and structured. It was also designed to grow itself through investments and provide liquidity, provide capital for investment and develop the economy, critical infrastructure and long-term investments. The CPS (Contributory Pension Scheme) is maturing. It is responsive to the Environment. The peculiarities of Nigeria, its history, its culture leads to various other concerns both for the contributors directly and the nation as a whole. The scheme has exceeded a decade of practice. The Industry, despite its success in accumulating such a massive fund, (without being stolen or decimated), which is a great feat that no other industry except may be the oil industry is doing, is grossly misunderstood. Accumulating such fund size (N7.9Trillion) looks strange in an environment where any sizable accumulating fund is ‘attacked’, while the CPS looks impregnable, is disturbing to some. The Industry has survived various attacks. In response, like the sustainable development philosophy, the industry has chosen to go beyond its immediate objectives of being set up, which is safety and security of the pension fund, and availability when needed, to the helping to develop the economy and bridging infrastructural gaps. In line with this, the MultiFund era commenced this July this year. This has segmented the Pension funds into four parts, which determines to which extent each fund may be used - long term or short, with the consequent benefit of higher returns on investment potential for the younger contributors who may not need their funds for longer time. It will address critical funding challenges. There is a yawning gap in the nation’s infrastructure needs such as stable light on which large and small industries grow,

Glory Etaduovie

which creates jobs and relates to the economy to address transportation gaps, housing and house ownership, health, education etc. Other benefits would include helping stability of the stock market by reducing the volatility impact created by capital flight. It would create more capital and liquidity for firms and to explore growth potentials. GDP would also be enhanced. Financial intelligence will grow, and knowledge domiciled, and the international players would hence show more interest in the Nigerian Market. There is however, a temporary concern from contributors of this seeming change, though largely a reclassification. It is like asking ‘what are these people doing with our money and our future?’ It is a natural concern. There also fears of legitimate and transparent use of the funds. Again, there is the dislike by some civil servants for the contributory pension scheme because, it is thought that it pays lower than the defined benefits scheme. This leads to attempts to by some implementers to frustrate it in many states. They forget quickly that the governments can no longer carry such weights. This more so when it is difficult to meet up salary payments. This is the new reality. These are some of the many concerns.

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

BUSINESS DAY

Wednesday 25 July 2018

C002D5556

E-mail: insurancetoday@businessdayonline.com

Gambia, Nigeria, Ghana top in 2017, as WAICA gross premium closes at $62.1m

...shareholders get $2,500,000 as dividend Stories by Modestus Anaesoronye

AICA Reinsurance Plc (WAICA Re), a West Africa company in the 2017 financial year recorded a 26 percent growth in gross premium income, moving from $49.2 million in 2016 to $62.1 million. Its investment income also went up by 55 percent, from $1.6 million in 2016 to $2.4 million in the review year. In the WAICA Re member countries, the Gambia recorded the highest level of growth of 30 percent, increasing its contribution from $177,391 to $232,182 in 2017; followed by Nigeria 19 percent, which grew its premium contribution from $11,657,221 to $13,914,802, while Ghana came third with 15 percent increase, from $12,164,106 to $14,019,918 in 2017. While the corporation recorded negative growth of 36 percent and 8 percent in Sierra Leone and Liberia respectively. Kofi Duffuor, chairman of the Company who disclosed this at its Annual General Meeting in Lagos, said its profit before tax (PBT) moved up by 28 percent to $7.9 million in 2016, as against $6.2 million in 2016, from where shareholders got a divided of approximately $0.0509 per share

amounting to $2,500,000. He stated that total assets of the reinsurance company rose 30 percent to close at $ 120 million, from $92.3 million in 2016. Duffuor said that in line with its strategic objective of growing the business beyond the Anglophone West Africa region, the company attained a remarkable growth level in the Francophone Africa region in 2017. “The French region grew by an impressive 34 percent while earnings from other overseas countries also grew by 33 percent. Our Tunisia office which started operations in June 2017, raked in $1.4 million premium income.” “Your Corporation embarked on a significant market expansion program over the years and this ia an indication of our improved market position in terms of coverage and footprint across sub-Saharan Africa and beyond, he said. “Retrocession premium remained relatively unchanged due to increased retention arising from the additional capital raised in December 2016. This resulted in the overall premium retention ratio increasing slightly from 92.5 percent in 2016 to 94 percent in 2017.” According to him, currency volatility in Nigeria and Sierra Leone in the first half of 2017 once again resulted in significant exchange loss of $3.6 million. To mitigate this situation, we have resolved to hold

L-R: Dauda Kolapo Adedeji, managing director/CEO; Yusuf Hamisu Abubakar, chairman; and Taiwo Otuneye, company secretary, all of Niger Insurance Plc during its 48 Annual General Meeting in Lagos

most of our funds in hard currency (US$). Nonetheless, this represents a 25 percent reduction from the $4.8 million recorded in 2016. Duffuor also stated that the capital injection of $13.3 million received in September 2017 and the $7.9 million profit for the year 2017 contributed to Shareholders’ Funds rising to $84.1 million from $62.9m in 2016, representing 34 percent growth. Total assets also grew by 30 percent from $92.3 million in 2016

to $120 million in 2017. “Our Corporation has been a Growth-focused entity since inception and it is our aim to continue embarking on high profile and targeted marketing activities to expand beyond our present operational base by adding new geographical locations in the African continent and the Middle East.” “In order to consolidate and further expand our diaspora pre-

mium production portfolio, the Corporation plans to augment its marketing engagements with key International Brokers that are strategically located in the Middle East, India, Africa and Europe.” With our premium production portfolio reflecting a Company that is truly International in nature, it is our desire to maintain this trend and further improve the performance of the Diaspora in the coming years, Duffuor said.

Eddie Efekoha rises to the pinnacle of his career with another decoration as CIIN president

ddie Agberia Efekoha, managing director/CEO, Consolidated Hallmark Insurance(CHI) Plc who recently completed his reign as the chairman of the insurance industry trade group, the Nigerian Insurers Association (NIA) was again yesterday decorated as the president and chairman of council of the Chartered Insurance Institute of Nigeria (CIIN), a feat, which only a few people in the market have. Eddie Agberia Efekoha, born on the 16th of August 1959 attended Anglican Primary School EgboUhurie and Agbassa Primary School Warri from where he obtained his First School Leaving Certificate in 1971. He proceeded to Nana College, Warri, a Teacher Training College, between 1974 and 1979 from where he obtained the Teacher Grade II Certificate. As a trained teacher, Eddie taught briefly before joining Warri Refinery & Petro- Chemical Company in 1979 as a Plant Operator. It was during his stay with the Refinery that he studied as a part-time student and passed

the GCE Advanced Level in Geography and Economics. Eddie was a pioneer student of Economics at the then Bendel State University, now Edo State University, Ekpoma but spent just one academic session before accepting his admission to study Insurance at the University of Lagos in 1982. He graduated in 1985 with a Bachelor of Science degree, Second Class Upper Division, and in 1995 obtained a Master Degree in Business Administration from the same university. Efekoha became an Associate of the Chartered Insurance Institute of London by examination in 1987 and Fellow of the same Institute in 1991, specialising in property insurance. He was consequently elected a Fellow of the Chartered Insurance Institute of Nigeria in 1995. Earlier this year, 2018, Efekoha was admitted as a Fellow of the Institute of Directors, Nigeria. His work experience in the insurance industry started with Everyman Insurance Brokers Ltd, Ilorin in 1985 where he did his national youth

service and was later retained as a permanent staff. He worked briefly with Hogg Robinson Nigeria (19861988) from where he left for Glanvill Enthoven & Co (Nigeria) as an Assistant Manager. Due to the versatility, hard work and extra-ordinary capacity which Efekoha brought to bear on

Eddie Efekoha

each assignment given to him he enjoyed rapid promotions and in 1997 the Board appointed him Executive Director in charge of its technical operations. Efekoha left Glanvill Enthoven & Co in 1997 to spearhead the turnaround of Fountain Insurance Brokers Ltd as its MD & CEO. The company enjoyed tremendous goodwill and reputation for professional broking services and it attained a top ten position in less than five years. The entrepreneurial drive of. Efekoha led him again to champion another turnaround in 2003, this time in the underwriting sector of the insurance industry when he and others acquired the then Metropolitan Trust Insurance Company Ltd. The company was immediately renamed Consolidated Risk Insurers Plc. (CRI) and Efekoha became its executive vice chairman and CEO. Consolidated Hallmark under his direction has significantly grown its revenue base over the years and has since diversified into other aspects of financial services through

the establishment of subsidiaries including Grand Treasurers Limited (GTL), a Finance Company fully licenced by the Central Bank of Nigeria and Hallmark HMO, a Health Maintenance Organisation Efekoha is an alumnus of both Lagos (CEP 14) and Harvard Business Schools and was until recently the Deputy President of the Chartered Insurance Institute of Nigeria (CIIN) and Chairman of the Board of the College of Insurance & Financial Management, a subsidiary of the CIIN. For several years in the Lagos insurance market, Eddie assisted in preparing students for both the CII London and CIIN professional examinations in property, pecuniary and business interruption insurances. Efekoha joined the Governing Council of the Chartered Insurance Institute of Nigeria in 2005 and since then to-date he has served in various capacities including but not limited to being the Chairman of the Education Committee, Hon. Treasurer (June 2014 – June 2017) and member of several other ad-hoc and standing committees.

Wednesday 25 July 2018

C002D5556

BUSINESS DAY

E-mail: insurancetoday@businessdayonline.com

Redefining insurance for generation next, what the industry must do now Funmi Babington-Ashaye, the immediate past president and chairman of Council of the Chartered Insurance Institute of Nigeria (CIIN) has set what can be described as blue print, that the nation’s insurance industry must embrace to attract the next generation of talents, as well as customers. In her valedictory lecture held recently in Lagos titled ‘Insurance and Generation Next – Meeting the Needs of Stakeholders’ she identified measures that are needed now to attract the next generation. Modestus Anaesoronye presents the report in part.

o the next generation of insurance practitioners, the way we work would impact our ability to attract, retain the best and brightest into the profession and industry. Quoting Jardine (2017), she said “if we are to continue to attract the best of the world’s talent we need to start to consider new ways of working, possibly with a more flexible approach to working hours and job sharing. “We also must sell the market more effectively, to demonstrate to ambitious young people that it offers great opportunities for them to have a fulfilling career”. Now, more than ever, our industry has more opportunities for individuals with diverse skill sets—mathematics, actuary, risk management, information technology, science and statistics. I dare say that the youths, if persuaded, will find fulfillment in our industry. Somebody needs to engage them.” Repackaging Insurance Products As professionals, we need to take our bearing from the market place by packaging products that meet the needs of stakeholders. Take for instance, the life insurance policy, I mentioned earlier. The message often is that the breadwinner may die prematurely or suddenly and so, to protect the family, it is necessary to buy a life assurance policy. Persuasive as this position is, we cannot be oblivious of the fact the life expectancy of the populace has improved beyond what it was two decades ago. Youths no longer marry early and would prefer to have small-sized families. Besides, many people now lose their jobs due to macro-economic challenges. What the youths will desire in my view, will be value-driven policies that will take these scenarios into consideration, provide waivers for out of job situation and support for disabilities. Generation Next youths have seen friends and neighbours lose their jobs, homes or ability to earn a living. They need policies that will provide protection against loss of income due to unemployment. For instance, unemployment protection insurance, also referred to as redundancy insurance, protects policyholders’ incomes, if a person suddenly loses his job for any variety of reasons. Subject to the terms of the policy, it should pay out a monthly sum for a set period of time to keep the insured going and the policy active. Thus, our product should be responsive to their needs to attract the right patronage. The information about our product offerings must be communicated through their

Mohammed Kari, Commissioner for Insurance

social media. In other words, to satisfy younger generation of buyers, life insurance products need to provide multiple solutions, such as protection from unemployment and disability. Insurance products must seek to address these challenges to retain their appeal. Data Mining Strategy In our various organisations, we have huge data on customer profiles and market structure stored everywhere and even in the cloud. Are we leveraging these data to improve stakeholder mapping and business strategies? One strategy recommended to insurance companies by Bill Gates in this IT-driven environment is data mining. According to him, insurance companies have products that are profitable with some customers and less profitable (or unprofitable) with others. The experience is related to loss experience with policyholder claims. Data mining can provide an insurance company with customer profiles and geographies where its loss experience is very low or very high. This information will influence the entities’ marketing and pricing strategies to people in an age group or geography based on the loss experience. When you have that kind of variability, it is worth a lot to do data mining to help develop your product strategy. “The powerful capabilities

of data mining will help companies determine how to acquire new customers, whom to market to, how to tailor and price their products and how to attract individual customers (Gates, 1999, p. 234)” who in this case, are generation next youths. Product and Pricing strategy To attract Generation Next to patronize our products, the pricing strategy must be right too. This category of consumers will detest, for instance, the age-old practice of compulsorily buying fixed rate auto-insurance policies every year when in fact, the car is in the garage because the customer works from home most times or travels by train. According to Hamel (2002), the British Norwich Union overturned this industry practice by offering its customers insurance by the mile. “Rather than pay to protect a car that is sitting in the garage while you work from home, carpool or travel by train or plane, you just pay for insurance when you are on the road”. Using a global positioning system, pay-as-you-drive customers are charged an insurance premium that is based on how often, when and where their cars are used. In other words, the implication is that the insured pays premium only when he is actually on the road. This is a novel pricing structure that will most probably appeal to Generation Next.

Funmi Babington-Ashaye

Indeed, it is insurance for the mobile generation. Founded in Silicon Valley, the technology Apps and digital insurance platform provide tracking, price information, and on-demand insurance coverage for single items, which allows customers to easily ‘turn-on’ cover for short periods of time. But is our environment ready for this type of initiative? Conclusion The Insurance Profession/Industry is at threshold of its evolution in which developments in technology will significantly impact its product offerings, operations and the skill sets of personnel required to deliver value to its diverse stakeholders which, in the near future, will be dominated by Generation Next. Given the declining inflow of new entrants into the profession, the fear of a talent gap is rife. The causes of this trend like poor perception of the profession, age-long conservatism and information gap about the robustness and beauty of Insurance must be frontally addressed. We need to change the wrong perception by showcasing the career opportunities that exist, the products we develop, the risks we assume and the professional advisory services we provide. As captains of the Insurance industry, we individually have exciting stories to tell about our

experiences and career path that will stimulate the next generations. Let’s create the opportunities to tell them the stories and win more converts to our profession. Without doubt, our underwriters, actuaries, risk engineers, claims specialists, risk managers and brokers have special skills to drive the growth of the profession and industry into the near future. To ensure that there is no gap, therefore, the current generation must begin to give serious and strategic consideration to the issue of succession through mentoring while the Institute must strive to persuade and partner with many more tertiary institutions to deepen knowledge in insurance while producing many more qualified manpower for the profession. In addition, the Institute must seek international partnership to obtain funding and technical support for its College of Insurance. The challenge of meeting the needs of Generation Next is real, severe and requires an industry-wide approach. The attitude and disposition of Generation Next have deep messages for us. We must listen, hear and act. In the words of Peter Drucker, “the most important thing in communication is hearing what is not said.” It is my earnest hope that we would make a difference before we quit the scene.”

BUSINESS DAY

Wednesday 25 July 2018

Leadership Shaping people into a team

Task shifting could help lower costs in US health care and-video curriculum developed with Stanford University. This kind of self-service care reduces staffing costs and allows for more personalized care for the patient, while also ensuring continuity and uniformity of care when the patient goes home, thereby reducing post-surgical complications and readmissions.

Vijay Govindarajan & Ravi Ramamurti

HEALTH f you ran a fancy restaurant, would you want the chef also to clean dishes and mop the floor? Of course not. You’d hire others to do these things and let the chef focus on producing delicious food. Task shifting, the idea of moving routine tasks requiring lower skills away from high-skilled professionals, has influenced how many businesses operate. The same logic also applies to health care. For years, nurse practitioners and physician assistants have taken on tasks that doctors once performed. This has saved money, of course, but it has also improved quality, because doctors and paramedics perform tasks that best fit their expertise. Based on our research in India, we believe there’s a lot more room for task shifting in U.S. health care. Some Indian hospitals have pushed the envelope on task shifting because of intense pressure to make the most of the country’s very limited supply of doctors and specialists, while maintaining quality and keeping costs low. Three task-shifting ideas from India are worth considering: — CREATE NEW JOB CATEGORIES: The Indian hospitals we studied have taken task shifting to new heights by creating entirely

On all these fronts, U.S. hospitals could do more. Right now most of cost reduction programs in U.S. institutions start with cuts in low-cost staff jobs, forcing doctors to spend more time on routine tasks such as transcription, logistics and billing. Task shifting could change that, creating thousands of new jobs across the industry, while improving care and lowering overall cost.

new categories of low-cost health care workers. For instance, when Dr. Govindappa Venkataswamy founded Aravind Eye Care hospital in south India, he had plenty of patients but too few ophthalmologists and optometrists to treat them. His solution was to hire village women with high school diplomas and train them for two years to work as “midlevel ophthalmic paramedics.” Over time, these paramedics have made up two-thirds of Aravind’s workforce and perform tasks such as admitting patients, main-

taining medical records, counseling patients and assisting doctors in surgery. — UPSKILL EMPLOYEES: Indian hospitals also strive to raise the skill level of their employees. At the high end of the skill spectrum, for instance, HCG Oncology has developed a new category of “onconurses” who are better trained than normal nurses to assist doctors in chemotherapy and radiation treatments. Likewise, Narayana Health, a multispecialty hospital, encourages nurses to advance

to the higher-skilled position of “nurse intensivist,” akin to a nurse practitioner in the United States. — ENCOURAGE PATIENT SELF-SERVICE: An extreme form of task-shifting is selfservice, in which patients or their family members take over tasks traditionally performed by hospital staff. For example, Narayana Health encourages family members to provide post-intensive care unit care for patients after undergoing a four-hour audio-

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Vijay Govindarajan is the Coxe distinguished professor of management at Dartmouth’s Tuck School of Business. He is a co-author, with Ravi Ramamurti, of “Reverse Innovation in Health Care: How to Make Value-Based Delivery Work” Ravi Ramamurti is the university distinguished professor of international business and strategy and the director of the Center for Emerging Markets at Northeastern’s D’AmoreMcKim School of Business. He is a co-author, with Vijay Govindarajan, of “Reverse Innovation in Health Care: How to Make Value-Based Delivery Work.”

BUSINESS DAY

C002D5556

Wednesday 25 July 2018

Transforming public transport hubs key to better city living, says US Page 31 professor Airlines reacts to rising temperatures

Why every traveller needs a checklist Page 30

CCECC must replicate GE model in technology transfer – FG Page 31

Page 30

VW Group hits record first-half sales … but hints at slowdown

T Mercedes has strong presence in Nigeria – Envoy Stories by MIKE OCHONMA

n its resolve to establish a strategic point of sale location that appeals to customers and provide easy access and better customer service for existing and prospective high net worth clients in Lagos, MB Automobile Services Limited which is one of the authorized passenger cars dealers of Westar Associates Limited, owners of the Mercedes Benz nameplate in Nigeria has unveiled what could better be described as fit-for-purpose , stateof-the art showroom in Lagos. The new showroom is strategically located at 37, Akin Adesola, Victoria Island. It boasts of convenient parking space, world class comfort for clients and visitors and an array of latest Mercedes-Benz vehicle models are also on display.

Speaking at the official unveiling of the showroom, His Excellency, Mr. Ingo Herbert, the General Consul of the Federal Republic of Germany to Nigeria, applauded MB Automobiles Services Limited for its unwavering commitment to keeping the Mercedes-Benz brand alive. “I am personally thrilled and excited with the unveiling of this showroom. This shows that the Mercedes-Benz brand is waxing stronger on a daily basis in the Nigerian auto market. This increase has been made possible by the uniformity of increased bilateral trades between Nigeria and Germany. This investment is no doubt a game changer for the Mercedes-Benz brand in Nigeria” he said. Benson Uwatse, managing director of MB Automobiles Services

Limited, hinted that the need to constantly innovate and bring satisfaction to the varied customers of the Mercedes-Benz brand in Nigeria engineered the decision to unveil this new showroom. He said: “This new showroom is specially designed to cater for all categories of our customers. Our customers are dear to us always. Our decision to give them the best of quality, comfort coupled with excellent service spurred us into the acquisition of this new complex”. Mirko Plath, Managing Director, Westar Associates Nigeria Limited, highlighted that the opening of this showroom is indeed a milestone worth celebrating. He further buttressed that the company’s resolve to continually give the best to customers, propelled the sighting of the new showroom.

he Volkswagen Group says it recorded the best ever first half of a year in its history, delivering 5,5 million vehicles to customers worldwide. However, the German firm added that the second half of 2018 would likely be impacted by the implementation of the new Worldwide Harmonised Light Vehicles Test Procedure (WLTP). “This was the best ever first half year in our company’s history. Group deliveries increased significantly in all core regions. Our core brands recorded strong growth in the first half year,” said Fred Kappler, head of group sales. “We expect deliveries in the second half of 2018 to be affected by the introduction of the new WLTP standard. Some vehicles will probably be handed over to customers later than planned,” he added. This echoes earlier comments from Volkswagen Group CEO Herbert Diess that the brand would face production interruptions at its main plant in Wolfsburg in the third quarter of 2018. “Within the Volkswagen brand

alone, we need to test more than 200 model variants and have them typeapproved within a very short space of time,” Diess said in a statement in June, explaining that the new test procedure was “much more complex” and “took much longer”. The VW Group – which includes the Volkswagen brand, Audi, Bentley, Bugatti, Lamborghini, Porsche, Seat and Škoda, plus commercial marques Man and Scania – says it delivered more than 2,4 million new vehicles (a year-on-year increase of 6,5 percent) to customers in Europe since the beginning of the year. Deliveries in the North America region, meanwhile, “remained stable”, with 465 000 new vehicles handed over from January to June. The firm reported a “noticeable reluctance” to buy from consumers in the Chinese market in June (deliveries dropped 2,2 percent), saying this was “attributable to the lower tariffs on imported vehicles”. Still, the Chinese market accounted for just under two million deliveries in the first half of the year, representing 9,2 percent growth.

Truckmasters graduates 22 automobile technicians

fter a 12-month intensive training programme, Truckmasters Academy, a subsidiary of Truckmasters Nigeria Limited has chunned out 22 young graduands that have just completed their mandatory course in automobile diagnosis and repair. This is coming on the heels of a recent call on the Federal Government to channel more funds to automobile and other skill acquisition courses to increase the industrial research capacities of Nigerian youths and make them self-employed. Speaking during the event, Folusho Samuel, director of projects, Nigeria Employers Consultative Association (NECA); and Taiwo Ajibola, managing director of MDS Logistics, , advised the new technicians to be diligent, honest and display profes-

Sitting at the middle is Tony Arenyeka, managing director of Truckmasters Nigeria Limited with invited guests and graduands of Truckmasters Academy that completed their courses in auto diagnosis and repairs recently.

sionalism in the discharge of their duties. They also urged them to continue to update their knowledge on the new automobile technology as well

as pool resources together should they need to form partnership. On his part, Tony Arenyeka, managing director of Truckmasters Nigeria Limited, said although 30

people started the batch training programme, only 22 found to have satisfied the requirement were graduated and awarded certificates. The company chief executive, who made this known in Lagos at the graduation ceremony of the academy, disclosed that the school was set up as part of the Truckmasters Nigeria’s contribution to the development of the society. He said, “The mission of the academy is to provide technical skill acquisition through development of automobile maintenance competencies. “The academy exists to bridge the skill gaps and promote the development of competent indigenous technical manpower to meet the increasing complexities of today’s vehicles following the challenging trends in

the global automotive sector.” He also said, “The Technical Skills Development Programme specifically designated Truckmasters as a focus centre for truck and heavy duty diesel engine training. The centre meets this expectation through the rich and diversified curriculum of the school designed to deliver integrated training diagnosis for heavy duty vehicles/ equipment and passenger cars. Part of the curriculum promotes entrepreneurial capacity building in the participants targeted at reducing unemployment among Nigerian youths”. The TSDP, according to him, is sponsored by the Industrial Training Fund, Nigeria Employers Consultative Association and TruckMasters.

30 BUSINESS DAY

C002D5556

MTravel

Wednesday 25 July 2018

odern

Cheapest destinations for last-minute summer holiday

Why every traveller needs a checklist Stories by MIKE OCHONMA

o form of travel is not well planned, no matter how urgent or casual the trip appears. For the traveller not to be caught in the web of confusion and helplessness, especially when travelling alone and to a very strange destination other co-travellers may appear unfriendly either while in transit, or after coming out of the aircraft. Every traveller should have a travel checklist, especially if you as forgetful as I am. I once forgot my socks and dental kit at homeand spent hours at a local market in Thailand trying to purchase replacements.

While it may seem trivial, forking out money for something that you could have easily brought from home will set you back- especially if the local currency is stronger than the ZAR. Travellers should plan their checklist up to 2 weeks before their trip to avoid any last minute surprises. Here are some items to tick on your next checklist: Travel documents: These may include passports, identity documents, travel insurance papers, accommodation and tour paperwork and flight tickets. Medication: Travel emergencies can happen anytime so having the correct medication as ordered by your doctor is important. Every traveller also needs toiletries, even as they would not want to

forget their deodorant or toothbrush and of course including money for some incidental expenses. Depending on the weather at your location, try to make a list of clothing items that are needed ranging from swimsuits to jackets, make sure you take clothing to suit all weather conditions. For a pleasurable travelling experience, the passenger would also need to capture the best travel pictures with their smartphone, and anyone can be a photographer Not many travellers are clued up when it comes to snapping travel shots, resulting in hazy, low resolution and barely capable of being sent through the instagram . With the age of smartphones, anyone can be a photographer if they follow some simple rules.

amilies in search of a lastminute bargain beach holiday would do well to consider Turkey, Europe’s cheapest destination for summer according to new research. The Post Office’s annual Family Holiday Report, published over the weekend, compared prices in 15 sun and sea favourites, with the Turkish resort of Marmaris shown to be the cheapest option ahead of Sunny Beach, Bulgaria, and Spain’s Costa del Sol. The survey compared the average price of 12 common holiday purchases, including hire of a sun lounger, a meal for four in a local restaurant, and a bottle of suncream. The basket of items will typically cost around £80 in Marmaris, £84 in Sunny Beach, and £97 in the Costa del Sol. At the other end of the table are Nice, Ibiza Town and Sorrento, where the same purchases will set travellers back in excess of £200. The methodology isn’t perfect - savvy families can still devise a budget break in the costlier destinations, while hotel and flight prices are not included - but the report offers a fair snapshot of typical costs on the ground. That Turkey should top the rankings is hardly a surprise as it has long been considered one of the best value destinations in Europe.

But the value of Turkish lira has also plummeted in recent months, making it even better value for British travellers. The Post Office study revealed a 36 per cent year-on-year fall in prices and suggested that a family of four in Marmaris can eat out for just £10 a head (compared with £32 a head in Nice), while an beachside ice cream costs the equivalent of only 73p (in Nice it’s £1.80). Other destinations are the cheaper end of the table include Crete, Corfu, Paphos and the Algarve. Year-on-year prices were found to have fallen in a number of other places, including Corfu (-24.2 per cent) and Paphos (-10.4 per cent). However, prices have risen in the Algarve (+12.4 per cent) and Porec, Croatia (+18.5 per cent). “The big variations in costs we found between the European resorts mean it really will pay dividends to do some homework before leaving home,” said Andrew Brown, spokesperson for Post Office Travel Money. “ ‘’If you haven’t already booked and are looking for a late deal, the low resort prices in Turkey and Bulgaria make these countries great bets. In the Eurozone, Spain is still great value and the low prices we found in Corfu make Greece a good tip too.” Andrew Brown said.

Airlines reacts to rising temperatures …as industry feels effects of climate change

assenger planes have been approved to fly at higher temperatures in the US, following a request from American Airlines, which grounded dozens of flights last year due to extreme weather conditions. Every aircraft has a maximum operating temperature, which is set by the manufacturer and approved by regulators. If the air temperature exceeds that limit then planes are not permitted to take off. Such a scenario played out at Phoenix International Airport last year, resulting in dozens of cancellations, and more recently at Delhi’s Indira Gandhi International Airport, where delays were reported in June when the mercury nudged 45C (113F). Keen to avoid a repeat of last summer, American Airlines – along with Mesa Airlines and SkyWest Airlines – asked Bombardier to increase the operating temperature of its CRJ jet, which had to be

grounded during the heatwave. American Eagle, the regional branch of American Airlines, uses the Bombardier CRJ. The CRJ had a maximum operating temperature of 47.7C (118F), which was a shade lower than the 48.3C (119F) recorded at the airport by the National Weather Service. According to Ross Feinstein, a spokesman for American Airlines “After the summer of 2017, we approached Bombardier, along with Mesa and SkyWest, to see if it was possible to raise that limit to 50.6C (123F),”. “After multiple technical assessments with Bombardier, American, Mesa, SkyWest and the Federal Aviation Administration (FAA), approval was received to operate the CRJ at the higher limit.” Embraer, one of Bombardier’s competitors, has also increased the temperature limit for some of its jets, a sign that the aviation industry is now preparing for a warmer

New conservation expeditions to key emerging African destinations

climate. “Rising temperatures have been an important design consideration for Embraer,” an industry stakeholder said. Planes can struggle to generate enough lift when the mercury rises. In hot weather, planes can struggle to generate enough lift during takeoff because warm air is thinner than cool air. Some researchers warn that as the climate changes, cancellations due to high temperatures may become more common.

ward-winning safari gu i d e M i c h ae l Lo rentz of the Conservation Travel Initiative has joined the non-profit c ons ervation organization African Parks to offer oneoff expeditions and limited offerings for c ons ervation travellers. Beginning in mid-2018, Lorentz and African Parks will offer expeditions to key emerging destinations in African Parks’ conservation portfolio, namely Zakouma National Park (Chad), Bangweulu Wetlands (Zambia), Liuwa Plain National Park (Zambia), Odzala-Kokoua National Park (Republic of the Congo) and Akagera National Park (Rwanda). These expeditions will serve to highlight the contemporary

conservation work of African Parks and attract individuals with a strong interest in supporting and funding conservation of African wildlife and communities. This more intentional travel enables travellers to go well beyond the typical tourism experience to connect more deeply with the cultures, wildlife and wilderness across Africa. By participating in these private expeditions, travellers will not only experience unique wildlife encounters and have access to otherwise inac c essible destinations, they will also join a community of global conservation contributors highly valued for the b enefits they can bring to the crucial work of African Parks.

Wednesday 25 July 2018

C002D5556

BUSINESS DAY

Local and global rail news as it breaks

CCECC must replicate GE model in technology transfer – FG

Stories by MIKE OCHONMA

he federal government has reiterated the need for the Chinese Civil Engineering and Construction Company (CCECC); the contractors handling the Lagos-Ibadan standard gauge rail modernisation project to prioritise the transfer of technology and skills to Nigerians working with the company in the course of the on-going construction work. Rotimi Amaechi, Nigeria’s minister on transportation reechoed this last Monday during the monthly inspection tour of the Apapa port end of the railway project by his ministry with other members of the project steering committee in Lagos. As the minister put it, ‘’If we don’t capture this technology, we can’t progress. ‘’I would recall that when I went to China, the Chinese told me themselves, that they were able to understudy GE. When I went to Indonesia, they told they were able to understudy GE, when I went to South Africa railways, they also said they were understudying GE and the Chinese companies. But here if we don’t do that they will just dump the technology and leave’’. Amaechi pointed out for the true position to be established if the contractors are correct or not is to actually go an active site where work is on-going and see for ourselves. The minister promised to find out the number and quality of local site engineers during his next. The minister expressed doubt over the quality and number of engineers he met during his last visit. Amaechi recalled that during the visit, he saw only two

Melbourne Airport rail link set to take off

engineers that he interacted with adding that the number of them working at project sites is not enough, while their qualification level remains a subject of scrutiny. On his assessment of extent of work done so far, the minister said, ‘’Am not impressed, but am not also unhappy with them, while am not an engineer, but they have explained to me, that it is not about laying, that they can actually 1.5 kilometre per day, what they have laid now is about 9 kilometers but the problem with it is that they have to deal with bridges before they can lay those things’’. The Lagos-Ibadan standard gauge rail contract is broken into

two phases; the first phase is from Ebute-metta to Ibadan. He stated that even if CCECC is not able to complete it as scheduled, the country can go ahead and begin commercial activities from Ebute-metta to Ibadan which is the original contract. We believe they should be able to complete that, we also believe that they should be able to complete Apapa to the Seaport. ‘’This government has said look; all railways must terminate at the seaport. So that one if they finish it on time we will go with it, if not we will commence commercial activities at Ebute-metta to Ibadan, but work is progressing rapidly from Iju to Ibadan’’.

He added. He lamented that the problem in Lagos is relocation of gas and oil pipeline, adding that the steering committee have been able to solve the rest. According to the minister, ‘’Today we will try to award the contract for the relocation of the water pipelines, even we have not finished the technical work for the relocation of the gas and oil pipelines, so is slowing down activities in Lagos’’. Amaechi regretted that up till the time of filing this report, that the major problem in Lagos is relocation of gas and oil pipeline, even when solution to other challenges has been found.

he Australian state of Victoria has announced that if re-elected in the forthcoming November state election, it will provide up to $3.5bn towards the construction of a dedicated rail link from the Melbourne city centre to the international and domestic airport at Tullamarine. This matches a previous commitment of $A 5bn made to the project by the Australian federal government in April this year. Current estimates put the cost of the project at between $A 8bn and $A 13bn, with private sector expected to finance the balance. Following an assessment of four corridors undertaken by Transport for Victoria, the western alignment via Sunshine is now the state government’s preferred route. Fo l l o w i n g t h i s d e v e l o p ment, trains will reach the airport via a new transport hub at Sunshine, which will provide an interchange between the airport line and regional and suburban lines, including services via the new Melbourne Metro Tunnel. From Sunshine, trains will head north utilising both the Albion East rail reserve and sections of tunnel to reduce the impact on homes and businesses, before connecting into Melbourne Airport at Tullamarine. Earlier this month, Melbourne Airport released plans for a major redevelopment, including a new domestic terminal and upgraded international facilities. The number of passengers passing through the airport is forecast to reach 68 million a year by 2038. Construction is unlikely to commence before 2022.

Transforming public transport hubs key to better city living, says US professor

reating transit-oriented developments (TODs) is one way to build a more sustainable city with lower car use and higher density, says University of California, Berkeley, city and regional planning professor emeritus Robert Cervero. TODs refer to public transport hubs evolving into a “place to be”, compared with a “place to pass through”. Transforming these stations into hubs where people can live and enjoy some leisure time, building a community can lead to the development of a more sustainable city. To turn stations into places where people want to have a cup of coffee and to transform it from a logistical staging area to a people friendly place requires a certain degree of planning. Also, in order to become attractive destinations, stations must be comfortable. They require amenities, green spaces, links to shops

and they must be architecturally friendly, notes Cervero. “How cities are built shapes how people move about them. You need a good urban vision to then drive transport infrastructure.” As TODs evolve further, that can turn into PODs – pedestrian-oriented developments. If cities make it possible for the

inhabitants near TODs to walk in a radius of roughly 5 km around public transport stations to find almost everything they require, they will ensure that people travel less. By walking to their nearby school or job, TOD dwellers are almost surely set to use public transport, as opposed to private

car, when they are forced to travel longer distances from their residence. Should a car be necessary, cities can ensure the availability of car-sharing and ride-hailing services. Once TODs are established, they can further transform cities by becoming links in a transitoriented corridor, with a number

of TODs linking together like a string of pearls. As cities densify, the demand for public transport will increase. Fewer cars also mean a decline in demand for parking space, with the possibility then to transform these redundant parking lots into green spaces. The cities around the world that are happier places to live, all manage to contain the vehicle kilometres travelled per capita, he adds. TODs, even pedestrian-oriented TODs, can still go one step further, explains Cervero, by becoming inclusive TODs, promoting the concept of shared prosperity. This concept means that everyone benefits from the development of public transport and TODs, and not only the rich. In places like the Central Saint Giles station, in London, however, an effort was made to make available below marketrate housing near the public transport hub, in the spirit of shared prosperity.

32 BUSINESS DAY

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Wednesday 25 July 2018

Interview

‘Terminoxx is redefining lifestyles, banking in Nigeria’ Tayo Awosanya is the managing director of Zercom Systems; a software technology company located in Victoria Island Lagos, providing IT solutions to corporate institutions. In this interview with Ifeoma Okeke, he speaks on how Terminoxx, his ATM lifestyle and monitoring app, is delivering innovative client-focused solutions

hat isTerminoxx all about? Terminoxx is a Mobile ATM Lifestyle & Monitoring App that provides realtime ATM operational status and location direction for Bank customers. A customer simply taps on the ATM closest to his/ her location, gets the direction and current working status of the ATM. A customer will be able to see if the ATM is on, Dispensing cash or “Out-of-Service” before they decide to go to the ATM. What do you mean by ATM Lifestyle? A large and increasing percentage of banking customers depend on the Automated Teller Machines as their primary banking channel, and the machines also do more than just dispense cash. Customers are able to perform a variation of financial transactions on the ATMs just as if they were in the Banking hall. In the first three quarters of 2016, N3.5 trillion worth of financial transactions took place across the country via ATMs; thus, this has become a lifestyle for most as a new relationship has been formed between the customer, their ATM cards, and the Machines. Terminoxx has been created to serve as a virtual assistant while customers perform these ATM transactions; before, during and after the transaction. If you say Lifestyle, does the application cater to nonfinancial institutions as well? Yes, it does, it actually serves as a customer’s personal guide. In 2017, it was reported that customers purchased 1.7 Billion Naira worth of airtime through the ATMs of a particular commercial Bank. Terminoxx has a geo-location service that helps customers to locate establishments where their ATM cards will be accepted to carry out such transactions. This feature automatically identifies a change in customer’s location, like when a customer travels from Lagos to Abuja, the app prompts you by welcoming you to Abuja and then offers different types of services available in the customer’s new location. It’s a special feature called “Loyalty connect”, where banking customers are allowed to search and locate all restaurants, hotels, and car hire services within the customers’ new geographical area, especially those in promotional partnership with the Bank. It also specifies what type of discounts/points customers will get when they use their Bank cards in those establishments. Reservations and appointments with those establishments can be made through the app. It seems the App gives a lot of information to the customer, but does it solve any

Awosanya

problems? Yes, it helps customer to resolve issues on the ATMs. Occasionally, customers visit ATMs and get debited without receiving the money they intended to withdraw. When this happens, customers are required to visit the branch to make a complaint by filling a dispense error complaint form, resolution of which usually takes about a week. However, Terminoxx allows customers to report failed ATM transactions immediately it occurs through the app without stepping into a banking hall. A digital error form on the App is completed by the customer, with details of the withdrawal error, such as location, time, amount involved, ATM error message among others and that is sent directly to the ATM unit of the Bank including the customer’s account officer. They receive the electronic complaint and start working on a refund process immediately. The customer is also notified by his/her account officer on the progress of the refund. Customers no longer have to physically visit the Bank branch or wait for a long time just to get their refund. The entire refund process is done through the help of Terminoxx. How have the banks responded to this app? Giving customers value for their money is always a good thing. The banks are excited at the idea that this App caters to their customers while aiding the effectiveness of banking operations as regards ATM’s. As Terminoxx is also a mobile monitoring application with a comprehensive administrative and monitoring

module for the Bank’s entire ATM network, the ATM monitoring unit of the Bank is now constantly aware of the “status” of the ATM network right from their mobile devices. This aids in ensuring that ATMs are up and running at all times, downtimes are monitored and the speed in response time and service maintenance is increased. It also helps the bank gather information about customer interaction, attitude, social behaviour and spending patterns through its predictive analytic capability. With all the information gathered by the app, are the banks able to cross sell through this app? The bank is able to leverage on some of this information gathered, especially with customers’ geographical movement. There is a Promo Alert notification that prompts customers to participate in the bank’s promos depending on proximity to the promotion location such as malls, kiosk Branches, partner agents, Branches, ATMs amongst others. A customer will receive a promo alert when he/she is within a specific radius of a participating branch or outlet. Promos on loans, new and special products, bonanzas, discounts amongst others are all announced and facilitated through the App. You mentioned predictive analytics capability earlier; can you explain what that does? Terminoxx has a predictive analytic capability very similar to the messages Google sends to our phones nowadays. Through historical data, it is able to an-

ticipate a customers’ next line of action and help make that a pleasant experience. An example is the downtime alert notification, when a particular ATM is temporarily down or out-of-service, customers who frequently use this ATM are automatically notified through the app that their frequently used ATM is currently down or out of service. It saves the customer from visiting an ATM that is non-operational. However, the app also suggests other ATMs nearby that are in working condition. In addition, the app also has asset expiry notification, the App automatically sends customized messages for important dates and deadlines to the customer about his/her ATM card’s fast approaching expiry date. Expiry date on international passports, driver’s license, medical insurance premiums among others are included. The message contains address and directions to the nearest bank branch or service location where a new card or asset can be collected on or before the expiry date. Has this app been launched already, if so, what has been the feedback? Yes, the app has been launched and is being used by a couple of Banks already, but still not available to the general public, except banking customers only. For the banks that have Terminoxx, the customer feedbacks have been very positive, and the banks themselves can’t do without it due to its sophisticated monitoring and reporting back-end, which is also mobile. By partnering with other Banks, our goal is to have about ten thousand ATMs on the Terminoxx database within the next 12 months. Where can people download this app? Unfortunately, the app is not available for download as a stand-alone app; at least not yet. Terminoxx was designed to sit inside the banks’ internet banking app for convenience, so that customers don’t have to download a separate app. We have built an app that integrates seamlessly with the internet banking app that the customers have already downloaded, thus, the Terminoxx services just shows up on their phones. At the moment, only customers whose banks have Terminoxx are able to enjoy these benefits because the ATMs are owned by individual banks. In a lay man’s terms, what does Terminoxx do? Terminoxx gives Customers operational information about the ATM right on their mobile phone without necessarily visiting the ATM. Customers can make reservations to hotels, Restaurants, and Car hire services etc through Terminoxx. Customers

are alerted about ATM card expiry dates and other personal assets with Terminoxx alert notification and can now make complaints and get instant resolutions on problems encountered on the ATMs without stepping into a banking hall. Aside from making their customers happy, why should a Bank invest in this app? The Banks should invest in this App because it not only caters for their customers and improves their brand; it also improves their ATM business. Terminoxx has an administrative and monitoring module with a graphical representation of the bank’s entire ATM network. With a single tap, a summarized view shows upper management the performance, in percentage ratios, of the bank’s ATM network; at State, Region or Nationwide levels. Managing directors and executive directors love this view, as it tells them the health of their ATM network at a single glance. They get to do all this on their mobile devices. There is a service request button that allows ATM managers to view the number of ATMs in their region; the uptime, downtime and specific issues with the nonworking terminals are displayed on their phones. Managers will be able to make a service request with a single tap of this button, and a notification is sent to the custodian of that ATM through Terminoxx; this in turn reduces the inflow of customers in the banking hall that come to the customer service desk with ATM related issues. Are customers charged for the use of Terminoxx? No, customers are not charged to use Terminoxx. Terminoxx sits in the internet banking application of the Bank, thus it is totally free to use it; just like the bank’s App. We built Termionoxx with the goal of helping the bank to be more efficient, and most of all, solving problems encountered by customers while using the ATMs. Our dream is for Terminoxx to contribute to the nation’s overall goal of becoming a truly cashless economy, and to be known as the app that helps people in their everyday lives, and it comes as a value-added service to customers. Is this a first of its kind or are there other apps in the market doing the same thing? There are one or two other apps developed by the ATM manufacturers for managing and reporting on ATM performance, but nothing geared towards helping customers because these types of problems don’t exist overseas. The significant difference is that Terminoxx was built by a team that understands the challenges. Our main objective is solving those ATM issues customers encounter in Nigeria on a daily basis.

Wednesday 25 July 2018

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BUSINESS DAY

ANALYSIS

The math on NNPC’s FAAC remittances doesn’t add up State Commissioners of finance from Nigeria’s 36 states feel the corporation is short-changing them as FAAC remittances continues to dip even as Nigeria sells more crude from higher oil prices, writes ISAAC ANYAOGU.

ommissioners for finance from the 36 states of the federation recently said their state governments would not accept anything short of the NNPC fully remitting N20 billion outstanding to the Federation Account. They had gone into the monthly Federal Allocations Account Commitee (FAAC) meeting along with Kemi Adeosun, minister of finance expecting to share N147billion being proceeds from oil sales for the month of May but found that the NNPC remitted only N127 billion. Seething, they walked out of the meeting. Addressing journalists after the fallout, Mamood Yunusa, chairman of the Finance Commissioners Forum, alleged that the national oil company remitted N127 billion as May earnings instead of N147 billion, leaving a shortfall of N20 billion. “Based on all provable assumption parameters, the Nigerian National Petroleum Corporation (NNPC) is to remit N60 billion as Royalty based on the verbal admission of the Department of Petroleum Resources (DPR) and based on the MTEF (Medium Term Expenditure Framework) submitted by NNPC. The Petroleum Profit Tax (PPT) expected was to be 1.46 multiplied by 60 billion amounting to N87.6 billion; amounting to N147 billion expected in the federation account as against N127 billion paid by NNPC,” Yinusa said. Yinusa further said, “NNPC claimed it spent N3.5 billion on product leakages, pipline vandalism, but the Department of Petroleum Resources (DPR), an agency that is supposed to keep such record claimed ignorance of the amount.” The commissioners were especially miffed that they got more revenue from NNPC when crude oil was $50 per/barrel. It seemed strange that they are now receiving far less when the commodity is over $70/barrel. “As equal stakeholders in the business, NNPC owes it a duty to Nigerians in the spirit of openness and transparency and by the Act that established it to be open and transparent to all stakeholders but states as stakeholders in federation account are not expected to take NNPC’s account hook, line and sinker but are allowed by law to ask questions for clarity.” But the NNPC does not exactly deal in clarity. It explained in a release that it reached an understanding with the governors to accept a monthly remittance of N112 billion until revenue improves because it is paying cash call obligations on Joint Ventures and deducting fuel cost under recovery and pipeline maintenance fees. The state-owned corporation says it should be patted on the back for increasing the FAAC haul by N35billion. Federating states share

proceeds from oil income at monthly FAAC meetings. But the meeting for June to share May oil revenue ended in deadlock. However, data obtained from the NNPC’s monthly financial reports indicate gaps in its claims. Faltering Cash calls Nigeria announced exit from cash call arrears in January last year, a debt burden that rose to $6.7bn according to NNPC data, by reaching an agreement with the International Oil Companies (IOCs) to trim down the amount to $5.1bn knocking off $1.6bn. By the terms of the agreement, Nigeria would repay the $5.1bn over

a period of five years. This means that the NNPC must pay at least $1.02billion each year to cover the debt. But according to Maikanti Baru, the NNPC group managing director, the corporation has only paid $1billion out of these arrears since January 2017 indicating that the corporation has already fallen behind in payments by $530million as at July 2018. Meanwhile the volume of remittances the NNPC claims it is paying for Joint venture cash call funding to guarantee future and present production is trending north. BusinessDay analysis of NNPC Monthly Financial and Operations

report for March which contains figures for January to March indicates that the state-owned oil corporation has more explaining to do. The table below shows that the NNPC claimed it paid N460.9bn for JV cash funding for oil production with upstream operators and cost of production on domestic crude allocated to Nigeria. Yet the corporation remitted only N298.59bn to FAAC within the three months. It is very unusual that the corporation is spending almost two times what it is realising from producing oil at a time it said it had reduced cost of production to $20 per barrel from around $32. The auditor General report for 2016 also raised this concern. It demanded from the corporation “explanation(s) as to why the amounts paid out as Joint Venture Cash Calls were exactly the same as the proceeds from Crude Oil throughout the year 2016, why the JVs are not making/declaring profits, and all records, accounts and returns held by NNPC in respect of the JVs for audit examination,” The corporation is yet to produce the information. The accusation of under remittance by the NNPC to the federation account is hardly a new one, what has been lacking is the political will to effect change. “It was observed from the examination of NNPC report to Technical Sub- Committee of Federation Account Allocation Committee meeting held in December 2016 that a cumulative total of N4,076,548,336,749.75 remained unremitted to the Federation Account by NNPC as at 31st December 2016,” said the Auditor General’s annual report on the accounts of the Federation. NNPC’s position Ndu Ughamadu, the NPC Group General Manager, Group Public Affairs, in release said the agreement NNPC had with the governors was that the corporation would make a monthly remittance of N112billion

to FAAC subject to sufficient funds from sales of domestic crude oil allocation for the corresponding month after meeting cash call obligations on JVs, deductions of Premium Motor Spirit (PMS)-cost under recovery and pipeline maintenance. The NNPC further said it has surpassed the terms of agreement with the governors on the monthly remittance for the month of June by N35billion, having taken a cue from their postures by taking from the sum meant for settling cash call obligations. The corporation regretted the Governors’ additional request of N40billion, saying it was unfortunate, given the fact that NNPC is set to exit the cash call phenomenon But the NNPC is not in a hurry to exit the cash call phenomenon considering that it is not even meeting its obligation as it has an outstanding of $530million from last year till date. Figures given for under-recovery, pipeline vandalism and crude losses have continued to astound. Between January and March 2018, the NNPC claimed it spent N139.3billion on under recoveries which is an expense head where fuel subsidies are subsumed. NNPC also reported crude losses of N1.17billion, product loss of N81.1million and pipeline repairs and management cost of N8.5billion. The absence of clarity over what constitutes these expenses is a key reason why the corporation is often termed opaque and unwilling to reform. The NNPC says payments it is making to fund joint venture operations is key reason why national oil income is on the decline and the IOCs seem to agree. Osagie Okunbor, country chair, Shell Companies in Nigeria and managing director, SPDC at a recent oil and gas conference in Abuja said, “For as long as I have been in this industry, we have been discussing cash call as a never-ending issue. I think that we were able to sit down together as an industry and government to try and tackle that issue and we should not underrate the importance of that. “What that has done is that it opens up the appetite to have a conversation about investment. Nigeria is competing for capital with every other country in the world and, sometimes, we forget that and think that we are world unto ourselves. But the reality is that each of these companies (IOCs) operate in 20, 30, 80 countries and people are competing for capital.” Osunbor further said that for the first time in a long while, some IOCs in Nigeria recently closed their year financial year without being owed cash call obligations by the NNPC However, this does not absolve the corporation of its obligation to explain how national income is being spent.

BUSINESS DAY

Wednesday 25 July 2018

FEATURE

Agric research: The weak link in Nigeria’s diversification quest Nigerian agricultural research institutes are lagging behind peers owing to a combination of factors which has made the institutes fail in their mandates writes Josephine Okojie.

igeria’s agricultural research institutes are proving to be the weak link in Nigeria’s drive to diversify the economy through the sector and make exponential gains by way of earnings, employment and other spin-offs. The institutes across the country are however falling grossly short in providing the technologies that would drive growth in the sector and are lagging behind smaller peer nations, where agriculture is less of a priority. Experts have attributed this to poor funding, corruption, policy flip flop, delay in budgetary allocations and total neglect of the institutions by the government. In its bid to increase agricultural productivity, improve the lives of rural communities and make Nigeria sufficient in food production, the Federal Government established various agric research institutes across the country. The institutes where mandated to provide technologies that will increase farmers’ productivity and boost food production through the science of research. But today, the dream has become dead, the vision blurred and the mission a mere statement of expression as majority of the institutes are mere shadow of themselves. “We have a total of 13,000,000 staffs and 90 percent of the yearly allocation goes into salaries and emoluments. Only 10 percent goes into research. This is why the institutes have not been able to improve farmers output,” Baba Yusuf Abubakar, former executive secretary of the Nigerian Agricultural Research Council (ARCN) told BusinessDay. “We cannot conduct effective research which such stipends. Research plays a pivotal role in transforming the agricultural sector and that is why we must take it very seriously,” Abubakar said. Data obtained from the budgetary allocation to the agricultural ministry shows that the research institutions got an average of N28 billion yearly ($78 million) in the last five years. Comparing Nigeria’s annual spend on its agric research institutes with that of India’s $2 billion, Brazil’s $1 billion and China’s $700 million, shows that research is still grossly underfunded in the country. According to Michael Oluwole Ajala, professor of Seed Technology, Federal University of Agriculture Abeokuta (FUNAAB) the agric research institutions in the country are underfunded and lack basic facilities needed to conduct research.

A laboratory in one of the agric resaerch institutes in Nigeria

Ajala stated that most of the equipment’s are obsolete and cannot be used for modern research work. Similarly, a 2015 ActionAid report, states that for every $100 of agricultural output, Nigeria invests only $0.42 into agricultural research, as compared to $0.94 and $1.40 in Ghana and Uganda respectively. Despite the country’s large size of agriculture in relation to other African nations, Nigeria lags behind its peers in the sector in terms of research funding. Nigeria has the highest agricultural research system in Africa though, in terms of investments and number of researchers, with over 80 government and high education institutes and over 2,000 researchers engaged in research. However, official fraud limits funds from reaching their points of critical need as well as tussle over leadership and incessant strikes. “Corruption is also a big problem. Most of the money allocated to these institutions in the budget doesn’t get to the institutions. One third of the total allocations finally get to these institutions. The money gets into private hands instead of the research institutions,” Ajala said. The institutes just called off a four month strike to demand for more research funding and a review of scientists’ condition of service. The incessant strikes have channelled available international research funding to other Africa’s research institutes with little or none coming into Nigeria over the years despite having the highest number of scientists in the region. “All the funds for cocoa develop-

ment meant for West Africa goes to the Ghana Cocoa Research Institute because of the never ending crisis in the Nigeria’s Cocoa Research Institute,” Rima said. “The institute has been having internal crisis over leadership and this has crippled activities in the research centre. Also the recent strike embarked upon by agricultural research institutes that lasted over three months was a problem as well,” Rima added. This has made it difficult for farmers to easily have access to hybrid seeds and seedlings for the cultivation of their cops. As a result, farmers yield per hectare has remained perpetually low over the years. Data from the Food and Agricultural Organisation (FAO) shows that Nigeria has the least average yield per hectare of some selected crops, among its African peers like Ghana,

Comparing Nigeria’s annual spend on its agric research institutes with that of India’s $2 billion, Brazil’s $1 billion and China’s $700 million, shows that research is still grossly underfunded in the country

Kenya, South Africa, and Ethiopia. For tomatoes, the average yield per hectare in Nigeria is 7 metric tons (MT), Kenya’s average yield for the crop is 20MT, Ghana tomato yield is 8.6MT and South Africa’s average yield for the crop is 86.8MT. Similarly, for maize, which is the most consumed grain on the continent, Nigeria, Kenya and Ghana have same average yield of 2MT per hectare, while Ethiopia’s average yield for the crop is 3.8MT per hectare and South Africa’s average yield is 6MT per hectare. Also, for groundnut, which is widely grown on the continent, Nigeria’s average yield for the crop is 1.2MT, Ghana groundnut average yield is 1.4MT, South Africa is 1.6MT, Kenya’s average yield is 1.8MT and Ethiopia with the highest average groundnut yield among countries compared of 2.4MT. Experts have attributed low crops yields to the scarcity of quality seeds and seedlings in the country, which they stated has forced farmers to buy cheap and adulterated varieties that produce low crop yields. The total national seed requirements for eight major crops, including maize and rice, in Africa’s most populous country stood at 388,690.64 metric tons (MT) in 2015, while the quantity available was 126,173 MT, leaving a yawning gap of 262,518 MT. “We are not producing enough currently because our yield per hectare is still very low, compared with other nations of the world,” said Abiodun Olorundenro, operations manager, Aquashoots Nigeria said. “Our population is growing very fast and we are yet to increase our

productivity. This is even making the available food items more expensive for consumers and that is the cause of the recent rise in food prices across the country,” Olorundenro said. The research institutes in Nigeria have blamed the government for the gap that exists between the farmers, research institutes and extension service. The government needs to address the problem with the delivery of extension services in other to boost farmers’ productivity. Government has to make provision for bridging the gap between the lab and the farms, they complain. “When we come up with new technologies which should improve farmers’ productivity, it never gets to the farmers because the extension agents fail to transfer these technologies to them. And this is the case because the extension workers are not just there. The issue is because of the failed system and the gap created by the government,” Celestine Ikuenobe, director of research, Nigerian Institute for Oil Palm Research (NIFOR) said in a telephone interview with BusinessDay. Ikuenobe said that the agents are not adequately funded and lack motivation. He stressed the need for government to address these issues of extension service delivery if the economy will be diversified through agriculture. According to a study conducted by Lucia Omobolanle Ogunsunmi, principal research fellow, Institute of Agric Research and Training, Obafemi Awolowo University, “74.4 percent of the farmers surveyed had no contact with extension services for three years while only 4.8 percent were visited within a year. Only 27.4 percent were visited or had contact with extension services for 1-4 times a year.” Way Out In view of this shortfall, experts emphasise on the need for government to increase its investments in agricultural research, if truly it hopes to revive the sector. The experts stressed for the need of government to address the issues of neglect, corruption and underfunding if truly it wants the sector to play a leading role in its diversification quest. They also underscore the need for private-sector participation in the funding and delivery of agricultural extension services so as to meet the needs of the farmers. They argue that agricultural extension services have been dominated by the Agricultural Development Programme in Nigeria for a long time.

C002D5556

Wednesday 25 July 2018

BUSINESS DAY

Tax Issues

Uncertainty in tax matters: Causes, solutions IHEANYI NWACHUKWU

ax ad ministrations are playing a critical role as governments start implementing new international measures to counter offshore evasion and combat tax avoidance by multinational enterprises (MNEs). While this remains topical in today global economy, there are also issues bothering on tax uncertainty and possible solutions. As the reporting and automatic exchange on offshore financial accounts pursuant to the Common Reporting Standard (CRS) becomes a reality in over 100 jurisdictions this year, many taxpayers that held undeclared financial assets offshore have come clean to their tax authorities. Key findings from a ‘global revenue statistics database’ show that across 80 countries, tax-to-GDP ratios range from 10.8percent to 45.9percent. Half of the countries have a tax-to-GDP ratio ranging between 18.2percent and 33.2percent of GDP; while the median tax-to-GDP ratio is 26.2percent. Since 2000, three-quarters of the countries in the database have increased their tax to GDP ratios. Half of the countries have increased their tax-to-GDP ratios by between 0 and 5percent of GDP. A further quarter increased their tax-to-GDP ratio by more than 5percent of GDP. Most of these countries are from Africa and Latin American and Caribbean (LAC). The remaining quarter of countries, where taxto-GDP ratios fell, are predominantly Organisation

for Economic Co-operation and Development (OECD) countries. In Africa (16) and LAC, taxes on goods and services (especially VAT) and corporate income taxes are particularly important as a share of revenues. Since 2000, VAT has become increasingly significant in more than three-quarters of the countries, in many cases, with corresponding falls in the share of income taxation or taxes on other goods and services. The exceptions are the quarter of countries with the highest increases in their tax to GDP ratios, which recorded strong increases in most or all major tax types. Per capita income and different types of tax structures are linked to the level of taxation. There is a positive correlation between tax-to-GDP levels, per-capita income levels and the share of personal income tax and social security contributions; but there is a negative correlation between tax-to-GDP levels and the shares of corporate taxes and taxes on goods and services. The International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) recently identified the sources of uncertainty in tax matters and the various tools that taxpayers and governments could use to reduce. Notably, prominent issues contributing to tax uncertainty and which required urgent attention included insufficient administrative capacities, aggressive tax planning especially by mul-

tinational enterprises, corruption, lack of leadership, political interference, poor information communications technology (ICT) within tax administrations and weak tax legislation. To enhance tax certainty, the report identifies a set of concrete and practical approaches and solutions. These include improving the clarity of legislation, increasing predictability and consistency of tax administration practices, effective dispute prevention, and robust dispute resolution mechanisms. The survey respondents across African counties confirmed that tax certainty is required by tax administrations to create a stable tax environment to encourage investment. It was also noted that tax uncertainty in Africa was exacerbated by dependency on a few large taxpayers whilst a significant portion

of a country’s economy falls outside the tax net and contributes towards revenue losses and the destabilisation of a country’s revenue base. Also, there tends to be a mismatch between tax policy and tax administration and overall fiscal consequences of individual tax incentives and tax treaties are often ignored. “The lack of coordination or the absence of a ‘whole-ofgovernment approach’ was an additional factor contributing to tax uncertainty in Africa”, the report says. Overall, the findings from the survey give some indications on why and how governments in developing countries may want to address tax certainty issues. Addressing issues on VAT and withholding, for example, appear of greater importance for developing countries. These areas thus might benefit from increased focus. Africa especially may gain from simplified approaches

such as safe harbours. “We emphasize the effectiveness of tax policy tools in supply-side structural reform for promoting innovation-driven, inclusive growth, as well as the benefits of tax certainty to promote investment and trade and ask the OECD and IMF to continue working on the issues of pro-growth tax policies and tax certainty”, according to G20 leaders. As at the first-half (H1) of 2018, jurisdictions around the globe have identified an estimated 93 billion Euro in additional revenue (tax, interest, penalties) as a result of voluntary compliance mechanisms and other offshore investigations put in place since 2009. Tax certainty calls for clear and simple rules and regulations that minimise disputes. In the area of international taxation, several ongoing developments are contributing to enhancing tax certainty, such as a consistent implementation of Base Erosion and Profit Shifting (BEPS) measures through the BEPS Inclusive Framework. Also, the OECD is working specifically to address uncertainty in the application of tax treaties and is supporting the Treaty Relief and Compliance Enhancement (TRACE) project. The minimum BEPS standard on country-bycountry (CbC) reporting, automatic exchange of information, and implementation of the OECD International Value Added Tax (VAT)/ Goods and Services Tax (GST) guidelines also contribute to tax certainty. The Treaty Relief and Compliance Enhancement

(TRACE) project aims to standardize the system for claiming withholding tax relief at source on portfolio investments through a self-contained set of agreements and forms to be used by any country that wants to implement the so-called Authorised Intermediary (AI) system. It removes the administrative barriers that currently affect the ability of portfolio investors, including investors making use of pooled investment vehicles, to effectively claim the reduced rates of withholding tax to which they are entitled pursuant to tax treaties or to domestic law of the country of investment. Moreover, it minimises administrative costs for all stakeholders and enhances the ability of both source and residence countries to ensure proper compliance with tax obligations. Under the Action 13 BEPS Minimum Standard, jurisdictions have committed to foster tax transparency by requesting the largest multinational enterprise groups (MNE Groups) to provide the global allocation of their income, taxes and other indicators of the location of economic activity. This aims to boost tax authorities’ riskassessment capabilities. This can help reduce tax uncertainty for tax administrations. To date, over 50 jurisdictions, including the overwhelming majority of OECD and G20 countries, have adopted rules for the VAT/ GST treatment of Business to Consumer (B2C) supplies of services and intangibles by foreign suppliers in accordance with these Guidelines.

Transfer Pricing considerations for commodities transactions VICTOR ADEGITE & NANA

Introduction: commodity is a product of value that can be traded across multiple markets. Generally, commodities could be categorized as either hard or soft. Hard commodities include natural resources which are either mined or extracted from the environment such as crude oil, bitumen, natural gas, gold silver, steel, copper, aluminum etc. Soft commodities, on the other hand, are agricultural goods or livestock which are grown. Transactions in the commodities market may involve physical trading (buying and selling physical goods) or derivatives trading (trading involving an underlying asset). Why are commodity transactions peculiar? Commodities are versatile as their production, supply and prices vary significantly. They are usually affected greatly by various external factors, such as inflation, domestic and global economic growth, geo-political concerns, among others. Commodities are

very key to domestic economy and global economy alike. It is also a major source of government revenue for most developing countries such as Nigeria Multinational enterprises (MNE) engaged in commodities trading, consolidate their supply chain activities within the Group, to achieve economies of scale and optimize efficiencies while bearing in mind the inherent peculiarities of the market and profit maximizing. Tax authorities focus on these transactions especially when conducted across borders because of the possibilities of transfer mispricing which maybe in the form of over pricing or underpricing of commodities

traded. Given the wide variety of commodities traded from agricultural goods to metals, the pricing of commodities even within the same class, differ. For instances while some commodities are traded on standardized exchanges, some are traded over the counter. While the perishable nature of some commodities may affect how they are priced and traded, the durable nature of some would have an opposing effect on the pricing and trading terms. The structure and terms of the contract of supply or sales contract may affect the pricing and how the commodities are traded. From the foregoing,

clearly, commodities have distinct characteristics which make them peculiar. As such, justifying the pricing of commodities for tax purposes requires a thorough understanding of the nature of the commodity, market characteristics, buyer’s requirements, contractual terms, delivery mode among other considerations. Challenges faced in determining the arm’s length pricing of commodities In determining the arm’s length pricing of commodity transactions and in particular cross border transactions, there are a number of challenges faced. These include: •The nature of the product: The characteristics of the products can affect the price. For instance, price of agricultural produce may differ in various locations, as various factors such as seasonality, durability, storage, quarantine policies etc. may affect pricing of the produce. The quality of the products may also affect the transfer price; for instance, the transfer price of a brand milk includes supplements and additional nutrients which enhances the value of

the milk for a particular market region. Comparing these with comparable prices (which do not have these special supplements) would not be appropriate as the milk with additional supplement would attract a premium over and above the comparable prices. •Market conditions: The price of a particular product may vary across different markets in different jurisdictions. This is due to cost differentials prevalent in these markets which include significant differences in economic conditions. Considering the constraints of getting reliable data in Africa for instance, the search for comparables may extend to other regions outside Africa which may not truly reflect prevailing circumstances and conditions in Africa. •Contractual terms: The differences in contractual terms as well as inclusion of specific clauses to standard terms affects the pricing of the product. The incoterms for any commodity trade clearly specifies the responsibilities and risks of parties to the trade. This in turn affects the pricing as the more risks and re-

sponsibilities borne by the seller, the higher the price of the goods/ products. Trade discount for buying in bulk, credit terms may affect price of the commodities. Getting comparable companies having similar terms / arrangements as the inter-company transaction may be very difficult. •Stage in supply chain: Entities engaged in dealing in certain commodities that have a complex supply chain may experience difficulty in determining comparable uncontrolled price. This is because at each stage of the supply chain, different functions/responsibilities are carried out by the relevant parties, as well risks borne, which attract different returns. Thus, comparing the intercompany price against an independent party’s price in a different stage of the supply chain would not be appropriate. Victor Adegite is Senior Manager and Nana Abu is Senior Adviser in KPMG Advisory Services, Lagos, and may be contacted by email at: victor. adegite@ng.kpmg.com and nana.abu@ng.kpmg.com To be continued next week

BUSINESS DAY

SHIPPING

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LOGISTICS

Wednesday 25 July 2018

MARITIME e-COMMERCE

NIWA finally secures concessionaire for N4.6bn Onitsha River Port 6-year after completion Stories by UZOAMAKA ANAGOR-EWUZIE

ix years after the Federal Government under the then administration of ex-President Goodluck Jonathan, invested over N4.6 billion in the rebuilding the abandoned Onitsha River Port, the Nigerian Inland Waterway Authority (NIWA), said on Monday, that it has finally secured a concessionaire to manage the port. The long awaited concession of the Onitsha River Port holds huge economic implications to businesses located in the commercial Eastern cities of Onitsha, Nnewi and Aba, which would as a result of the concession, have the privilege to forgo the transportation of coming to Lagos to take delivery of their consignments. This will also save as much as over N500,000 put in as cost of transporting the cleared consignment from Lagos ports to the states and also help to decongest the over stretched Lagos. Recall that Onitsha River port, which was built by exPresident Shehu Shagari and rehabilitated by ex-President Goodluck Jonathan at the tune of N4.6 billion in 2012,

has remained unutilised as it has been awaiting concessioning for over six years. Speaking to newsmen in Lagos on Monday, Danladi Ibrahim, acting managing director of the National Inland Waterways Authority (NIWA), said that the river port has finally been concessioned for 25 years to a private terminal operator. Ibrahim, who disclosed that the name of the con-

cessionaire that won the bid would be made known to the public after the letter of award, is issued, expressed optimism that the concessioning would revive the river port for the economic benefit of both the importers based in the Eastern part of the country and Nigeria in general. “Agreed the concession of Onitsha River Port has lasted for a very long time, and that

was because the Central Bank of Nigeria (CBN) took over funding of the concession exercise. The apex bank, came up with a methodology that was cumbersome and responsibility of appointing a transaction adviser rested on the CBN, while the transaction adviser has the power to advertise for concessionaire. There were so many other factors, but, if it was NIWA that was responsible

NPA reviews suspension order on Maerskline, Cosco Shipping, APS and Lansal …Gives 2-week grace period to expand capacity of holding-bays

ew days after the Vice President Yemi Osibanjo stormed the troubled Apapa port city and brought some measures of sanity in the area, the Nigerian Ports Authority (NPA), said it has restored the services of the four shipping companies whose operations were suspended for their failure to comply with the directive of acquiring and operating holding-bays for their empty containers. The affected shipping companies whose suspension took effect from Saturday, July 14th, 2018 include Maerskline, Cosco Shipping, APS and Lansal, and their operations were practically suspended for

about 10 days. According to a statement signed by Isah Suwaid, assistant general manager, corporate and strategic communication of NPA, and sent to BusinessDay, the affected shipping companies have now been given two weeks, beginning from Friday July 20th 2018, to comply with four conditions to ensure sustainable relationship. The conditions include that the affected companies must increase the capacity of their holding-bays ranging from 1,800 Twenty-foot Equivalent Units (TEUs) to 7,500 TEUS. In addition, the affected companies will sign-off on

the volume capacity of their individual holding-bays verified at the end of the grace period and that at the expiration of the two weeks, an inspection will be conducted to ascertain compliance level. Also, the NPA said it will not hesitate to give out further sanctions on failure to meet the said conditions. It could be recalled that a fortnight ago, shipping services of Maersk line, Cosco Shipping, APS and Lansal were suspended by the NPA for their inability to upgrade their holding-bays capacities. The suspension was for 10 days in the first instance. The two weeks period of grace granted to the four af-

fected shipping companies was sequel to a meeting, which the management of the Authority held with officials of the companies over the weekend. The decision by the NPA to grant the period of grace was after due consideration of their presentations at the meeting and a subsequent joint inspection on their existing facilities. A formal letter dated 20th July, 2018 informing the accepted companies of the review of the suspension order signed by Joshua Asanga, general manager, Marine & Operations, on behalf of the managing director, Hadiza Bala Usman, has since been dispatched to the companies.

for the concessioning, we would have finished within one month,” Ibrahim said. According to him, the concessioning has been completed, and “NIWA opened the financial bid on July 3rd and we have picked the most competent concessionaire and any moment from now, the concessionaire will take over the cargo handling operations of Onitsha port.” When asked the name of the concessionaire, the NIWA boss said, “We cannot reveal it now because the award letter has not been issued but two companies were pre-qualified for the financial bid and it will be concessioned for 25 years.” Ibrahim further disclosed that in order to enable the River Port operate effectively, that the authority was investing fund in the acquisition of barges for movement of bulk cargoes from Lagos port to Onitsha River Ports. “NIWA is purchasing some barges to set the pace for transshipment of bulk cargos from Lagos Ports to Onitsha and Baro Port. We have a master plan to drive transshipment because this is a sector that has been neglected for a long time. Government needs to set the pace to show that the sector is viable and also practica-

ble, that is why government is acquiring vessels to move bulk cargoes from Apapa port to Onitsha and Baro Ports,” he further explained. Continuing, he said: “Right now, as am talking to you, we are talking to about three companies. One want to be moving from Apapa, Tin-Can to Mile 2 (Festac) where their trucks will be picking cargo while the other is to move from Apapa; Tin-Can to Epe and there is another one that want to move from Warri using the authority’s dockyard in Warri. Basically, government is the landlord and regulator but why we want to partake in the operations was to convince the private operators that the sector is viable. Ibrahim also said that the dredging of River Benue will commence fully in 2019 and that it would boost commercial activities around the two river ports which would come into mainstream before the end of 2018. Ibrahim said that the Onitsha and Baro ports are 100 percent ready for commissioning in 2018. Though, he did not give the financial implications of the dredging but added that a fresh contract would be awarded. He said that NIWA is installing buoys from Lokoja to Baro.

Ports Authority, Army College of Logistics partner on capacity building

he Nigerian Ports Authority (NPA) has said it will sustain the existing partnership with the Army College of Logistics to enable it benefit from the logistics experience of the college. Speaking when the team of army logistics led by Major Gen. Richard Duru, Commandant of the college, paid a working visit to the management of the NPA, Idris Abubakar, executive director, Engineering and Technical Services, said that in order to standardise operations at the nation’s seaports, the Authority would tap into the knowledge of the logistics professionals of the Nigerian army. Abubakar, who represented the managing director, Hadiza Bala-Usman, offered a common area of confluence of understanding and information sharing to necessitate basic solutions to

questions requiring answer in the dual-collaboration involving both agencies of government. Earlier, Major Gen. Richard Duru said that being a crucial hub for national logistics supply chain, the NPA deserves support from all and sundry with the view to ensuring that necessary variables are deployed expectedly. He said the Army College of Logistics would be ready to partner with the NPA and other government agencies in the area of offering training facilities of repute manpower development to employees, thereby contributing meaningful in enhancing the logistics at the Ports. He commended the various successes recorded by Bala-Usman led NPA and expressed optimism that NPA would surpass greater expectations placed on them by stakeholders.

Wednesday 25 July 2018

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NEWS

BUSINESS DAY

Oando, JV partners support development via infrastructure in host communities

ood roads are an integral part of economic development; with Nigeria’s road network spanning over 193,200km, of this barely 28,980km (15%) of the roads are paved. With the population projected to hit 397 million by 2050, if the status quo remains Nigeria’s already strained infrastructure is likely to reach breaking point sooner than later, hindering economic development and denying citizens the much-desired national prosperity. With this realisation that the government cannot do it all, some private sector companies have taken on the mantle of partnering with government to provide the much-needed infrastructural development through Public Private Partnerships and Corporate Social Impact Initiatives across Nigeria. According to the World Bank, every 1% of government funds spent on infrastructure results in an equivalent 1% increase in the nation’s Gross Domestic

Product (GDP), hence the value of infrastructure cannot be underplayed. In light of the above, Oando plc in conjunction with its Joint Venture (JV) partners NNPC and NAOC, commissioned a series of road projects with drainage systems in its host communities in Imo, Rivers and Bayelsa states. In Imo, Oando and its JV partners commissioned three road projects, specifically the Flora Nwakuche road, the Echina road and the Bishop Nwedo road, with drains in the Oguta community. Roads were alsocommissioned in the EbgemoAngalabiri community, Ekeremore and in Etiema, Nembe in Bayelsa state, whilst in Rivers state; a 1.5km road was commissioned in the Aggah community, Onelga. These road projects will improve access to and from the community, in the process spurring economic activities and growth and will improve the quality and standard of living of members of the community.

L-R: Bruce Onobrakpeya, chairman of the occasion; Funmi Babington-Ashaye, immediate past president, Chartered Insurance Institute of Nigeria (CIIN); Eddie Efekoha, president, CIIN, his wife, Oghenenyoreh, and Mohammed Kari, Commissioner for Insurance, during the investiture of Efekoha as the 49th CIIN president in Lagos, yesterday.

Gridlock: Truck, trailer drivers siege continues on Apapa … no respite as trucks stay on roads, bridges despite Executive Order … as FG shifts closure of 3rd Mainland Bridge to August JOSHUA BASSEY

elief seems far from businesses and residents of Lagos, as petroleum tankers and containerised trucks continue their siege on the roads and bridges inward Apapa, despite the deployment of Federal-Lagos State joint task force charged with the task of dislodging the trucks and freeing the roads. This is as the Federal Government announced a shift of the three-day closure of the Third Mainland Bridge for investigative maintenance test earlier slated to begin on July 27, to August 24. Babatunde Fashola, minister of works, power and housing, said this on Tuesday, in a statement. Economic and commercial activities in the estimated N7.3 trillion Apapa economy have ebbed significantly, as the siege continuestopreventedcustomers from reaching the markets and employees from having access to their offices. The two ports in Apapa handle about 75 percent of shipping activities in Nigeria. The gridlock again grew furiously on Tuesday, stretching on Eko Bridge inward Ijora Olopa.

The Western Avenue axis, in Surulere,inwardsIjoraviaIponriwas also on a lockdown. This forced the security and traffic agencies to direct motorists to drive against traffic flow (one-way) into Apapa. Our correspondent who monitored situation observed that Apapa-bound vehicles were sandwiched between two rows of trucks and trailers, with movement impeded. The situation was not better on the Cele-Mile-2-Tin Can axis, as the trucks remained on the Apapa-bound lanes of the expressway, extending their occupationtotheservicelaneearlier opened up for other vehicles. Ladi Lawanson, commissioner for transportation in Lagos State, said it was not very easy to pull thousands of trucks off the roads and bridges in two days, noting that this task was an ongoing process. Asidesthe72hoursultimatum issued last Friday by Vice President Yemi Osinbajo to the truck owners to vacate the roads, which expired on Monday morning, the Federal and Lagos State government on Monday afternoon, also agreed to a joint taskforce, involving the military, police, Lagos traf-

fic agency officials, and unions in the maritime and transportation sectors to dislodge the trucks. Armed policemen and soldiers accompanied by men of the state traffic management unit LASTMA moved into Apapa on Fridaynighttobeginenforcement against the trucks. By Monday, motorists had a semblance of relief, driving into Apapa with some ease. By Tuesday, the roads and bridges were again fully occupied, worsened by the ongoing slow paced rehabilitation works being carried out by the Federal Ministry of Works, and Dangote/Flour Groups on Ijora-Apapa bridge/road. Months ago, Osinbajo visited Apapabyhelicopterbuthisorders thenwasignoredbythetruckdriversandtheirsponsors,compelling him to make another visit last Friday, but it all seems nothing is working. The Federal Government earns close to N1 trillion annually inrevenuesfromApapa,whilethe state government rakes in billions in fees paid for every container coming out of the two ports in Apapa – Tin Can Island Port and Apapa Wharf, but Apapa remains in ruins.

Keystone Bank emerges Best Innovative Bank in Africa

… as Ohiwerei bags Banking CEO of Year Award

eystone Bank Limited has added to its growing list of laurels, as the lender emerged ‘Africa’s Most Innovative Bank of the Year, 2018’ at the European Global Banking & Finance Awards held in London. The bank chief, Obeahon Ohiwerei, also clinched the Best Banking CEO in Africa Award. Organised by the European Global, UK, the European Global Banking & Finance Awards, according to a statement from the organisers, reflect the innovation, achievement, strategy, progressive and inspirational changes taking place within the Global Financial community. Keystone Bank and its CEO beat other competitors in Africa

to emerge leaders of the continent at the award ceremony. On Ohiwerei’s emergence as the ‘Best Banking CEO in Africa’, the organizers said that the Keystone Bank boss was chosen in recognition of his exceptional achievements over the last year, which is seen as an inspiration for business and government leaders working to raise Africa’s investment profile. The judging panel of the award considered excellent leadership skills, enhanced organizational image and innovation. Since he became managing director of the lender, Ohiwerei has spearheaded a number of growth initiatives, which has

placed the bank on upward trajectory. Receivingtheawards,Ohiwerei said: “We are honoured to win the ‘Africa’s Most Innovative Bank’ award and to be recognized as the ‘Best Banking CEO’ in Africa. “These awards mark another milestone for Keystone Bank and is a testament of the diligent execution of the bank’s strategic initiatives on customer service. “Keystone Bank will continue to leverage its local knowledge, global exposure as well as presence to drive positive change in Africa, working actively with the government, local businesses, regulators and other stakeholders in deepening financial services.

Nigeria slows global fight to eradicate AIDS ANTHONIA OBOKOH

igeria is responsible for more than half (51%) of the HIV burden in Western and Central Africa, says the latest report by the Joint United Nations Programme on HIV/ AIDS (UNAIDS), indicating that Africa’s largest economy is slowing down global efforts to control the disease. “Nigeria has more than half of the HIV burden in the region, and there has been little progress in reducing new HIV infections in recent years,” the report notes. “New HIV infections declined by only 5 percent (9,000) in seven years (from 179,000 to 170,000) and only one in three people living with HIV is on treatment (33%), although HIV treatment coverage has increased from just 24 percent two years ago. “InWesternandCentralAfrica, only 26 percent of children and 41 percent of adults living with HIV had access to treatment in 2017, andNigeriawiththeregion’slargest population is most culpable. This compares poorly with 59 percent ofchildrenand66percentofadults in Eastern and Southern Africa,” according to the report. Since 2010, AIDS-related deaths have fallen by 24 percent in Western and Central Africa, compared with a 42 percent decline in Eastern and Southern Africa. Data show that Nigeria has the second largest HIV epidemic globally, with an estimated 3.2

CHANGE OF NAME

I, formerly known and addressed as Miss Olufunmilayo Tosin Ojedokun now wish to be known and addressed as Mrs Olufunmilayo Tosin Ojedokun Adeponle. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Azubuike Echefu now wish to be known and addressed as Azubuike Onwunabonze-Echefu. All former documents remain valid. General Public please take note.

million people living with the disease, and particularly high HIV infection rates among key populations. This is why Tedros Adhanom Ghebreyesus, directorgeneral, World Health Organisation (WHO), said despite all the remarkable advances that had been made, progress on ending AIDS was still too slow calling for sustainable actions to check the disease. Ghebreyesus made this known at the 22nd International AIDS Conference (AIDS 2018) held in Amsterdam, in his keynote speech on eliminating AIDS epidemics on the road to universal health coverage, advocated for HealthForAll, a programme to improve access to healthcare, stressing that it was an opportunity to accelerate efforts to eliminate AIDS and amplify the impact of investments in HIV. Medical experts say fear of stigma and discrimination affects people living with HIV, so they find it difficult to identify themselves for treatments. “The government needs to improving laws and policies in Nigeria, with the present significant challenges for key populations so people can be treated and widespread of the disease will be curtailed,” Larne Yusuf says. On February 3, 2015, the Federal Government signed the HIV/AIDS Anti-Discrimination Bill 2014 into law, as part of gov-

CHANGE OF NAME

I, formerly known and addressed as Aighu Emmanuel Aipeleokhai now wish to be known and addressed as Aighu Emmanuel Osikhena. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss Ndike Onyinye Judith now wish to be known and addressed as Mrs. Nwoye Onyinye Judith. All former documents remain valid. General Public please take note.

ernment’s effort to end AIDS in the country by 2030. Although HIV/AIDS stigmatisation and discrimination is a crime in several African countries, implementation of the law remains an issue. Ghebreyesus stressed that HIV prevention and care must be part of the fight for universal health coverage. “HIV remains a clear priority for WHO. I commit to ensuring zero barriers to treatment to all people and to ensure that no one is left behind, people living with HIV deserve to live full and healthy lives free from discrimination,” “We will not end HIV epidemics without focusing on key populations. The best way to address the full spectrum of their health needs is through strong health systems based on peoplecentred Primary Healthcare that is directed towards achieving HealthForAll,” he said. HIV prevalence among adults is 2.9 per cent, while HIV prevalence is 14.4 per cent among sex workers and 23 per cent among gay men and other men who have sex with men.

CHANGE OF NAME

I, formerly known and addressed as James Deborah Olufunmilayo now wish to be known and addressed as Miss Aluko Deborah Olufunmilayo. All former documents remain valid. Access Bank, UBA & General Public please take note.

CORRECTION OF NAME

This is to inform the general public that my name was wrongly written as Udoka Nelson Eze instead of my correct name which is Udoka Nelson Eze Eme. All banks and genral public please take note.

CHANGE OF NAME

I, formerly known and addressed as Eze Ifeanyi Christian now wish to be known and addressed as Ezeunara Ifeanyi Christian. All former documents remain valid. General Public please take note.

38 BUSINESS DAY NEWS

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Risk to economy soars as 2019 politics... Continued from page 1

of Representatives, also defected Tuesday, with 32 joining the PDP.

The defection of the senators came after unsuccessful attempts by security operatives to prevent Senate President Bukola Saraki from presiding over plenary. The security men, however, left the residence around 8am after they realised that the Senate President was not in the house. He was said to have switched off and left his phone in his home to avoid his location from being tracked by security agents without his convoy. The defecting Senators include Rabiu Kwankwaso, a former governor of the northern state of Kano, Dino Melaye, Barnabas Gemade, Suleiman Hunkunyi, and Usman Nafada, among others. “Historically, there is uncertainty, particularly 8 months to the elections,” Paul Uzum, a Stock broker at Golden Securities Ltd said. “In country like Nigeria political risk is very high and it is very possible to have a change of government coming in 2109 as a result of the defection today. Investors will be on a hold mode to see how things will shake out.” Nigeria’s economy is struggling to recover from a 2016 slump, the worst in 25 years, after first-quarter growth was 1.95 percent, below the 2.6 percent median estimate. The Stock market is down by -4.68 percent this year as investors sell equities and shift to the sidelines ahead of the elections. PZ Cussons a U.K based consumer goods firm said yesterday while

reporting its financial results that a sustained lack of liquidity at both consumer and trade level has resulted in a significant contraction in the size of the market, resulting in lower volumes, prices and margins across most areas of its portfolio in Nigeria. The firm stated that as higher oil prices have contributed to increased foreign exchange reserves for the country and a relatively stable exchange rate regime, liquidity has not flowed down into the economy. In addition, wage inflation has continued to remain well behind the significant cost inflation of recent years, resulting in consumer disposable income under pressure with subdued buying levels. Tuesday also witnessed dramatic and palpable tension, as the residence of the Deputy Senate President Ike Ekweremadu, was besieged by operatives of the Department of State Services (DSS) and Economic and Financial Crimes Commission (EFCC). Saraki accused the police of acting in concert with the government to detain him as a way to prevent some lawmakers from defecting from the APC. “This plot is aimed at compelling me and my associates to stay in a party where members are criminalized without just cause, where injustice is perpetrated at the highest level and where there is no respect for constitutionalism,” Saraki said. The police denied deploying operatives outside Saraki’s residence, saying the policemen seen at the site were those attached to the Senate president. Police spokesman Jimoh Mos-

hood confirmed in a statement that Saraki had been invited to report to a station in conjunction with the robbery investigation. According to Rafiq Raji Chief Economist at Micro Africa intel, it is uncertainty from the power play between the executive and the legislature, which is most concerning. “This will push investors to delay their investment decisions.” Africa’ most-populous nation of about 200 million people has an urban annual population growth rate of 6.5 percent, according to the National Population Commission. The unemployment rate spiked to a seven-year high of 14.2 percent in the fourth quarter of 2016, according to the National Bureau of Statistics (NBS). The International Monetary Fund (IMF) forecasts Nigeria’s economy will expand 2.1 percent this year from less than 1 percent in 2017. Lawmakers on May 17 approved a 2018 budget of N9.1 trillion ($25 billion), the biggest yet, with money being earmarked for investments in roads, rail, ports and power, but much of the funds is unlikely to be spent before elections. The Senate adjourned plenary till September 25, 2018. With this development, the People’s Democratic Party (PDP) now controls majority in the upper legislative chamber with 55 senators, followed by All Progressives Congress (APC) with 49 lawmakers, ADC (2) All Progressive Grand Alliance (APGA) one and two vacant seats, occasioned by the death of Ali Wakili (Bauchi State) and Bukar Mustapha (Katsina). Continues on wwwbusinessday online.com

L-R: Aliyu Daneji, secretary, Al-Ihsan Foundation; Ahmed Aminu, chairman, Al-Ihsan Foundation; Abayomi Oniku, group head, public sector, SystemSpecs Limited, owner of Remita; Nasir Muhammad; Muktar Dangaga, chairman of the occasion, and Ahmed Idris, accountant general of the federation, at the commissioning of a social welfare centre and a special primary school donated by SystemSpecs Limited to the Aminu Kano Teaching Hospital, in Kano.

jective of lowering the interest rates, particularly to the priority sectors (Manufacturing and Agriculture), we would encourage large corporates to issues commercial paper notes in the market,” Governor Godwin Emefiele told reporters on Tuesday in the capital, Abuja. Emefiele said the CBN may if need be then buy those instruments to compliment the efforts of the deposit money banks, adding that the details of the framework are being worked out by the Banking supervision and monetary policy department and research and would be released very soon. “The MPC deliberated extensively on what can be done to encourage banks to increase credit, because from the numbers we looked at during the main meeting, MPC was concerned that credit to the economy was sliding. Hence, there was need

Three years on, Apapa is rocket science ... Continued from page 1

to power. One of the most glaring is Apapa. In Apapa, the party saw the infrastructural decay, the port congestion and the siege on the port city by rampaging trailers and tankers as a campaign tool and capitalized on it, assuring the business community and residents that an APC government would put an end to their woes. The promise was to reverse the decay and bring sanity back to Apapa within six months, something the PDP government could not do in four years. For the APC returning sanity to Apapa was not “rocket science” after all. Three years after, despite several stakeholder-meetings chaired by representatives of the federal government and several failed attempts, Apapa has remained a mess, and has actually deteriorated from the position APC met it three years ago. The APC government has shown an exceptional level of cluelessness on how to go about fixing the chaos in Apapa. Increasingly, Apapa is degenerating into a wasteland where residents are groaning, businesses are dying, the environment is degrading and suffocating, properties are decaying and losing value in hundreds of millions of naira, but the government is smiling to the bank with billions, sometimes trillions, of naira revenue from the ports—the nectar that draws the bees. To think that both the Lagos State and the federal governments are products of the same party makes it even more difficult to understand the lack of capacity to resolve the Apapa debacle. Before now, part of the excuse for lack of interest in Apapa by the Lagos State government was that it belonged to the

federal government, which was then controlled by PDP. Today, the story is different. As Lagos governor, Babatunde Fashola was pained by the situation in Apapa and demonstrated this with his frequent interventions that helped to check the activities of the mindless truck owners and their agents. Expectation was high when the same Fashola emerged Minister of Power, Works and Housing in Abuja, the Nigerian Capital, Apapa would be his first priority. Sadly, political inertia has been the case. The Buhari government inherited a Trailer Park under construction along the Apapa-Oshodi Expressway which was over 80 percent completed. The park, when completed is to help take away about 500 trucks from the expressway, which would have significantly reduced the chaos. Three years of APC government, the park is “still under construction” and the contractor is one day on, and one month off the site. The palliative work on the expressway for which billions have already been expended has become a lameduck project and the entire stretch of that expressway from Sunrise through Coconut Bus Stop to Tin Can Second Gate/Liverpool Bridge has not only collapsed but also become a death trap with trailers and tankers falling on one another on regular basis. But for the intervention by the trio of Dangote Group, Flour Mills of Nigeria, and Nigeria Ports Authority (NPA) which have undertaken the reconstruction of the 2km IjoraApapa-Wharf Road at an estimated cost of N4.3 billion, the second major route to the port would have collapsed completely by now. Continues on wwwbusinessday online.com

Oil companies under labour strike ... Continued from page 1

casions leading to a loss of 30 productive days and billions of naira worth of oil income due to labour, employment related grievances BusinessDay has gathered.

CBN embraces QE, may buy CPs from.... Continued from page 1

Wednesday 25 July 2018

to incentivise the Deposit Money Banks to be able to increase credit to the real sector,” Emefiele said. Credit to the private sector contracted by 0.16 per cent in April 2018, compared to the provisional annual growth benchmark of 5.64 percent. Reacting to the development, Ayodeji Ebo, managing director, Afrinvest Securities Limited said, “We expect to see more avalanche of commercial papers before the end of 2018 due to the lower yield environment.” Consequently, he said this will lower the finance cost of the companies that take advantage of this opportunity and provides attractive investment opportunities for investors seeking for alpha. However, this Ebo said this may have negative impact on banks’ interest income as banks may find it challenging to create further risk assets amidst increasing choppy business environment. “This will be positive for the econ-

omy in the medium to long term as companies’ margins may improve translating to greater chances of survival that is business continuity,” Ebo said in an emailed response to BusinessDay. The CBN also maintained the asymmetric corridor at +200 and -500 basis points around the MPR; retained the Cash Reserve Ratio (CRR) and Liquidity Ratio (LR) at 22.50 percent and 30 percent respectively. “Inflation forecasts point to further moderation,” but pre- election spending could boost aggregate demand, Emefiele said, calling for coordinated fiscal and monetary measures to stem the build-up of price pressures. Out of the 10 member committee who attended the meeting, seven members voted to retain the monetary policy rate at 14 percent.

Two members however voted to increase the MPR (monetary policy rate) by 50 basis points, one member voted to cut it by 25 basis points. Continues on wwwbusinessday online.com

American oil company ExxonMobil is embroiled in a showdown with the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) over the disengagement of 860 security support personnel in a bid to enforce an April 20th Supreme Court judgement that reversed their disengagement and ordered compensations. The Nigerian Union of Petroleum and Natural Gas Workers, (NUPENG) in June threatened to embark on a nationwide strike due to the alleged sack of 300 of its members by some oil companies. It has now issued a fresh 7 day ultimatum after which it plans to embark on strike. Chevron Nigeria is in a pickle as an industrial action is underway after over a hundred staff laid down tools in protest against being used as casual labourers after years of graduate traineeship with the company. In its third week, the intervention by the National Assembly and the International Labour Organisation has not yielded a truce. “The sum of all these strikes is that we are making our oil and gas sector less competitive,” says Godwin Aigbkhan, an advisor at

the National Competitiveness Council of Nigeria. Nigerian oil unions have weaponised strikes actions to compel oil companies to improve welfare and working conditions for their members. BusinessDay analysis indicates that 90 percent of the grievances this year alone were based on employment related issues. Under the cloak of collective bargaining, a disengagement of a handful of workers in one company, triggers country-wide strike actions. In December last year, the sack of 150 Exxon Mobil staff, led members of PENGASSAN to extend the industrial action to Chevron, Shell and ENI a subsidiary of Agip. “I think this collective bargaining principle has to be reviewed in view of where the oil sector is heading and what is happening globally,” said Aigbokhan. In 2016, the total number of oil and gas layoffs around the globe stood at 441,371, according to data compiled by Houston-based consulting firm Graves & Co. 178,466 (40 percent) were in the United States; 124,000 (28 percent) are published UK North Sea job losses; and 46,000 (10 percent) are published Canadian job losses. This agrees with the Oil & Gas UK annual report, a trade body for the sector which said 60,000 direct and indirect jobs were lost across the industry in 2016, more than the Continues on wwwbusinessday online.com

Wednesday 25 July 2018

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BUSINESS DAY

News Extra

NIM/Third Force petitions international community over growing presidential impunity

igeria Intervention Movement (NIM) has expressed deep concern by the resort to panicky gestapo actions by the Nigerian Presidency, using security forces to prevent the Senate President, Bukola Saraki and his deputy, Senator Ike Ekweremadu from attending to their constitutional legislative duties at the National Assembly A statement signed by Nasser Kura, national publicity secretary of NIM, said that the ruthless show of force being foisted on the leadership of the Nigerian Parliament by its Executive counterpart, is to say “the least anti-democratic, highhanded and reckless and have the potential of truncating the life of Nigeria’s hard earned civil rule if caution is not quickly taken.” NIM called on President Muhammadu Buhari to immediately caution his men in the security agency, so as to avoid the “break-

Saraki and Ekweremadu

down of order and a breach of the country’s peace and stability.” According to the statement, “We further wish to advise the leadership of the ruling All Progressives Congress (APC) that rather than employ arm-twisting tactics, to urgently make amend by taking the right step in genuinely engaging and appeasing its teeming

aggrieved leaders as the backlash of their current escapades in government is capable of rendering governance of the country totally comatose and chaotic at this critical period of the Nigeria’s economic downturn.” The group further added that as the vanguard of the third force movement of fresh breed po-

litical leaders in the country, NIM “strongly demands an immediate refrain, remorse and unreserved apology to the leadership of the Senate of Nigeria to the Presidency for today’s reckless show of power against the parliamentary institution of the Nigerian peoples so as to avoid incurring a mass action from the third force movement; the type that can keep tongues wagging in the annals of Nigeria. “In demonstration of our disapproval of the reckless siege on the representatives of the people and in order to prevent further occurrence of this sort of dastardly act by government, we in the leadership of the third force movement shall be forwarding a formal ‘Save the Soul of Democracy’ petition to the international community, especially the United Nations and the African Union, to prevail on the APC government to stop muzzling the democratic rights and freedom of the peoples of Nigeria.”

R-APC commends Saraki, APC lawmakers for defecting to PDP …Flays IGP INNOCENT ODOH, Abuja

he Reformed All Progressives Congress (R-APC), a breakaway faction of the ruling All Progressives Congress (APC), has praised the President of the Senate, Bukola Saraki and the national legislators who defected to the People’s Democratic Party (PDP) on Tuesday on the floor of the Nigerian Senate. A statement issued by the Publicity Secretary of the R-APC, Kassim Afegbua, entitled ‘Well-done, Our Gallant Lawmakers’ made available to BusinessDay noted that the lawmakers had the courage to resist the draconian attitude of the Federal Government led by President Muhammadu Buhari, who tried in vain to use the compromised police to stop the Senate from carrying out

its constitutional duties. The R-APC also condemned the action of the Inspector-General of Police IGP, who directed the police to harass Saraki, saying “while the nation is suffering in the hands of bandits, Fulani herdsmen, terrorists and kidnappers, as if it were unpoliced, the Inspector-General of Police has suddenly developed erection in trying to undermine the institution of the Legislature. We say never again shall we allow anyone, no matter how highly placed, to undermine our democracy,.” 15 Senators of the APC defected to the PDP in a gale of defection that suddenly hit the ruling party Tuesday morning. Among the APC senators that defected to the PDP are; senator representing Kano central, Rabiu Kwankwaso, and senator representing Kogi west,

Dino Melaye. Other senators are; Abdullahi Danbaba, Sokoto, Isa Misau, Bauchi; Suleiman Nazif; Baki Shittu, Jigawa; Monsurat Sunmmonu, Oyo; Bayero Nafada, Gombe and Olanrewaju Tejuoso, Ogun and Barnabas Gemade, Benue. In the House of Representatives, Speaker Yakubu Dogara read the respective letters of members that defected at the plenary, stressing that a total of 36 members on Tuesday dumbed the APC. Four of the lawmakers from Oyo State defected to the Africa Democratic Congress, ADC, 32 others went to the PDP. The R-APC said in its statement that “We woke up on Tuesday, 24th July to the very pathetic, ridiculous, fascistic, gangsteristic, and gestapoeic realities that have occupied our democratic space when President Buhari’s police decided to lay

siege to the house of the leadership of the Senate, Bukola Saraki. He was prevented from proceeding to the hallowed chambers to carry out his legitimate duties as the duly elected Senate President of the Federal Republic of Nigeria. “We had raised alarm on the juicy carrot being dangled before some of our members and had alerted the country of sinister moves to call the Senate President a bad name in order to hang him. Barely three days after our earlier note of caution, the well scripted drama to undermine the rights of our members have come to light but in a very disturbing and utterly condemnable, Gestapo manner similar to that of members of the Jacobian scandal club of mideaval ages in American 16th Century political history,” the statement said.

Atiku welcomes NASS members’ decampment into PDP

or mer Vice President of Nigeria and frontline presidential aspirant of the People’s Democratic Party (PDP), Atiku Abubakar has welcomed the decampment of members of the ruling All Progressives Congress (APC) in the National Assembly into the People’s Democratic Party, saying that it is an indication that the ruling party is a sinking ship. Atiku, who noted that the decampment from the APC further explains the lack of capacity of the ruling party to hold and manage a political party, and indeed a government, and called on the new entrants to see their decampment as a call to duty, said: “The decision of a significant number of members of both the Senate and the House of Representatives to leave the APC and decamp into the PDP clearly indicates that there is hope that the country can be rescued from the misrule of the APC government.” According to him, “I want to extol the courage of those legislators for standing up for a mission of salvaging our democracy, restoring the economy to make it work for Nigerians, creating opportunities for the teeming youth, promoting unity and security to lives and property. “At such a time like this when the APC has brought our country to an all-time low in poor management of the economy and millions of Nigerians out of job; the daily killings of Nigerians while the police is being deployed to persecute political opponents – it is commendable that these lawmakers have chosen to be on the right side of the moment and history shall keep a noble account of their exceptional courage,.” The former Vice President congratulates the People’s Democratic Party for presenting itself as a suitable platform for the new entrants.

Fayemi unveils members of transition committee

kiti State Governor-elect, Kayode Fayemi, has released a list of eminent citizens of the state that will serve in the Governorship Transition Committee, charged with the responsibility of liaising with the outgoing administration for a smooth transition ahead of the October 16th take off date of the new government in the state. The 32-member committee is headed by a former member of the National Assembly, Senator

Olubunmi Adetunmbi as chairman, while a former Chairman of Ijero Local Government Council, Hon. Abiodun Omoleye will serve as deputy chair. A former Permanent Secretary in the state’s civil service, Ayodeji Ajayi, is the secretary of the committee. The Committee is to be known as the Ekiti State 2018 JKF/APC Governorship Transition Committee. According to a statement signed by the Special Adviser on Media to the Governor-elect, Yinka Oyebode,

the inauguration of the Governorship Transition Committee will hold at the Conference Hall, AB Hotels, Ado-Ekiti, on Wednesday, July 25th, by 12 noon. Members of the Governorship Transition Committee, Ekiti State are: Senator Olubunmi Adetunmbi, chairman; Hon. Abiodun Omoleye, deputy chairman; Prof. Eddy Olanipekun, member; Ropo Adesanya, member; Dare Ojo, member; Prof. Tale Omole, member; Hon. Olubunmi Oriniowo, member; Tunde

Olatunde, member, Debo Ranti Ajayi, member, and Abiodun Oyebanji, member. Others who made the list are Prof. Francesca Aladejana, member; Seyi Aiyeleso, member; Ayeni Agbaje, member; Ayo Owolabi, member; Folusho Olaniyan, member; S. Badmus, member, Sola Salako-Ajulo, member; Eyitayo Fabunmi, member; Toyosi Omope, member; Hon. Bunmi Akinniyi, member; Hon. Seyi Shittu, member, and Ayodeji Ajayi, member/secretary.

NASS defections: Our party remains firm - APC SIKIRAT SHEHU, Ilorin

he All Progressives Congress (APC) yesterday said that despite the mass defection from the party, it remained firm as the party is in control of 25 states out of 36 states of the federation. In a statement signed by Bolaji Abdullahi, national publicity secretary

of the ruling party, it said: “APC notes the development in the National Assembly with the defection of some of our members from the party. “In the last couple of weeks our party leaders have worked to stave off this situation as responsible party leaders would do. It would appear however, that the individuals involved have different considerations beyond the grievances that they were

willing to discuss and which our leaders were willing to address. “As a truly democratic party, we respect the right of every citizen to political association. Therefore, we urge our members to remain calm as we continue to work hard to position our party strongly for the next general election. APC remains in firm control of 25 states of the 36 states of the federation and

maintains a clear majority in the federal House of Representatives and states assembly. “We assure members and supporters that our great party will continue to consolidate on our majority status in the lead up to the 2019 general election, even as our government continues to work hard to deliver on our promises to Nigerians.”

Atiku

He emphasised that the choice of the PDP as a preferred destination for them is an endorsement of the kind of leadership the national chairman of the PDP, Uche Secondus has provided since assuming office. “Like I said at my declaration rally in Yola barely 72 hours ago, there are more mass defections from the APC into the PDP and it is important to mention that these defections signify a vote of no confidence in the APC-led government and the 2019 election is going to be a referendum of how the APC shattered the expectations of Nigerians”.

BUSINESS DAY

NEWS Explainer: Problems that could hinder success of Nigeria Air IFEOMA OKEKE

n July 17, 2018, the Federal Government unveiled Nigeria Air as the country’s new national carrier. The unveiling of Nigeria Air, which took place at Farnborough, England, has since received both criticisms and commendations. A national or flag carrier by definition is an airline that, being locally registered in a given sovereign state, enjoys preferential rights or privileges accorded by the government for international operations. While Hadi Sirika, the minister of state, aviation, stressed that the carrier would be private sector led. But history has shown this is not the first time government is floating a private sector led airline, as various attempts by past governments to set up national carriers failed over power play, government intervention, lack of management and unhealthy competition, among others. Questions have been raised on whether government have resolved issues that could hinder the success of the new airline, how the airline will be managed, how

transparent the government will be in the process and what legal frameworks have been laid down to ensure due process is followed. Sources close to the exNigerian Airways staff who craved anonymity told BusinessDay that the airline would not see the light of day except the government pays them N45 billion pension benefits of former workers of the defunct Nigeria Airways Limited (NAL). This implies that unless the government is able to clear the N45 billion debt, its efforts to kick off the carrier on December 19, will be stalled by the ex-Nigeria Airways staff, who have promised to ground the operations at the airport except all their monies are paid. Sirika explained that the national carrier would cover 81 routes, but experts have also advised that the new carrier should first consolidate on the domestic routes for five to six years, before going into regional and international routes. This way, it will cover both the primary and secondary airports. With its operations in secondary airports, it will be able to ease movements and bridge the gap evident in the country’s multi modal means of transport.

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Market women, NURTW march to Edo House in solidarity

arketwomenandmembers of the National Union of Road Transport Workers (NURTW) in Edo State have staged solidarity walks in support of Governor Godwin Obaseki. The leader of the Market Women Association, Blackie Ogiamien, in their separate march, told the governor, “We are here to express our appreciation to your leadership style. As keen followers of your administration, we salute you for your various initiatives, which include the promotion of cleanliness through the weekly sanitation introduced by your administration. “Many persons have attested to the restoration of law and order in the state capital. This has improved the free flow of human and vehicular traffic especially around markets. In the beginning it seemed like child’s play but today, we have seen the result.” Ogiamien said, “As mothers, wives and workers, your prompt payment of workers is quite commendable as it encourages workers to plan ahead and meet the demands of their families. “We market women commend you for demobilising street urchins and thugs or ‘agberos’ who were terrorising our mar-

kets and making trading almost impossible. We commend you for restoring sanity in this area as we the market women now have peace and are able to do our business without any harassment.” She appealed to the governor not to allow for the return of thugs in the state, recalling the harrowing experiences they had in the hands of the thugs while they held sway. In his response, the governor expressed his appreciation to the women for their support, and explained: “With the support of members of my administration, we stopped ticketing through which different groups were extorting market women. I never knew that my pronouncement would go far and restore sanity in the city, which has improved the totalrevenuecollectedbythelocal government monthly.” In a separate event, the chairman,EdoStatechapterofNational UnionofRoadTransportWorkers (NURTW), Odion Olaye, who led other members of the union on a solidaritywalktotheGovernment HouseinBeninCity,commended the governor for what he called “the good work Obaseki has done within a short time in office,” and assured that members of the union are behind him.

Wednesday 25 July 2018

FG orders Apapa properties audit as Lagos-Ibadan rail project gains traction MIKE OCHONMA

head of the planned move to extend the Apapa railway station to achieve the desired modernisation of the ongoing Lagos-Ibadan rail project, Rotimi Amaechi, minister of transportation, has ordered an audit of railway properties within Apapa port complex and its environs. He gave the directive during an inspection of the Apapa station shortly after a meeting of the Project Steering Committee held at the CCECC yard. Speaking with newsmen at the Apapa station during an inspection of the Apapa port section of the rail modernisation project, Amaechi said, “We have come to inspect what the Apapa station looks like. We are not too impressed now. The station would be moved backward to the centre of the road since all the properties around here belong to the NRC.” He said all railway projects must terminate at Apapa station. On the progress of the work, the minister said contract for the relocation of the water pipeline would be awarded this week, adding that the gas pipeline within the Lagos axis had slowed down the progress

of work. He said, “The task we have given the contractor now is because the contract is broken into two phases; the first phase is from Ebute-metta to Ibadan. We believe they should be able to complete that. “It is also expected that they should be able to complete Apapa to the seaport, but even if they are not able to complete it, we can go ahead and begin commercial activities from Ebute-metta to Ibadan, which is the original contract.” He reiterated the position of government that all railways must terminate at the seaport so that if they finish it on time, we would go with it, if not we would commence commercial activities at Ebute-metta to Ibadan, but work was progressing rapidly from Iju to Ibadan. He lamented that the problem in Lagos was relocation of gas and oil pipeline, adding that the steering committee had been able to solve the rest. According to Amaechi, ‘’Today, we will try to award the contract for the relocation of the water pipelines, even we have not finished the technical work for the relocation of the gas and oil pipelines, so it is slowing down activities in Lagos.”

Ease of Doing Business: Manufacturers laud Obaseki’s reform initiatives, back investment in infrastructure

anufacturers on Tuesday in Benin City, the Edo State capital, lauded the ongoing reform initiatives of the Governor Godwin Obaseki-led administration and pledged their support to the state government. Chairman of Manufacturers Association of Nigeria (MAN) Edo/Delta Branch, Alofoje Unuigboje, who led members of the association on a courtesy visit to the governor, noted that the ease of doing business in the state had greatly improved. “The ease of doing business in Edo State has improved considerably. The desilting activities on Ugbowo-Uselu axis and other locations in Benin City are appreciated. “The disappearance of the ‘ocean’ at Okhoro/New Lagos Road crossroad has improved traffic situation considerably and saves cost of vehicle repairs,” Unuigboje said. The association applauded the rural/urban dichotomy in Land Use Charge and advised that “it should be sustained to assist rural development and stem rural-urban drift.” It urged the state government to sustain her focus on developing science and technology, which it described as “the sub-stream on which industrialisation rests,” among other recommendations. In his remark, Governor Obaseki assured the MAN that his administration

would continue to create an enabling environment for businesses to thrive in the state. The governor told his guests that the he was committed to developing the infrastructure that would attract foreign and local investors, adding that the completion of the Benin River Port and the Benin Industrial Park is top priority to his administration. Obaseki said: “My administration has done well by eradicating private tax collectors from the state. This has also increased the Internally Generated Revenue of the state. “The easy way to creating jobs for our people is for government to ensure that an enabling environment is created for businesses to boom. In the area of tax collection, the good news is that we have now introduced the use of technology in all the local government areas of the state.” On infrastructure, he assured, “Our goal as a government is to continue to rehabilitate and reconstruct roads that will connect all parts of the state and serve as major channels for the distribution of goods. “As part of making Edo State more viable, a very transparent and procurement process has been put in place, such that all government procurements are listed and matched with local producers,” he said.

L-R: Patricia Fomba, company secretary; Kofi Duffuor, chairman, and Abiola Ekundayo, CEO, all of WAICA Reinsurance plc, during the 5th annual general meeting of the company in Lagos, yesterday. Pic by Olawal Amoo.

NCAA declares zero tolerance on flight cancellations, delays IFEOMA OKEKE

igerian Civil Aviation Authority (NCAA) has declared in strong terms zero tolerance on flight cancellations/delays that has plagued airline operations within Nigeria. This declaration was made at the just concluded stakeholder’s forum organised by the authority at the NCAA annex, Ikeja Lagos. The forum was attended by 13 international airlines, eight domestic airlines and airport operators - the Federal Airport Authority of Nigeria (FAAN) and Bi-Courtney Aviation Services. At the discussions, officials of the NCAA requested the airline operators to enumerate

their challenges that could be the likely causes of delays and cancellations. In response, the airlines itemised various challenges, among which are fuel supply, need for improvement in infrastructure at the airport, unruly passengers and traffic along airport road, among others. The management of the NCAA and FAAN in their response assured the operators that all these challenges would be tackled very soon. In a statement sent by Sam Adurogboye, general manager, public relations, NCAA, some of the resolutions from the meeting are as follows: Airlines should be realistic in their flight planning/schedules, they should always disseminate on time information to passengers on flight status and ensure

they provide right to care to passengers in times of delays/ cancellations in line with the Nig. CARs 2015 Part 19. Also, NCAA and FAAN should liaise with FMTA to replace fuel hydrants if the old ones will cost a lot of money to be fixed and the supply points should be connected to the airports and the FAAN, airport operators should ensure facilities at the airports are functional (lightings, carousels, cooling systems among others). In addition to these, Federal Ministry of Transportation, Aviation and Allied Organisations (FMTA) should liaise with Pipelines and Product Marketing Company (PPMC) on fixing the underground pipeline layout from Apapa to Lagos airport to minimise surface transportation of fuel.

“FAAN should beef up security at the airports to prevent unlawful interference. Airlines’ representatives should be available to testify whenever cases of unruly passengers are referred to the Nigeria Police Force and the representative of FAAN management should ensure that action is expedited on the upgrade of lighting on Runway 18L/36R (MMIA). “Airlines and airport operators should maintain constant Communication. Airlines should always request for re-imbursement of expenses incurred from third parties/service providers with whom they signed Service Level Agreements (SLAs) as stipulated by the Nig. CARs Part 19 and FAAN should ensure that the CCTV cameras are always operational,” Adurogboye said.

BUSINESS DAY

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Wednesday 25 July 2018

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BUSINESS DAY

FINANCIAL TIMES EU to pay member states €6,000 for every migrant taken in

Trade war winners and losers grapple with Trump tariff chaos Page A4

Page A5

World Business Newspaper

Trump taunts EU on trade: what is at stake at Juncker meeting? Despite the threats, both sides are signalling the possibility of new deals Chris Giles

onald Trump has taunted European leaders ahead of a difficult meeting on Wednesday as the US and EU risk sliding into an ever more damaging trade war. The US president took to Twitter on Tuesday morning to send the message that Jean-Claude Juncker, president of the European Commission, was only willing to talk to the US on trade now that Washington is slapping tariffs on their goods. “Countries that have treated us unfairly on trade for years are all coming to Washington to negotiate. This should have taken place many years ago but, as the saying goes, better late than never!” he wrote. “Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that — and everybody’s talking! Remember, we are the “piggy bank” that’s being robbed. All will be Great!” he added. The Twitter posts will further complicate the scheduled meeting, which was hoped to de-escalate tensions on tariffs and slow the moves towards a damaging trade war between the two blocs. The first round is already under way, with the US imposing a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminium. The EU responded with tariffs on $3.2bn of iconic US goods, including Bourbon whiskey, peanut butter, motorcycles and blue jeans. Round two is imminent. Mr Trump has threatened to impose a 25 per cent tariff on imported vehicles using the justification of protecting US national security. This would affect almost $50bn of European exports, with Germany hardest hit. The EU is drawing up a new list of US products to tax in retaliation. However, despite the threats and bad blood, both sides are dangling possible new trade

deals in front of each other. Does the US have a strong case against EU trading practices? No. The EU and US have very similar and low levels of tariffs on goods. Even though some trade is deterred by specific high tariffs on both sides of the Atlantic, the average weighted tariffs applied by the EU on US goods were 3 per cent in 2015, a little lower than the US equivalent of 3.3 per cent in the same year. Mr Trump’s complaint in a CNBC interview last week that “for years we have been losing $150bn with the European Union and they are making money easy”, relates to the US bilateral goods trade deficit with the EU. This is a product of a healthier US economy and a surplus in services rather than unfair European trade practices. When Steven Mnuchin, US Treasury secretary, called at the G20 meeting in Buenos Aires last weekend for trade on a “fair and reciprocal” basis, economists would say this already applies to transatlantic commerce. Is there a potential US-EU deal on the table? Yes, if you take politicians’ statements at face value. At the G20, Mr Mnuchin said: “If Europe believes in free trade, we’re ready to sign a free trade agreement.” He insisted that any deal required action on tariffs, non-tariff barriers and subsidies. “It has to be all three issues,” he said. European finance ministers object to what they see as the US bullying tactic of making trade overtures “with a gun to the head”, as Bruno Le Maire, French finance minister has put it. But European officials are mostly attempting to defuse the rhetoric and seek to avoid any escalation in the trade war. Pierre Moscovici, European economics and financial affairs commissioner, said: “We were in mutual listening mode and I hope that this is the beginning of something.” Meanwhile, Europe has floated an idea for all leading economies to drop car tariffs globally to zero.

Iranians fear US confrontation as war of words escalates Rescalating hetoric underlines how Rouhani is dispensing with his usual diplomatic language Najmeh Bozorgmehr

ust over a year ago, hundreds of thousands of Iranians poured on to the streets of cities across the Islamic republic to celebrate Hassan Rouhani’s landslide victory in an election viewed as a referendum

on Iran’s nuclear agreement. But now many Iranians fear the country is heading towards a possible confrontation with the US as Tehran and Washington trade increasingly belligerent rhetoric. “The way things looks today, Continues on page A4

Jean-Claude Juncker, president of the European Commission, will seek to de-escalate tensions around tariffs at his meeting in Washington © AFP

Turkish lira tumbles after central bank keeps interest rates steady Decision made despite high inflation, adding to fears over Erdogan’s economic rule Laura Pitel, Adam Samson & Chloe Cornish

he Turkish lira plunged on Tuesday after the central bank kept interest rates on hold despite soaring inflation, reigniting fears about the country’s economic management following the reelection of President Recep Tayyip Erdogan. The central bank announced that it would keep its headline one-week repo rate steady at 17.75 per cent even as annual consumer price inflation reached 15.4 per cent in June — more than triple the official target. Markets had been expecting a rate increase of about 100125 basis points, according to a Reuters survey. The embattled

lira plummeted following the announcement, falling 3.5 per cent against the dollar to 4.91. The Turkish currency has lost more than a fifth of its value since the start of 2018, fuelling inflation and putting pressure on a corporate sector saddled with almost $300bn of foreign currency debt. Paul Greer, a portfolio manager at Fidelity’s emerging market debt fund, described the rate decision as a “major policy mistake” and a “missed opportunity” by the central bank to build on the credibility it established with three interest rate rises in the run-up to June’s elections. Tuesday’s decision was seen as critical test after Turkey’s transition to a powerful new presidential system with Mr Erdogan at its helm.

Markets were rattled by the Turkish president’s decision to place his own son-in-law, Berat Albayrak, in charge of the economy brief when he unveiled his new cabinet earlier this month. Even before Mr Albayrak’s appointment, investors were alarmed that last year’s stimulusfuelled 7.4 per cent GDP growth had led to serious imbalances, including high inflation and a wide current account deficit equivalent. Mr Albayrak’s new role — and the sidelining of figures respected by the markets — had fuelled the anxiety of investors. They feared that Mr Albayrak, who is married to Mr Erdogan’s daughter Esra, would become the enforcer of his father-inlaw’s unorthodox views on the economy.

North Korea starts dismantling missile launch facility Satellite images first sign of progress since Trump-Kim summit in June Demetri Sevastopulo & Song Jung-a

orth Korea appears to have started dismantling a key missile launch facility, according to satellite imagery, in what could be the first concrete sign of progress since Donald Trump and Kim Jong Un met in Singapore in June. According to fresh commercial satellite images obtained by 38 North, a Washington-based group that focuses on developments in North Korea, the regime has torn down some of its installations at Sohae, the country’s main missile launch facility that is located in western North Korea not far from the Chinese border. 38 North said that satellite im-

ages taken over a period of three days from July 20 suggested North Korea had dismantled part of a building where space launch vehicles were assembled, in addition to a rocket-engine test-stand used to develop liquid-fuel engines for ballistic missiles and other launch vehicles. “Since these facilities are believed to have played an important role in the development of technologies for the North’s intercontinental ballistic missile programme, these efforts represent a significant confidence-building measure on the part of North Korea,” said Joseph Bermudez, a North Korea analyst who studied the satellite imagery for 38 North. Mr Bermudez told the FT the images marked the “first evidence”

of movement since the TrumpKim summit in June. He said one image from last month had shown no activity, but cautioned that it had been hard to monitor Sohae in recent months due to bad weather. He added that while he wanted “to be positive and say that this is a significant step”, it was also important to remember that North Korea had a history of taking actions that concealed its true intentions. He stressed that future images would need to be studied to see how far the dismantling of the facilities had gone. Mr Bermudez said it was possible that North Korea believed it had less use for the liquid-fuel related facilities at Sohae, as it continued to make progress towards developing solid-fuel rockets.

BUSINESS DAY

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NATIONAL NEWS

FT Iranians fear US confrontation as war...

EU to pay member states €6,000 for every migrant taken in

Continued from page A3 confrontation with the US may become inevitable,” said an oil businessman with links to the regime. Mr Rouhani, one of the principal architects of the 2015 accord, promised to pursue re-engagement with the world and use the deal to lure much-needed investment to the republic. But now he has been drawn into a war of words with Donald Trump. Iranians’ concerns escalated this week after the US president warned Iran of severe “consequences” if it threatened America. Mr Trump’s toughest words yet towards the republic were apparently triggered by Mr Rouhani warning of the risk of war between the two countries. The Iranian leader was quoted as saying at the weekend that Americans should realise that establishing peace with Iran was the “mother of all peace” while conflict would be the “mother of all wars”. The rhetoric underlines how Mr Rouhani, a pragmatist, is dispensing with his normal diplomatic language as the stand-off with the US pushes him closer to the regime hardline that endured a humiliating defeat at the May 2017 elections. His tough stance has won him applause from the elite Revolutionary Guards and the judiciary, powerful groups at the heart of the hardliners’ camp. In contrast, pro-reform forces, which secured Mr Rouhani’s election victories in the hope that he would open up the country, are largely silent. But even reformers accept that national pride dictates that Mr Trump tirades against Iran makes it ever more difficult for the government to even consider talks with the US. “It is poisonous to negotiate with Trump under the circumstances,” said Hossein Marashi, a senior reformist politician. “When we face unfair attacks, we have no choice but to answer those attacks. This US approach is not sustainable and we should wait until there is a change in the next Congress or administration.” Yet a year ago, Mr Rouhani’s backers were hoping he could use his second term to resolve other contentious issues with the west, with the nuclear accord central to his economic and foreign agendas. The president even pledged during the 2017 election campaign that he would work to have remaining sanctions lifted, hinting that he could be willing to open negotiations with the west over Iran’s role in the Middle East and its ballistic missile programme. But Mr Trump’s decision in May to pull out of the nuclear deal signed with six world powers and reimpose tough sanctions on Iran has dashed those hopes. Many Iranians believe the Trump administration is now pushing for regime change, putting the survival of the Islamic republic at stake. “The Islamic republic cannot give up its regional and defence policies under US pressure which equals its death,” said the businessman close to the regime.

Wednesday 25 July 2018

Brussels also ready to foot bill for ‘controlled centres’ to process asylum claims Mehreen Khan

Voestalpine, the Austrian steel group, has filed more than 3,000 exclusion requests, each covering a particular highly detailed product specification © Bloomberg

Trade war winners and losers grapple with Trump tariff chaos Companies bewildered by judgments on exemptions as backlog of decisions rises Ed Crooks & Fan Fei

pecialised wire for windscreen wipers: yes. Steel plates for repairing broken bones: no. Bill Brebrick, sales manager for Zapp Precision Wire, has been learning fast about what the US government will exempt from its tariffs on imports of steel and aluminium. Specialised wire made in Germany, sold by Zapp to be made into windscreen wipers in Mexico, is available only on import, the US department of commerce has ruled, and has therefore won an exemption. Shaped plates used to repair badly broken bones, however, could in the government’s view be made in the US, so Zapp faces tariffs on those unless it finds a domestic supplier. The Trump administration in March introduced tariffs of 25 per cent on steel and 10 per cent on aluminium, and also set up a process for US importers to request exclusions. As application for requests on tens of thousands of products have flooded in, many companies said they were finding

the bureaucracy frustrating and the decisions bewildering. Winners and losers are being chosen seemingly arbitrarily by the government, they complain, distorting markets and disrupting supply chains. Meanwhile, a backlog of decisions continues to grow. “Manufacturing was doing so well,” said Mr Brebrick. “People would like to get back to business as usual. Let us compete on a level playing field and leave us alone. No more regulation, please!” Zapp, which is Germanowned and has its US manufacturing centre in South Carolina, filed more than 30 requests for exclusions and has received just 12 decisions so far. One has been granted, 11 were declined. Mr Brebrick is finding it hard to get explanations for the decisions. He has called the commerce department half a dozen times, using the numbers published for inquiries, and left messages but has heard nothing back. A Financial Times analysis of the exemption requests filed and published by the government suggests Zapp has been less fortunate than other companies

in its hit rate with tariff exclusions. As of the end of Friday, 55 per cent of the 933 decisions announced by the commerce department on requests for exclusions from the steel tariff had been to approve an exemption. But Zapp’s experience is typical of the daunting bureaucratic complexity of the process and the unpredictability of its results. Officials in the commerce department are being called on to make snap judgments about highly complex questions of industrial capacity. Companies that want to import products that are not, or cannot be, made in the US, according to the government’s judgment, can be granted selective exemptions. Products deemed to have home-produced alternatives cannot escape. US businesses are often cautious about discussing the process on the record, not wanting to jeopardise their chances of securing one of the valuable exclusions. But complaints about the process are widespread. As one industry representative put it, there is “a lack of transparency and a lack of consistency”.

Wealthy Saudis sit on cash as purge casts shadow over investment Businesses attempt to shift funds offshore but fear they are being monitored Simeon Kerr & Andrew England

ealthy Saudi merchant families are holding back from investing in the kingdom as nervousness triggered by Riyadh’s anti-corruption purge exacerbates a fragile business climate. According to bankers, private businesses have resorted to sitting on their cash, while some are looking for ways to shift funds offshore. Yet some wealthy Saudis fear their financial affairs, especially attempts to transfer money, are being monitored to prevent them moving assets overseas, the bankers say. “A $30,000 transfer being made by a relative [of a well-connected businessman] was questioned by a government official at the bank,” said a Saudi wealth manager. “These are targeted — but huge

scale — capital controls.” Larger transfers made by Saudi royals and businessmen have also been blocked, said the wealth manager. “A royal asked to transfer millions for a property in London, but was told no,” added the manager who, like others who spoke to the FT, asked not to be named because of the sensitivity of the subject. The unease and lack of appetite to invest in the kingdom risks undermining Crown Prince Mohammed bin Salman’s efforts to overhaul the oil-dependent economy and create 1.2m private sector jobs for Saudis by 2020. Unemployment hit 12.9 per cent in the first quarter — the highest level on record. Bankers say a combination of factors are fuelling the subdued mood, ranging from increased costs of employing foreigners, who account for more than 80 per cent

of the private sector workforce, to concerns Prince Mohammed could launch another sweeping anti-corruption crackdown. More than 300 tycoons, princes and former government officials were rounded up in a graft purge in November and detained at the Ritz-Carlton hotel in Riyadh. The government insists the crackdown was necessary to tackle fraud in the business community. Most of those detained were released after agreeing to settlements under which they transferred assets and cash to the state. Riyadh says it will net $100bn from the purge. The families of royals and businessmen still under investigation have to apply for stipends from frozen bank accounts, bankers say. Some are blocked from exchanging riyals for other currencies, in effect ensuring their wealth remains within Saudi borders.

taly has dismissed a plan by Brussels to offer EU governments €6,000 for every migrant they take in from boats stranded in the Mediterranean, in a sign that the discord sparked by the migrant crisis is unlikely to be resolved soon. Responding to the European Commission proposals on how to stem the flow of migrants coming into Europe, Italian interior minister Matteo Salvini, said: “If they want to give money to someone else let them do so, Italy doesn’t need charity”. Mr Salvini, who is also the leader of the anti-immigration League, added: “We want to stop the inflows in order to clear the backlog of hundreds of thousands of people. We are not asking for money but for dignity and we are recovering it with our own hands.” The commission’s plans, published on Tuesday, include helping to foot the bill for creating “controlled centres” for migrants for member states that agree to set them up on their territory. The commission will also pay governments for up to 500 migrants that they rescue from each boat stranded at sea, said an official briefed on the talks. The introduction of the financial incentives came after migrant rescue boats were barred from docking in Italy by Rome’s new populist government. Brussels will offer countries that agree to take some of the rescued people €6,000 per migrant, according to the plans. Spain is likely to be the biggest beneficiary, having taken in more than 1,200 rescued migrants from stranded boats in the Mediterranean in the past week alone. France, Portugal, the Netherlands and Malta have also received smaller numbers from rescues in recent weeks. By offering financial incentives to countries to share the burden, Brussels is hoping to persuade the Italian government to do more to prevent failed asylum seekers who enter Italy from travelling on to other EU member states. The cornerstone of this plan involves frontline migrant states setting up controlled centres on their territory to process asylum claims and to send back failed claimants to their country of origin. The commission will say that it will provide any government that houses the centres the “full support of the EU and EU agencies”, including border guards and security officers paid for with money from the bloc’s common budget. Despite EU leaders spending nine hours thrashing out an agreement to create controlled centres inside Europe last month, no government has said it is willing to establish one on its territory. Italy is most resistant to the idea.

Wednesday 25 July 2018

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BUSINESS DAY

FINANCIAL TIMES

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@ FINANCIAL TIMES LIMITED

EU to pay member states €6,000 for every migrant taken in

Brussels also ready to foot bill for ‘controlled centres’ to process asylum claims Mehreen Khan

beneficiary, having taken in more than 1,200 rescued migrants from stranded boats in the Mediterranean in the past week alone. France, Portugal, the Netherlands and Malta have also received smaller numbers from rescues in recent weeks. By offering financial incentives to countries to share the burden, Brussels is hoping to persuade the Italian government to do more to prevent failed asylum seekers who enter Italy from travelling on to other EU member states. The cornerstone of this plan involves frontline migrant states setting up controlled centres on their territory to process asylum claims and to send back failed claimants to their country of origin. The commission will say that it will provide any government that houses the centres the “full support of the EU and EU agencies”, including border guards and security officers paid for with money from the bloc’s common budget. Despite EU leaders spending nine hours thrashing out an agreement to create controlled centres inside Europe last month, no government has said it is willing to establish one on its territory. Italy is most resistant to the idea. To persuade governments to agree, Brussels will tell member states they can set up the centres on an ad hoc temporary basis and also decide for themselves whether they should be open or closed camps. The commission will urge “pilot” centres to be launched “as soon as possible”. The plans are set to be discussed by EU28 ambassadors on Wednesday.

Guardian owner halves losses and heads towards break-even Chief executive David Pemsel cites cost cuts and reader donations as key factors Matthew Garrahan

uardian Media Group, t h e ow n e r o f Th e Guardian and The Observer, has halved its annual losses and is on course to break even in 2019, in line with a three-year plan to return the publisher to stability. David Pemsel, GMG’s chief executive, said in an interview that tighter cost controls and a programme to encourage donations from readers had cut losses from £38.9m to £18.6m in 2017-18. “We laid out our plan two years ago to break even by March next year and we are on track,” he said. The three-year plan was devised by Mr Pemsel and Kath Viner, editor of The Guardian, in 2016 when the publisher’s losses hit £57m. They were projected to rise sharply in future years, lead-

ing to fears that the company, which is supported by the Scott Trust, would eventually run out of cash. The value of the endowment that supports GMG fell to £743m that year, from £838m. However, GMG has since then sold down its stake in Ascential, the global information group that owns the Cannes Lions advertising festival, which has lifted the total value of the endowment and cash holdings to £1.01bn. Mr Pemsel suggested that the existential threat facing GMG had receded thanks to lower spending — the company has reined in costs and cut as many as 400 jobs — and the success of reader donations. But he warned that the advertising market was “incredibly challenged” for publishers. “There’s no let-up in the amount of money going to the big digital platforms. Companies now have to face the reality about how the ad market will play out,” he said.

Migrants disembark from a rescue boat after arriving at Algeciras. Spain is likely to be one of the main beneficiaries of the proposed EU payments © Reuters

Turkish lira tumbles after central bank keeps interest rates steady Decision made despite high inflation, adding to fears over Erdogan’s economic rule Laura Pitel; Adam Samson & Chloe Cornish

he Turkish lira plunged on Tuesday after the central bank kept interest rates on hold despite soaring inflation, reigniting fears about the country’s economic management following the re-election of President Recep Tayyip Erdogan. The central bank announced that it would keep its headline one-week repo rate steady at 17.75 per cent even as annual consumer price inflation reached 15.4 per cent in June — more than triple the official target. Markets had been expecting a rate increase of about 100-125 basis points, according to a Reuters survey. The embattled lira plummeted following the announcement, falling 3.5 per cent against the dollar to 4.91. The Turkish

currency has lost more than a fifth of its value since the start of 2018, fuelling inflation and putting pressure on a corporate sector saddled with almost $300bn of foreign currency debt. Paul Greer, a portfolio manager at Fidelity’s emerging market debt fund, described the rate decision as a “major policy mistake” and a “missed opportunity” by the central bank to build on the credibility it established with three interest rate rises in the run-up to June’s elections. Tuesday’s decision was seen as critical test after Turkey’s transition to a powerful new presidential system with Mr Erdogan at its helm. Markets were rattled by the Turkish president’s decision to place his own son-in-law, Berat Albayrak, in charge of the economy brief when he unveiled his new

cabinet earlier this month. Even before Mr Albayrak’s appointment, investors were alarmed that last year’s stimulusfuelled 7.4 per cent GDP growth had led to serious imbalances, including high inflation and a wide current account deficit equivalent. Mr Albayrak’s new role — and the sidelining of figures respected by the markets — had fuelled the anxiety of investors. They feared that Mr Albayrak, who is married to Mr Erdogan’s daughter Esra, would become the enforcer of his father-in-law’s unorthodox views on the economy. The Turkish president is a longstanding and vocal opponent of high interest rates, which he argues cause rather than curb inflation — a view that runs contrary to the stance of most economists and was seen as limiting the freedom of the central bank.

Foreign investors dumped record volumes of Italian debt May sell-off points to future turbulence as coalition prepares to publish budget Kate Allen

oreign investors shed record volumes of Italian debt in May as a sharp sell-off hit the country’s bond market, according to data highlighting the challenges facing the new populist government in the coming months. Italy’s governing coalition is set to bring forward a contentious budget this autumn, which some investors fear could threaten the country’s fiscal outlook. Earlier this month the new government said it would not take any further measures to cut its deficit this year and warned of a possible downgrade to growth forecasts. The country’s bond yields have settled back from the highs they hit at the peak of the sell-off in late May but remain elevated in comparison with pricing before the populist coalition came into government. Two-year Italian debt is yielding about 0.7 per cent, having been in negative territory until mid-May, while 10-year paper is yielding around 2.7 per cent, up

from 1.9 per cent before the selloff. Yields rise when prices fall. May’s sharp rise in yields was accompanied by a significant drop in foreign holdings of Italian debt, recently-published figures from the European Central Bank show. Foreign investors sold a net €33.7bn of Italian debt securities in May, topping the previous record of €32.2bn in December 2016. When adjusted for seasonality, May was “by far and away the biggest month of net foreign selling of Italian debt securities since the ECB started compiling the data” in 2008, according to David Owen, chief European economist at Jefferies. The ECB’s figures also suggest that the potential contagion effect of Italian political turbulence could be greater than many market observers had previously anticipated. Foreign investors sold €3.1bn of Portuguese debt securities and €15.5bn of French debt securities in May on a seasonally-adjusted basis, Jefferies estimated. Data for Spain has not yet been published. However, Mr Owen cautioned

that the situation was nowhere near as bad as the eurozone has faced previously. “Obviously, May is only one month,” Mr Owen said. “If one goes back to 2012, net foreign selling of Italian debt securities was relentless, totalling seasonally adjusted almost €100bn in the first seven months of the year before Mario Draghi gave his commitment to do whatever it takes.” Luca Cazzulani, deputy head of fixed-income strategy at UniCredit, said that foreign investors’ debt sales were offset in May by purchasing by domestic Italian banks. However “stabilisation of demand from foreign investors will be key for the dynamics of BTPs (Italian sovereign debt), especially as net purchases under quantitative easing drop to zero”, he said. The traditional summer lull in Italian politics is likely to mean that the country’s debt market remains tranquil in the coming weeks, Mr Cazzulani added, although the publication of the new government’s budget lingers on the horizon as a potential flashpoint in the autumn.

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Wednesday 25 July 2018

COMPANIES & MARKETS

CDC backs $66m Kenyan solar power plant in first ever debt deal LOLADE AKINMURELE

Value of Africa M & A deals slides 57% in the first half of 2018 ...As inbound investment suffers from political uncertainty LOLADE AKINMURELE

otal deal volumes a n d va l u e s o f Merger & Acquisition (M&A) transactions in Africa fell sharply in the first half of 2018, declining 44% in deal volume and 57% in aggregate value, compared to the first half of 2017. This is according to analysis by Baker McKenzie of Thomson Reuters M&A data for Africa. The report notes that there were 485 deals valued at USD 19.4 billion in the first half of 2017, this dropped to 270 deals valued at USD 8.31 billion in H1 2018. On a positive note, intraregional cross-border deals rose twofold in terms of aggregate value from USD 418 million in the first half of 2017 to USD 1.29 billion in H1 2018. It is difficult to pin down specifically what has caused the downturn in M&A activity in the first half of the year, according to Morne van der Merwe, Managing Partner and Head of the Corporate/ M&A Practice at Johannesburg-based Baker McKenzie, as “Africa is a continent with 54 different countries, all with different economies.” Generally, inbound investment in Africa has been affected by political uncertainty and unpredictabil-

ity - business does not mind challenge but has no affinity for uncertainty. Corruption and bad governance, as well as the strict anti-bribery and anti-corruption laws in some investor countries, such as the United States and the United Kingdom, has made investors more cautious.” Intraregional trade “Despite the downturn in M&A transactions, it appears that regional economies are developing and intraregional trade is doing well. East Africa is developing a strong regional focus and had almost left the Southern African region behind, although this region has come back onto the radar of late,” van der Merwe notes. Van Merwe explains further that certain economies such as Ethiopia are becoming more of a discussion point as popular investor destinations in Africa because of interesting development initiatives taking place in this country. The majority of the intraregional deals in Africa were in the High Technology Sector (cutting edge or advanced technology) which accounted for 21% of all deals. Interregional dealmaking value was highest in the Financial sector which made up 82% of the total value. There were four High Technology intraregional deals in Africa in the

first half of 2018. Intraregional deals in the financial sector in H1 2018 were worth USD 1,056 million. Van der Merwe says that the financial services sector, especially banks and insurance companies have been deploying various models for their expansion into Africa, including regionally focused strategies. “Lessons I have picked up from these markets include that having the right local partner remains key to being successful in Africa and that it is important it to think twice before you impose your brand on a market where you have recently made an acquisition. This is because you may change the recently acquired company from what had made it successful in the first place. Keeping the local brand and management in place has worked very well for some in the financial services sector who have expanded into Africa,” he notes. Van der Merwe explains that events such as Barclays withdrawing from South Africa had left many wondering how a financial giant like Absa would rethink its strategy and possible expansion into Africa, and it will be interesting to follow the unfolding of their strategy to position themselves as an African Bank. “I think that expanding

into the continent and having a regional approach as part of that expansion is something they are most likely thinking about very carefully,” he says He notes that the growth in investment in both the financial services sector and the technology sector in Africa are interlinked. Financial services organisations are becoming more dependent on investment in technology and innovation as they look to upgrade their IT systems and find news way to grow their customer bases. Inbound In terms of inbound crossborder transactions with other regions, Industrials was the most popular by deal volume (16% share of the total) with 16 deals completed in the first half of the year. Energy & Power attracted the highest share of aggregate deal value (35% of the total value), with deals valued at USD 1,493 million. “The industrials sector is a focus area for many developing economies across the continent and the sector is well established, leading to many more opportunities than one would find in less well established sectors,” he says. Van der Merwe explains that the extent of the power deficit in Africa is well known and increasing electricity gen-

Continues on page A7

DC and Globeleq have announced a debt investment of $66 million in Malindi Solar Group, to build a 52MWp solar photovoltaic power plant in South-East Kenya, in a deal that will see the UK development finance institution, CDC, invest $50 million, while Globeleq, an Africa-focused independent power producer, provides $16 million. The investment is a first for CDC’s Project Finance team – the first loan agreement as a sole lender; and the team’s first direct debt deal in Kenya, according to CDC’s CEO Nick O’Donohoe. “Power infrastructure is vital for Africa’s economic growth and for the millions of individuals, families and businesses who struggle to access the electricity they need,” O’Donohoe said. “Our investment will bring clean energy and jobs to a region of Kenya that struggles to reach its potential because of energy shortages.” The long-term, 16-year financing will provide much needed power in the Malindi area, which currently struggles with regular power shortages and relies largely on expensive thermal plants. Kenya’s per capita electricity consumption is well below the Sub-Saharan average and 44% below the level that would be expected for its level of GDP per capita. Located in a region where load shedding is widespread and power demand is increasing, it is expected most of the generation will be consumed locally. It is estimated that the power generated will support the creation of jobs through direct employment and indirect job creation due to more consistent supply of electricity. Globeleq, a majority owned independent power producer solely focused on building more power generation in Africa, is the sponsor of the project. Globeleq is working with its partners, Africa Energy Development Corporation (the originator of the project) and IDEA Power, to move the project into construction in the coming months. Malindi is on track to be the first of four utilityscale solar power plants in Kenya to begin construction. Globeleq will be the 90% shareholder of the Malindi project, with its partner AEDC holding the remaining 10%. Paul Hanrahan, Globeleq CEO, said: “Globeleq has been involved in the Kenyan power sector for many years. Obtaining CDC’s support to help the project move forward is essential in order to supply 52 MWp of clean, renewable power to the grid and support the Kenyan Government’s targets to build new generation.” Zohrab Mawani, AEDC’s Director, added: “AEDC has been working for several years to bring the Malindi project to fruition. We are very pleased to have it reach this stage and are working closely with our experienced partners, Globeleq and CDC. We look forward to continuing our successes on the Malindi project and many more projects in Sub Saharan Africa.”

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, DIPO OLADEHINDE, ENDURANCE OKAFOR, DAVID IBEMERE ... Graphics: David Ogar ) 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

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People & Perspectives Kenya shines as Franklin Templeton outlines investment opportunities in Africa

PrivateEquity & fundraising

Among frontier markets globally, Africa offers one of the most exciting investment stories, with Kenya seemingly at the fore front. This is the view of Bassel Khatoun, Managing Director, Portfolio Management, Frontier and MENA, Franklin Templeton Emerging Markets Equity.

hen thinking about investing in Africa, many investors identify South Africa as the most important market on the continent. However, we believe other countries in the region also offer much untapped long-term potential, even though we recognize that investors may need to be patient and understand some of the unique aspects of doing business in those markets, as well as the risks. Commodity Price Volatility Could Drive Reform As global demand for hard and soft commodities continues to grow, we believe Africa is in an enviable position with its vast natural resources. Many African markets not only boast significant supplies of oil, gas and hard commodities, but also have the means to expand the production of soft commodities. In the past couple of years, volatile commodity prices have presented a challenge for African countries, particularly those dependent on oil revenue. Commodity exporters faced substantial challenges after the dramatic oil price declines in 2014 and depleting fiscal buffers, which impacted growth in many countries. However, that volatility could also be viewed as an opportunity, as these countries recognized the urgent need to reform and diversify their economies. It forced governments to become more disciplined and improve income collections. Volatility also encourages countries to find ways to expand their economy through more diverse ventures, rather than just through the sale of a single commodity. China’s Growing Influence In Africa We are seeing a number of large multinational companies establish a presence in Africa for the first time particularly in countries with improving infrastructure and ease of doing business - to access its large, vibrant and youthful populations. The influence of China in particular is increasingly apparent, especially in financing the building of roads, ports, airports and tunnels. The Chinese are becoming local partners with African businesses. While Africa’s commodities are of interest to China, many business owners are staying in Africa and setting up their own

BUSINESS DAY

COMPANIES & MARKETS

Carlyle seeks to raise $4bn for new energy fund

rivate equity firm Carlyle Group LP is looking to raise a $4 billion fund for investing in oil and gas assets outside North America, according to a report first published in the Financial Times. The fund will be used to buy companies in the energy supply chain and through these companies, assets in exploration and production, refining, marketing and oilfield services will be bought, the FT reported. Carlyle was not immediately available for comment. “Not so many investors are deploying money in Africa, the North Sea and Russia, so there is an opportunity,” an institutional investor, with direct

knowledge of the new fund said. Carlyle’s London-based team is exploring investments in Europe, Africa, Latin America and Asia, according to the FT report. Two of the company’s top executives met investors on Tuesday, the report said, citing two people at the gathering. In 2013, the company had launched Carlyle International Energy Partners (CIEP), the group’s overseas energy investment fund, with $2.5 billion and made a number of high-profile deals. A Reuters report last November said the Washington-based company was raising $1 billion for a new fund to invest in oil and gas outside the United States.

Value of Africa M & A deals.... Continued from page A6

Bassel Khatoun

retail outlets there. Kenya’s Star Shines Bright One market in which we’ve identified a number of opportunities is Kenya. Over the past decade, Kenya has made significant structural reforms that have driven economic growth. Kenya’s position on the fastgrowing east coast of Africa allows it to act as a hub for trade and investment flows from the east into the rest of the continent. Exports, predominantly tea and horticultural products, have recovered strongly. The tourism sector is also seeing a strong rebound in the form of incoming foreigners. Despite slowing to 5.5% GDP growth in 2017 due to subdued credit growth, a prolonged political impasse and drought conditions, Kenya’s economy is expected to accelerate in 2017 and 2018 to 5.8% and 6.1%, respectively, with the adoption of prudent macroeconomic policies and strengthening consumption. The pursuit of progressive monetary, fiscal and exchange rate policies has helped stabilize and safeguard the economy. A diverse economy driven largely by services also provides resilience to exogenous conditions and the potential to be one of the strongest growth stories on the continent. Kenya’s infrastructure is also likely to benefit from China’s “One-Belt One-Road” (OBOR) initiative, which aims to transform Chinese economic and diplomatic interests. In 2014, China established a special, multibillion-dollar fund to finance a variety of infrastructure projects along the OBOR routes. In Africa, that includes the

port of Nairobi in Kenya. Africa’s Financial Service Revolution Kenya is also at the forefront of the mobile banking revolution that is overhauling financial services in Africa. A success story that is touted globally is a mobile phonebased money transfer and financing service in Kenya that has a growing subscriber base and has enabled unbanked and under-banked users to have a secure means of remitting and receiving funds. Users of the system grew dramatically to 28.6 million registered customers since its founding in 2007, with a corresponding exponential growth in the value of transactions. As a result, mobile banking has spread rapidly to many other countries in the region, substantially boosting financial inclusion. Beyond banking services, mobile phones are connecting users to other sectors of the economy such as retail, education and healthcare, leapfrogging the need for traditional brick-and-mortar assets and linking to the burgeoning population in emerging markets. The potential for longterm growth in consumerrelated areas is also very attractive, and we’ve identified potential opportunities in the brewing industry in Kenya. General consumption patterns in East Africa suggest some attractive growth potential. For example, the per capita beer consumption, for example, is lower than in South Africa or other emerging or developing markets. Overall, Kenya is expected to be one of the fastest growing markets over the next decade due to rising economic development and urbanization.

Taking A BroadView Approach To Africa It’s understandable that South Africa should remain prominent in investors’ minds as they survey the opportunities across Africa. Recent macroeconomic indicators, including GDP growth and an interest rate cut in March, have been broadly positive. And we’re pleased to see the democratic process has remained intact. But it’s not the only story in the region. Africa as a whole is expected to grow more than 5% annually in the next 20 years, due to an improving investment environment, better economic management and China’s rising demand for Africa’s resources. More than 100 African companies have revenues in excess of US$1 billion. Africa also has impressive stores of resources, not only in minerals but also in food - 60% of the world’s uncultivated arable land is found in Africa. The potential for longterm growth in consumerrelated areas is also very attractive, with around 1 billion inhabitants on the African continent. More importantly, Africa is expected to account for 3.2 billion of the projected increase in the global population by 2100, with its working age population increasing by 2.1 billion. This demographic dividend not only provides the opportunity for transformative growth on the continent, but also has implications for consumption globally. We consider a number of African markets have the potential for strong economic growth, which should produce an environment favorable to corporate profitability and earnings growth.

eration, whether on-grid or off-grid, across the continent is the focus of a number of initiatives, all of which are driving investment. In terms of foreign investors, the United States (US) was the most acquisitive in Africa, representing 18% of deal volume and 39% of deal value. The US completed 18 deals in Africa in H1 2018, worth USD 1,694 million. “The US has been a significant investor in the African continent for some time. Trump’s policies have played out well for certain countries in Africa and the relationship between the US and Africa is very much focused on strategic bilateral relationships influencing the direction of investment flow,” he notes. Outbound In terms of outbound deals, High Technology had the highest volume of outbound interregional crossborder deals (13% of total deals). There were eight outbound deals in the High Technology sector in the first half of the year. Real Estate accounted for the highest share in aggregate value at 27% of total value of outbound deals. This sector completed USD 430 million worth of deals in H1 2018. “The high number of outbound technology deals from Africa is because African tech companies are targeting offshore investments in companies that will deepen their access to new technologies, markets and talent,” he says. The real estate sector attains prominence because of relative value of real estate as an asset class. “As economies develop, so does real the estate sector. For example, the expanding middle class and consumerism in Africa has led to a growth in the consumer goods sector and real estate development

is part of that as new shopping centres are developed. Also, African infrastructure development is high on the agenda across the continent and there is a big real estate element associated with that as well,” he explains. The UK had the highest number of investors from Africa during the period H1 2018 (20% share), with 12 deals being completed in the first half of the year. India was the most attractive market in terms of value (46% of total value). African dealmakers completed transactions worth USD 735 million in India in H1 2018. “The ease of doing business with the UK brought about by various factors, including, time zones, easy access, language, historical ties and familiarity has meant that investment between the UK and numerous African countries has always been good. Brexit has impacted positively on investment in that it has caused UK trade outreach initiatives to various historic trade partners,” van der Merwe explains. “With regards to India being a popular investment destination for African businesses to invest, this is because like Africa, India is a developing economy. African investors are astute in seeking out opportunities in these economies because the environment and challenges are often similar, or at least comparable. This makes it easier to build a relationship with local partners, which is so necessary for successful investment. India is also a very large economy and so huge opportunities can be accessed for investors who know where to look. In addition, historical ties between India and many countries in Africa adds to the familiarity and relative ease of doing business,” he adds.

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A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

Wednesday 25 July 2018

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Appraising the state of the Nigerian aviation sector … how sufficient are the existing airports? IKEDIONU UJU

well-functioning aviation sector presents substantial economic growth and developmental benefits via its significant contribution to GDP, job creation, trade generation and tourism promotion. It also fosters global economic integration and provides dynamic connectivity on a national, regional, and international scale. The Nigeria aviation sector has experienced gross infrastructure deficiency over the years, with many airports built in states where they neither promote economic development nor take advantage of market potential. Decaying infrastructure, obsolete equipment and inability to fully utilize the commercial and trading activities, have been the main cause of inefficiency of the nation’s aviation sector. Evaluation of Nigeria’s air passenger traffic According to the Nigerian Aviation Industry Report by BusinessDay Research and Intelligence Unit (BRIU), of which the data was sourced from the National Bureau of Statistics (NBS), Nigeria’s total passenger traffic (international and domestic, arrival and departure) grew 8.6 per cent from 14,126,767 in 2013 to 15,335,745 in 2014; sliding 7 per cent to 14,330,857 in 2015, before it rose 2 per cent to 14,564,720 in 2016. In 2017, the total passenger traffic stood at 13,394,945, a decline of 8 per cent. In 2017, Nigeria’s total passenger traffic grew steadily from Q1 to Q3. From 2,880,494 in Q1, the passenger traffic rose 10.2 per cent to 3,173,825 in Q2, and rose 16 per cent to 3,680,627 in Q3. It then declined 0.6 per cent to 3,659,999 in Q4. Nigeria’s total aircraft traffic In 2013, the total aircraft traffic (international and domestic, arrival and departure) in Nigeria was 227,644, and it increased in 2014 to 257,734 (13%). However in 2015, it fell to 242,831 (-6%) and fell further to 213,059 (-12.3%) in 2016. In 2017

Sources: NBS, BRIU

however, the total aircraft traffic stood at 214,358 (0.6%). In first quarter 2017, total aircraft traffic in Nigeria was 50,240. This increased by 4.5 per cent to 52,504 in the second quarter, 3.1 per cent to 54,130 in the third quarter, and by 6.2 per cent to 57,486. Nigeria’s total cargo movement The total cargo movement (international and domestic, arrival and departure) fell 7 per cent from 204,104,618 kg in 2013 to 189,754,412 kg in 2014, dropping further by 3 per cent to 189,172,871.9 kg in 2015 before rising 3.1 per cent to 195,106,868 kg in 2016. It plunged 17.1 per cent in 2017 to 161,800,520 kg. There was a steady increase in total cargo movement throughout the first three quarters of 2017. From 41,457,573 kg in the first quarter, total cargo movement inched 1.4 per cent to 42,033,390 kg in the second quarter, rose 6.8 per cent to 44,883,814 kg in the third quarter, but dropped by 25.5 per cent to 33,425,744 kg in the last quarter. BRIU in their research observed that the decrease in both cargo and passengers’ traffic in 2017 could be attributed to two factors: the recession in 2016 caused by crash in the global oil prices and the exchange rate volatility which led to the devaluation of the naira.

The 2016 recession slowed down Nigeria’s economic activities and reduced investors’ confidence. This caused credit impairment and bankruptcy in the real sector and fall in real wages. Its effect on the aviation sector was significant as the number of people who travelled for tourism and business declined, reducing the air traffic. Furthermore, the exchange rate volatility that was accompanied by devaluation of the naira made it more expensive for airlines to operate - the cost of aviation fuel increased while the spare parts and aircrafts maintenance became highly expensive because the nation still imports most of its fuel while aircraft maintenance is done overseas. The reduction in air traffic due to recession and high cost of operation due to exchange rate

Sources: NBS, BRIU

volatility, led to some airlines winding up and others scaling down or suspending operations. Some international airlines stopped coming to Nigeria because the cost of operations were too high. Mail Movement In 2013, the total mail movement (international and domestic, arrival and departure) in Nigeria was 6,452,629 kg, but decreased by 5.8 per cent in 2014 to 6,080,668 kg. In 2015 however, it rose 6 per cent to 6,439,495kg, growing by 2 per cent to 6,570,335 kg in 2016. 2017 recorded a significant increase in mail movement as this jumped 5004 per cent to 39,445,722 kg. In Q1 2017, total mail movement in Nigeria was 6,466,211 kg and increased by 28.57 per cent to 8,313,347 kg in Q2. It rose 39.1 per cent to 11,561,661 kg in Q3

and grew further by 13.3 per cent to 13,104,503 kg in Q4. Nigeria’s airports sufficiency “Airports in Nigeria are sufficient for existing passengers. Even though one might be tempted to compare the number of airports in Nigeria to the United Kingdom, USA and some other developed countries, such comparison may be misplaced as aviation is a commercially viable entity and as such, the number of airports in a country is not a function of the country’s population but GDP, disposable income, and other metrics.” Tayo Ojuri, the CEO of Aglow Aviation told BRIU. “Nigeria has a huge population but low disposable income. Before an airport is set up in a particular region, it is necessary to ensure that the region has the economic capacity to drive and optimize the airport,” Ojuri added. When cost-benefit analysis of airports is conducted, we discover that there must be a driver and city pair for any airport to be viable. For instance, the oil companies in Warri and the traders in Onitsha combine to drive traffic to the Asaba Airport. Cargo movement is also an important consideration in deciding whether and where to establish an airport. Airports are not social services venture as are hospitals and schools. Hence, they should not be built just anywhere. If there is a need for fast and easy movement, investing in airstrips could be a better option than spending huge amount of money in building airports that would not be optimally utilized. The secondary airports or airstrips can be used as cheaper form of operations for airlines and means of commuting for the people. Nassarawa and Osun States, for example, are building airports. But Nassarawa is not far from Abuja, and Osogbo is not far from Ibadan. Ekiti State is also proposing to build an airport when Ondo State is just 30 minutes away. The key approach for Nigeria should be effective multi-modal means of transportation that will include road, rail, air and water. This is what Japan has done: building a fast rail that links it to Europe. Finally, the most important part of operating an airport is having the necessary infrastructure and maintaining it for the safety of airlines and passengers. However, most airports in Nigeria are not efficient and self-sustaining due to several factors that include low passenger and cargo traffic and lack proper maintenance, causing them to become moribund; even some of the active ones operate skeletal flights.

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NEWS YOU CAN TRUST I WEDNESDAY 25 JULY 2018

Opinion More than four walls and a roof: Housing as an anchor in times of turbulence •Singapore shows how an effective housing programme can promote social and political stability

WONG HEANG FINE Fine is Group CEO, Surbana Jurong

n every continent, there are pockets of political turmoil, driven in part by economic resentment. At the same time, the world is inexorably urbanizing. More than half the global population already lives in cities, and the figure will be two-thirds by 2050. To cope, and also to strengthen their own legitimacy, governments need to address their citizens’ concerns. Housing is at or near the top of the list in many places. In this regard, the experience of Singapore is worth considering. Even before it became independent in 1965, Singapore considered housing a high priority. Many people were living in unhygienic slums and squatters’ camps and new immigrants were adding to the strain. On the

basis that widespread home ownership would foster social stability, the government took concerted action to improve matters. By any measure, it has succeeded. More than 90 percent of households own their residences, up from 59 percent in 1980, and they are well maintained, with social, commercial, transit, and recreational facilities readily available. In 2010, Singapore’s Housing and Development Board (HDB) won the UN-Habitat Scroll of Honour Award for “providing one of Asia’s and the world’s greenest, cleanest, and most socially conscious housing programs.” A survey of residents of HDB units in 2013 found that 91.6 percent were satisfied with their homes and 92 percent with their neighborhoods. The provision of quality affordable housing has tethered Singaporeans to the dream of a more equitable future; it is a core part of the country’s national pride and identity. Every country and city is unique, but the basic issue is the same everywhere: to craft

policies that enable housing projects to be developed and financed to suit the needs of all levels of society. In addressing that question, Singapore, in effect, turned the problem of housing inside out, recasting it as an opportunity to build both the economy and the society. As the government saw it, the state would not only be building homes but also a sense of community and national identity. That was important for a new, multiethnic country. Economically, the public-housing program sought to make the home an asset, thus creating and managing a sustainable national housing market. Socially, the housing authorities envisaged building spaces that would encourage different ethnic groups to interact and to allow for multigenerational households. In the early 1960s, Singapore was a developing country struggling to find its feet. In this context, providing every household with a decent home was a challenging goal. But by demonstrating its commitment to the population, the government

hoped also to create a spirit of responsible citizenship and thereby contribute to political stability. Making it work For the program to succeed, land had to be acquired, homes had to be built at a reasonable cost, and people needed to be able to own them. To solve the first challenge—particularly acute in a land-scarce city-state like Singapore—in 1967, the Land Acquisition Act empowered the government to acquire private land at market prices. With respect to building, HDB was set up in 1960 to be the sole independent agency in charge of planning and executing the housing program. Since its early days, HDB has earned a good reputation for creating selfsustaining, high-rise townplanning designs, complete with social and commercial amenities and efficient public transport. It continues to be highly regarded for its innovative planning and design. To give one example, as people’s expectations have risen, planners have worked to design each new township

with a distinctive identity. For another, HDB uses the most modern construction techniques, such as precast and prefabricated volumetric construction. HDB has also embraced the concept of sustainable design, integrating highly efficient energy, water, and waste- management systems in its townships. The Treelodge@Punggol HDB project in northeast Singapore, designed by Surbana Jurong and completed in 2010, is an award-winning eco- development. Since 1960, the HDB has built more than a million units; these house more than 80 percent of Singapore’s citizens. How was all this paid for? The Central Provident Fund (CPF) has been critical. Established in 1955 and revised several times since, this colmpulsory savings plan for every working Singaporean and permanent resident is funded by individuals and their employers and helps to pay for retirement, healthcare, and housing. Citizens can draw from their CPF at low interest rates and use the money to buy their homes.

The CPF therefore actively supports home ownership and ensures that public housing is within reach of the population so that less than a quarter of a first-time buyer’s monthly household income is used to pay for his or her mortgage instalment. Increasing urbanization and ageing, growing populations will test the ability of many societies to develop the housing and social amenities that future populations will both aspire to and be able to afford. Political and social environments vary considerably. Even so, it is clear that Singapore’s public-housing record is one that city planners and world leaders can learn from. Government policies and programs— specifically the creation of a single independent agency accountable for results, and the steady financial resources derived from the CPF—have been the basis of this success. Singapore has shown that the provision of affordable housing for all can be a force for stability. Given the turbulent times, that may be the most important lesson of all.

2018 budget: What’s in it for the capital market?

UCHE UWALEKE Uche Uwaleke is a Professor of Capital market and the Chair of Banking and Finance Department at the Nasarawa State University Keffi

oing by rational expectations, the approval of an expansionary budget should excite the capital market because it is assumed to have something for every sector of the economy. The 2018 federal budget which was assented to by President Buhari on 20th June, 2018 qualifies as an expansionary one with a projected aggregate expenditure of N9.12 trillion, the highest in the nation’s history in nominal terms. It is designed to fit well into the goals of the government’s Economic Recovery and Growth Plan. According to the Minister of National Planning Senator Udo Udoma, it ‘’seeks to continue the reflationary policies of the 2016 and 2017 Budgets which helped put the economy back on the path of growth’’. In the 2018 budget, Recurrent (nondebt) spending is expected to increase by 17 per cent, from the previous financial year’s

level to N3.51 trillion while Capital expenditure (excluding transfers) has been increased by 22 per cent from N2.36 trillion in the financial year 2017 to N2.87 trillion. In all, capital spending is 31.5 per cent of total federal government expenditure in 2018. The breakdown of the capital spending shows that it has been prioritised in favour of critical ongoing infrastructural projects such as power, roads, rail and agriculture. Some of these include the circa N162 billion counterpart funding for Railway projects, N26.7 billion Federal Government National Housing Programme and about N344 billion for the construction and rehabilitation of several roads nationwide. Others include the N4.2 billion for Rural Roads and Water Sanitation programme as well as over N25.1 billion for promotion and development of value chain across more than 30 different commodities. It goes without saying that large-scale infrastructure development is a potent stimulus in driving economic growth and by extension the growth of the capital market. Capital expenditure on critical infrastructure is bound to filter through to industrial stocks, technological and agric stocks among others. The N500 billion for FGN Special Intervention Programme (including Home Grown School Feeding Programme, Government Economic Empowerment Programme, N-Power Job Creation Programme and

Conditional Cash Transfers) if well implemented promises to have a positive spill-over on agriculture and consumer goods sectors. It is heartening to note that in the current budget, the provision to retire maturing bonds to local contractors increased by 7 per cent from N177 billion in FY2017 to N190 billion ‘’in view of government’s desire to liquidate all contractor arrears of the federal government going back to several years’’. This should help reduce the incidence of non-performing loans in banks with a positive effect for corporate results and shareholders’ wealth. The bond market will equally feel the impact of the budget as the overall budget deficit of N1.95 trillion in 2018 (representing 1.74 per cent of GDP) is to be financed mainly by borrowing N1.643 trillion out of which the sum of N793 billion would be sourced locally. Be that as it may, it would appear the equities market in particular is not excited by the budget numbers. It will be recalled that the 2018 budget proposal was presented to the National Assembly by the President on 7th November, 2017. It was passed by the National Assembly on the 16th of May, 2018 and assented to by the President on 20th June, 2018. To the surprise of many close watchers, the stock market reaction to the news of the budget assent was anything but cheering. According to the Nigerian Stock Exchange

Stock Market report for the week ending June 22 2018, ‘’the NSE All-Share Index and Market Capitalization depreciated by 2.74% to close the week at 37,862.53 and N13.716 trillion respectively. Similarly, all other indices finished lower with the exception of the NSE Insurance Index that appreciated by 3.55%, while the NSE ASeM Index closed flat’’. Also, the market breadth was negative as ‘’twenty-five (25) equities appreciated in price during the week while forty-four (44) equities depreciated in price with one hundred (100) equities remaining unchanged’’. So contrary to expectation, the market actually sagged during the week the 2018 Appropriation Bill was formalized into a law dragging down Year-toDate return to -1.00 per cent. To understand why, the 2018 budget, unlike the experience in countries that we often benchmark, does not seem to contain measures that directly address the concerns of the domestic issuers and investors in the market. These countries recognize the importance of fiscal incentives as triggers for capital market growth and make effort to incorporate them in their annual budgets. Take the 2018 Malaysia budget for example, it has a section on ‘’Tax incentives for Malaysia’s capital market’’ in which ‘’the budget proposes a three-year exemption on stamp duty for exchange-traded funds in order to promote Malaysia’s capital market and make it internationally more com-

petitive’’. In addition, ‘’the budget offers tax relief for venture capital companies and income tax deductions for environmentally and socially responsible Islamic bond issuers’’. Malaysia is currently implementing a second capital market development blueprint after successfully implementing the first 10year capital market development plan. In Pakistan, the pro-capital market budgetary measures involve a string of tax incentives including a gradual decrease in corporation tax rates from 30 percent in 2018 to 25 per cent in 2023. According to the country’s finance minister Dr Miftah Ismail who announced the budget, ‘’reduction in Corporate Tax by 1 per cent each year until 2023 is expected to boost sentiments and so would the extension of tax credit allowed for new industrial undertakings till 2021’’. In addition, the government is abolishing the 5 per cent tax on bonus shares which is an incentive for companies to issue bonus shares. Expectedly, the Pakistan Stock Exchange (PSX) witnessed a rally as an immediate reaction to the budget announcement. In Hong Kong, the budget contains a raft of measures to incentivise bond issuance including the extension of tax exemptions to debt instruments with maturities below seven years. Other notable measures announced in the budget capable of lifting the capital market include the tax exemptions for open-ended funds expected to come into effect this year. In

India, the 2018 budget mentions that three government insurance companies would be merged into a single entity and subsequently listed on the stock exchange, The government also announced the privatisation of national aircraft carrier Air India as part of the its strategic disinvestment in 24 Central Public Sector Enterprises (CPSEs) most of which would be undertaken through the stock exchange. Back home, the government expects to receive about N306 billion from privatization proceeds to finance part of the budget deficit. The capital market stands to benefit more if this plan is made to materialize through the Nigerian Stock Exchange. There is no doubt that the 2018 budget contains some drivers to lift consumption spending and productive activity, but they may not result in significant traction for the capital market in Nigeria given the current exit of foreign investors in search of higher returns and lower risks in the US and other developed economies. The budget numbers need to speak directly to the concerns of domestic issuers and investors alike in order to cushion the impact of global headwinds as well as neutralize the negative impact of heightening political tension and security concerns. The good news is that, despite all odds, the Nigerian capital market has room for upsides given current valuations. Although short on market expectations, the 2018 budget could serve as the much-desired trigger if well implemented.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08116759801, 08082496194. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

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ENERGY intelligence oil

gas

power

Wednesday 25 July 2018

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BUSINESS DAY

interview

‘We are in a unique position to provide unbiased advice to authorities for Nigeria’s oil, gas sector’

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finance people appointments

Debrief

Could there have been a better time for NLNG Train 7? FRANK UZUEGBUNAM

Dispute settled over rig contract offshore Ghana Page 6 OPEC weekly basket price DAY

PRICE

20/7/18

71.06

13/7/18

74.05

6/7/18

75.13

29/6/18

72.4

22/6/18

71.83 Source: OPEC

ecently, the Nigeria LNG Limited (NLNG) awarded the contracts for Front End Engineering Design (FEED) for Train 7 to B7 JV Consortium and SCD JV Consortium, inching closer to realising its expansion goals of increasing liquefied natural gas production output from 22 Million Tonnes Per Annum (MTPA) to 30 MTPA. A completed FEED process will pave way for Engineering, Procurement and Construction (EPC) pricing and bidding processes which are preconditions for Final Investment Decision (FID). But could there have been a better time for Train 7?

“If you think about 2016; the perception was that the whole world will be drowning in LNG and then 2017 will be the worst year for LNG market because there will be LNG all over the place. If you follow the trends and the reality that happened; the whole of last year, there was only one FID. Those predictions did not happen”, Tony Attah, chief executive, NLNG, told Businessday on the sidelines of 2018 World Gas Conference (WGC) in Washington D.C “Ten years ago, Train 7 was a fantastic business so I can just imagine 10 years later it has to be even better business”, Attah added. Investment in new LNG supply projects is set to fall to just $15 billion this year, the International Energy Agency (IEA)

said and is likely to dip further in the coming years in the absence of new final investment decisions. In its latest annual World Energy Investment report, the IEA said spending on new LNG liquefaction plants had remained “subdued” over the past two years. “On the basis of projects sanctioned, investment is projected to fall to around $15 billion in 2018 and, in the absence of new projects, to continue to fall thereafter,” it said. This, it said, was a result of a decreased level of FIDs after the large wave of projects mainly from Australia and the US were sanctioned in the first half of the current decade. The agency said that the current overcapacity in the market

has meant a reluctance to spend on new projects. “Many companies have been adopting a wait-and-see approach to new LNG investments,” it said. “This is consistent with the reduced incentive to embark on large and multi-billion dollar projects due to financial constraints affecting the upstream oil and gas sector.” A reluctance to invest is also related to buyers not being willing to commit to new long-term contracts despite expectation of higher gas demand. “In the absence of the sanctioning of new LNG liquefaction projects over the next 12-18 months, the LNG market could significantly tighten by 2023,” the agency said.

02 BUSINESS DAY WEST AFRICA Outlook Nigeria: NNPC cuts Bonny OSP, raises Qua Iboe, Forcados

igerian National Petroleum Corporation (NNPC) has cut the official selling price (OSP) differential for its mainstay grade Bonny Light in August, while raising the OSP differentials of Qua Iboe and Escravos, the company said. The Bonny Light OSP differential was cut 8 cents/b to a premium of 65 cents/b to Dated Brent for August. This is the lowest the OSP differential has been since December 2017, when it was at a premium of 50 cents/b to Dated Brent. The Qua Iboe and Escravos OSP differentials were both raised 17 cents/b, to a premium of 92 cents/b to Dated Brent and a premium of 99 cents/b to Dated Brent respectively. The Forcados OSP differential was raised 16 cents/b to a premium of 91 cents/b to Dated Brent, while naphtha-rich Akpo’s OSP differential was cut by 2 cents/b to Dated Brent

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Wednesday 25 July 2018

oil

Brief Kenya: Tullow’s oil operations threatened as impasse endures

minus 66 cents/b. Meanwhile, three months of loading programmes for Bonny Light emerged. Exports of Nigeria’s Bonny Light crude oil are set to fall in September to five cargoes from

seven in August, a loading programme from a trade source showed. September cargoes will load at a rate of 152,000 barrels per day (bpd), compared with 216,000 bpd in August. July will have just three cargoes

following the two-month force majeure. Bonga will have three cargoes in September. The Escravos programme came out with five cargoes and Agbami will have six cargoes in September.

ullow Oil Plc may shut down operations in northern Kenya unless persistent issues with local residents, which threaten progress of the project, are resolved. Disruptions in the remote Turkana region have already halted the shipments of a pilot program to test early production and deliver oil from Lokichar to the port of Mombasa about 1,000 km away, for future export. Tullow, along with partners Africa Oil Corp. and Total SA, plans to make a final investment decision next year to ramp up production by 2021 and develop a pipeline to ultimately transport the estimated 560-MMbbl resource. Tullow has enough supplies to run its Kapese Integrated Operation Base for another 14 days, “after which we will have no option other than a complete shut-down of the camp,”

the company said in a statement. “This will further delay resumption of crude oil trucking by about two months.” Kenya’s recent celebration of the first oil shipments, a milestone since Tullow’s discoveries in 2012, has been short lived. Aggrieved local community members seized trucks transporting crude on June 28 and broke into Tullow’s Ngamia 8 oil well and storage site, protesting rampant insecurity in Turkana county.

Ghana: GNPC lifts 3.96m barrels of crude oil in first five months of 2018

he Ghana National Petroleum Corporation (GNPC) has lifted four parcels of crude oil on behalf of the State in the first five months of 2018, compared with three liftings in 2017, according to Ken OforiAtta, Minister for Finance, when he presented the 2018 Mid-year Budget Review to Parliament in Accra. The 2018 liftings involved 3.96 million barrels of crude oil, compared with 2.89 million barrels in the same period in 2017. Also, a total of 8,881.38 million standard cubic feet of gas was delivered

to Ghana National Gas Company (GNGC) in the first five months of 2018, compared with 8,782.20 million standard cubic feet in the same period in 2017. He said, however, in terms of lifting proceeds, the volumes covered five liftings, with the 41st Jubilee and 5th TEN liftings, which were carried out in December 2017 and paid for in January 2018, adding to the number. “This makes it a total of five liftings, same as 2017, involving, 4.96 million barrels, compared with 4.87 million barrels in 2017,” he said. The Minister said a total

of US$313.34 million accrued from the five parcels of crude oil liftings in January-May 2018, compared

with US$249.81 million in the same period in 2017. Total petroleum receipts for January-May 2018 was

US$372.30 million, adding that there were no gas receipts in the referenced period due to the Volta River Authority’s non-payment for gas supplied it by the GNGC. On the outflows between January-May, 2018, he said the Petroleum Revenue Management Act (PRMA) required that not more than 70 percent of government’s net petroleum receipts was designated as Annual Budget Funding Amount (ABFA) and not less than 30 percent designated as Ghana Petroleum Funds. He said out of the amount transferred into

the Ghana Petroleum Funds (GPF) and the Ghana Heritage Fund (GHFs) received not less than 30 percent, with the rest transferred into the Ghana Stabilisation Fund. He said the JanuaryMay, 2018 petroleum receipts were allocated based on the provisions of the PRMA, as amended and total revenue distributed was US$373.30 million, compared with US$277.79 million in the analogous period in 2017. Of this amount, GNPC (the NOC) was allocated a total of US$94.26 million, compared with US$90.90 million in 2017.

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Wednesday 25 July 2018

gas

ENERGY intelligence

Egypt: IMF-backed austerity plan pushes gas prices up by 75 percent

up from 0.100 pounds. The price for consuming between 30 and 60 cubic metres was set at 0.250 pounds, up from 0.175 pounds, while consumption of more than 60 cubic metres was set at 0.300 pounds from 0.225 pounds. The statement did not specify the timeframes over which the consumption levels apply. But officials said they covered the usual billing period, which is monthly in Egypt.

Global LNG: Prices slide as demand retreats in Japan, China, South Korea

Geopolitics of Germany’s natural gas demand - Lessons for Nigeria STEPHEN ONYEKWELU

sian spot liquefied natural gas (LNG) prices softened for another week as the focus of purchasing activity switched to September, encountering weak demand, new supply and a falling yuan potentially sapping Chinese demand. Spot prices for September LNG delivery in Asia were assessed at $9.50 per million British thermal units (Btu), down 50 cents from the previous week. Traders Vitol, Trafigura and Diamond Gas International offered five cargoes in total via the Platts Market on close process but there were no takers even as offers on some of the cargoes slipped to around $9.05 per mmBtu, traders said. In the world’s three-biggest LNG importers Japan, China and South Korea de-

WEST AFRICA

Brief

gypt said it was raising the price of natural gas for home and commercial use by up to 75 percent, the latest move in an IMF-backed austerity programme that has left many Egyptians struggling to make ends meet. The increases follow hikes to fuel, electricity and public transport prices that are part of a $12 billion IMF loan programme signed in 2016 that aims to lure back investors and lift the economy battered by political turmoil since 2011. The government statement published in the Official Gazette said that, effective August 1, the price for consuming up to 30 cubic metres of gas had been set at 0.175 Egyptian pounds ($0.0098) per cubic metre,

BUSINESS DAY

mand weakened or was set to drop later in the year. Already, Japanese LNG imports in June fell to the lowest in more than two years as utilities switched on more nuclear reactors shut following the Fukushima nuclear disaster in 2011. Japan has six reactors operating and three others have passed safety inspections and could be operating by October, allowing utilities to switch away from LNG.

ermany, Europe’s biggest economy thirsts for more natural gas from Russia because its energy transition policy is set to miss targets and Nigeria, Africa’s largest economy has some lessons to learn to become a regional hub for natural gas. To meet its growing natural gas needs, Germany is willing to go ahead with construction of the Nord Stream 2 gas pipeline. This generated controversies at the North Atlantic Treaty Organisation’s (NATO) July Summit in Brussels, Belgium. Donald Trump is the most outspoken critique against the $11 billion Nord Stream 2 pipeline for geopolitical reasons. The Ukrainian president has misgivings about the planned gas pipeline too. “This is not a commercial project – it is not economical or profitable – it is absolutely a political project. There is no point, from the economic point of view, creating this project. This is absolutely a geopolitical project”, Petro Poroshenko, the Ukrainian president said in the week ending July 20. Unlike Germany, a net importer of natural gas, Nigeria is a net exporter of the energy commodity and has opportunity to be for West Africa, what Russia has become for the European natural gas market – a major supplier of the much needed energy source to fire power plants and sustain transportation networks. The planned gas route under the Baltic Sea will more directly link Russia and Germany. Along with

some European nations, both former Presidents G. W Bush and Obama were against the project, knowing that it riskily ups Europe’s dependence even more on Russia and poses national security threats to the Western allies. Yet, others claim the pipeline is critical to more freely bringing gas into the continent. Germany imports more than 80 percent of its gas and Russia provides about half of the imports. In West Africa, a similar gas infrastructure exists – the West African Gas Pipeline. Nord Stream 2 Pipeline and the West African Gas Pipeline are not here compared in terms of size and scope but the function they were both designed for. But West Africa’s has been riddled by challenges. In the spirit of Economic Community of

West African States (ECOWAS), four West African countries, Benin, Ghana, Nigeria and Togo in February 2000, signed an Inter-Governmental Agreement to build a gas pipeline, which will supply Nigerian gas on West African markets. Nigeria is leaving the West African gas market to Russia’s Gazprom. Ghana has signed a 12year deal with Russia’s Gazprom for liquefied natural gas (LNG) supply. Privatisation will lead to energy efficiencies in the West African sub-region one of the experts suggested. “The gas that will come from Russia to Ghana’s regasification plant will cost $12 per standard cubic feet (SCF). I can put gas at $3 per SCF into the West African Gas Pipeline if it were efficiently managed and with an extra cost of

$2 per SCF for transportation cost I can deliver gas to Ghana at $5 per Scf less than half of what the Russian gas will cost” Austin Avuru, CEO of Seplat, a Nigerian oil and gas exploration and production company said at the roundtable of oil and gas experts. In July 2016, Walt Perez, managing director of West African Pipeline Company Limited (WAPCo) stated that the company faced significant risks because of its financial health engendered by low gas volumes, huge indebtedness totalling about $179 million and dwindling cash flows. Privatisation is clearly not a silver bullet that fixes all inefficiencies; however, it is worth considering whether it will help improve energy efficiencies along the West African Gas Pipeline.

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Cameroon: Nachtigal Hydropower project secures $794m investments

he World Bank Group has approved an investment package of $794.5 million for the Nachtigal Hydropower project in Cameroon, to help the country reach its goal of providing access to electricity for 88 percent of its people by 2022. “This investment in clean energy is key to lowering the cost of electricity and ensuring that Cameroon’s economy is competitive. The Nachti-

gal Project is one of the very few public-private partnership (PPP) hydropower projects in subSaharan Africa that will accelerate Cameroon’s realisation of its development goals, including poverty reduction,” said Elisabeth Huybens, World Bank country director for Cameroon. The Nachtigal Hydropower project builds on a sustained, 20-year engagement in the energy sector by the World Bank Group in Cameroon.

Once completed, it is expected to increase the country’s electricity generating capacity by 30 percent and provide greater opportunities for the poor, who are disproportionately excluded from economic activities due to inadequate power supply. The bank noted that over the past two decades, Cameroon has embarked on a series of sector reforms in the power sector to enhance financial viability and attract private sector investment.

Guarantees amounting to $300 million from the International Bank for Reconstruction and Development (IBRD), guarantees worth $262.5 million from the Multilateral Investment Guarantee Agency (MIGA) and equity totaling $70 million, loans worth $152 million, and currency risk management swaps from the International Finance Corporation (IFC) have been brought together in a package to bring sustainable private sector solutions to the infrastructure sector. “By working for almost five years as co-developer of the project, the Nachtigal HPP is a great example of how IFC is using InfraVentures to help projects become reality in Africa. In addition, as Global Coordinator of the Project’s senior debt, IFC has mobilised the entire debt package, including senior loans from development finance institutions and local commercial banks of around $ 859 million equivalent,” said Oumar Seydi, IFC director for Africa.

Wednesday 25 July 2018

power

Europe: Vitol to invest €200m in European renewables

il trader, Vitol, is to invest €200 million in European renewables, the oil trading company said. New ambitious climate targets by the European Union are expected to lift renewables’ share in the energy mix above 30 percent by 2030. The company has launched a Jersey-based fund VLC Renewables together with UK-based investment company Low Carbon, it said. The fund will initially target investments in both onshore and offshore wind and will invest in projects at various stages of the development cycle, including late-stage development, construction and operation, it added. The fund builds on Low Carbon’s considerable expertise in renewables based on 320 MW of UK solar projects and Vitol’s understanding of energy markets and commodity flows, it said.

The initial €200 million has been committed by Vitol, and investment opportunities may be offered to third parties, it added. “Partnering with Vitol, one of the largest energy companies in the world, will enable us to drive scale in the investment and development of clean energy,” Roy Bedlow, Low Carbon CEO said. “By 2025 almost 27 percent of European electricity will be generated from wind and solar. As a major participant in Europe’s power markets and as a significant investor in energy infrastructure worldwide, Vitol is keen to build a portfolio of renewable investments to complement its existing activities,” Vitol’s Simon Hale added. Vitol, founded in Rotterdam in 1966, today trades over 7 million b/d of crude oil and oil products. At any one time it has 250 ships transporting its cargoes, it said.

remuneration, it said. After several years of growth, global investment in renewables and energy efficiency declined by 3 percent in 2017, with solar policy changes in China raising the prospect of a further slowdown this year, the IEA said. The decline was worrying, IEA executive director Fatih Birol said: “This could threaten the expansion of clean energy needed to meet energy secu-

rity, climate and clean-air goals.” Final investment decisions for coal power plants declined for a second year, but the global coal fleet continued to expand in 2017, mostly due to markets in Asia, it said. Meanwhile, retirements of nuclear power plants exceeded new construction starts as investment in the sector declined to its lowest level in five years, it added.

IEA: Global electricity investment ahead of oil, gas for second year

lobal energy investment declined 2 percent on year in 2017 with electricity investment ahead of that for oil and gas for a second year in a row as the shift to electrification accelerates, the International Energy Agency said. Over $750 billion was spent in the electricity sector despite a 7 percent drop for renewable energy investments, while $715 billion was spent on oil

and gas supply globally, according to the IEA’s annual WEI report. At 40 percent of the total, investment by stateowned energy companies proved more resilient last year than private sector investment, the IEA said. Government policies are playing a growing role in driving private spending in the electricity sector, with more than 95 percent of the sector total based on regulation or contracts for

Wednesday 25 July 2018

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Interview

BUSINESS DAY

‘We are in a unique position to provide unbiased advice to authorities for Nigeria’s oil, gas sector’ CHIKEZIE NWOSU is the chairman, Society of Petroleum Engineers (SPE), Nigerian Council. In an interview with FRANK UZUEGBUNAM, editor, West Africa Energy Intelligence, he talks about SPE Nigeria’s role in developing and shaping oil and gas policy framework amongst other issues. Excerpts: What has been SPE Nigeria’s main activities and achievements since its founding? PE Nigeria has grown from the Lagos Section in 1973 to five sections in Abuja, Benin, Lagos, Port Harcourt and Warri, with 32 affiliated students’ chapters, over 4300 professional members and over 4900 student members. Its main activities include the continuous development of professionals in the oil and gas industry in technical, ethical and strategic leadership, outreach programs to bring Energy to the primary, secondary and tertiary institutions (and the grassroots) through the Catch Them Young, Ambassador Lecture Program and the Energy4Me outreach, socially responsible programs and advocacy on the responsible use of oil and gas held annually across all the SPE Nigeria sections, advocacy to policy makers and the legislature on critical energy issues, gas to power, gas based industry, renewables leveraging on oil and gas experiences, diversification of the Nigerian economy etc. What is SPE Nigeria’s role in developing and shaping oil and gas policy framework? The SPE is a non-profit and apolitical professional organization, regulated by international best practices through the SPE International (established in 1957). We are therefore in a unique position to provide unbiased advice to the authorities for the better good of Nigeria, without the accusation of working in our own, or anyone else’s, personal interest. In addition, we provide an international perspective, through both our relationship with SPE International and, especially, through a lot of our members who have many decades of experience working internationally. Of recent, many policy areas the Nigerian Government have undertaken, e.g. the ‘7 Big (Must) Wins’ (which has embedded within, the National Oil and Gas policies) and the Petroleum Industry Bill, are supported either indirectly by SPE NC or directly through our members who con-

sult for both the National Assembly and the Federal Executive. This international perspective is perfectly balanced with our local knowledge and provides a powerful tool to influence and support Government policy for the benefit of all stakeholders. The SPE Nigeria will continue to play a strong role in policy formulation and execution through ensuring that the outcomes of its engagements are well documented and presented to the authorities, and continuing to encourage its members to provide the expertise in their field/s to Government, either through consultancy or service, During the Nigeria International Petroleum Summit (NIPS2018) hosted by the federal government of Nigeria, at the ministerial session in which you were part of contributors: you used of phrase ‘7 MUST WINs’. How do you expect the 7 MUST WINs to be driven? For the ‘7 MUST WINS’ to be successful, they must outlive the people, groups, committees etc. that have birthed and shaped them. This requires buy-in from

all the industry players that typically outlive the government of the day. The key players all have umbrella organizations that have existed for a long time, and it is imperative that they speak with one voice and continue to emphasize the ‘must win’ nature of the ‘BIG 7’. These umbrella organizations include the OPTS, IPPG, PETAN, NAPE, NGA and, of course, SPE Nigeria. We cannot afford to manage this process in the same manner the PIB has been, or we will have the same outcome – a more than decade long delay in implementation, and the attendant flight of capital investments from the Nigerian oil & gas industry. Add to this the challenging outlook on the future energy balance, and it becomes evident that there is an urgent need to solidify on the early gains of the ‘7 MUST WINS’, and embed the tenets in the way we do business in the oil and gas industry. Now that the Petroleum Industry Governance Bill (PIGB) has been passed, what are your expectations?

The Petroleum Industry Governance Bill that was sent to Presidency for assent is one part of the four-pronged PIB. It is important to note that dividing the original PIB into four manageable bills by the 8th National Assembly is to be applauded and tactically allows the passage of the full PIB in four separate (but ultimately consistent) bills. The other three bills – The Petroleum Industry Administration Bill (PIAB), the Petroleum Host & Impacted Communities Development Bill (PHICB) and the Petroleum Industry Fiscal Bill (PIFB) have all been ‘publicly heard’ by the Joint National Assembly Committee on the PIB. I was at the hearing in Abuja and it became apparent that there were still fundamental differences among major stakeholders. These differences are however not insurmountable, but all parties must walk away from positions of ‘winning for themselves’ and find the right compromises for all to benefit from the expected growth in the industry this bill will engender. On how the industry will change – I will touch on a few important areas and/or principles. The Single Industry Regulator, which is one of the tenets of the ‘7 MUST WINS’ is captured within the Governance bill as the Nigerian Petroleum Regulatory Commission (NPRC), which in principle will take over the functions of the current DPR and PPRA. This a very positive change and, with the right governance structure and people, should result not only in the needed transparency in regulatory activities from the upstream to downstream sectors, but also in the transparency in the reporting of rent and royalties in the Nigerian oil and gas industry. The PHICB is crafted to ensure that the Host and Impacted Communities become partners in the exploitation of resources in their locality, and is expected to bring the needed peace in these oil and gas communities to enable smooth operations of the industry. The

PIFB strives to create an equitable distribution of each barrel of oil between government and investors / operators, with a recognition of ‘terrain equity’. It also is crafted to ensure that only responsible investors / operators can derive benefit from these investments (through production allowances linked to delivering on production promises, cost efficiency and hydrocarbon reserves replacement). How can Nigeria increase its revenues from other sources using oil and gas as enabler? I have mentioned energy as an enabler, especially Gas to power. The National Gas policy must open the vast opportunities to deliver energy and earn significant revenue from our abundant gas resources. We are the regional giants in gas, and the entire West African (possibly Sub-Saharan Africa) region will boom if Nigeria gets it right. With our population, a booming West African region will create huge opportunities in just about any industry. Think India and China!!! Nigerian companies in the renewable energy space (solar, wind, biomass etc.) will also benefit from the human capital we have developed (top class engineers), adaptable technology and the strides that have been made by our partner companies in R&D on renewables. What factors will drive oil and gas as enabler for Nigeria government diversification program? Quite simple – creating the right business environment for the industry to thrive will enable the much-needed diversification. Policy that enables this growth is clearly critical, but long-term stability of the business environment is also important. Policy will serve to trigger the first tranche of investments, but longer term growth in these investments will only come where Nigeria has a stable investment climate. We must earn the respect and trust of local and international investments.

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WEST AFRICA

ENERGY intelligence

K PetroChina inks threeyear LNG supply deal with PNG LNG

finance people appointments

Dispute settled over rig contract offshore Ghana

Brief

hina’s stateowned PetroChina International has signed a three-year agreement for the purchase of 0.45 million mt/year of LNG from the ExxonMobil-operated Papua New Guinea LNG project, expected to begin soon, Santos and Oil Search said in filings to the Australian Stock Exchange. China’s increased procurement of LNG supplies on the back of higher demand has helped soak up new and existing production capacity, supporting prices in the region. The Platts JKM for cargoes to be delivered in September was assessed at $9.279/MMBtu. “We are delighted to have entered into a sale and purchase agreement (SPA) with PetroChina, which has been an active buyer of spot LNG cargoes from PNG LNG. The first sale under the new agreement is ex-

Wednesday 25 July 2018

pected to take place this week,” Peter Botten, Oil Search’s Managing Director said. The deal takes the total contracted volumes from PNG LNG to 7 million mt/ year, with 6.6 million mt of the project’s annual output already committed under long-term contracts to JERA, Osaka Gas, Sinopec and CPC, the two companies said. ExxonMobil is also negotiating with a number of other parties for potential mid-term LNG supply agreements in lieu of spot sales, on behalf of the partners in PNG LNG, Santos said. “These agreements are expected to be concluded in the near term and increase sales under new mid-term agreements to 1.3 million mt/year,” it added. The LNG project has a nameplate capacity of 6.9 million mt/year, but consistently operates above it.

osmos Energy said it succeeded in arbitration with Tullow Oil over a rig contract canceled because of maritime disputes off the coast of Ghana. The International Chamber of Commerce ruled in favor of a Ghanaian subsidiary of Kosmos in arbitration over expenses related to the cancellation of a rig contract two years ago. As a result, Kosmos is not liable for the estimated $50 million owed to rig owner Seadrill. “Kosmos will also be reimbursed by Tullow for approximately $14 million plus interest, related to amounts previously paid under protest as well as certain costs and fees of pursuing the arbitra-

tion,” it stated. Tullow announced in early July that an English court ruled against its 2016 suspension of its rig contract with Seadrill. The courts ruled Tullow erred in cancelling the contract in response to a decision from the government in Ghana to halt drilling at a field then claimed by the Ghanaian and Ivorian governments. After production at the Tweneboa, Enyenra, Ntomme field started in 2006, Tullow cautioned that drilling may stand still because of border disputes between the governments of Ghana and Cote d’Ivoire. Tullow offered no comment on the ruling other than to say “the tribunal’s award is final and binding.”

Tullow’s oil production during the first quarter averaged 87,700 barrels of oil per day, led by gains from the TEN complex offshore Ghana. Tullow is still in the process of remediating problems with a floating production fa-

cility parked over the Jubilee field off the coast of Ghana, considered one of the larger finds in recent years. Spending plans for Tullow for 2018 remain unchanged at $460 million.

Shell in talks to sell $2-billion Nigeria oil assets

oyal Dutch Shell Plc is in talks to sell two Nigerian oil licenses in an area that is at the heart of environmental and human rights controversies for $2 billion, according to people familiar with the plan. The Anglo-Dutch oil major is discussing selling oil mining licenses 11 and 17 to Heirs Holding Ltd., a company run by Nigerian tycoon Tony Elumelu, the people said. Included in the sale are infrastructure assets such as a natural gas-fired power plant that would be managed by Transnational Corporation of Nigeria Plc, another company run by Elumelu, they said. Exiting the two blocks would cut Shell’s exposure in a region of Nigeria rife with controversy. The company has sold billions of dollars of Niger Delta

assets in the past decade amid local opposition, civil conflict, militant attacks and accusations of causing pollution. The latest sale would leave Shell to focus on its operations in Nigerian waters, where the risks of attacks on infrastructure and theft are relatively low. Discussions between Shell and Elumelu have been advanced at times and run into hurdles at others as he is yet to secure

financing, the people said. No deal has been reached and the talks could still fall apart, they said. Shell discovered oil in the Niger Delta in the 1950s and became among the biggest producers in the West African nation. Tensions between the company and the local people broke out over the years regarding pollution and Shell’s contribution to civil society. The growing cri-

sis shot to world attention when in 1995 a prominent protester and Shell critic Ken Saro-Wiwa, a member of the Ogoni ethnic minority, was executed by the Nigerian government along with eight others. Shell’s Niger Delta operations have faced outside scrutiny. In 2011, a 260-page report by the United Nations Environment Programme said the company hadn’t applied its own procedures when operating in the delta and that environmental destruction was worse than previously thought, creating a “tragic legacy.” Shell has continued to face opposition in the region, with some reports suggesting local people even blocked the company from accessing some parts of the delta for years. This has left Shell with undeveloped oil and gas reserves.

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Wednesday 25 July 2018

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marketinsight

Key European refiners start to halt Iranian crude imports

ey buyers of Iranian crude in Europe are starting to cease imports of Iranian crude for September-loading cargoes as the first round of US sanctions on Iran kick off next month. Trading sources at refineries in Spain, Italy and France that actively buy Iranian crude told S&P Global Platts that Augustloading stems were probably the last time they

would lift Iranian crude as securing banking, shipping and insurance around Iranian crude transactions were already a huge challenge. The US sanctions specifically targeting Iran’s oil sector snap back on November 4 but the first set of sanctions aimed at Iran’s financial sector start on August 6, and this is expected to make it even tougher for refiners to buy Iran’s crude. “I think August is the

last. It will get more and more difficult to deal with Iran probably August will be the last month to lift. All around difficulty with banking, shipping,” a source at an European refiner said. Europe is a key outlet for the OPEC member, taking around 600,000700,000 b/d, or one-third, of Iranian crude exports. The key buyers of Iranian crude in the region are Turkey, France, Italy, Spain and Greece.

OPEC Flakes OPEC, allies vow to ‘not deviate’ from 100 percent cut compliance

Sources said these refiners were now already looking to replace Iranian barrels with crudes from Iraq, Saudi Arabia and Russia. “Gradually everyone will stop buying Iranian barrels so I assume that Iraq’s Basrah Light and other similar crudes will gradually be more appreciated,” said a source from a European-based trading house. “As far as I understand August will be last month.” The only country in this region unlikely to halt Iranian crude imports is Turkey, which is likely to continue doing business with Iran, sources said. Turkey buys almost 150,000-220,000 b/d of Iranian crude, making it one of the top five customers of Iran’s oil. EU foreign ministers last week backed draft rules intended to protect EU companies dealing with Iran from US sanctions related to Iran’s nuclear activities, taking them a step further towards becoming binding.

US crude oil output hits 11 mbpd for first time ever

S crude oil production last week hit 11 million barrels per day (bpd) for the first time in the nation’s history, the Energy Department said, as the ongoing boom in shale production continues to drive output. The gains represent a rapid increase in output, as the data, if confirmed by monthly figures, puts the United States as the second largest producer of crude oil, just behind Russia, which was producing 11.2 million bpd in early

July. The United States has added nearly 1 million bpd in production since November, thanks to rapid increases in shale drilling. Crude inventories increased 5.8 million barrels in the week to July 13, compared with analysts’ expectations for a decrease of 3.6 million barrels. Crude futures edged down on the data. US crude was down 55 cents to $67.51 a barrel, while Brent dropped 39 cents to $71.77 a barrel. The benchmarks have gained steadily

since bottoming out below $30 a barrel in early 2016; US crude is up nearly 12 percent this year. In the last several weeks, the EIA has rounded off US production to the

BUSINESS DAY

nearest hundred thousand barrels, so that figure had been stuck at 10.9 million bpd for over a month. This report comes amidst worries that infrastructure bottlenecks, which make it difficult for producers to get their oil to market, could soon start curtailing output. Even as production ramps up, the United States, the world’s top oil consumer, still depends on imports. Net U.S. crude imports rose last week by 2.2 million bpd to about 9 million bpd.

PEC and its allies restated their pledge to “not deviate” from overall 100 percent conformity levels in their output agreement after the Joint Ministerial Monitoring Committee met, but the group has still left unsettled the contentious topic of quotas. 21 percent in June, higher than what the alliance had agreed on at its meeting in late-June, the statement said. The next teleconference meeting of the JMMC will take place on August 20 following the meeting of the JTC the same day. The committee of delegates advises the JMMC, which is chaired by Saudi Arabia and also includes Russia, Kuwait, Venezu-

ela, Algeria and Oman. Iran, which does not sit on the JMMC, sent a delegation to the meeting. OPEC on June 23 agreed with Russia and nine other allies on the 1 million b/d production boost to head off any supply shortages expected from US sanctions on Iran and Venezuela’s continued decline, among other market disruptions.

OPEC weighs legal response to US Congress bill, Trump tweets

PEC is devising a legal strategy to counter socalled NOPEC legislation in the US that would revoke the producer group’s sovereign immunity, as President Donald Trump’s tweets about the organization have raised alarm, sources familiar with the deliberations told S&P Global Platts. OPEC’s legal department will meet at the organization’s headquarters in Vienna to consider its options, the sources said. Several member country delegates will also attend the meeting, as they are already in town for a technical meeting on production quotas. The bill, which would require passage in both houses of Congress and Trump’s signature to become law, would allow

the US attorney general to sue a foreign crude producer for price manipulation under the Sherman Antitrust Act. House and Senate leaders have given no indication they will bring the NOPEC bills to a floor vote this year and a congressional aides said that they are waiting for Trump to signal support for the bill before pushing it forward.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 25 July 2018

talking points

In association with

Global shift to cleaner fuels to render Nigeria’s refineries obsolete ISAAC ANYAOGU

igeria’s three refineries are already in advanced stages of decay, but what will finally do them in, seems to be a world where cleaner energy becomes a necessity in order to meet sustainable development goals. Performing at a paltry 10 capacity utilisation, the NNPC, continues to map out ambitious strategies to revamp them when actually they should be selling them off as scraps. Since the days of Turn-Around-Maintenance, Nigeria’s unfortunate refineries have become easy way to explain difficult expenditures. Meanwhile, the new threat to these refineries is that their output, however limited, will not meet future specifications in a low carbon future the world is heading to in line with the sustainable development goals of the United Nations. The quality of refined products from Nigeria’s refineries is making a case scrapping them. In Europe the trend is towards low sulphur content of gasoline to reduce emissions standards and the countries are setting regulations requiring gasoline to have sulphur content of not more than 10 parts per million. In Nigeria, refined petroleum products are produced with sulphur content of more than 3,000 parts per million and is a major factor in the thick smoke that exhausts pipe of vehicles emit. The diesel produced in Nigeria’s refineries are about 700 parts per million, this is not suitable for the low carbon future that is currently in transition. The refineries that will survive in future are those that will produce low sulphur content in keeping with clean energy trends. Interestingly, the Standards Organisation of Nigeria have reduced the maximum allowed levels of Sulphur in Petroleum fuels in Nigeria from July 1, 2017 but the standards are largely being ignored. SON stipulates that diesel fuel (AGO)

should have maximum Sulphur levels of 50 parts per million while premium motor spirit (petrol) should have maximum sulphur levels of 150 ppm. This is due to the fact that petroleum fuels that have high sulphur levels generate directly high emission levels in automotive engines. Such vehicle emissions contain high level of toxic pollutants such as benzenes and particulates that have negative impacts on human health and on the environment. This situation is at variance with Nigeria’s commitment to clean energy. In 2015, Nigeria joined over 190 countries in signing the Paris

Accord which seeks to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius, above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. The agreement also seeks to strengthen the ability of countries to deal with the impacts of climate change. To reach these ambitious goals, appropriate financial flows, a new technology framework and an enhanced capacity building framework will be put in place, thus supporting action by developing countries and the most

vulnerable countries, in line with their own national objectives. The Paris Agreement requires all Parties to put forward their best efforts through nationally determined contributions (NDCs) and to strengthen these efforts in the years ahead. This includes requirements that all Parties report regularly on their emissions and on their implementation efforts. These refineries would negate Nigeria’s clean energy ambition and will continue to endanger new vehicles imported into the country. Modern vehicles require fuels that meet high quality standards for a more efficient operation of their engines.