BusinessDay 25 Jun 2020

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news you can trust I ** thursDAY 25 june 2020 I vol. 19, no 592

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rom July 1, 2020 electricity customers in Nigeria will begin paying for electricity based on how long they receive power daily as the Nigerian Electricity Supply Industry (NESI) will undertake a new methodology for determining how bills are

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DisCos to compensate customers if they renege on service agreement Must remit 90% of obligation to the electricity market

structured.

BusinessDay gathered from sources in the Federal Government that the Nigerian Electricity Regulatory Commission (NERC) has negotiated six tariff bands that will ensure that payments can reflect quality of services offered. It is part of a grand plan by the government to Continues on page 3

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Nigeria plots way out of darkness with new service-reflective tariff plan ISAAC ANYAOGU

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Edo 2020: Coast clear for Obaseki in PDP as court strikes out case after settlement … I instituted lawsuit to save party from impending disaster – Ogbeide-Ihama Ignatius Chukwu (Port Harcourt) & Innocent Odoh (Abuja)

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do State governor, Godwin Obaseki, can now contest in the People’s Democratic Party (PDP) governorship primaries scheduled for today, Continues on page 3

Inside

Hadiza Bala-Usman (l), managing director, Nigerian Ports Authority, and Bashir Jamoh, director-general, Nigerian Maritime Administration and Safety Agency (NIMASA), during her visit to NIMASA, in Apapa, Lagos.

Nigeria’s Economic Sustainability Plan seen offsetting IMF’s -5.4% P. 2 growth projection

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Thursday 25 June 2020

BUSINESS DAY

news Nigeria’s Economic Sustainability Plan seen offsetting IMF’s -5.4% growth projection … as analysts expect negative growth Q2 HOPE MOSES-ASHIKE & BUNMI BAILEY

T

he International Monetary Fund’s projected sharp recession for Nigeria with growth contraction of 5.4 percent in 2020 could be offset by the Federal Government’s Economic Sustainability Plan if implemented accordingly, according to analysts.

The Washington D.C.based IMF on Wednesday released its World Economic Outlook Update titled ‘A Crisis Like No Other, An Uncertain Recovery’, estimating further plunge in Nigeria’s growth to -5.4 percent in 2020 from -3.4 percent it predicted in April.

The COVID-19 pandemic has had a more negative im-

pact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. Nigerian government had estimated -4.40 percent decline in economy if it sticks to its budget with no stimulus.

In 2021, global growth is projected at 5.4 percent.

Ayodeji Ebo, managing director, Afrinvest Securities Limited, said the revised negative growth rate may be attributed to the prolonged FX illiquidity that is impacting on business activity as well as increasing number of new cases. Notwithstanding, he said the actual negative growth will be premised on the action the FG to takes to salvage this situation.

“The Economic Sustainabil-

ity Plan looks very robust but the implementation is key and can reduce the projected negative growth rate. Both the monetary and fiscal actors need to take decisive actions,” Ebo said.

FG launched the Economic Sustainability Plan with the objective to stimulate the economy by preventing business collapse and ensuring liquidity; retain or create jobs using labour-intensive methods in key areas like agriculture, facility maintenance, housing and direct labour interventions, among others.

“What the IMF released is only a forecast based on some assumptions. I do not think the Nigerian economy will contract that much this year given that Q1 of 2020 was able to post a positive growth of 1.87 percent,”

Uche Uwaleke, a professor of finance and capital markets and chair, Banking And Finance Department, Nasarawa State University, Keffi, said.

He said the government and the CBN have pumped and are still pumping money into the economy to contain the negative impact of COVID-19 on the economy. By the same token, much of the external loans already secured for either balance of payment (BOP) support or for infrastructure have moratorium periods effectively postponing repayment obligations. Moreover, oil price is beginning to climb following compliance with production cut agreement coupled with the fact that the economy is gradually being reopened.

R-L: President Muhammadu Buhari; Vice President Yemi Osinbajo, and Boss Mustapha, secretary to the government of the federation, during a virtual Federal Executive Council meeting at the Council Chambers of the State House in Abuja, yesterday.

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LOLADE AKINMURELE

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he board of the World Bank on Wednesday approved Nigeria’s long-standing request for about a billion dollars, releasing the first tranche of $750 million credit to support the country’s power sector recovery as a lifeline to the cash-strapped sector.

This fresh cash injection will contribute to fixing the Central Bank of Nigeria’s beleaguered balance sheet, analysts say.

The fund, which could rise to $3 billion (N1.1 trillion) in a few years, was committed to by the World Bank as part of its programme to improve the CBN’s balance sheet which has been strained by incessant credit to the government.

The CBN has specifically been flowing unbudgeted credit to the Federal Government to fund the power sector since 2014, something the World Bank and a motley crew of economists took a very dim view of because it bypasses the standard Nigerian appropriation process.

The Federal Government has spent N1.5 trillion since 2014 in bailout funds for the power sector, with the CBN directly funding the bulk of the interventions.

The latest bailout in August 2019 was worth N600 billion.

Themoneywaschannelledinto bridging the shortfall in the pay-

ment of monthly invoices by key stakeholders in the sector.

The government had also intervened in the sector in March 2017 when the Federal Executive Council approved a N701 billion CBN facility under the Power Assurance Guarantee for NBET for a period of two years.

Before then, the government had tapped the CBN for a loan of N213 billion for DisCos under the Nigeria Electricity Market Stabilisation Facility.

How disbursement will work The Federal Government will be credited by the World Bank in dollars, which goes to improve the country’s foreign reserves level while paying the CBN back in naira for its unbudgeted credit to the power sector.

The money will be targeted at achieving financial and fiscal sustainability and enhancing accountability in the power sector, according to the World Bank.

It will also be used “to improve the reliability of electricity supply” by ensuring power supply to Nigeria’s grid, the World Bank said in a statement Wednesday.

Subsequent disbursements from the World Bank for the power sector will depend on Nigeria’s swift commencement of a tariff regime that will guarantee cost recovery and abolish subsidies.

FEC approves N2.3trn Economic Sustainability Plan TONY AILEMEN, Abuja

IDPs: Dangote Foundation donates relief materials, N5m to Katsina, FOMWAN uccour has come the way of thousands of internally displaced persons (IDPs) in Katsina State with the donation of relief materials and a cash sum of N5 million towards their welfare by the Aliko Dangote Foundation (ADF).

The relief materials comprising 10,000 pieces of sleeping mats, 10,000 cardigans and sweaters and 10,000 assorted blankets were donated to the Katsina State government, while the cash sum was donated to the Federation of Muslim Women Associations in Nigeria (FOMWAN) to provide special support to women and children in the IDPs camps in the state.

It would be recalled that recently, 19 villages in three communities in Dandume, Faskari and Sabuwa Local Government Areas of Katsina State were attacked and destroyed by bandits, thus rendering over

How World Bank loan will help repair CBN’s beleaguered balance sheet

10,000 people homeless.

The Aliko Dangote Foundation, in addition to the money, would also provide additional support to the women in Dandume and Faskari IDP camps with sanitary products, toiletries, baby diapers and other needs of women, according to Sanusi Ahmad Abdukadir, its representative, during the donation.

Abdukadir explained that the gesture was meant to bring succour and put smiles on the faces of the IDPs so that they could feel at home.

While praying for Allah to bring to an end the armed banditry facing some parts of the state, the Foundation officer called for judicious distribution of the items to beneficiaries.

Receiving the donations, Mannir Yakubu, Katsina State deputy governor, expressed the state government’s gratitude to the Foundation owned www.businessday.ng

by billionaire businessman Aliko Dangote.

Yakubu, who was represented by Isyaku Ahmad Karofi, permanent secretary, state Ministry of Agriculture, commended the Foundation for the gesture, which he described as a timely one that would go a long way to alleviating the deplorable condition of IDPs in the state.

He recalled that recently, the Foundation distributed hundreds of millions of naira to vulnerable women across the 34 local government areas of the state which was aimed at boosting their small scale businesses.

While assuring the judicious distribution of the items, he disclosed that the Foundation has also sent trailers of foodstuff which would be distributed to people as coronavirus (COVID-19) palliative soon.

He called on other public-

spirited organisations in the country to emulate the Aliko Dangote Foundation by giving support to the IDPs in the state to give them a sense of belonging.

In its own response, FOMWAN commended Aliko Dangote for the invaluable support to the cause of humanity and for responding promptly to the plight of the displaced persons across the nation.

“A total of 6,545 displaced persons comprising 4,245 women and 2,300 children are currently at Dandume and Faskari Model Primary Schools,” said Halima Jibril, national amirah of FOMWAN. According to her, an investigation by a joint team of FOMWAN in Katsina and Faskari indicated that the increasing number of IDPs in Sabuwa IDP camp may mean that about 12,000 or more people could have been displaced in Katsina.

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he Federal Executive Council (FEC) on Wednesday approved the immediate implementation of the N2.3 trillion Nigeria Economic Sustainability Plan (NESP).

The NESP, a N2.3 trillion stimulus plan to support the Nigerian economy in the face of the disruptions and challenges of the Covid-19 pandemic, which was recently presented to the president by Vice President Yemi Osinbajo, was approved by the FEC after thorough deliberations by the ministers.

Minister of finance, budget and national planning, Zainab Ahmed, in a briefing after the FEC meeting presided over

by President Muhammadu Buhari, said the Council approved report of the Economic Sustainability Plan.

The goals of the NESP are to create jobs, put money into the economy, hopefully stop it from slipping into recession, support small businesses and prioritise local content.

“The NESP is a 12-month ‘Transit’ Plan between the Economic Recovery and Growth Plan (ERGP) and the ERGP-successor-plan cur@Businessdayng

rently being worked upon,” Ahmed said.

“The total package that we presented today (Wednesday) is in the sum of N2.3 trillion, N500 billion of this is a stimulus package that is already provided for in the amended 2020 Appropriations Act. These are funds that we have sourced from special accounts. We also have N1.2 trillion of these funds to be sourced as structured low cost loans which are interventionary from the Central Bank of Nigeria as well as other development partners and institutions,” she said.

“We have N344 billion that will be sourced from bilateral and external sources and also additional funds that we can sourced locally. There is a strategy that has been adopted and this whole plan is to enable us respond to the triple problem of low exchange rate, youth unemployment as well as negative growth which is facing us now,” she further said.

Ahmed said the plan has to also support small businesses that have suffered severe impact of COVID-19 as a result of lockdowns.

Thursday 25 June 2020

BUSINESS DAY

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news Nigeria plots way out of darkness with...

Continued from page 1

enthrone a viable electricity

market which can also pay for critical gas supplies to power plants across the country.

According to the new plan, customers have been grouped into different bands based on the number of the hours of electricity they enjoy daily.

Band A is for customers who get 20 hours of power and above daily, Band B has customers who get power for 16 hours daily, and Band C has customers who enjoy power for 12 hours and above a day.

Those that enjoy power for eight hours and above are in Dband, and E-band has customers who only get four hours and above but below eight hours of power supply daily.

Under the plan, there will be no increase for customers in Band E and the consumers called lifeline customers, mostly the rural poor, irrespective of how much power they get every day.

With the declining oil prices and the consequent fall in revenue, the Nigerian government can no longer afford subsidies on electricity and now seeks to have customers who have enjoyed more stable power pay their fair share.

Therefore, the negotiated tariff model does not emphasise only recovering cost but also ensuring that customers get service that reflect what they pay for power and for the DisCos to compensate them if they are not treated fairly.

This year alone, the Federal Government will spend N380 bllion on subsidising power for Nigerians, according to a source in the government.

But the bulk of this amount, about 60 percent, has gone to subsidise power for industrial customers as well as the rich who get more power daily on account of where they live – Maitama in Abuja, Ikoyi and Victoria Island in Lagos, and such enclaves for the rich and mighty in cities across Nigeria.

Now the government thinks that the rich people have enjoyed subsidised power enough and it is time for them to pay their fair share by way of higher tariffs from July 1.

According the NERC, DisCos will get a certificate of no objection when they present their plan to follow the new system and will be responsible for communicating this increase to their customers.

Some analysts have expressed concerns over the financial situation with the market and the regulator’s inability to intervene.

“It is either they live up to their billing as regulator and take hard decisions or play the ostrich,” said Chuks Nwani, an energy lawyer based in Lagos, who expressed concern over the timing of the plan.

Already, there are indications that some DisCos have begun complying.

“Following the directive of

the Nigerian Electrical Regulatory Commission (NERC), with the approval of the Federal Government, on the planned electricity tariff review which will take effect on July 1, 2020, the Enugu Electricity Distribution Company (EEDC) wishes to notify her esteemed customers of this development,” said a notice from EEDC. “This review is necessitated considering the inability of the Federal Government to continue to subsidizing the power sector, and also the need for the Nigerian Electricity Supply Industry (NESI) to continue to sustain its operations and deliver improved services to customers,” said the release signed by the DisCo’s management.

According to the agreement reached with the DisCos, if any DisCo is incapable of providing as much power as it has agreed with a customer, it will be forced to compensate the customer for the loss. For instance, if a DisCo is increasing tariff on the basis of 16 hours and in a given month it did not fulfill that obligation, it will compensate the customer.

After new tariffs kick off on the first day in July, the government will communicate to Nigerians that on the basis of the negotiations they have had with their DisCos, any time they are denied power for a time outside the agreed limit, they would be encouraged to report their DisCos to NERC and NERC will ensure they are compensated.

The Federal Government by this action is indicating that it wants to allow the market function based on commercial arrangements after spending over N380 billion on subsidies this year alone.

DisCos are now required to remit up to 90 percent of their commitment to the electricity market monthly, except for troubled DisCos like Yola DisCo which has been returned to the government following insurgency in the north.

The Federal Government has budgeted only N60bn for subsidies in 2021 and it plans that this amount will go to support the power used by the poorest of the people.

Nigeria is replete with record of failed attempts to enshrine a cost-reflective electricity tariff regime since the sector was privatised in 2013.

Firstly, the government outlined the so-called MYTO, a multi-year agenda during which government subsidy for power consumed will operate side by side with a gradual increase in tariff.

In 2015, an enhanced tariff regime was announced for implementation but the regulator shockingly reneged after political pressures on the eve of the crucial presidential election which the government then lost. www.businessday.ng

L-R: Sharon Ikeazor, minister of state for environment; Yerima Peter-Tarfa, director, department of climate change, Federal Ministry of Environment; Jidere Bala, directorgeneral, Energy Commission of Nigeria (ECN), and Catriona Laing, British High Commissioner to Nigeria, during the signing of a Memorandum of Understanding between ECN, Federal Ministry of Environment and the UK Department for Business, Energy and Industrial Strategy, on Nigeria Energy 2050 calculator, a veritable tool to support Nigeria to formulate and communicate long-term low Greenhouse Gas (GHG) emissions development strategies consistent with the Paris Agreement, in Abuja.

Edo 2020: Coast clear for Obaseki in PDP...

Continued from page 1

June 25, 2020, ahead of the state’s governorship election in September.

This is because the court case seeking to stop him has been struck out after out-of-court settlement in Port Harcourt on Wednesday.

The Federal High Court sitting in Port Harcourt struck out the suit filed by Omoregie Ogbeide-Ihama seeking to stop Obaseki from participating in the governorship primary election of the PDP in Edo State.

One of the counsels for the plaintiff, D. C. Denwigwe, had upon court resumption of hearing, in an oral application informed the court that the parties in the suit had resolved their differences.

Denwigwe told the court that their clients had settled and had asked their counsels to withdraw the case, apologised to the court for the inconveniences and urged it to strike out the matter based on the oral prayers.

Emmanuel Enoidem, counsel for the 1st defendant, Uche Secondus, and 3rd to the 7th defendants, counsel for the 2nd defendant, Higher King, and counsel for the 8th and 9th defendants, Alex Ejesiema, also concurred to the motion.

The presiding judge, E. O. Obile, struck out the matter following the submission of the counsels, and commended the counsels for resolving the matter.

Ogbeide-Ihama, who instituted the case, said he took the action against the party to prevent impend-

ing disaster following the way Governor Obaseki was being imposed on party stakeholders by the national leadership ahead of the primaries.

Ogbeide-Ihama, in his address to members of the PDP and the people of Edo State on Wednesday, stressed that as painful as it was, “it is the quickest and most necessary thing to do at this time to save our party from an impending disaster”.

Recall that Governor Obaseki joined the PDP last week after he was denied the chance to seek re-election in the All Progressives Congress (APC) under which he had ruled the state for the past four years.

Ogbeide-Ihama noted that as a loyal and committed member of the party, he had laboured to build a vibrant, peaceful and stable structure and would not sit back and allow a situation where certain leaders in the party would plot to stop his ambition of becoming governor of the state by trying to impose Obaseki as the party’s flag-bearer against the will of the stakeholders in an illegal and unjust manner.

“Before I embarked on this project to serve our state in executive capacity over a year ago, I consulted extensively with leaders within and outside our party, and with the assurances and promise of support I got, we embarked on the tedious and demanding process of reaching out and building relationships and alliances with our members across the 18 local governments of

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the state,” Ogbeide-Ihama said.

“This year-long exercise culminated with another ‘meet-the-delegates tour’ across the state last week, after which we came back to prepare for primaries.

Suddenly the brewing plan by certain ‘leaders’ in our party who for certain reasons had decided they were going to stop my ambition by all means shockingly materialised with their bringing the governor into the party on the same day we were to have primaries they had influenced to be postponed,” he said.

He said he had spent quite some time in politics and understood that due to its dynamism, sudden strategic calculations may necessitate re-alignments and the need to make sacrifices.

“What I found difficult to understand was the brazen manner in which a process that was a few hours to completion could be bastardised, established rules and due process turned on its head, hard work and efforts treated so inconsequentially, and key stakeholders treated so shabbily and disrespectfully, all in the bid to enthrone what had all the clothings of illegality. No dedicated member of the PDP deserves to be treated that way,” he said.

He said a critical look at the process adopted to allow the governor participate in the primaries will show that probably as a result of the rush to make it happen, a couple of illegalities may have been made which could create legal loopholes for opponents of the party or aggrieved @Businessdayng

parties to exploit.

“It is expected that we learn lessons from the situation in the last elections with the opposing party in Zamfara and Rivers States,” he said.

Ogbeide-Ihama said that even with such travesty and injustice, his loyalty to the party was first consideration, adding that in the event of an ugly situation which necessitates a change, the least that was expected was that a meeting would be called where issues could be tabled and discussed, especially pertaining to the internal and external dangers related to the process that brought in the governor.

“Nothing of such was done. That a man marries a new wife does not mean the old one must be sent packing ingloriously, forgetting that she contributed to the attraction the new wife saw in the man in the first place,” he said.

The federal lawmaker insisted that his action was not an affront on the party or its leadership as some people may decide to interpret it, but rather a last attempt to save the party from making a major blunder that could lead to series of lawsuits with a possibility of disqualification of the party from participating in the September 2020 Edo Governorship Elections.

“I state unequivocally that I was very happy to welcome our governor, His Excellency Godwin Obaseki, into the party.

PDP remains a progressive umbrella that is open to everyone that can add value to our common goal, and I believe our governor offers such value,” he said.

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Thursday 25 June 2020

BUSINESS DAY

news

Glo unveils reward scheme for customers

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lobacom has unveiled a scheme to reward its loyal customers for consistently recharging their phone lines.

The scheme, GloRewards Cashtoken, will give Glo subscribers a Cashtoken of N6 every time they recharge their lines. Apart from this guaranteed cashback, the customer is also eligible to win between N5,000 and N100 million in weekly lottery draws.

According to a press release from the head office of the company in Lagos on Tuesday, the new scheme is targeted at enriching the experience of millions of Glo subscribers, especially during this period of Covid-19 pandemic.

The release said customers could enrol for GloRewards programme between 1st June and 31st August, 2020. Those with more enquiries or specific issues are requested to contact CeLD Innovations helpdesk @09077555557.

Globacom explained that all existing and new customers will become eligible to take part in the programme by dialling *777#, after which they will receive a welcome SMS within 48 hours, with details of the last 3 months’ average recharge value and recharge target for the month. The recharge target SMS will be received every month throughout the duration of the reward programme.

“Our loyalty partner, CeLD Innovations, will contact customers when they win in the weekly lottery.

The lottery draw will be telecast on TV channels (AIT 253 DSTV and

Pop Central 189 DSTV) every Saturday,” Globacom said. The scheme is open to only prepaid customers.

Elucidating further, Globacom said new customers (using Glo services for less than 3 months) will earn their first Cashtokens on first recharge of N200 and above and subsequently earn Cashtokens on every cumulative recharge of N1000 during the calendar month after their enrolment for the programme.

Similarly, existing customers (using Glo services for more than 3 months) will start earning their Cashtokens on every N1000 cumulative recharge during the same period of regular recharge while customers need to recharge 10 percent higher than last 3 months’ average to qualify for Cashtokens.

“There is no upper limit to accumulating the Cashtokens.

Customers will keep earning and accumulating CASHTOKENs as per the eligibility criteria from the time of opt-in until 31st August, 2020, while CASHTOKENs will be credited in a virtual wallet linked to customer’s mobile number within 7 days of recharge. They will be able to view it by dialling *6700#,” Globacom added.

The telecom company disclosed further that accumulated Cashtokens can be redeemed by dialing *6700# to purchase airtime/ data recharge, pay electricity bills, pay Cable television bills or other payments. The tokens can also be transferred to the bank and the equivalent value cashed out.

Maritime Union donates PPE to seafarers amid Nigeria’s rising COVID-19 cases JOSHUA BASSEY

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o keep the maritime sector working amid rising cases of COVID-19 in Nigeria, the Maritime Workers Union (MWUN) is stepping up donations of Personal Protective Equipment (PPE) to seafarers and other dockworkers across all seaports in Nigeria, starting from Lagos.

President general of MWUN, Adewale Adeyanju, at the presentation of the PPE to the seafarers at the Tincan Island and Apapa Ports, on Wednesday, said this had become imperative in view of critical role played by the sector in the sustenance of the nation’s economy.

The donation of the PPE comes as COVID-19 infections continue to spike, with 452 new cases recorded as of Tuesday, June 23. This figure, according to the Nigeria Centre for Disease Control (NCDC), brings Nigeria’s total confirmed cases to 21,000.

Of this number, 533 are reported dead, with 7,338 discharged.

According to Adeyanju, the maritime sector and the workers remain invaluable to the growth of the economy, and must therefore be protected, hence the continuing donation of the

equipment.

Among the items handed over the seafarers were hand gloves, facemasks, infrared thermometers, hand sanitizers, among others. The union is expected this weekend to move to the Eastern ports, including Port Harcourt, Calabar, Warri, and Onne to make similar donations.

“Our focus as a union in this dire time is foremost the protection of human health to prevent further spread of COVID-19 in the ports and among the workers- seafarers,” adding that the latest donation marked the second phase of the exercise in collaboration with the International Transport Workers Federation (ITF) who provided the counterpart funding.

“This programme was made possible through collaboration with ITF, a world confederation of transport unions with affiliates from 157 countries, and to which our union is equally affiliated,” Adeyanju said.

The labour leader, who described the seafarers as “floating prisoners,” said the workers needed the support of the government, the regulator-Nigerian Maritime Administration and Safety Agency (NIMASA) and employers so as to strengthen and sustain the sector.

Rotary Club of Eko Atlantic renovates school

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otary Club of Eko Atlantic has adopted Tinubu Methodist Primary School in Lagos Island and has successfully completed the first phase of a project that includes painting and renovation of classrooms.

Project leader, Mamta Deb Roy, says it is a long-term project taken up by the Club with a vision of equipping the school with better classrooms, cleaner environ-

ment, waste bins, safe drinking water, toilets and a library.

Showing some pictures that show before and after the first phase of the project, the President of the Rotary Club of Eko Atlantic, Sunit Deb Roy, notes that these young students are the future of Nigeria and “we should nurture them in a prim and proper environment, so that they turn out to be responsible citizens.” www.businessday.ng

. L-R: Geoffrey Onyeama, minister of foreign affairs of Nigeria; Michael Femi Abikoye, high commissioner of Nigeria to Ghana, and Femi Gbajabiamila, speaker of House of Representatives, during an interactive session with the House Committee on Foreign Affairs on the illegal invasion and demolition of a residential building in Nigeria’s diplomatic NAN premises in Accra, Ghana,

Ghanaian President apologises to Buhari over demolition of Nigeria’s diplomatic building Innocent Odoh & James Kwen

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resident of Ghana Nana Akufo-Ado has apologised to President Muhammadu Buhari over the demolition of a residential building within the premises of the Nigerian High Commission in Accra, Ghana, last Friday.

This was confirmed in a statement issued late Tuesday night by the spokesman of the Ministry of Foreign Affairs, Ferdinand Nwonye.

The statement read: “The Ministry of Foreign Affairs wishes to inform that the President of Ghana, Nana Akufo-Addo, called President Muhammadu Buhari, GCFR today, June 23, on the phone, to express his sincere regrets and apology for the demolition of a building on the premises of the Nigerian High Commission in Accra, Ghana.

“He informed President Buhari that he had directed a full investigation of the unfortunate incident. It further

emerged earlier in the day that some suspects had been arrested and will be arraigned in court.”

The spokesman therefore called on Nigerians home and abroad to remain calm despite the highly provocative attack on the High Commission of Nigeria in Accra, Ghana, and to reassure Nigerians that the Federal Government was engaging the Ghanaian authorities at the highest level to seek redress.

It was widely reported that the some officials of the Ghanaian government allegedly led the team and supervised the demolition of the property, which shocked many Nigerians and led to strident calls on the Nigerian government to take a decisive action against Ghana as the act violated the Vienna Convention.

It could be recalled that the House of Representatives, at Tuesday plenary, asked President Muhammadu Buhari to invoke the diplomatic principle of reciprocity against Ghana, in

reaction to the demolition of Nigeria’s Embassy building in the West African country.

The House described the demolition of Nigeria’s embassy building in Ghana as a direct attack on the nation’s sovereignty, as an embassy of a country is an extension of her territory and sovereignty.

Speaker of the House, Femi Gbajabiamila stated this Tuesday during the interrogation of the minister of Foreign Affairs, Geoffrey Onyema, over the demolition of parts of Nigerian High Commission in Ghana.

Gbajabiamila called for retaliatory measures against those who trample upon the diplomatic rights and privileges of Nigerians and in foreign lands.

He said the situation had become a recurring decimal in the nation’s foreign policy engagements, lamenting that many African countries had taken the liberty of hurting Nigerians while the country looked the other way in the name of brotherhood.

The speaker stated: “We all have a responsibility to make sure that we uphold the honour and integrity of the country that we serve. The Hon. Minister has explained what happened and what they have done or doing, but I think we should look at it from the premise that it was the Nigerian State that was attacked, not just a building.

“In terms of visibility and otherwise of the property, I want to say that it is trite to understand that all countries exist through their Embassies in other countries. So for that reason, Nigeria was attacked

by Ghana because if anything happens in Ghana, it’s the Nigerian Embassy that Nigerians will run to and get protection due to the diplomatic immunity that it should enjoy.

“So let’s face it. If the American Embassy was demolished, do you think the US will be asking for apologies and indemnity? Or the UK, Canada or any other Western country, they won’t ask for apology”.

ANED harps on alignment on TCN, Gencos, Post COVID-19: Kano plans new partnership with OPS to revive economy DisCos for improved power market Adeola Ajakaiye, Kano

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ano State government says it is planning a partnership with the Organised Private Sector (OPS), as part of its postCovid-19 economic recovery strategy, aimed at expanding the key sectors of the economy.

The Gezawa Commodity Market, currently under development, has been identified as one of the key sectors that the government will be partnering in expanding economic development post-Covid-19.

Governor Abdullahi Umar Ganduje, who made this disclosure when he paid a working visit to the market situated 52 kilometres outside Kano metropolis, acknowledged the huge economic benefits of the commodity market.

According to the governor, the stategovernmentwillbecollaborating actively with the management of commodity market in its quest

to make the agriculture sector the major driver of the state economy.

“This kind of global economic centre is one of the core sectors thatmyadministrationwantsfully maximized in our Post-Covid-19 economic recovery strategy.

“The state government and the management of the Market would work together in a good synergy for the overall economic development of the state, in this regard,” he stated.

Governor Ganduje noted that the market, designed to be a global platform for trading in commodities, such as sesame, groundnuts and other items, would go a long way in providing jobs along the value chains.

He pointed out that the water plant provided in the market had capacity to supply water to the entire Gezawa town, and a good road network had been built to connect as well as make the market visible to other parts of the country.

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HARRISON EDEH, Abuja

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ower Distribution Companies (DisCos) have supported the call for effective coordination and alignment of all electricity equipment improvement projects being executed by the Transmission Company of Nigeria (TCN), the Generation Companies (GenCos) and the DisCos The DisCos say the alignment is key towards attaining the country’s electricity supply goals. This comes on the backdrop of the recently concluded Public Hearing by the Senate Committee on Power on Tuesday.

Sunday Oduntan, executive director, Association of Nigerian Electricity Distributors (ANED) on Wednesday, said at present, the lack of coordination in the power sector had hampered the efforts of @Businessdayng

the sector towards improving power supply to Nigerians.

There are cases where the DisCos are not carried along in the transmission expansion project of TCN, even when the DisCos are the ones relating directly with electricity consumers and know where they require power supply the most, ANED said.

“TCN is building a series of transmission facilities but they are not in good proximity to the load distribution centres of the DisCos. The farther the transmission facility is to the load distribution centre, the higher the losses, the more the bill for the consumer.

“This is a concern for us and we want the Federal Government to intervene and ensure that there is coordination of the expansion project.

This will be of more impact to the Nigerian electricity consumer,” Oduntan said.

Thursday 25 June 2020

BUSINESS DAY

news NNPC made more gas available for domestic market in March …produces 218.37bcf of natural gas …records 47% decrease in pipeline vandalism Olusola Bello & HARRISON EDEH

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igerian National Petroleum Corporation (NNPC) has said 218.37 billion cubic feet (bcf) of natural gas was produced in March 2020, translating to an average daily production of 7493.65 million standard cubic feet per day (mmscfd).

Out of the 218.37bcf of gas supplied in March 2020, according to a report, 120.73bcf of gas was commercialised, consisting of 33.45bcf and 87.28bcf for the domestic and export market, respectively, translating to 1,235.56mmscfd of gas to the domestic market and 3,817.40mmscfd of gas supplied to the export market for the month.

The report said 55.6 percent of the average daily gas produced was commercialised, while the balance of 44.37 percent was re-injected, used as upstream fuel gas or flared.

This was contained in NNPC Monthly Financial and Operations

Report for March 2020, a release by the corporation’s group general manager, group public affairs division, Kennie Obateru.

The release said 3,119.89bcf of gas was produced for the period March 2019 to March 2020, representing an average daily production of 7,912.05mmscfd during the period.

It explained that period-to-date production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and NPDC contributed about 69.37 percent, 21.67 percent and 8.95 percent, respectively, to the total national gas production.

Gas flare rate was 9.08 percent for the month under review, i.e.

679.54mmscfd, compared with average gas flare rate of 8.43 percent, i.e. 666.90mmscfd for March 2019 to March 2020.

During the month under review, the report also announced a trading deficit of N9.53 billion for March 2020, compared with

the N3.95 billion surplus posted in February 2020.

The report declared that the over 300 percent decline in March 2020 earnings was due primarily to the huge decrease of 181 percent in the National Oil Company’s Upstream Subsidiary, Nigerian Petroleum Development Company’s (NPDC) due to the decline in crude oil prices precipitated by the coronavirus-induced global slowdown, which it stated led to reduced exports and dwindling world oil consumption; combined with deficits posted by the refineries, among others.

The NNPC MFOR indicated a total crude oil and gas export sale of $256.19 million in March 2020, which decreased by 30.89 percent, compared with last month’s. Of the total sales, crude oil export sales contributed $184.59 million (72.05%) of the dollar transactions compared with $281.14 million contribution in the previous month; while the export gas sales amounted to $71.60 million in the month.

More trouble for Oshiomhole camp as Buhari backs Giadom-led NEC Tony Ailemen & James Kwen

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he political camp of the suspended national chairman of the All Progressives Congress (APC), Adams

Oshiomhole, is on the verge of collapse as President Muhammadu Buhari on Wednesday, backed the Victor Giadom-led National Executive Committee (NEC) faction.

Since Appeal Court upheld

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the suspension of Oshiomhole last Tuesday, there has been uneasy calm in the party’s leadership cycle sharply divided between the proand anti-Oshiomhole forces.

Sequel to the decision of the court, the pro-Oshiomhole group in the National Working Committee (NWC) interpreted certain sections of the APC Constitution and made Abiola Ajimobi, deputy national chairman (South), acting national chairman, but due reported ill-health, the same group nominated Hilliard Eta, national vice chairman South/South to be acting on his behalf.

Also, APC deputy national secretary, Victor Giadom, assumed the position of acting national chairman based on standing Court order and has gone ahead to convene a NEC meeting of the party.

While the pro-Oshiomhole faction led by Eta dismissed the meeting as illegal and unconstitutional, President Buhari on Wednesday indicated his willingness to attend the meeting and recognised Giadom based on legal advice.

Buhari in a statement by his special assistant on media and publicity said: “The President has received very convincing advice on the position of the law as far as the situation in the party is concerned and has determined that the law is on the side of Victor Giadom as acting national chairman.

“Because will always act in accordance with the law, the President will be attending the virtual meeting Giadom called for tomorrow afternoon.

“We urge the media to stop promoting manufactured controversies and to not give any further room for mischievous interpretations of the law on this matter.

“In addition to the President, the Giadom meeting will, hopefully, be attended by our Governors and the leaders of the National Assembly.”

Consequently, there has been an unusual calm in the Oshiomhole camp following the development as the APC national publicity secretary, Lanre Issa-Onilu could not respond to calls and text message by our correspondent to comment on the matter. https://www.facebook.com/businessdayng

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June 12 and the founding fathers of Nigeria (2) Positive Growth with Babs

Babs OlugbemI

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ast week, I huge Nigerians to stop the unnecessary eulogy for the founding fathers. This because they failed to put in place a structure to harness unity in our diversity, the foundation for a united country. Here is the concluding part of the article.

We should stop blaming our situation on the amalgamation of 1914 alone.

If we think the merging of diverse ethnic nations was a mistake and a marriage of convenience by the British, look at the United States of America, the world’s most diversified country. In the ranking of countries on Ethnic fractionalisation and Cultural diversity indexes, India is ahead of Nigeria. What we lacked are detribalised and selfless leaders, a governance structure that guarantees fairness and equality, and institutional framework to make good outcome out of our diversity. There’s hope I believe; something good can come from our Nazareth.

June 12 as history and event would have been the bastion and the turnaround experience for Nigeria. The founding fathers we are fond of eulogising would have been delighted to see how June 12 corrected their undoing.

This is because, our lack of masterplan for diversity, national values, unified purpose and the regrets or failures of the founding fathers would have been corrected by the election that was ranked the best in the history of Nigeria. We lacked transformational leaders. That

should be the only reason to agree with, General Ibrahim Babangida’s position to respect the demands of Sanni Abacha and the northern leaders that clamoured for the annulment of the June 12 election. They wouldn’t have thought of the cancellation if they were leaders with a transformational mindset. Abiola should have been that important or a massive threat than the desire of the Nigerian voters to have him as their president. Are we that ethnic-oriented or self for personal reasons? Let us leave posterity to judge our leaders. IBB and other leaders deserve no eulogy as they destroyed the golden opportunity to unite Nigeria, create a standard for electioneering and possibly for governance in Nigeria.

June 12 was the only electioneering process with prepared candidates.

MKO Abiola and Alhaji Bashir Tofa were not selected, candidates. They voluntarily entered themselves into the race and campaigned throughout Nigeria.

Unlike today, an anointed candidate can be rigged into the presidency without the rigour of campaigning all the nooks and corners of Nigeria. Moshood Abiola was made before the election; he wouldn’t have stolen our money like his predecessors and those that took advantage of the event after that. He, as the president-elect was an educated person and above all, he understands the adverse effects of poverty and lack of quality education on people from his childhood experience. Perhaps, he wouldn’t have turn out as the best president the country had, but it would have been part of the journey and legacy for politics with little ethnic and religious colouration, and not we have as the rules of the game. We became so sensitive to the Muslim/Christian and the North/South permutations after June 12 elections. Nigeria missed the golden opportunity to stand on a solid rock and start the beginning of the “nomitocracy” and “mypocket” politics. Babangida destroyed the legacy and works of the founding fathers with the annulment of June 12. He has a case to answer when and if he ever meets with the founding fathers. He makes the regular eulogy we give them useless and

senseless to the youth who will prefer to live in Hong Kong, a non-sovereign nation with the 32nd most significant gross domestic products in the world.

After all, it is better to have a good standard of living than independence with poverty and blink future.

Before giving President Buhari the accolade for declaring June 12 a public holiday, a feat the direct beneficiaries of June 12 cannot do, we must acknowledge a rare unifying father in the person of Shehu Yar’dua. Shehu Yar’dua died in the Abakaliki prison serving a jail term for the funny Abacha coup. An unconfirmed report claimed Yar’dua called his proteges including Atiku Ababubar and informed them of the likelihood of his demise in prison. He pledged his boys to ensure the presidency of Nigeria returns to the south to address the injustice of the June 12 annulment.

If you doubt whether Shehu was a different breed northern leader or not, consider the fact that he didn’t topple the Obasanjo regime like IBB did and was a reliable number two of the junta that handed over power to Shagari. He understood the diversity of Nigeria and fairness as a virtue in building a united Nigeria. He is not one of the founding fathers but a rare unifying father, a prophet of nation-building. We are searching for new prophets to ensure Nigeria stays united under true federalism. Will El-Rufai, Ibrahim Dakwanbo, Abdullahi Sule, and other cerebral leaders from the north be the prophets? I call out the north because that is where the pains and sacrifices to keep Nigeria united will be needed most if the fractured nation is to be healed.

Buhari did one thing very right, the declaration of June 12 as the democracy day. Whether due to second term political calculations or voluntarily, his decision to declare June 12 as the nation’s democracy day among others is one of the plasters and anaesthesia to heal the wounds of the past. If Obasanjo, whom I considered as the most hardworking president in the last 21years couldn’t do that courageous work of recognising June 12, then Buhari deserves accolades for June 12 declaration as the democracy day, though his other actions are

‘

June 12 was the only electioneering process with prepared candidates. MKO Abiola and Alhaji Bashir Tofa were not selected, candidates.

They voluntarily entered themselves into the race and campaigned throughout Nigeria.

Unlike today, an anointed candidate can be rigged into the presidency without the rigour of campaigning all the nooks and corners of Nigeria

hrough the AllOn/CTIAF Enterprise Development Project, a group of 18 early stage entrepreneurs are currently undergoing top class incubation support from Clean Technology Hub. These enterprises include – a solar powered battery pack for lightning and powering gadgets; inverters manufactured from recycled laptop batteries; Uninterruptible Power System with automatic billing meters; a portable solar powered device for charging mobile phones; a renewable energy solution to IAP (Indoor Air Pollution) with zero emissions; a remote monitoring device and metering solution for gas cylinders; and a fuel level to eliminate upfront cooking gas costs.

These are some of the smart innovations that are currently being incubated under the Off-Grid Energy Ideation Challenge run by Clean Technology Hub in partnership with All On. These teams will receive support and funding of $10,000. These new businesses at scale can contribute significantly to closing the energy access gap currently affect the un-served and underserved segments of the Nigerian population. With over 60 percent of such communities un-electrified, these areas,–

mostly rural and deep rural communities; often tend to be lower income or impoverished areas and are often the hardest hit in terms of energy poverty in Nigeria Furthermore, several millions of Nigerians connected to the grid experience unstable and irregular power supply on a daily basis with an average of only four hours a day and can be served with an increase in service providers that cater to their niche markets, demographics and communities.

The incubatees are currently undergoing a full bouquet of enterprise development courses from (Please list a few courses here outside of those of Mercy and Frances listed below)- Expert facilitators mostly from the private sector have taken the incubatees on substantive ways to structure, build and grow a business. Mercy Olrunfemi while facilitating the session on “milestone setting and developing a lean model canvas” further mentioned that businesses must ensure that their customers need their products. Whilst Frances Udukwu, a staff of All On mentioned that 120 Million people are without access to electricity and this creates a market opportunity during her session with the companies on understanding target customers.

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An incubatee working on developing standalone solar energy systems to underserved communities in Africa, remarked that the training had positively impacted his knowledge of the business and the regulations underpinning the sector.” Another incubatee working on clean cook gas technology gave his remark by saying, “This training has increased the scope of our business by enlightening us on the way to go about proper planning of our business using lean model canvas and how to boot strap our business, more importantly how to prepare a compelling business plan, understand intellectual rights, patents, tax and compliance issues.”

Yet another team of incubatees say they have learnt a lot on product positioning, customer segmentation and targets and they have gained “the opportunity to interact with other entrepreneurs and with seasoned professionals who could provide guidance for growing our company.”

All On is an off-grid energy impact investment company that works with partners to increase access to commercial energy products and services for underserved and unserved off-grid energy markets in Nigeria, with a special focus on the

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undermining the unity of Nigeria which he fought for as a military officer.

If the effects of colonialism and nationalism movements are still with us and the missed opportunity in June 12 is not yet recovered, the second wave of colonialism is here, and I wonder if the current fathers of the nation can liberate us from the waves of huge foreign debts and China’s agenda. Africa is becoming another economic colony of China with the purchase of her land, and the use of her people in slavery-like employment.

We should not allow another foreign dominance that will dictate the future economic relevance of our people.

For leaders who are with the remote control of Nigeria’s politics, posterity will be fair to you only if you act in the best interest of the people. You might leave wealth as a legacy for your children from our commonwealth, but they will not leave in peace to enjoy it if we don’t take care of the majority who are impoverished by your actions.

A clear case is the wave of banditry in the Nigeria where the youth that was once satisfied with the crumbs from the masters’ tables are now with arms to harm and over-run their masters. The greatest legacy Buhari and his teams in the APC and PDP can leave for Nigeria is the legacy of fairness and true federalism where religion, north or south, and ethnicity are relegated for merit in a country where the children of nobody can become somebody. This is the time to set in motion the legacy. The true political legacy is the structure and constitutional arrangement set in motion to foster unity in diversity, ensure fairness in power and resources allocation. A system will ensure that productivity is rewarded. Thus, the legacy of founding fathers or the political leaders are in the structure and institutions they build to sustain equity, fairness and unity in diversity, and not the wealth they have or leave behind for the children and associates.

Babs Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

Increasing Nigeria’s energy access and bridging gaps

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Ifeoma Malo & Chisom Udemezue

Niger Delta. Clean Tech Incubation and Acceleration Foundation is a hub for the research, development, demonstration and incubation of clean and green ideas and technologies in Africa, and their validation for commercial stage development. It is also an early start-up incubator for inventions and innovations in clean energy, a consultancy for sustainability and energy efficiency solutions, and a driver of clean energy and climate smart investments into Africa.

The organisers Clean Technology Hub, believe that the Off-Grid Energy Ideation Challenge will enable All On to further her mandate to collaborate with various stakeholders to leverage their capabilities to close the energy access gap in Nigeria.

Udemezue Coordinates the Enterprise Development Program at Clean Technology Hub and is a Senior Associate at the Hub Malo is the CEO of Clean Technology Hub

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Thursday 25 June 2020

BUSINESS DAY

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Coro: No to premature celebrations! PMBs June 12 speech: A front-page analysis

ik MUO

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wo weeks ago, I anticipatorily celebrated the resumption of public worship scheduled for 21/6/20, bade bye to my Holy Cross online Parish and Parishioners and we (my family) started preparing for a return to our Parish (OLSOW, Okota, Lagos). But it was not to be and as such, on 21/6/20, I was still at my online parish and TV mass. That Sunday, the “popular side” at a whole Holy cross cathedral consisted of just 3 Revered Sisters! Archbishop Martins saw the continued suspension of public worship as unfortunate and sad but reminded us that “All things work for good…(Romans, 8:28), that we should give thanks in all things we should give thanks( 1 Thess,5:18) and to the 3m Catholics in Lagos and indeed to all Nigerians, he said DO NOT BE Afraid (Mt 10).

This suspension of public worship is because Lagos State and a few other sub-national governments treated all religious organisations as the same, ignoring the differences in structure and modus operandi. This approach will continue to elicit resentment, particularly from those who are willing and capable of resuming public worship.

However, life goes on We experienced an unprecedented open heavens in Lagos for three days (18-20 June) and it appeared that we were in for another “Noah scenario” except that God had promised never to flood the world out of existence again (Genesis 9:11) But that Sunday (21/6/20) the weather was mercifully dry and so, I went out for my usual circa

3km daily walk (at an elders pace). I was alarmed to notice that 98 percent of the people I met along the road had no face masks while 95 percent had no regard for physical distancing. This is despite the declaration by one Wilfred Okiche that the face mask had become the new condom while the saying, ‘united we stand’ has been transformed to “separated we survive”.

On 16/6/20, somebody sent me a message titled “a gentle reminder”, showing the CORO numbers for the 16th of April, May and June. It was alarming. However, I decided to extend it from the 23rd of February to the 23rd of June and got the following figures February,0; March, 36; April 873; May,7526 and June, 2019!!! Note the frightening galloping from April and May and then from May to June. On 18/6, we had the highest daily record (745 new cases) while on 21/6/20, the world had the highest global record (183,000/day). Africa now has more than 300000 cases while Brazil has exceeded 1m cases with 50,000 deaths These figures “no de smile at all”; they indicate that “agwo no na akirika” (there is a snake atop the thatched roof). It appears that our people have forgotten that the easing up (both here and elsewhere) is not because “aghaebigo” (the war is over); it is because of “how-for-do” (we don’t have much option!) and thus they ignore the recent warning of WHO that CORO is still accelerating! The DG, of National Orientation Agency, while presenting the 2nd report of the agency’s sensitisation activities, stated that disbelief on the impact and danger of coro still persists with statements like ‘there is no coro in Nigeria, our religious leaders say that coro is not real’; high incidence of non-compliance with distancing, face mask and stay at home and that in the cities where there was initial high compliance, people are letting down their guards and most of those who wear facemasks do so to avoid harassment by policemen (Guardian, 20/2/20) This is sad and saddening.

These figures and other Coro-relat-

ed reports show that we have to gird our loins. Governor Okezie Ikpeazu is on treatment, 13 Imo lawmakers just tested positive; 20 LGS in Nigeria account for 60 percent of the cases (with the top 4 from Lagos, 3 and Kano, 1) 80 percent of these infected with Coro are not in Isolation centres, in Ogun, state, 104 cases were traced to one company while in Kaduna a private school was conducting entrance exams under this lockdown. We need to be more careful The DG of WHO also said that “The politicisation of the pandemic has exacerbated it. None of us is safe until all of us are safe. However, it appears that across the globe in Nigeria, politicisation of coro goes unabated. Last week, we examined the political dynamics of Coro in Kano State. That same last week, Governor Ganduje of Kano state called a World Press Conference to present ‘a well-researched and a well assembled and concluded report’ which showed that only15.9percent of Kano Mysterious deaths were coro related. He then declared that “The report by the Technical Committee from the Federal Ministry of Health indicating that it was 60 percent, certainly lacked correlation; their data cannot pass the test of time, reliability and validity… you can as well, throw away that investigation into an ocean, because it signified nothing, reported nothing and misled almost everybody.

This is a bombshell! What was his motive? To show that NCDC/FMH do not know what they are doing? To show that Kano was doing it better than NCDC? To prove that he was not clueless in the war against coro? What did he achieve by this world news conference? What is the impact of that on the public perception, especially in kano, about the war against coro? And he wants or expects the FG and NCDC to collaborate with Kano in this war?

The politics of coro is still raging.

‘

This is a bombshell! What was his motive?

To show that NCDC/FMH do not know what they are doing?

To show that Kano was doing it better than NCDC? To prove that he was not clueless in the war against coro? What did he achieve by this world news conference?

discovered and embraced two years ago. Research works usually start with vast, deep and wide literature review, paying homage to those who have made significant inputs into the subject matter. The more the citations the better and at times, these citations and references obfuscate the issue at stake.

I am involved. However, about two years ago, I designed the FPA (still being finetuned), which involves simply analysing an issue by examining current and relevant media reports on the matter, rather than lengthy citations. So, anyone who wants to research on (in) security in Nigeria, will just read related media reports of the past, say, 30 days and the matter would have settled itself.

So, my analysis of PMBs June 12 speech is based on modified FPA technique because I will just look at one news medium report on a day Presidential speech was a BIG thing in those days. People usually closed from offices and shops, rushed home and went to the neighbouring bigman’s abode to watch and listen via his Black & White TV, and they did so with rapt attention. And by the time the speech was over, a lot of hope-building quotable-quotes would have been extracted. Gradually, the gap between the rulers and the ruled widened; the speeches became more exclusive and about self-adulation, warnings and threats and most often, there were no more quotable quotes. So, these presidential speeches lost relevance. Since the “I belong to nobody” declaration, I had never sat down to listen to PMBs speech. Even before then, I no longer bothered about presidential speeches.

On 12/6/20, however, I decided to listen and I just don’t know why. My wife actually wondered why I should put on the tuke-tuke generator” in this covidious hard times for that purpose.

Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng

Other matters: Buhari’s June 12 Speech: A front-page analysis Front-Page Analysis (FPA) is a method of socio-economic research that I

Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Nigeria’s endless scourge of rape

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rom the dense forest of Sambisa, Maiduguri to the coastal marshy terrains of the Niger Delta, the trending news is rape. It is the everyday staple the news media feed us now. Our ears are inundated with sordid and sad tales of ladies, who were raped including old women and minors.

The Oxford Advanced Learner’s Dictionary of English defines rape as the “crime of forcing someone to have sex with you, especially using violence.” Daily , we are regaled with tales about rape, so what is the reason behind the prevalence of rape in our society? Some people posit that women invite rape to themselves by dressing suggestively and scantily.

It is believed that the bare flesh of women, especially the erogenous zones and mid-riffs, sets men’s sexual hormones on fire when they see it. That’s why the campaign against indecent dressing is being carried out on campuses across the country.

However, in the olden times, it was said that women would do farm work and domestic chores either scantily dressed or in their birthday suits. Yet, they were not ravaged by male sex predators. So, some men’s rationalization of their perpetration of the act of rape on the grounds that they cannot rein in their sexual urge upon seeing the erogenous zones of women holds no water.

But, is it the sexual attractiveness of female toddlers that drive male rapists to defile them? can those minors who are without sexual attractiveness arouse sexual urge in normal men?

Can women who are octogenarians excite sexual

passion in normal men? These grandmothers and female minors who do not exude sexual charm have become sexual games for morally depraved men.

But why do rapists rape female octogenarians and little female children? The answer is not farfetched. They rape these people to make their money-making rituals potent. This horrendous act of the rapists underlines the godlessness that has existed among us, although we devoutly profess Christianity, Islam, or other religious faiths. It is a pointer to the fact that we do not set store by virtues, such as love, holiness, faithfulness, and chastity which are preached by our religious leaders.

It is also saddening that our religiosity has not succeeded in stemming the tide of the erosion of moral values in our society. Instead of according respect to men of moral probity, we despise them for their poverty. However, people with ill-gotten wealth, who are morally debased, are lionized and eulogized and have become our role models.

More so, incestuous relationships have become part of our narratives. There are men, who deflowered their daughters and turn them to sex toys. And there are women who lured their sons into bed for sex. So, the family, which is one of the agents of socialization, has failed abysmally in its onerous responsibility of instilling good morals into children of impressionable ages.

It is an indisputable fact that both religion and family, which are agents of socialization, have contributed significantly to the increase in rape cases in Nigeria. We do hear tales about pastors

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who rape female members of their churches, too.

Again, in our today’s society, men’s addiction to hard drugs like tramadol, heroin, cocaine, marijuana, and others predisposes and emboldens them to commit sundry heinous crimes, such as armed robbery, kidnapping, pickpocketing, and rape. Those rapists, who are continually under the influence of drugs, are sadomasochists, who derive immense pleasure from sexually assaulting their victims.

These sexual perverts are neatly dressed and spruced up, and do not look like people who commit the crime of rape. They may hold top posts in the civil service, military, banks, and others.

And, there are men, who nurse grudges against their old flames, who jilted them. They couldn’t come to terms with the fact and reality that their romantic relationships with their girlfriends had come to an end. Instead of moving on with their lives, they would expend their mental energies plotting how to revenge on their former girlfriends. So, they would either bath their old flames with corrosive liquid or they would gang-rape them, inflicting both physical and psychological pains on them.

The effects of rape on rape victims are legion and devastating. Not a few female rape victims are traumatized for the rest of their lives after they had been raped. Are some women’s frigidity not traceable to the sexual violence that was inflicted on them by rapists? Even after they had gotten married, they would still have a great dislike for sex owing to what they suffered in the past. Their

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Chiedu Uche Okoye

negative attitude to sex can cause the breakup of their marriages.

More so, victims of rape are stigmatized, which makes them have low self- esteem. That’s why some women who suffered rape did not make it public, not to talk of them inviting the police to arrest the rapists.

When rape victims keep silent, rapists are emboldened to continue perpetrating the vile act of rape and some of the rape victims are landed with unintended pregnancies while others are infected with the deadly HIV diseases and other STDs. So, it behooves us to step up the war against rape in our country. In Nigeria, we have enough laws for addressing the issue of rape. And I urge rape victims not to keep quiet for fear of being stigmatized. They should invite the police to effect the arrest of the culprits and press charges against them.

Okoye, a poet, wrote from Uruowulu- Obosi, Anambra State

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When it comes to country size, is bigger always better? ‘ Of course, Remi Adekoya

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“

e are very grateful to Britain for giving us Nigeria. It is a great thing to belong to a big country. There is always an unspoken contempt for small countries in international affairs, so we are happy to be citizens of a big country,” Obafemi Awolowo told foreign journalists in 1958. Ever since its inception, Nigeria has been pitched, first by its British and later Nigerian rulers, as a commonsensical national project based in significant part on the supposed obviosity that when it comes to countries, bigger is always better. This assumption now enjoys the status of conventional wisdom among many Nigerians, but how accurate is it?

How large a country and its population ought to be for optimal chances of national and global success is still debated by political scientists and economists. There are strong arguments in favour of big countries. Most revolve around economic potential. A big country offers a large domestic market, local businesses can use to grow until they become strong enough to compete internationally. China is a great recent example of this. Larger countries can also pool resources from their many citizens to build strong public services in key spheres like healthcare and education.

The problem is that these advantages of scale may never materialise if the large country is dysfunctional. Nigeria’s 200 million-strong domestic market, the 7th-largest in the world by numbers, has not resulted in a single Nigerian Fortune

500 company, in other words, a major global economic player. Switzerland, with a tiny domestic market of 8.5 million people, has produced fourteen Fortune 500 companies. South Korea, population 51 million, is home to sixteen global giants. Taiwan, population 24 million, has produced ten. Popular migration destination Canada boasts thirteen Fortune 500 companies despite having a modest domestic market of 37 million people.

In terms of per capita wealth, most highly successful countries today are small or relatively small in terms of population. Of the 10 nations with the highest GDP per capita in the world, eight have a population below 10 million, according to IMF. Of the 20 nations with the highest GDP per capita, seventeen have a population below 40 million. America is the only country with a population above 100 million to make it to the top 20 list.

On the African landscape, Botswana, the continent’s favourite success story, is a country of just 2.2 million people.

Mauritius, another rare positive example, has a population of 1.2 million. Additionally, the Mo Ibrahim Governance Index ranks both Botswana and Mauritius among the top 5 best-governed African states, alongside Namibia, Cape Verde and Seychelles.

All these five countries have populations below 3 million. While still facing a long road ahead in terms of development, post-genocide Rwanda is an inspiring example of how an African state can be turned around in less than a generation. The fact it has a population of 12, and not 120 million, likely made things that much easier. Correlation may not prove causality, but it does provide food for thought.

Of course, there are many unsuccessful small countries. However, what is undeniable is that the capacity of a state to effectively coordinate economic and other relevant activities on its territory is key to a successful economy. This coordinating capacity is cheaper and easier to achieve in smaller states than larger

ones. The Nigerian state clearly lacks coordinating capacity. Little suggests this will change significantly anytime soon, especially considering the government simply cannot keep up with Nigeria’s rapidly-expanding population.

The case of America is rather the exception to the rule in terms of being a highly-populated country that is significantly wealthy in per capita terms. And it is definitely the only highly-diverse heavily-populated country whose citizens are indisputably well-off on average. Japan, the only other nation significantly wealthy in per capita terms with a population over 100 million, is culturally homogenous.

But before we start considering diverse America a model to emulate, it is worth recalling the methods by which America’s success was achieved. Not via compromise arrangements between its various racial groups, but via open domination by its majority white group. For the first 200 years following America’s 1776 declaration of independence, its white elites ran the country how they saw fit while other weaker groups had little choice but to go along.

Only in recent decades have demographic gains emboldened racial minorities to challenge white dominance, part of the reason for the racial tensions that got Donald Trump elected president.

My broader point here is of a practical, not moral, nature. In Nigeria, no single ethnic group and its elites have the numbers and power to steer the country in a consistent direction the way white Anglo-Saxon protestants, for better and worse, did for so long in America. Nigeria thus resembles an octopus, complete with tentacles flailing in all different directions. Apart from agreement on the need for “development”, it is difficult to discern any pattern of cohesive cross-regional Nigerian consensus in the sphere of how-to’s.

The idea a “good government” will one day emerge from this confused octopus and catapult Nigeria to development seems increasingly highly suspect.

I don’t claim to have all the answers. I

there are many unsuccessful small countries.

However, what is undeniable is that the capacity of a state to effectively coordinate economic and other relevant activities on its territory is key to a successful economy. This coordinating capacity is cheaper and easier to achieve in smaller states than larger ones

am just thinking out loud here. Desperate for answers as I know are others. In his speech commemorating the 50th anniversary of the end of Nigeria’s civil war this January, Wole Soyinka called for a frank reflection on how Nigeria has been constituted and the consequences of that. “Have we been had?”, Soyinka queried of the Nigerian project.

The rhetorical nudge is aimed at steering us towards a realistic answer to the fundamental question facing Nigeria’s inhabitants: How can this space we live in be made to work? As Soyinka himself has suggested, it is difficult to imagine any practical solution to the Nigerian conundrum that would not involve a radical reimagination and reorganisation of its territorial space. Instead of a heavily centralised authority in Aso Rock that lacks the capacity to secure the territory under its control, much less coordinate its economy, wouldn’t the Nigerian space be better organised into smaller, more manageable, de-facto self-governing political units in clusters larger than the current state system?

Not because Yorubas hate Fulanis and Igbos or vice-versa, but because smaller states are more easily manageable than larger states.

There is no silver bullet here. No particular kind of politico-spatial organisation guarantees success. The question rather is about which option offers the greatest realistic probability for success.

Big hasn’t worked. So perhaps it is time to go back to the drawing board and start small? Awolowo, who generally advocated maximum federalism, declared in 1958 that it is a great thing to belong to a big country. I would perhaps add today that it is a great thing to belong to a big successful country. For it is difficult to see the benefits to regular inhabitants of belonging to a big unsuccessful country. When it comes to countries, what ultimately matters is success, not size.

Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs, Washington Post and Politico among others. He tweets @ RemiAdekoya1

Nigeria’s ruinous subsidy regimes

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n January of 2012, I watched with dismay as the labour unions, youth groups and civil society groups shut down the country in protest over the government’s deregulation of the downstream sector and the removal of subsidy on petrol.

What started as mere protests by the youth caught fire and became a popular movement that almost brought down the government of the day. Despite the rationalisations of some of the protest leaders, it was apparent Nigerians were resolutely against the removal of the subsidy on petrol.

But I just could not see the sense in the protests/strikes. In 2011 alone, about N1.5 trillion naira ($9.3 billion) was spent on subsidising imported refined petrol. This represented about 30 percent of Nigeria’s government’s expenditure, 4 percent of GDP and 118 percent of the capital budget. In comparison, Nigeria’s education, health and works/roads’ budget for 2011 was just a mere $2.2 billion; $1.32 billion and $680 million respectively. This is besides the obvious fact that Nigeria was exporting its jobs and what it does not have while importing what it has.

How could any right-thinking government accept this kind of frivolous and senseless expenditure? It was quite clear to me then that the government was right in wanting to do away with the subsidy regime so as to free up such huge funds for other

priority areas like education, health, infrastructure, and security among others. Besides, the removal of subsidy will ultimately lead to private investments in refineries that will obviate the need to spend hard-earned foreign exchange on importing petrol. The later revelations that the subsidy regime was riddled with fraud were all the more reason why I thought it should go.

But arguing for subsidy removal wasn’t a popular position to hold in Nigeria in January of 2012. Some of us who did were called names. Perhaps that is why thought leaders, prominent citizens and academics decided to bury their heads in the sand with some hypocritically claiming to side with the people when it was clear the people were being seduced into demonstrating against their true interest.

Much more pitiful however is the behaviour of opposition politicians at the time who saw the protests/strike only through the prism of their ambitions. They fuelled the protests by concocting figures and arguments to show that there was nothing like subsidy and petrol should actually be selling below N40/litre. No wonder some Nigerians were expecting the president to reduce the price of petrol upon coming to power.

Organised labour on its part was only interested in protecting its interests – which is better served by government regulation

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of the industry so it can retain the privilege of protesting and going on strike anytime an increase in the price of petrol is announced.

That was how they seduced late president Yar’adua into revoking the sale of 51 percent equity stakes in the Port Harcourt and Kaduna refineries to the Bluestar Consortium Limited for a princely sum of $721 million promising him, together with the NNPC that the NNPC was capable of turning around the fortunes of the refineries to make them functional at 100 percent capacity within months.

But one could ask, why are Nigerians so used to subsidies and why is the Nigerian state so bent on providing subsidies, especially for consumption even when it is economically ruinous to do so?

The answer is rooted in the nature of the Nigerian, nay African state. Most African post-colonial regimes did not make any effort to broaden the social base of state power and had to concentrate on capital cities and urban centres where opposition to their rule is most likely to come from. They impoverish the rural areas to keep the cities happy.

They impose price controls on rural farmers to keep foodstuffs cheap in the cities. They provide transportation, petrol, electricity, and foreign exchange subsidies to keep the few middle class and city population happy or calm. Also, buoyed by a sense of entitlement, Nigerians felt they should not

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CHRISTOPHER AKOR be paying much for fuel and that it is part of the benefits they should enjoy since their country produces oil.

Well, in Nigeria, the subsidies have only grown over the years while budget allocations for health, education, infrastructure have dwindled. We could boldly make the claim that the subsidy regimes in Nigeria are responsible for the poverty, low quality of life, and the economic malaise the country faces presently. Take for instance the electricity subsidy. Despite the government privatising the electricity generation (GENCOS) and distribution (DISCOS) companies, the government still holds the sector by the neck fixing and dictating prices. Of course, the current prices fixed by the government are below the production cost for power. Is it any wonder then that there has been no major investment in the sector and Nigeria continues to wallow in darkness?

Note: The rest of this article continues in the online edition of BusinessDay @https://businessday.ng

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12

BUSINESS DAY

Thursday 25 June 2020

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Resolving the financial crises in Nigeria’s power sector Meter every user and charge tariffs that guarantee commercial returns

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

Bashir Ibrahim Hassan

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

T

he major problem bogging down Nigeria’s power sector is its ineffective market which is about as efficient as a basket would be in retaining water. It makes sense then, that the place to start in finding a solution is fixing the electricity market so that debt obligations can be settled and the services priced fairly and paid for.

This may appear like oversimplifying the problem but in reality, it’s really not as complex as both the government and the operators are making it appear. Nigerians just want electricity for most hours of the day and are willing to pay a fair rate for power as long as they are not cheated through estimated billing - most Nigerians anyway.

The place to start is ensuring that all customers are metered.

Imagine a petrol station where the fuel that is sold is not measured rather customers are charged according to how expensive the car they drive appears to be. This is what obtains by denying customers meters and charging them estimated billing based on what similar houses in the neighbourhood should be paying.

Currently there are around 10.4

million registered customers on Electricity Distribution Company (DisCos) books and only around 37 percent of them are metered. Around 20 percent of these meters are old and defective.

So, it means only 8million customers are paying for electricity. Of this figure, about 4.1million customers are unmetered and pay through estimated billing. Worse still, there are over 20million buildings with electricity connections in Nigeria.

To solve the problem of meters, the regulator, the Nigerian Electricity Regulatory Commission (NERC) approved a nifty arrangement to meter everyone - The Meter Asset Providers (MAPs) regulation. This allows thirdparty investors to provide meters for customers which they could repay over a year. But the government unwisely set up a 35 percent levy on meters, according to it, to encourage local production, never mind, there is no power to produce them. The Nigerian Customs is now charging the levy on both meters and their components. This is what happens in a government that lacks both vision and coordination.

If the government were serious about solutions, it will make meter importation duty-free at least for one year, float a bond through a developmental financing institution or multilateral organisations say over

ten years to finance meter purchase for all customers and order that every electricity customer must be captured.

It will make it a crime to use power without a meter.

This action will bring over 20million customers into DisCos books and if they pay on average N5,000 a month, the sector will generate N1.2 trillion in revenue yearly.

The second reason for the poor financial condition of the power sector is that tariffs do not guarantee commercial returns. In arriving at the Multi-Year Tariff Order (MYTO), the model for pricing electricity in Nigeria, the parameters used includes gas prices, inflation, and foreign exchange rate. All these parameters have changed since 2015 when the last retail price for electricity was reviewed but the regulator has prevented operators from raising tariff until April this year.

It moved commencement to July following the outbreak of COVID-19.

The government has maintained a stranglehold on tariffs because it fears popular revolt. Yet, Nigerians spend billions of naira yearly powering generators. This is self-defeating because the Nigerian government in the past three years has spent over N1.3trillion in bailouts to the sector to make up for keeping tariffs low. The government’s 40percent stake in the

DisCos is not generating returns as the sector is haemorrhaging money faster than a broken faucet. The government has also been unable to tax the sector because the DisCos have been reporting losses. In their 2018 financials, the eleven DisCos recorded cumulative losses of N787billion a 10 percent increase from the previous year.

Clearly, the biggest problem with the sector is not money but a lack of imagination by the Ministry of Power and NERC, the sector regulator. An unwillingness to take difficult decisions and preventing markets from taking the lead, rather than populist and parochial sentiments. This will only make matters worse.

Apart from money, there is an absence of governance by operators and deliberate disregard for market rules. Technical problems fester and rickety assets are not fixed promptly.

There is also a lack of accountability in how the Transmission Company of Nigeria and the System Operator manage costs, an indication of poor leadership in the sector.

Nigerians are bearing the brunt of this high-level incompetence and the economy is the biggest loser, recording over $29 billion worth of losses yearly on account of the epileptic power supply according to World Bank and Ministry of Finance report.

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

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Thursday 25 June 2020

BUSINESS DAY

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

13

In association with briu@businessday.ng

08098710024

Domestic and Foreign Portfolio Investment: takeaways from investors’ sentiments ADEMOLA ASUNLOYE

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otal transactions at the nation’s bourse has been on the decline since January 2020, except for the sharp increase in March 2020.

In comparison to the performance in January 2020, the nation’s bourse as at May 2020 had decreased by 49.40 per cent—a reflection of 22.60 percent decrease in foreign inflow transactions, 63.85 per cent decrease in foreign transaction outflows, 48.34 per cent decrease in domestic retail transactions, and 50.02 per cent decrease in domestic institutional transactions.

A major reason for this overall decline in total transactions year-to-date (YTD) could be the impact of the pandemic, which then rippled on the drop in the price of oil and the volatile state of the foreign exchange (FX) market.

As at May 31, 2020, total transactions at the nation’s bourse decreased by 7.40 per cent from N128.67 billion (about $332.22 million) in April 2020 to N119.15 billion (about $307.32 million) in May 2020. Similarly, on a year-on-year (YOY) basis, total transactions decreased by almost half from the N221.13 billion recorded in May 2019.

There is no doubt that the global pandemic is largely responsible for the 46.12 per cent decrease in total transactions YOY in May 2020 since oil prices have a positive correlation with the stock market. COVID-19 created a demand shock in the oil market as lockdowns, curfews and social distancing reduced movement and travels; this led to oil price shock.

In May 2020, 70 per cent of the total market transactions were initiated by domestic investors while the remaining 30

Source: NSE

per cent by foreign investors. Of the total N83.91 billion domestic transactions, 50.41 per cent were outflow transactions while 49.59 per cent were inflow transactions. Also, inflow transactions accounted for 52.30 per cent of the N35.24 billion foreign transactions while outflow transactions (N16.81 billion) accounted for the remaining 47.70 per cent.

Unlike what played out be-

for every N1 billion that came in through foreign inflow transactions in the market, about N2.25 billion was recorded for domestic inflow transactions. Put in another way, for very N1 billion of inflow transaction, domestic transactions accounted for about 69.30 per cent, while foreign transactions accounted for the remaining 30.70 per cent.

Similarly, while 71.56 per

by domestic investors, 50.28 per cent (worth N42.19 billion) was initiated by retail investors while institutional investors executed transactions worth over N41.72 billion, that is 49.72 per cent of the total domestic transactions.

A comparison of domestic transactions between the current and prior months (April 2020) revealed that total domestic inflow decreased by 4.69 per

cent of the total outflow transactions were executed by domestic investors to the tune of N42.30 billion, 28.44 per cent (N16.81 billion) were closed by foreign investors.

The value of domestic transactions executed by domestic retail Investors surpassed institutional investors by 0.56 percentage point in May 2020. Of the total transactions executed

cent to N41.62 billion in May 2020 from N43.67 billion in April 2020—1.30 per cent increase in retail transactions, but 12.38 per cent decrease in institutional transactions. The decrease was as a result of the low market performance of domestic institutional investors.

Quite the contrary, total domestic outflow increased by 32.90 per cent from N31.82 bil-

Source: NSE

tween January and February 2020 where there was decrease in the value of total domestic transactions compared to foreign, we saw a reverse between April and May 2020: an increase in the value of total domestic transactions (N83.91 billion) compared to foreign transactions (N35.24 billion) by circa 40 percentage points.

In the month of May 2020,

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lion (April) to 42.29 billion in May 2020: 9.31 per cent increase in retail transactions and 56.66 per cent increase in institutional transaction.

The month-on-month (MoM) comparison revealed that the institutional participation in the domestic market is gradually decreasing as more and more institutional investors exited the market in May 2020 with transactions worth of N24.94 billion (58.97 per cent of total domestic outflow transactions); yet not so much of them made buy-in, as evident in their transactions.

Another reason why domestic institutional investors are exiting the market is a direct relationship that exists between them and foreign investors— they go in wherever direction that foreign investors go. This implies that if foreign investors bet on a stock or a sector, domestic investors will go in similar direction. The domestic investors believe that foreign investors have the financial wherewithal to carry out research on any sector or stock of interest to them.

Although, the total inflow of market transactions (N60.04 billion) exceeded outflow (N59.11 billion) by N930 million, this does not reveal the real activities of the market. Total foreign outflow recorded its least transaction of N16.81 billion YTD, meanwhile it also recorded its least inflow of N18.43 billion YTD. Despite that stocks are currently cheap in the market; foreign investors are not coming simply because a lot of them cannot exit the market. The Central Bank of Nigeria (CBN) is limited by the national reserves to meet the accumulating needs of those in need of forex as it has a forex demand backlog of about $1 billion dollar yet unmet.

14

Thursday 25 June 2020

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Market capitalisation

NSE Premium Index

The NSE-Main Board

N13.137 trillion

2,227.98

N12.951 trillion

2,154.07

NSE All Share Index

Week open (11-6–20)

25,182.67

Week close (16-6–20)

24,826.75

Percentage change (WoW)

-1.41

Percentage change (YTD)

-7.51

-3.94 1.79

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

1,037.88

762.45

135.76

425.20

219.31

1,841.29

1,193.02

1,009.65

1,048.27

1,094.50 1,078.56

300.00

762.45

290.81

131.54

432.89

208.65

1,859.82

1,219.69

1,005.79

-3.06

-3.11

1.00

0.00 0.00

-8.99

-1.46 -8.43

-18.50

4.55

1.81 -26.98

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

-4.86

1.01

2.24

-3.94

-20.53

1.37

13.40

-4.58

Japaul Oil faces litmus test in plan to raise additional equity capital Iheanyi Nwachukwu

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About the company Japaul Oil & Maritime Services Plc was first incorporated in 1994 as a private limited liability company with an authorized and paid up Share Capital of N1,000,000 divided into 1,000,000 Ordinary Shares of N1 each. The company commenced active business operations in 1997. Japaul Group had raised N1.3 billion through its initial public offer (IPO) in 2005 and N20 billion through public offer in 2007. Having become Japaul Oil & Maritime Services Plc; the company has over 25,000 Nigerians as its shareholders.

As at the year ended 2019, the company has five subsidiaries: Japaul Shipping & Offshore Services Limited, Japaul Mines & Products Limited, Japaul Dredging

Services Limited, Japaul Gulf Electro Mechanical LLC Dubai UAE. Remembering Milost Global failed equity financing facility of $350 million Japau l Oil and Mar itime Services Plc had in 2018 pull out of the $350 million said equity financing facility with Milost Global Inc. Japaul had then noted that the decision was because of several red flags associated with the then purported equity injection by Milost Global in listed Nigerian companies including Japaul. The purposed financing then ‘arranged and negotiated’

by Palewater Advisory Group Inc in New York and Banklink Africa Limited in Nigeria for the company was to help the company optimise

‘

It should be noted that a portion (N43.017billion) of the net profit in the current year relates to provision written back as a result of the settlement between the company and its creditors

‘

h e n shareholders of Japaul Oil & Maritime Services Plc meet in Lagos on July 29, 2020 for the company’s 15th annual general meeting, they will in summar y transact both the ordinary and special businesses of that day.

Ordinary business Among other ordinary businesses, the shareholders in attendance by proxy will receive the report of the directors, the consolidated statement of financial position of the company as at December 31, 2019 together with the consolidated statement of comprehensive income for the year ended on that date and the report of the auditors and audit committee thereon.

Special business During the special business session of the meeting, the shareholders will consider, if thought fit, approve that the authorised shares of the company to be increased from 6 billion ordinary shares to 60 billion.

Also, the company will seek shareholders’ approval to raise additional equity capital up to N27billion whether by way of Rights Issue, Public Offer, Private Placement through Book Building or offer for subscription and/or other securities at such time for such consideration and upon such terms and conditions as the directors may deem fit.

In line with its plans to raise equity, Japaul Oil & Maritime S er vices Plc w ill also seek s h a r e h o l d e r s’ a p p r o v a l t o carry out share reconstruction.

Likewise, the directors will seek the shareholders’ approval to change the name of the company from Japaul Oil & Maritime Services Plc to Japaul Gold & Ventures Plc. A l s o, s h a r e h o l d e r s w i l l among other special businesses at the meeting be required to authorize the company to engage mining and technology business activities, through partnerships and acquisitions.

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the potentialities in all areas of its businesses especially in areas of mining which the group has diversified into.

Principal activities The principal activities of the group are engaging in oil and maritime services in the upstream segment of the oil and gas industry. The group’s scope of operations covers the provision of offshore oilfield vessels, dredging activities in oil fields/locations, quarry services, maritime and logistics, oil flowlines/pipeline construction in swamps.

Financials The Group shareholders fund turned positive as a result of liquidation of obligation to its creditors and debt forgiveness, it noted in its annual report submitted at the Nigerian Stock Exchange (NSE).

The group’s revenue decreased to N725.47 million in 2019 from a high of N936.28million in 2018. Gross loss narrowed to N943.394million in 2019 from a high N1.026billion in 2018.

It reported operating profit of N42.236billion in 2019 as against operating loss of N3.412billion in 2018.

The group’s profit before taxation in 2019 financial year was N41.028billion from loss before tax of N6.583billion in 2018. The group’s earnings per share was 653kobo from loss per share of @Businessdayng

105kobo in 2018.

Shares trading information The share price trades at a new low of 23kobo close to its 52-week low of 20kobo and far from a 52-week high of 33kobo.

Its market capitalisation is little above N1.44billion on shares outstanding of 6,262,701,716 units. It is listed on the Energy Equipment and Services subsector of the NSE Oil & Gas Sector.

Auditor’s red flag PKF Professional Services, the independent auditors of Japaul Oil & Maritime Services Plc audited the consolidated financial statement of the company and its subsidiaries (the Group) for the year ended December 31, 2019.

The auditors drew attention of investors to Note 2.3 in the financial statements which indicates the group’s current liabilities exceeded its current assets by N1.566billion (December 2018: N10.821billion).

“It should be noted that a portion (N43.017billion) of the net profit in the current year relates to provision written back as a result of the settlement between the company and its creditors.

As stated in Note 2.3, these event and conditions along with other matters as set forth in Note 2.3, indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter,” the auditors stated.

Key audit matter The auditors communicated key audit matter where it noted that the group’s continued existence is dependent on revenue from contracts with major International Oil Companies (IOCs) and lending from creditors. The auditors noted that the oil glut and free fall in oil price has resulted in major IOCs curtailing operations and renegotiating existing contracts. “ This is likely to impede revenue earnings and repayments of existing loan obligations. The group’s shareholders fund was a positive balance of N6.1billion from an eroded balance of N34.6billion in 2018. The company has been persistently making operating losses in the last years up to 2018,” the auditors stated.

Thursday 25 June 2020

BUSINESS DAY

news NIMASA, NPA agree on maritime security, wreck removal to ease vessel navigation … say floating dockyard to commence in July AMAKA ANAGOR-EWUZIE

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he Federal Government has concluded plans to make the Integrated National Security and Waterways Protection Infrastructure, also called the Deep Blue Project, the central security structure for all anchorage areas in the Nigerian maritime domain. This is to reduce the cost of shipping goods into the country.

Hadiza Bala Usman, managing director, Nigerian Ports Authority (NPA), disclosed this Tuesday in Lagos after a meeting with the executive management of the Nigerian Maritime Administration and Safety Agency (NIMASA) led by Bashir Jamoh, director-general at the Agency’s headquarters in Lagos.

Usman also disclosed that both agencies had agreed to work out modalities for effective removal of all wrecks and derelicts that might hinder vessel navigations in the Nigerian waters.

According to Usman, NIMASA and NPA are sister agencies and should be seen to be collaborating more for the growth of the maritime industry and the country in generally.

She also disclosed that arrangements were on top gear to berth the NIMASA floating Dockyard permanently in order for it to commence operations in July.

“We had a range of discussions bordering on the Secure Anchorage Area which our supervising Ministry desires the Deep Blue Project to provide security for all anchorage areas in the country. Aside saving the country a lot of money, it will ensure that the security of the Nigerian Maritime domain is given a focal attention,” she said in a statement signed by Philip Kyanet, head, corporate communications of NIMASA. She also disclosed that both agencies agreed to interlink the C3i of the NPA and C4i of NIMASA in order to interchange information that would assist the Nigerian Navy’s response to maritime security.

“We have the C3i Command, Control and Intelligence centre at NPA and NIMASA has the c4i while the Navy has falcon eye. We need to interlink these facilities and we believe that this would assist the country in response to maritime security threats,” she noted.

Nigerian CLOs decry FG’s exclusion from 2020 marginal oil fields bid round process .. seeks NASS, NEITI involvement in bid process HARRISON EDEH, Abuja

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igerian civil society groups on Wednesday decried their exclusion by the government from the processes involved in the forthcoming 2020 marginal oil fields bid round.

Recall, the Department of Petroleum Resources (DPR) recently opened the bid process for the award of 57 new oil licences to prospective Nigerian companies and investors interested in participating in the exploration and production business in the country.

But, the group said the published bid guidelines by the DPR did not involve civil society among agencies that would monitor the exercise.

In a letter dated June 15 to the DPR director, Sarki Auwalu, the group demanded immediate inclusion of about two civil society representatives in

the bidders screening team as observers to build public trust and investors’ confidence in the bid process.

Besides, the group called for a strong legislative oversight by the National Assembly, and involvement of the Nigerian Extractive Industries Transparency Initiative (NEITI) before, during and after the exercise to avoid the experience of the past.

The group expresses concern that the published guidelines were fraught with provisions that may hamper the interest of genuine bidders in the oil fields and deny the country the benefits of set objectives.

“After reviewing the Guidelines, and putting into perspective past experiences and pitfalls of similar processes, we deem it important to draw your attention to some of the points that could hinder the success of the process, or limit Nigeria from deriving optimal financial and

socio-economic benefits from the exercise.

“We are prepared to play our roles as Civil Society in support of this very important national exercise, with the understanding that it is intended and designed to deliver the overriding interest of Nigeria and Nigerians,” the group said.

The letter was signed national coordinator, Publish What You Pay (PWYP) Nigeria, Peter Egbule; executive director, Centre for Transparency Advocacy (CTA), Faith Nwadishi; executive director, Civil Society Legislative Advocacy Centre (CISLAC), Rafsanjani Auwal Musa; chairman, Human and environmental Development Agenda (HEDA), Olanrewaju Suraj, and national president, Green Alliance Nigeria (GAN), Chima Williams, among others.

The bid round expected to be completed over the next six months is coming more than

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inister of aviation, Hadi Sirika, has said a test run is to be conducted at the Lagos airport to ascertain the level of preparedness of the airport for resumption of flights.

The test run exercise, according to the minister, will come up on Saturday this week, June 27, to see how things would look like at resumption.

Announcing the briefing in Abuja by the Presidential Task Force on COVID-19, the minister said a lot of devices were coming up that would be introduced into air transportation.

One of them, he said, is the reverse chairs to face opposite and put a capsule over and above a passenger.

In a recent document issued

by the Infrastructure Concession Regulatory Commission (ICRC), it disclosed that the Federal Ministry of Aviation (FMOA) will be adopting Public-Private Partnerships (PPP) procurement methodology for the concession of Murtala Muhammed International Airport Lagos (MMIA), Nnamdi Azikiwe International Airport Abuja (NAIA), Mallam Aminu International Airport Kano (MAKIA) and Port Harcourt International Airport (PHIA).

The Federal Government through the Ministry of Aviation has adopted PPP as the strategy to leverage private sector participation and investment to achieve the upgrade and development of new terminal infrastructure at the four identified airports in a cost-effective and value for money based manner.

Polaris Bank disburses billions of naira under Health Sector Loan in 30 days

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olaris Bank in its support for SMEs in the health sector (private hospitals, pharmacies, retailers, diagnostic centres, etc.) launched a onestop-solution in September 2019, and has disbursed billions of naira to support the growth of the Nigerian health sector through tailor-made banking products for businesses in this space.

This drive was further reenforced by the CBN N100 billion Health Sector support fund set aside by the apex bank to help cushion the effect of COVID-19 on the nation’s economy and the health sector in particular.

This was made known by the bank’s group head, products and market development, Adebimpe Ihekuna, while commenting on the recently concluded webinar tagged “Managing Health Care Business During and PostCOVID-19”.

Eligible participants under the scheme comprise healthcare product manufacturers – pharmaceutical drugs and medical equipment; and healthcare service providers/medical facilities – hospitals/clinics, diagnostic centres/laboratories, fitness and wellness centres, rehabilitation centres, dialysis centres and blood banks. Others include pharmaceutical/medical products distribution and logistics services; and other human healthcare service providers as may be determined by the Central Bank of Nigeria (CBN) from time to time.

Adebimpe explained that the chunk of the disbursements are under the CBN intervention funds at 5% and up to 10 years loan tenor; as well as direct disbursement from Polaris Bank at a with highly competitive terms and conditions. www.businessday.ng

18 years since the last exercise in 2002.

Identifying licensing as one of the weakest links for value realization from Nigeria’s petroleum industry, the group said previous exercises between 2000 and 2007 not only fell below global best practices, it failed to secure maximum value for the country’s assets.

Emphasising strict adherence to globally accepted bestpractices, the group expressed doubts the current exercise would bring a different result from the past if government does not make the process more transparent.

To deliver the expected increase in revenue and proven crude oil reserves as well as increase in daily crude oil production the group said the government must ensure the set goals conformed to the country’s long-term planning objectives in the sector.

L-R: Matthew Azoji , managing director, Neimeth International Pharmaceuticals plc; Nnaemeka Onubueze, managing director, Ecoblessed Pharma Limited, and Temitayo Nelson, executive director, finance, Neimeth International Pharmaceuticals, at the presentation of award of National Best Customer of 2019 Business Year to Onubueze during Neimeths customer forum in Lagos.

FG to test run Lagos airport on Saturday ahead of flights resumption IFEOMA OKEKE

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FRC engaging with regulators on sectoral We are yet to receive N118m from Oyo to fight coronavirus - UCH corporate governance guidelines Hope Moses-Ashike

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i na n c i a l R e p o r t i n g Council of Nigeria (FRC) says it has been engaging with all Sector Regulators for the purpose of developing Sectoral Guidelines of Corporate Governance on specific requirements relevant to each sector, which are not covered under Nigerian Code of Corporate Governance 2018 (NCCG 2018 or the Code).

The process is ultimately important because all existing sectoral codes of Corporate Governance are to be withdrawn, and Sectoral Guidelines of Corporate Governance will be issued to address sector specific matters or requirements on Corporate Governance. To this end, NCCG 2018 as the National Code, would be the only Code of Corporate Governance in Nigeria.

At the current time, the Council’s expectation is that the Sectoral Guidelines would be released once the engage-

ment with Sectoral Regulators is completed. Additional information in this regard will be provided subsequently, FRC said in a statement.

Part of the statement reads: “We refer to Paragraph D of the Introduction section of Nigerian Code of Corporate Governance 2018 (NCCG 2018 or the Code) on Monitoring the Implementation of NCCG 2018, which provides that, “The implementation of this Code will be monitored by the FRC through the sectoral regulators and registered exchanges who are empowered to impose appropriate sanctions based on the specific deviation noted and the company in question.

In consonance with the relevant regulatory agencies of the Federal Government of Nigeria, the Council will subsequently issue corporate governance guidelines to assist implementation as may be required to respond to prudential considerations in different sectors of the economy.”

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REMI FEYISIPO, Ibadan

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uthorities of the University College Hospital (UCH), Ibadan, on Wednesday denied receiving N118 million from the Oyo State government to fight coronavirus (COVID-19).

Oyo State commissioner for finance, Akinola Ojo, on Tuesday said the sum of N118 million was given to the University College Hospital (UCH), Ibadan, as support.

Ojo told journalists that the state had spent N2.779 billion in the ongoing fight against COVID-19, while the state government raised N378 million cash from willing donors including individuals and corporate organisations.

But the hospital in a statement signed by its public relations officer, Toye Akinrinlola, on behalf of the Chief Medical Director (CMD), Toye Otegbayo, a professor, said, “Our attention has been drawn to the content of a press release from the Oyo State Government that the sum of N118 million was given to the hospital to fight against the COVID 19 pandemic.”

The press release quoted the state commissioner of finance, Akinola Ojo, as saying the said @Businessdayng

amount was released to UCH. “We contacted some officials of Oyo State for a clarification on this, but it seems there is a misunderstanding in the difference between the College of Medicine of the University of Ibadan and the University College Hospital Ibadan.

It therefore behoves the Management of the UCH to put the record straight.

“We hereby state emphatically that the University College Hospital, Ibadan did not and has not received any monetary donation from the Oyo State Government.

“The CMD of the UCH is a member of the Oyo State COVID-19 task force. He should know if any money was given to UCH outside the 250 pieces of the PPE given to the hospital.

“All other services rendered to Oyo State by UCH have been strictly humanitarian and no financial benefits have accrued to the hospital.

“The UCH has been able to cope with the rigours of pandemic through donations from the NCDC (an organ of the Federal Government), some corporate bodies, well-meaning Nigerians, Alumni associations of the hospital, staff and students of the hospital”.

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Thursday 25 June 2020

BUSINESS DAY

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Thursday 25 June 2020

BUSINESS DAY

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Thursday 25 June 2020

BUSINESS DAY

Garden City Business Digest Investors in south-south hail FG on end of price capping but call for bandwidth for profit as incentive ...Say deregulation with sale of oil fields would boost downstream sector with processing Ignatius Chukwu

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op investors in Port Harcourt who shape the investment climate in the south-south have hailed the end to price capping by the Nigeria National Petroleum Corporation (NNPC) which they hope means complete deregulation of the downstream sector of the oil economy. This began with subsidy removal in May 2020 and removal of capping in prices of premium motor spirit (PMS) or petrol.

The president of the Rivers Entrepreneurs and Investors Forum (REIF), Ibifiri Bobmanuel, told BusinessDay in Port Harcourt that the move would open up the sector for massive investments. Sources said some investors in the region were already putting heads together to take action in area of refinery investment and importation of fuels now that the government would no longer decide prices.

Bobmanuel, owner of a construction firm and now a tractor manufacturing firm,

Ibifiri Bobmaniel

however joined the call for the FG to create incentives that would attract serious investors by putting a cap on what they call range of profit.

The REIF president said the range would decide whether there would be influx of investors or a lull. He said investors have to call up capital from fi-

nanciers and banks, saying the language of investors is profit.

REIF has been in the fore front of policy advocacy in the economy and business sector in the past few years of its existence. It also organises the most credible governorship election debates in the country in Rivers State with support

with the European Union and other organisations without levying the political parties or their candidates whatsoever.

He said while the call is not for another kind of price regulation to be reintroduced, but said there is the need for the petroleum pricing agency to oversee how profit is made and set a range that would not choke investors. He said that it is important for investors to know the profit range allowable for imported PMS so they can calculate the need to set up jetties, storage facilities, distribution channels, etc, that go with a deregulated sector.

His words: “First incentive has been done; deregulation.

Next incentive is how not to gag the investors with very slim range of profit because it requires millions of Dollars to invest. This new opening will account for next phase of investments that will accrue to the Nigerian economy.

“This is bcause it will attract huge interest, let the FG quickly give the latitude to lure them into the space being created now. The investors are going to develop infrastructure such as landing base, waterfronts

with lots of facilities there. The vessels are going to be coming there. The truth is that the local players are not big enough. The sector has a lot of space for more players. It will attract foreign direct investors especially in refining and distribution of petroleum products.

“The current investors space is to take crude out of the country and bring back refined products, but with this policy, you see more investors trying to cut that gap between export of crude and import of finished products. That brings to mind why the interest is more in the current bid round in the marginal fields in the oil and gas space. This is because most of the investors interested in the marginal fields would be looking beyond exporting the crude but at refining the product in-country. That would create more headroom for job creation. It’s a gamut of opportunities that is opening up.

The FG has taken the first step”.

Bobmanuel noted that the future of oil is in processing, saying it is not true that all aspects of oil is dying.

The investors advised Nigeria to focus on oil products in

Africa, saying Africa would be the hub of petroleum products for decades as other continents host diminished interests in the sector.

This, he noted, is because the new oil fields would no longer be for investors eager to drill and export alone but for those willing to process the crude into fuels and sell for better profit. He said there is more activity in the processing than in exporting crude.

REIF president said the petro-chemical plants being established by the Dangote Group alone in Lagos were believed to be worth about $22Bn, an indication of the kind of investments and funds that could accrue to Nigeria in a completely deregulated downstream economy.

Bobmanuel had in a previous interview estimated that at least $100Bn worth of fresh investments would head to Nigeria if the oil sector is completely deregulated. He had earlier also advised the FG to use incentives instead of subsidy to attract distribution of petroleum products to farflung states and cities in Nigeria especially northern states.

King of Bonny: Young in age, old in reasoning Port Harcourt

by Boat

IGNATIUS CHUKWU

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f the numerous messages of felicitation that inundated the king’s palace on June 11, 2020, when the Amanyanabo of Bonny clocked 55, perhaps the most striking is one crafted by a committee of friends of some six elites.

The message which was aired on NTA Port Harcourt stated thus: “We happily celebrate and congratulate His Majesty, King Edward Dappa Pepple 3rd, the Perekule X1 and Amanyanabo of Grand Bonny, on his 55th birthday. Your majesty the king, we your subjects thank the Almighty God for granting you life, good health, and unparallel wisdom. We pray that as you mark this day, the almighty God will continue to uphold you, grant you success and long life, in Jesus name, Amen!”

Many who listened to this pondered over the passion and consummate submission therein contained. Most citizens hardly accept to be called subjects to kings anymore, but the Ibani kingdom seems different when it comes to respect to, and reverence of, their culture.

Explaining the message and its logic, one

of the chiefs in the kingdom, an Amaopusenibo and engineer, Biekpo J. Chap-Jumbo, said this high respect is because the stool is a highly exalted one. “This is a stool that brought Christianity to Niger Delta region.

The throne is so important that everything has been done to protect and preserve its heritage and artifacts. One bishop from London came here and tried to persuade the king to part with the first Bible that came to this part of the world, but the king refused.”

Laying the foundation for the total respect the king commands, Mike Fubara, a member of the committee of friends that coordinated the messages, revealed that the original palace has been enclosed and protected with a new building to avoid destroying it.

He added: “The Ibani culture respects the king. The king is young but reasons like an elderly man. He is full of wisdom.”

In his own contribution, another member of the committee of friends, an Amaopusenibo and pastor, Jonathan Tobin, tried to explain another factor that creates excitement on the island these days; the Dubai concept.

He said: “Many nations want to be like Dubai but our king wants Bonny to overtake Dubai. He keeps charging us to believe in this dream and he is doing everything possible to actualize this. We his loyal subjects have bought into this vision and now we feel it can be done.”

Adding his voice, another Amaopusenibo (chief), Sotonye Banigo, said the king always wants residents or non-indigenes too to survive and share in the fruits of the island. “He gives them a quota of good things that come.

This is believed to be in order to secure the

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King Edward wILLIAM Dappa Pepple 111, Perekule X1 and Amanyanabo of Grand Bonny

enthusiastic determination of both indigenes and non-indigenes in building and protecting the island. That is why after five years, a settler is now treated as an indigene.”

Sources mentioned the the instance of Uber cars. It was gathered that some were given to non-indigenes and they knew how they shared them.

Chapp-Jumbo explained the thinking behind this: “The king wants all hands to be on deck on the island. He works hard to achieve peace and peaceful coexistence in Bonny. He consults widely too to know the wishes and desires of all segments and takes his decision.”

Chuks Igosibo Odikpo agreed on this and

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added; “He moved quickly to douse tension and prevent reprisal killing when a Bonny police officer was killed in Anambra State.

Many may not appreciate the worth of that action. Such things lead to widespread violence everywhere.’

An Amasenibo and engineer, Benneth Ezekiel-Hart said even in matters concerning the upcoming Train 7, “The king is passionate but very cautious about the project. He said the king shared the fallouts and gave a quota to non-indigenes.

“He also does not want what happened in the early days of the NLNG to happen again whereby after the construction phase, hunger and immorality came, and robbery exploded. He is initiating several measures to translate the temporary benefits to permanent assets.’

Others interviewed gave huge credit to the young monarch with the wisdom of the ancients. On the Bonny Chamber of Commerce, Industry, Mines and Agriculture (BOCCIMA), a source said the king came up with the reactivation idea and has pushed it to this stage where the Chamber is back in action. “He wants the chamber to coordinate businesses so that the future of the island would be secured and life would not scatter after Train 7.”

This may mean that good and mature leadership in any community in Nigeria would most likely guarantee peace and development. Bonny may not held together by gas liquefaction wealth but the gift of the palace and the kind of monarch on the throne. That king is 55 years and many want him to count on.

@Businessdayng

Thursday 25 June 2020

BUSINESS DAY

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ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Shell deploys $40million on social investments in 2019 olusola Bello

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hell’s Nigerian businesses made direct social investments of $40 million in Nigeria in 2019, making the country the largest concentration of social investment spending in the Shell Group.

These investments are carried out in other to enhance accessibilty to affordable healthcare, supporting education, enterprise support, accelerating access to energy, assistance and safety.

The companies through which these investments are delivered are Shell Petroleum Development Company (SPDC), Shell Nigeria Exploration and Production (SNEPCO) and Shell Nigeria Gas. There are other investments that have been made over time and these include community driven programme on which about $252million have been expended since 2006, there are about 667 mobile health outreach beneficiaries scattered around Niger Delta. In addition to these is the 6000 University grant since 2011 Shell Companies in Nigeria have invested in healthcare and education initiatives in Nigeria for decades and they continue to support a range of programmes.

The companies undertake two types of social investment activities: ■ Direct social investment across Nigeria, which focuses on community and enterprise development, education, community health, access-toenergy, road safety and since 2018, biodiversity.

■ Community-driven development programmes and initiatives in the Niger Delta, which focus on various themes

Shell production facilities.

as determined by benefitting communities and delivered through a Global Memorandum of Understanding (GMoU Since 2010, more than 27,000 babies have been delivered safely at Obio Cottage Hospital in Port Harcourt.

The Community Health Insurance Scheme was launched in 2010 at the Obio Cottage Hospital, a secondary health care centre in Port Harcourt.

Shell has supported community health programmes in Nigeria since the 1980s with equipment and pharmaceutical donations, emergency care and screening services, hospital maintenance and focused interventions on HIV/ AIDS, malaria, cancer and vision care. Today, Shell seeks to increase access to health services, introduce health insurance schemes and strengthen health systems.

The company continues to work with key stakeholders to achieve universal health coverage by increasing access to health and the uptake of services in the communities.

The SPDC JV and SNEPCo support 20 healthcare centres and

signature intervention projects throughout the country. They include: Health-In-Motion community care programme Health-in-Motion (HIM) is a mobile health outreach programme that takes free medical services to where people live and work. Funded by the SPDC JV and SNEPCo, it reaches an average of 50 communities annually.

In 2019, HIM services benefitted 27,490 individuals in Imo, Bayelsa, Delta, Rivers and Ogun States. Since its launch in 2010, more than 667,000 people have benefitted from the programme.

The Community Health Insurance Scheme (CHIS) is a partnership between SPDC, Rivers State Government and local communities. The programme aims to provide affordable, quality healthcare to the people of Rivers State.

In 2018, Nigerian Yolo Bakumor Smith, CEO of DeRabacon Plastics, won the first-ever Shell LiveWIRE Top Ten Innovators Awards for his business. De-Rabacon is a Nigeria-based plastic recycling and waste management

solution company that recycles end-consumer plastics to viable commercial products such as pavement blocks, buckets, cans, and carpets.

“There is often a paperthin line between success and failure in business, especially for a start-up. The training, support systems and valuable networks I have gained over the last five years courtesy of Shell LiveWIRE, have gone a long way to ensure that my business start-up, De-Rabacon Plastics is thriving,” he said.

“Shell’s approach to supporting local enterprises to grow and excel is enabling us to scale up our business and focus on designing ecofriendly, energy-efficient and affordable products. Today, my organisation employs 16 people and has recycled over 800,000 tonnes of plastic waste.

We plan to achieve two million tonnes by the end of 2020.”

Education Educating Nigeria’s young population is critical to the success of the country. Shell Companies in Nigeria have a long history of supporting education through scholarships

and other initiatives. Since the 1950s, the Shell scholarship schemes have supported several thousands of students many of whom are among Nigeria’s business, political and social leaders.

In 2019, the SPDC JV and SNEPCo invested $7.8 million in scholarships. Since 2011, the schemes have awarded more than 9,400 secondary school grants and over 6,000 university grants to students.

• Cradle-to-Career Scholarships The SPDC JV and SNEPCo invest in the Cradle-to-Career scholarship programme, which pays for children from rural communities to attend some of the country’s top secondary schools. The SPDC JV has awarded a cumulative 600 Cradle-to-Career (c2c) scholarships in the Niger Delta.

In 2014, SNEPCo began offering these scholarships to applicants across the country, and so far, 471 students have benefitted.

More than 1,000 students have received scholarships since 2011. The scholarships cover the full cost of tuition, travel, accommodation, uniforms, books and laptops.

Students completing the c2c secondary school scheme also receive support from Shell through the University Scholarship scheme.

This support is dependent on them securing admission to a Nigerian University.

Enterprise support Shell works to improve the chances for Nigerians to achieve their ambitions. In addition to providing access to loans to small and medium businesses which could become Shell suppliers and contractors, there is also the LiveWIRE youth enterprise development programme.

LiveWIRE was launched in

Nigeria in 2003 and provides training and finance to young people between the ages of 18-35 to start or expand their own businesses.

In 2019, 140 people benefitted from the LiveWIRE programme, receiving training in enterprise development and management, as well as business start-up grants. More than 7,000 Nigerian youths have so far been trained under the programme and almost 4,000 young entrepreneurs were provided with business grants.

Two Nigerian enterprises were shortlisted in 2019 for the Shell Global Top Ten Innovators Awards -- a global competition which highlights and rewards businesses that demonstrate excellence in innovation as well as giving entrepreneurs a chance to shine on a global platform.

The enterprises were FarmToJuice and Foods Nig. Ltd (“FarmToJuice”) and Basiled Energy Ventures. Farm to Juice produces juices, processing any waste into livestock feed and using a biogas digester to provide energy. Basiled provides solar lamps, solar installation maintenance and repair and solar battery recycling services.

Shell LiveWIRE in Ogoniland In 2014, Shell extended LiveWIRE to Ogoniland despite the SPDC JV no longer producing oil and gas in the area. Shell’s aim was to help raise living standards and reduce crude oil theft in the area through the promotion of sustainable alternative livelihoods. This was in line with one of the recommendations of the 2011 United Nations Environment Programme (UNEP) Report for the restoration of the Ogoni environment.

Global gas output set to fall by 2.6 percent in 2020, associated gas to take the hardest hit

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he Covid-19 pandemic has landed a lasting blow to both oil and gas markets.

Global oil production has absorbed the lion’s share of the impact, but natural gas output, which was previously set to grow, is also set to decline by 2.6% this year, Rystad Energy forecasts. Production of associated gas from oil fields will be hit most, losing some 5.5% compared to 2019 levels.

Before Covid-19 forced a new reality upon the energy world, Rystad Energy expected total natural gas production to rise to 4,233 billion cubic meters (Bcm) in 2020, from 4,069 Bcm last year. Now this estimate is reOlusola Bello, Team lead,

vised down to 3,962 Bcm for this year, rising to 4,015 Bcm in 2021 and to 4,094 in 2022.

Production from natural gas fields, which was initially expected to rise to 3,687 Bcm this year from 3,521 Bcm in 2019, is expected to reach 3,445 Bcm instead, recovering to 3,485 Bcm in 2021 and further to 3,551 Bcm in 2022.

The most affected output in percentage terms is the one of associated gas, which was initially forecast to stay largely flat year-over-year from the 2019 level of 547 Bcm. It is now expected to fall to 517 Bcm instead in 2020, rising to 530 Bcm in 2021 and 542 Bcm in 2022. Associated gas will

Graphics: Joel Samson.

likely only again exceed 2019 levels from 2023 onwards.

“Part of the recovery will be driven by optimism in future oil prices, which could gradually drive output from associated gas fields to near 600 Bcm by 2025. But how future oil prices really evolve will actually define the total natural gas output,” says Rystad Energy’s Head of Gas and Power Markets Carlos Torres-Diaz.

The biggest drop in associated gas production will be felt in North America, which accounts for about half of the global output. From a level of 259 Bcm in 2019, associated gas output will fall to 246 Bcm in 2020 and remain

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flat in 2021. Only later will it start recovering, to 256 Bcm in 2022 and 269 Bcm in 2023.

The second-largest associated gas producing region, the Middle East, appears a bit more resilient. Output will fall from 95 Bcm in 2019 to 91 Bcm in 2020, quickly recovering to 94 Bcm in 2021 and 99 Bcm in 2022.

Russia will see its associated gas production falling from the 2019 level of 52 Bcm to 46 Bcm in 2020, recovering to 50 Bcm in 2021, just marginally declining in years after that.

Europe’s output however, will keep its 2019’s 38 Bcm levels flat into 2020, seeing an increase to 39 Bcm in 2021 and 2022, before peaking at 40

Bcm in 2023.

Rystad Energy forecasts that oil Brent prices will stabilize at around $60 per barrel in 2025, leading to our base case associated gas production forecast of 596 Bcm in 2025. However, if prices were to remain at the current level of $40 per barrel, then there is a risk of seeing associated production drop below 500 Bcm. On the other hand, if Brent prices were to increase towards $120 per barrel, production from associated fields would see a fast recovery and have the potential to reach 800 Bcm by 2025.

While global gas demand for 2020 has been revised down to 3,883 Bcm due to the

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impact of Covid-19, a jump in consumption during 2021 as a result of continued low prices and recovering economic performance could lead to a tighter balance. Currently, the production forecast for 2021 is 4,015 Bcm, meaning that if demand grows more than 3%, the balance could tighten significantly. This would subsequently lead to higher prices, which could trigger a supply response.

Our current price forecast for 2021 suggests Henry Hub prices will average $2.7 per MMBtu and TTF prices $3.6 per MMBtu. The upside risk for global gas prices has increased as investments for projects are delayed.

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Thursday 25 June 2020

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

“Before marriage, all I had to do to have a girl speak to me, was give her my Arthur Andersen business card” – Adebiyi In this interview with OLALEYE ADEBIYI, Country Managing Partner of Andersen Tax in Nigeria, and Co-Chairman, African Regional Board, shares insight on essential ingredients for success in professional services, attracting top talent, Andersen Global Collaboration with TNP, current realities and the transition to remote work. EXCERPTS

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here are very few professionals in Nigeria that have the breadth and indeed depth of your experience in the legal and professional services space; from Arthur Andersen to Aluko & Oyebode and WTS Adebiyi & Associates and now Andersen Tax. Given your unique perspective, what would you say are essential ingredients/factors for success in legal/professional service businesses?

Quality! Quality! Quality! I think that adherence to quality cannot be overemphasized. Clients want the best, especially if they are paying top dollar for it. Firms need to get to a place where their clients can say, because I got this from so and so firm, I know I can rely on it.

This ties in with hiring right. When you hire right, you are somewhat assured of quality work from staff.

I remember back in my days in Arthur Andersen, after a certain level you were no longer appraised on technical competence, because that was a given.

A second factor for me, would be people management. If you do not treat your staff well, they will leave and that’s why some firms die. I remember in my days at Arthur Andersen, we did not have to think about salary increase, it just happened. The Firm took into consideration the rate of inflation and increased salaries accordingly.

I remember in my first year, I had three salary increases. It is important to pay people well, develop your staff, give them good training and continually make sure they are happy to remain with your firm.

That way, the firm can grow.

Are there any practices that you have observed in bigger larger firms and organisations which you were unable to replicate in WTS Adebiyi & Associates because it was a smaller practice?

The only thing I know I probably was unable to do, was pay the kind of salaries I felt should be paid even though we paid quite well accord-

reputation over the years. So, hire good people, produce top quality work and treat your people well.

So, those same things will build the brand?

Yes. It is not about having a foreign affiliation. There are other top firms in Nigeria. Banwo & Ighodalo, Olaniwun Ajayi and so on. These would typically be the firms that would get invited to do major transactions in Nigeria. These are all local brands built on quality.

ing to legal industry standards.

However, the competition was not just with law firms, but against the Big Four and others.

I think the only encumbrance for smaller firms might be that they are unable to pay top salaries and this might affect the quality of talent that they are able to attract to their business. Right now, in Andersen Tax, we are able to attract top talents and pay them well and we can also provide the type of environment where they are able to excel.

It’s a catch 22 situation. Is the brand the entire difference? As Andersen Tax you are able to guarantee a certain clientele, which enables you to pay more and therefore attract top talent, and by being able to attract top talent, you are able to guarantee a certain clientele which enables you pay more.

When I go with my Global CEO around Africa to other potential

INSIDE B&I emerges most active solicitor on FMDQ’s Q1 2020

Fixed Income Primary Markets Solicitor’s League Table

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Andersen Tax offices (we have offices in 38 countries in Africa), I always tell a story. Before I got married, all I ever needed to do to get a girl to talk to me, was give her my Arthur Andersen business card. They could say no to me later, but with the card, I could be sure they would at least listen to me; the brand was that strong then. Arthur Andersen was Number 1 by far ahead of the other Big 5.

I can tell you right now, that the brand has played a big part in elevating our practice to where we are now. Now, when RFPs are sent to the Big Four, they are also sent to Andersen tax.

So, what can local firms, do to attain or at least approach the same type of brand recognition.

I mentioned Aluko & Oyebode earlier. It is a local Firm that it is very strong locally. As a result, they have been able to attract engagements not just locally, but internationally as well. They have built a good

Lawpavilion applauds Paul Usoro led NBA

The firms you have mentioned are indeed widely recognized as tier one firms in Nigeria. There are also a few others in this category. They do good work, generally have a large work force and have clearly built a strong brand over the years. However, there are small firms that also do good work, treat their people well and so on, but do not have brand recognition.

What are they doing wrong?

What are they not doing?

I don’t think they are necessarily doing anything wrong. What I would say, is that they should mark their own time. There is no way, if you continue doing good quality work and treating your people right, your name will not come out. I will use WTS’ Adebiyi & Associates as an example. Though we started small and were offered “peanuts” for some jobs initially, as word spread about our work, we began to get very well-paying engagements and in many cases were chosen for engagements over very well established local and global brands.

I remember then, I would go to some places and mention my name and be surprised to hear “o yes, the tax guy”. I did not know that people actually knew who I was or what I was doing. There is no way, if you remain committed to quality, you will not be recognized. Yes, it may not be at the same level as some established brands, but remain committed and you will get there.

All it takes is one big break. If you get a job say with a big company and you do it right, they are

21

very likely to refer you to similar companies that have the same problem. Not too long ago, the CFO of one of the major conglomerates in Nigeria called us because the CFO of another conglomerate had spoken so well about us at a meet up of expatriate CFOs. Same would apply even for a smaller firm. If you do good work, in time, word gets around and a firm that was not known yesterday becomes a recognized brand. So, I cannot overemphasize doing good quality work as well as getting good people and treating them well. Regardless of how small you are, those principles are constant all over.

Great advice. Now let me go to TNP and the Collaboration. What was your thought process in embarking on the collaboration?

Right from the onset when setting up Andersen Tax, we wanted to have the whole gamut of tax and law. But for various reasons, it was not possible at the time. When we would go for meetings, we found out that legal issues would come up which we could not deal with as Andersen Tax, because we were not a Law Firm. As more opportunities began to arise, I had cause to think again about the original plan.

I had known TNP for some time. I knew that they think the way we think. They were a practice that wanted to make a change in the market and had started making their mark. So, on one trip to London these opportunities again came up, I called TNP’s Managing Partner and scheduled a meeting for when I returned to Nigeria.

As providence would have it, the Continues on page 22

BIO Olaleye Adebiyi is the Country Managing Partner of Andersen Tax in Nigeria, and Co-Chairman African Regional Board. He has more than 33 years’ experience in professional services across several firms, ranging from a global “big 5” multidisciplinary professional services practice, through one of Africa’s largest law firms and a boutique law practice.

Determination of significant economic presence by a foreign entity taxable in Nigeria’s digital economy

23

www.legal.businessday.ng legalbusiness@businessday.ng

Thursday 25 June 2020

BUSINESS DAY

INDUSTRYFILE

BD

21

LegalBusiness

B&I emerges most active solicitor on FMDQ’s Q1 2020 Fixed Income Primary Markets Solicitor’s League Table …as Stanbic IBTC Capital, Chapel Hill Top Sponsors’ League Table SEGUN ADAMS

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he FMDQ Fixed Income Primary Markets Solicitor’s League Table which represents the top solicitors of debt securities (excluding FGN Bonds and T.bills) listed and/or quoted on FMDQ Exchange for Q1 2020 showed that six capital markets solicitors actively participated in the bond and CP markets for the period.

However, according to FMDQ, the most active solicitor for the review period was Banwo & Ighodalo (B&I) participating as a solicitor for both bond listings and CP quotations for Q1 2020 with a total market participation value of N112.47bn and N208.37bn respectively. Banwo & Ighodalo has also been consistently awarded as the “Best Debt Capital Market Solicitor on FMDQ” at the FMDQ’s 2017, 2018 and 2019 Nigerian Debt Capital Markets Conference & Awards event.

Udo Udoma & Belo Osagie participated only in the CP market with securities valued at N40.99bn whilst Aluko & Oyebode participated in the CP market only, with a total value

of N24.21bn.

Banwo & Ighodalo ranked number one solicitor on both bonds and CPs issuances. Solola Akpana & Co. ranked second on the bonds table and P.O Akinrele & Co. was number three.

For CPs, Udo Udoma & Belo Osagie came second and Aluko & Oyebode was third.

The data by FMDQ showed Lagos State Government of Nigeria issued series 2 and 3 of bonds

worth N112.247 billion.

GEL Utility Funding SPV Limited was the second biggest issuance of the quarter at N113 billion while Eat and Go Finance SPV PLC issued N24.5 billion.

CPs issuers in the period included Dangote Cement Plc (N49.9 billion), Flour Mill of Nigeria (N7 billion), Mixta Real Estate Plc (N2 billion) among others.

On the FMDQ fixed income

platform in the first quarter of 2020, Stanbic IBTC Capital Limited and Chapel Hill Denham have emerged the most active sponsors, contributing over N362.23bn or 80% in bond issuance and Commercial Papers.

Stanbic IBTC remained at top spot contributing N233.78bn (N11.50bn in a bond issuance and N222.28bn worth of CPs), according to a quarterly report

by FMDQ.

In the quarter, Stanbic IBTC maintained its top spot on the Fixed Income Primary Markets Sponsors’ League Table for Commercial Papers and held on to its third place on bonds ranking.

On the other hand, Chapel Hill Denham Advisory Limited moved up to 2nd place on the table with N128.45bn (N112.24bn in bonds and N16.21bn worth of CPs). This was after the firm emerged number one on the bonds ranking although it slipped a notch lower to 6th place on the ranking for Commercial Papers.

FCMB Capital Markets Limited sponsored N86.29bn worth of Commercial Papers to emerge third overall biggest active sponsor.

Other big active sponsors were FBNQuest Merchant Bank Limited, Union Capital Markets Limited, Renaissance Securities Nigeria Limited, Rand Merchant Bank Nigeria Limited, Coronation Merchant Bank Nigeria Limited, EAC Advisory Limited, United Capital PLC, CitiBank Nigeria Limited and Cordros Capital Limited.

Overall in the first three months of 2020, there were four issues of bonds and 25 CPs with the face value of N136.75bn and N296.41bn respectively.

Lawpavilion applauds Paul Usoro led NBA

…Promises new innovations to help lawyers cope with the new normal

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awPavilion Business Solutions Ltd, over the weekend, confirmed its recent partnership with the Nigerian Bar Association (NBA) to provide Electronic Law Reports to Young Lawyers.

Speaking about this development, Ope Olugasa, the Managing Director of the LegalTech company commended the Paul Usoro led NBA for the well thought out initiative of giving back to the legal community, particularly the young lawyers.

Olugasa explained that the beneficiaries of this initiative are young lawyers between one to seven years post call who paid their annual practicing fee on or before the deadline stipulated in the Legal Practitioners’ Act. While observing that majority of these young lawyers are still trying to find their foothold in the industry, learning the ropes and mostly without a robust income, Olugasa opined that the beneficiaries, paying their annul Bar Practicing Fee as and when due, showed the level of their commitment to the legal industry and especially to the association. He therefore considered it very laudable that the

NBA deemed it fit to give back to such dedicated young lawyers.

He especially commended the fact that the NBA Exco looked for a palliative that will aid the career of these young but great minds.

Quoting the saying that “give a www.businessday.ng

man a fish and you feed him for a day but teach a man to fish and you feed him for a lifetime”, Olugasa said that by empowering these young lawyers with LawPavilion Electronic Law Reports, NBA has taught these young lawyers how to fish. He

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therefore hoped that the beneficiaries will make the best use of the opportunity afforded them.

On how it felt being a part of such history making initiative, Olugasa said it feels gratifying.

He gave insight into how deeply the COVID-19 pandemic hit the legal industry; particularly with courts, the last hope of the common man, being shut down for over a month.

He noted how the closure of the courts affected practicing lawyers who derive their livelihood as advocates. Similarly, Olugasa evinced how Solicitors were also affected because they couldn’t access their physical libraries as a result of the lockdown measures put in place in the different states in Nigeria.

He described how difficult and practically impossible it was for some Law firms to continue to render their legal services and how this led to some losing briefs or clients. He however pointed out how only a certain percentage who had embraced technology, through the use of LawPavilion products, were able to stay up and running all through the period. @Businessdayng

When asked if the legal industry should expect more from the LegalTech company now that the world is gradually returning to normal, Olugasa pointed out that life post COVID-19 is definitely not going to be like what we were used to.

According to him, there’s been a paradigm shift and Covid-19 has accelerated things technology-wise. He alluded to the fact that two years ago, nobody would have thought that IBA or NBA Conferences could be held virtually, and that now, virtual conferences, virtual meetings, remote work, e-filing and remote hearing are the new normal.

Olugasa further announced that apart from adding new features to enhance the company’s existing products to ensure optimal performance, the company will soon be unveiling a couple of products that will not only benefit Lawyers, Law Firms and Judges, but will be of great benefit to every Nigerian.

He further tipped that they are working on a complete ecosystem of LegalTech Solutions which will be unveiled at the forthcoming Conference.

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Thursday 25 June 2020

BUSINESS DAY

INTERVIEW

BD

LegalBusiness

The NBA should have a sexual harassment policy In this interview, OSAI OJIGHO, Country Director of Amnesty International shares her perspective on the current buzz around rape and sexual assault in Nigeria. She discusses Amnesty’s work in this regard and the role that lawyers, and the legal profession can play. EXCERPTS…

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Continued from last week

re you seeing any industries or sectors that are setting examples of best practices that can be adopted in addressing these issues?

For Nigeria, I will say, I have not really seen any cohesive standards that have emerged from any sector in addressing these issues. Sadly, even the churches and mosques are some of the worst perpetrators. But we have seen some organisations that have impressed on their staff that they will not accept a certain standard of behaviour. This is commendable and is something that should be replicated and encouraged.

My thinking is that we should also look at ways that professional bodies can be brought in to address sexual harassment complaints within professions. This will help ascertain some level of fairness and independence because one of the biggest complaints people make when discussing issues of sexual harassment is that they think HR is in cahoots with management.

There is also the need sometimes for anonymity depending on the situation, because in many cases it would be difficult for an accuser to continue to work comfortably in the same space with a person accused of sexual harassment. There is therefore need for intervention from outside the affected organization. Regulatory bodies can act as clearing houses, whistle blowers and so on.

Considering that when a person reports to a regulatory body, they may still face reprisals as the leadership of their organization is likely to have good relationships with

Osai Ojigho

the regulatory bodies, what is your view on the “name and shame approach”/ “court of social media”?

I think everyone should attempt the official routes first. Only if that fails should other options be considered. The courts are still an option.

Although sexual harassment is not strictly speaking a crime, depending on the circumstances the matter can be brought to court. For instance, in the OAU sex for grades case, the matter was dealt with as a corruption case and the charges against the lecturer were actually filed by the Independent Corrupt and other Related Offences Commission (ICPC).

Also persons living in Abuja and states that have domesticated the Violence Against Persons (Prohibition) Act (“VAPP”), who can plead violence as one of the elements of the sexual assault can bring such matters

to court relying on the VAPP. Social media should always be a last resort. To go that route you must have all your facts rights. You must also be ready for the publicity because it is a game changer. Even celebrities that are used to the lime light do not always find it easy when they reveal these issues. To go this route one must be ready for the onslaught and to go all the way. Some people are just looking to break the latest news, so do not give them the pleasure.

So I always say that though it might be slow and seem like nothing is happening, it is better to follow the official and judicial routes. Find the right groups that can work with and support you as you move the matter along.

Thank you so much for your time, I would like to end this by bringing it to you person-

ally. Please share with us a bit of your journey to Amnesty.

Its always interesting to tell my story.

Many of my friends and former classmates see me as gentle and really do not know how I got into this “aluta” stuff as they call it. For me its about sharing and throwing light on issues that would not have otherwise received attention. When I set out to study law, one of the things that motivated me as a young girl was that I would be able to help people who could not defend themselves.

But in university my interest changed and I became interested in corporate law and so when I did my masters, it was in commercial and international trade.

After my masters, I got the opportunity to do a six months internship at the International Criminal Court and this marked the turning point for me. The Court was still very new at the time. I worked in the victims and witness’s unit and we were exposed to some of the cases that were happening in Rwanda and Uganda and we were getting ready to see how we would support the victims and witnesses when they would come to the Court. Also, since it was based in the Hague, I had the opportunity to attend some of trials for the ICTY, i.e the International Criminal Tribunal for the former Yugoslavia. To actually see people that were committing genocide and all of these crimes was indeed eye-opening. I also got to hear people’s stories and the horrific things they had been thorugh. So with all of this, I told myself that I could actually use law to do something more reformative than just handling commercial transactions.

This guided my choices when I got back. I worked in Legal Research and Development Consultants from where I moved to Alliances for Africa.

It was there that I really learnt how to do campaigns, advocacy and so in.

Our work there was focused on the African human rights system and so I was thrown into it early on. I found people who were willing to teach me and mentor me which was really helpful particularly as I was not the typical activist type. I was more researcher, academic and a bit legalistic. I had to learn new skills, soft skills. It required a bit of humility. I also had to do a lot of studying.

While at Alliances for Africa, I took a sabbatical with the AU and went on a foreign mission to Mali, a country at the time just coming out of conflict. It was not until I donned the bullet proof vest and helmet that I asked myself if I really knew what I had gotten into. But it was such a crucial learning point, it was an opportunity to see and document first hand many of the scenarios we had been working on.

After that mission I went back to Alliances for Africa and after sometime got invited to apply for a position as state of the union coalition coordinator in Nairobi, Kenya. It was an Oxfam project. I was there for three years and undertook several roles in that period including a position as the Acting Pan-Africa Director for the Great Britain Arm and the PanAfrica programs manager for Oxfam International.

Many people were surprised that I was coming to Nigeria to take on a country role after doing continental work for so long. But it’s been an opportunity to come back home and contribute directly to my own country.

Also, Nigeria is a big and diverse country. The work here is very important and feeds into our work at the regional and global levels.

It has been an interesting journey and I have been quite fortunate to grow in my area of interest.

Before I got married, all I had to do to get a girl to speak to me, was give her my Arthur Andersen business card Continued from page 20 Partner and I were on the same flight back to Nigeria the next day.

I initiated the conversation and the rest as they say is history. They share the same passion that we do, they also want to dominate the world, not just Nigeria.

In view of some of the regulatory restrictions that exist in Nigeria, have you faced any resistance from the NBA or any regulatory bodies regarding the collaboration.?

No, we have not and should not.

Andersen Tax does not do legal work and TNP represents Andersen Global in Nigeria as a Collaborating Legal Firm, there is no common ownership relationship with Andersen Tax. We refer all legal work and opportunities that come our way to TNP, whilst we continue to address the tax needs of our clients. Under the model that we have adopted, Andersen Tax and TNP are separate practices and we do not combine revenue. Our common goal is to ensure we provide

high quality service to our mutual clients and solve their problems.

Talking about models, brings me nicely to my next question. There are many conversations going on globally and to some extent locally, on the business of law. From talks about business models for law firms, to the disruptions in the legal space caused by technology and alternative service providers (such as Andersen Tax) amongst others. Although you are strictly speaking, no longer a practicing lawyer, what are your thoughts or recommendations on the direction, lawyers and law firms should be taking in these times?

The only thing I would advise, is specialization. The days of having a law firm of generalists, is gone.

You have to specialise in an area.

Considering especially, that technology is taking over many things, you need to dominate an area and be able to deliver in that space. www.businessday.ng

For instance, if I say I am a tax lawyer, I can advise you not just on tax, but also on commercial law generally. So, I have an edge.

I remember years ago, I was asked to review the tax aspects of a major financing agreement, which the commercial lawyers had flown to London to conclude. I however took time to review the entire agreement and was able to advise based on my tax expertise, that the contract would-be dead-on arrival if signed the way it was.

The tax provisions of the agreement were inconsistent with the commercial objectives which the parties sought to achieve. I then made suggestions on how the agreement could be re-drafted in a manner that made it workable and actually received commendations from all stakeholders. There was also a case many years ago, where a major company that produces and exports gas had problems claiming hundreds of millions of dollars in tax benefits because they adopted a wrong contracting structure.

They wrongly adopted a con-

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tracting structure that entailed hiring rather than ownership of the vessels. Unfortunately, the hiring structure adopted in their contract did not provide the tax incentives they were seeking. A tax lawyer would have spotted that immediately at the contract drafting stage.

My point is that specialization has been and will continue to remain important regardless of technology and other disruptions.

So, specialization is the way forward. What’s your view on other issues like technology and let me tie that in with where we are now, COVID and the transition to remote work? Were you ready?

I am not sure anyone would say they were prepared for COVID. At least I was not. But I think many people had something that they could build upon. That was the case for us. Prior to COVID, everybody at Andersen Tax could log in and work remotely. If you call that preparation for COVID, then perhaps, yes, we were ready. It had to be so, because I have always had @Businessdayng

to work remotely. So, the ability to work remotely, has always been key. We just had to scale up a little.

Are there any specific tools that you leveraged, now and in the past?

I cannot speak specifically to that.

We may need to ask my IT Team.

On my part, I am able to connect to the office server from wherever I am in the world. And really, this is not new. I remember as far back as 1999 in my days with Arthur Andersen, from Chicago, I could connect to the Lagos office Server do my work and save straight into the server in Lagos. Organizations like that have been far ahead of the rest for a long time.

Technology is now more easily accessible which is why I would say that every lawyer or law firm that wants to scale up must take technology very seriously. You need to have amongst other things a server and dedicated IT people.

You cannot do it yourself. You need specialists that can ensure that you keep upgrading as technologies change and improve.

Thursday 11 June 2020

BUSINESS DAY

23

GREYMATTER

Determination of significant economic presence by a foreign entity taxable in Nigeria’s digital economy

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ursuant to powers conferred under section 13(4) of the Companies Income Tax Act (“CITA”), as amended by the Finance Act (2019), the Minister of Finance, on February 3, 2020, issued the Companies Income Tax (Significant Economic Presence) Order, 2020 (the “Order”), which become effective on the date the Order was issued.

The Finance Act amended the provisions of section 13(2) of the CITA, and has now extended its purview and applicability to profits that may accrue and or be attributable to the economic activities of any foreign entity in Nigeria’s digital economy; to the extent that such an entity has significant economic presence in Nigeria. The Finance Act however does not define what constitutes “significant economic presence”. The power to make such determination is vested in the Minister of Finance.

Besides highlighting the key provisions of the Order, this article seeks to identify and analyse the possible impact of the Order on the activities of foreign entities with business interests/operations in Nigeria’s digital economy, as well as potential regulatory, compliance and enforcement issues.

PRE-FINANCE ACT REGIME Prior to the enactment of the Finance Act, a foreign or Non-Resident Company (“NRC”) was only taxable in Nigeria, where it was established that it had commercial presence/ business interest in the country, and it had ascertainable profit that was or could be attributable to its in-country presence.

The basis and general consideration used to determine and establish the taxable commercial presence of an NRC in Nigeria, is the existence of any of the activities listed below or a combination of such activities: (i) Having a fixed base in Nigeria – this may connote physical presence of its staff in Nigeria, having an address in Nigeria, or any significant territorial connection to Nigeria; and or, if the Nigerian location is a place of regular resort for the NRC’s business; (ii) Having an arrangement with a dependent agent who executes commercial transactions on its behalf in Nigeria; (ii) Execution of a single contract for surveys, deliveries, installations, or construc-

shall not be construed or deemed to have significant economic presence in Nigeria, and thereby become taxable, if all it does incountry is (i) make payments to an employee of the person that effects payment under a contract of employment; (ii) make payments for teaching in an educational institution or for teaching by an educational institution; or (iii) receive payments from a foreign fixed base of a Nigerian company. tion in Nigeria (otherwise known as turnkey projects); or (iv) Engaging in an artificial or fictitious transaction, which involves a related party in Nigeria.

Establishing physical presence, with the tax applicable to such presence, is usually onerous and contentious. The difficulty associated with establishing local presence and incidences of tax relative thereto, was a beneficial tax shield for NRCs involved in the digital economy; because the fact of having a physical presence in Nigeria was very difficult to establish.

The leakage now appears to have been closed, as the Finance Act prescribes that the profits of NRCs derived in Nigeria, accruing from undertaking any of the activities set out below, shall be taxable under the CITA: • Operation in Nigeria’s digital economy; or Provision of technical, management, consultancy, or professional services in Nigeria; or • Provided an NRC has significant economic presence in Nigeria.

KEY PROVISIONS OF THE ORDER A NRC engaged in business or that carries on activities in Nigeria’s digital economy shall be deemed to have significant economic presence in Nigeria for tax purposes, if it: Derives gross turnover or income of more than N25 million or its foreign currency equivalent in an accounting period, from its digital activities in Nigeria; Uses Nigerian domain names (.ng) or registers a website address in Nigeria; or Has purposeful and sustained interactions with persons in Nigeria by customizing its digital pages or platforms to target persons in Nigeria, including reflecting the prices of

its products or services in Naira or it provides options for billing or payment in Nigerian currency.

In relation to NRCs from jurisdictions that have in place a Double Tax Treaty Agreement (“DTT”) to which Nigeria is a party, and where the DTT specifically addresses taxation of the digital economy, the Order prescribes that the potential tax liability of such NRCs will be determined under the applicable DTT. For the purpose of determining whether the N25 million gross turnover or income threshold specified in the Order has been met, activities carried out by connected persons in any accounting year shall be aggregated.

Connected persons is defined in the Order to include: a) Persons that are “associates” as defined in the Companies and Allied Matters Act (“CAMA”); or b) Persons that are business associates in any form, provided that persons are considered to be business associates where: (i) one person participates directly or indirectly in the management, control, or in the capital of the other; or (ii) the person or persons participate directly or indirectly in the management, control, or in the capital of both enterprises.

NRCs engaged in the provision of technical, management, consultancy, or professional services in Nigeria shall be deemed to have significant economic presence in Nigeria, and be subject to tax in any relevant accounting year, if they earn any income or receive any payment from a person in Nigeria, or from a fixed base or agent in Nigeria. The Order defines “services of a technical nature” to mean any service of a specialized nature (including advertising services, training, or the provision of personnel) that is not a professional, management, or consultancy service.

Under the new dispensation, a NRC

COMMENTARY By introducing a new tax chargeable on the activities of foreign entities carrying on business in the digital economy, the Order heralds a paradigm shift in our tax regime. Given the technological disruptions and interventions that have re-defined the global business landscape heavily geared towards e-commerce, updating our tax system to accommodate the present realities is not only commendable, it is also unassailable, as it will bring many foreign entities operating in Nigeria hitherto shielded from tax within our taxation purview.

Though timely and pragmatic, we note a regulatory impediment to the effective implementation of the provisions of the Order, and in effect, the attainment of the Government’s overall objective in respect thereof. For instance, the applicability of the Order to NRCs from countries and jurisdictions that have subsisting DTTs with Nigeria and the mechanism for the imposition and collection of tax from such NRCs is unclear and may be fraught with implementation and enforcement challenges. Whilst the Order stipulates that the tax liability of a NRC, shall be determined in accordance with the consensus arrangements in respect of the taxation of the digitalized economy under an applicable DTT, the problem in this regard is the fact that Nigeria is not presently a party to any DTT that speaks to, or has any mechanism for, taxing the digital economy. Needless to over-emphasize, the hurdles and challenges inherent in amending bilateral international agreements, such as a DTT, and the attendant statutorily prescribed process for domesticating such an agreement for the purpose of it having legal efficacy.

To be continued next week

DISPUTERESOLUTION

Shareholder Disputes in Nigeria – Arbitrable or Not? Continued from last week

Questions regarding the arbitrability of shareholders disputes in Nigeria came to the fore in Fagbola v. Niger Offshore Service Ltd & SBM Offshore Inc. (Suit No. FHC/L/CP/1570/2014) when the Federal High Court considered whether shareholders disputes arising out of the shareholders agreement and other disputes arising out of an unfair prejudice cause of action should be referred to arbitration. The Petitioner had argued that shareholders disputes ought to be resolved by the courts since the Nigerian constitution vests the Federal High Court with jurisdiction over matters concerning the administration of CAMA. The Respondent had argued that CAMA does not forbid the waiver of the right to have

the disputes resolved at the Federal High Court. The Respondent further argued that even if jurisdiction vests in the courts, a party who submits to arbitrawww.businessday.ng

tion can waive the court’s jurisdiction since under Nigerian law, a party can waive the provisions of a statute if those provisions are to the waiving party’s benefit. Additionally, the Respondent argued that reliefs being sought are not for a change of status of the company (from solvent to insolvent) and therefore can be granted by an arbitral tribunal.

The Federal High Court agreed with the submissions of the Respondent and referred the matter to arbitration in accordance with the parties’ arbitration agreement. The implication of this is that so far, shareholder disputes are arbitrable in Nigeria.

Lingering shareholders disputes often affect the viability and market value of a company. Therefore, it is essential that such disputes are expeditiously resolved

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and kept confidential. These are the advantages which resolving shareholders disputes by arbitration hold against resolving such disputes through the courts. It is therefore important that the arbitrability of shareholders disputes is maintained or protected by ensuring that there are enforceable arbitration clauses in applicable agreements.

Typically, articles of association of companies may not contain a dispute resolution clause. It may be beneficial to include an enforceable arbitrable clause in the company’s articles of association since it operates as a contract involving a company’s shareholders. This is so that even if there are no shareholders agreements, parties can still take benefit of resolving shareholders disputes through arbitration.

@Businessdayng

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Thursday 25 June 2020

BUSINESS DAY

BUSINESS TRAVEL How Air Peace salvaged Nigeria’s air travel during lockdown

IFEOMA OKEKE

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popular saying goes thus: ‘When opportunity meets preparation, success is inevitable.’

This appears to have been the situation of Nigeria’s largest carrier, Air Peace, which had diligently prepared for opportunities that came its way sooner than it expected.

Air Peace had earlier set a domestic record as the first Nigerian airline to acquire and register the Boeing 777 aircraft in the country.

Three of the four wide-body aircraft it acquired for its long-haul operations to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou and Mumbai had so far been delivered. The airline had in 2019 commenced the Dubai route but was awaiting landing permits from other international countries before the compulsory lockdown, making it impossible for airlines to continue scheduled international operations.

Allen Onyema, the CEO of Air Peace had explained that these aircraft will serve international routes in due time.

The opportunity therefore came sooner than expected, when the rise in cases of COVID-19 made several foreign nationals in Nigeria request to be evacuated to their countries and Nigerians outside the country also requested to come back home.

Air Peace was handy in making this a reality, all thanks to Onyema who made these aircraft available to carry out these evacuation flights.

Evacuation flights carried out

by AirPeace On the 23rd of March, 2020, the federal government shut down Murtala Muhammed International Airport (MMIA), Lagos and Nnamdi Azikiwe International Airport Abuja in a bid to contain the spread of COVID-19.

The closure of international flight operations at the Lagos and Abuja airports was in addition to the three other international airports in Kano, Enugu and Port Harcourt shut for flight operations on 21st of March.

Lagos and Abuja airports were however opened to emergency and essential flights within the period.

Since the shutdown, Air Peace has been able to carry out major evacuation flights to various countries.

AirPeace helped deliver the first batch of medical supplies in the fight against the spread of Coronavirus pandemic and for the treatment of those who are infected.

The airline also took delivery of the second batch of medical supplies and personnel from China.

Air Peace evacuated about 210

Israelis from Nigeria to Tel-Aviv on March 29, 2020, evacuated about 301 Chinese from Lagos airport to Guangzhou, China on May 28, 2020, and also evacuated 286 Indians to Kochi from Lagos on May 31, 2020.

Onyema said that the Air Peace was grateful to these three countries for the confidence they reposed on the airline, which in no small measure portrayed their support for the development of Nigerian airlines.

“Israel blazed the trail when it approved the evacuation of its citizens from Lagos and Abuja to Tel-Aviv, followed by China and India.

For the three countries to engage Air Peace to carry out the evacuation exercise speaks volumes about the level of confidence they have on the airline and its safety standards, which has been attested to by the International Air Transport Association (IATA) Operational Safety Audit (IOSA) certification of our airline.

“What the three countries have done will help in creating and sustaining jobs for Nigerians and by identifying with a Nigerian carrier at this time shows that they love our country and their support has challenged us to do more by improving on our achievements. Air Peace is grateful to the governments of these countries. Their support means a lot to us. It shows that they truly have the interest of Nigeria at heart,” Onyema said.

He also noted that this good gesture shown by Israel, China and India would not go unnoticed by the Nigerian public, which over the years have yearned for viable Nigerian carriers that could be flying them to different parts of the world, as it is known that Nigerians are great travellers.

Air Peace creates job opportuniwww.businessday.ng

ties despite lockdown With the few evacuation flights the airline was able to conduct during this period of lockdown, the airline was the only domestic airline still creating job opportunities for Nigerians in the aviation sector.

Through the evacuation flights, the engaged pilots, engineers, crew members, ground handlers, government agencies, air traffic controllers and security officials, amongst others.

These jobs were created in Nigeria and for Nigerians while economic activities were on hold as a result of the lockdown.

Stakeholders kick against using foreign airlines for evacuation Despite the capacity of Air Peace in carrying out these evacuations and huge job opportunities created in Nigeria, stakeholders have to wonder why the federal government has continued to use foreign airlines in carrying out evacuation flights.

Nogie Meggison, the executive chairman of AON, said that the onus still lies on the government to do the right thing by protecting its own carriers, as COVID-19 fears forced the government to bring back stranded Nigerians abroad.

The airline operators stated that almost on a daily basis, Emirates evacuates Nigerians from Dubai, revealing that the airlift is being negotiated and advertised by the Nigerian embassy in the United Arab Emirates (UAE), thus defying government’s directive that only Nigerian carriers should evacuate Nigerians as many other countries are doing.

He insisted that Nigerian airlines have the capacity to successfully execute such an exercise.

“We see these flights coming

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in everyday and we ask ourselves, why? Can you fly into Ghana or other countries if you don’t have landing permits? So we need to first put our house in order for things to work the way we want. I keep wondering why our airports are still not open for operations. Aviation is a major propeller of the economy.

I keep wondering what is delaying the opening of our airspace,” Meggison said.

Also speaking on the issue, Sheri Kyari, a member of Aviation Round Table (ART), a think-tank group in the industry, said that the negation of government directive by a government agency shows lack of synergy in governance and also lack of respect for the central authority.

Kyari emphasised that such actions attract opprobrium to the country.

“This is giving us a very bad image in the international community that our airlines are not safe, which is not true. This is a very wrong impression. Secondly, it’s like a connivance against the country to make sure that economically, we are not standing; when what is supposed to be our own and people are ganging up to make sure that we don’t get it. It is a bad one.

“The issue of ‘you do me, I do you’ has come out to play, but we are weak in one particular area, which is alliances. This is one of those things that the mega carriers are using against us by denying us the facilities. Having said that, the major area is for the federal government to step in and put their feet down. Ensure that our carriers are protected,” Kyari said.

How FG can support Air Peace As the aviation sector remains the worst hit as a result of this pandemic, @Businessdayng

experts have suggested some form of support or palliatives to help keep these airlines afloat.

Olumide Ohunayo, an aviation analyst, told BusinessDay that when the government strengthens the indigenous airline, from their strength, they begin to develop international capacity and from their performance, foreign airlines can easily partner with them to allow easy access to the international market.

“We have Air Peace with such capacity, so what the government needs to do is to see how they can support Air Peace in air diplomacy.

We see what happened between America and China recently. We need the government to support Air Peace that is flying international routes. You must back that airline up with all diplomatic and aero political laws and powers.

“We must protect and ensure reciprocity in whatever we do concerning the routes they hope to operate on. We must remove every stumbling block. Air Peace has shown that it has that capacity, so all the government needs to do is to show some powers and support so that anyone seeing Air Peace will know that Air Peace is representing Nigeria.

“Air Peace on its own must expand ownership, management and incorporate Nigerians into the airline so that people will see it more like a Nigerian airline than an individual airline. People will support it when they see the airline as their own,” Ohunayo said.

John Ojikutu, member of aviation industry think-tank group, Aviation Round Table (ART) and chief executive of Centurion Securities, commended Air Peace for its singular efforts of moving in the troubled weather of the Nigerian commercial aviation industry with very little support from everyone, not necessarily always from government.

In a bid to cushion the effect of COVID-19 pandemic, Seyi Adewale, the chief executive officer of Mainstream Cargo Limited suggested that government stimulus led packages and incentives must be given to limit the negative impact of this pandemic on the aviation subsector.

These Adewale said include deliberate sourcing, loans, grants, tax waivers, special forex windows and rates, airport infrastructure deliberate upgrades or construction, and reduction of airport taxes or surcharges.

He stated that locally and in Nigeria, the government can consider expanding the definition of aircraft spare parts to include other important aircraft items such as brake ASSY, safety appliances, rafts, aircraft tires in order to enjoy 0 percent duty waivers.

Thursday 25 June 2020

Innovation

BUSINESS DAY

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

25

TECHTALK

Broadband Infrastructure

Bank IT Security

Invictus Obi, Hushpupi is why Nigeria’s cyberspace need better enforcement FRANK ELEANYA

W

hile news of Obinwanne ‘Invictus’ Obi pleading guilty to fleecing unsuspecting victims in the US of $11 million deepens Nigeria’s image problem abroad, it also calls for a better approach to policing the country’s cyberspace.

According to a statement from the US Department of Justice Eastern District of Virginia, the 32 years old Obinwanne Okeke and other conspirators engaged in a conspiracy from approximately 2015 to 2019 to conduct various computerbased frauds. The conspirators obtained and compiled the credentials of hundreds of victims, including victims in the Eastern District of Virginia and elsewhere. As part of the scheme, Okeke and others engaged in an email compromise scheme targeting Unatrac Holding Limited, the export sales office for Caterpillar heavy industrial and farm equipment. In April 2018, a Unatrac executive fell prey to a phishing email that allowed conspirators to capture login credentials.

The conspirators sent fraudulent wire transfer requests and attached fake invoices. Okeke participated in the effort to victimize Un-

atrac through fraudulent wire transfers totaling nearly $11 million, in which funds were transferred overseas.

Unatrac Holding Limited, the UK Export Sales office for Mantrac Group had filed a report with the FBI in June 2018 stating they had been compromised via a phishing email that fraudulently acquired sensitive log-in details of their Chief Financial Officer (CFO).

Following his guilty plea, Okeke faces a maximum penalty of 20 years in prison when sentenced on October 22.

His prosecution is one of many other cyber-related cases involving Nigerian nationals that investigators in

the US have stepped up in recent times. In June, Ramoni Igbalode also known as Ray Hushpuppy, a Dubai-based Nigerian celebrity was arrested by the International Police (Interpol) and the Federal Bureau of Investigation (FBI) in connection with a $35 million ventilator scam.

Nigeria ranks among the top ten countries in the world where cyber crimes originate from. The country is notorious for scams and phishing emails. In addition to these scams, groups of young disenchanted and unemployed and relatively tech-savvy individuals spend significant amounts of time establishing online fraud schemes.

Between 2017 and 2018,

Nigeria is estimated to have lost N250 billion ($649 million) and N288 billion ($800 million) respectively to cybercrime. There is also an unquantified cost to national reputation.

“Land in any country today and our atrocities herald our presence. It took a friend going to about 10 banks before an account could be opened for him during the Invictus Obi saga,” said Eghosa Ewone, a supply chain executive.

The cyberspace in Nigeria is governed by the Cyber Crime Act of 2015. Under the Act, hackers if found guilty, of unlawfully accessing a computer system or network, are liable to a fine of up to N10

million or a term of imprisonment of 5 years (depending on the purpose of the hack).

The same punishment is also meted out to internet fraudsters who perpetuate their acts either by sending electronic messages, or accessing and using data stored on computer systems.

The Act also makes provision for identity theft with the punishment of imprisonment for a term of not less than 3 years or a fine of not less than N7 million or to both fine and imprisonment.

While the law exists, enforcement has been a major challenge. According to a 2018 Africa Cyber Security report for Nigeria, just 2.6 percent of 21.3 percent of reported cybercrime incidents to the police were successfully prosecuted. The report conducted by Demdiur and Serianu blamed low attribution and deterrent for the rising level of cyberattacks in Nigeria and other African countries.

Apart from not having sufficient deterrent, Kingsley Chibuzor and IT professional told BusinessDay that lack of updates on cybercrime policies has enabled the criminals. “ F ro m a t e c h n o l o g y standpoint, we lack the infrastructure to effectively manage our people which might make it hard identify-

ing these individuals on time.

First, there is no consistent database of citizens in Nigeria. This in itself hampers the tracking and identification of individuals involved in these crimes,” Chibuzor said.

In February 2020, the Ministry of Interior in Nigeria said it has set up the Citizen data management and harmonization committee to collect and harmonise data on citizens with the objective of fighting insecurity in the country.

The ministry in a statement said it would use standard methods of data collection and would work with different government agencies to arrive at one database.

Enyioma Madubuike, a legal practitioner and Strategy Lead at Lawrathon said the collaboration with the private sector, especially the tech community in Nigeria, would also go a long way to reducing cybercrimes and enable authorities to build a better relationship with the community.

“The Nigerian tech ecosystem is still young but it must start thinking about gaining access to spaces where policy is being discussed and made. Tech leaders must plan to take spaces in the political spaces so that they are in the room when these discussions are being had,” Madubuike said.

Nigeria’s software engineering outsourcing market gets ready for COVID-19 harvest FRANK ELEANYA

T

he increased technology awareness and adoption necessitated by the COVID-19 pandemic is expected to drive a surge in demand for software engineering talents from Nigeria, according to stakeholders.

Most of these talents would likely migrate to countries in Europe, the US, and the UK as soon as full normalcy is restored in the global economy. Already many of the businesses in the space are making frantic efforts to take advantage of the expected harvest.

The pandemic has seen companies lay-off staff and freeze capital on engaging new workers as part of measures to survive the lockdown and movement restriction that was imposed worldwide.

In the post-COVID era that is gradually setting in, experts project that companies’ re-

cruitment activities would mostly focus on people with high technical skills, many of whom are in the tech workers.

Since the outbreak of the virus, there has been a rapid migration of business operations to digital platforms across industries. Remote working is becoming an integral part of organisations operational strategies. Some global companies like Twitter, Facebook, and Google, to mention a few have given their employees the option of working from home indefinitely. In Nigeria, as well as in other African countries, business and government affairs are now conducted using virtual platforms.

With new capital deployed to acquire technological tools to power the new normal, highly technical skills able to work remotely are now in high demand, at least as far as big tech companies hiring is concerned. There were 46,188 new listings for software engi-

neers on CareerBuilder since March 8, according to the Wall Street Journal. Amazon alone advertised over 20,000 open tech jobs on top of the 175,000 new shipping and logistics roles it recently announced. Demand for cybersecurity engineers, systems engineers, and systems administrators went up 20 percent, 11 percent, and 7 percent respectively between February and March 2020 and is expected to grow more in the coming months.

India dominates the software engineering outsourcing market globally. For instance, the country has 0.3 percent - about 3.9 million people - of its software engineering population working in England alone.

Nigeria, on the other hand, has between 6000 to 10000 working as software engineers which is far below the global average.

“If Nigeria has 0.3 percent of its population, we should have about between 600,000

and a million as software engineers,” Chika Nwobi, founder and CEO of Decagon told BusinessDay. Decagon, a software engineering firm is on a mission to scale Nigeria’s talent pool by over 100,000. Nwobi says Nigeria is currently doing 100 times below its potential in the market. His organisation is pushing up plans to bridge the gap.

“We are punching above our weight and we are being recognised already as a software developing hub.

Microsoft and Facebook have an engineering program here.

Nigerians are being recognised for their quality. We don’t have the scale but we have the potential to have a huge scale,” he said.

Like Decagon, Tek Experts, a global software engineering company based in Nigeria, also has big plans for the market. Since the beginning of the year, the company said it has been actively recruiting and training new talents.

“We’ve been growing quite significantly before the pandemic. We started in Nigeria in April 2018 with 200 technical support engineers. In May 2020 we have over 1300 people. Which means In a little more than 2 years we’ve added over a 1000 people.

That is a beautiful story. What is even more beautiful is that we continue to hire during the pandemic and now that we have seen a flattening of that curve,” Ashim Egunjobi, Head of Business Development for Africa, Tek Experts told BusinessDay. The industry has seen its fair share of challenges.

Earlier this year, Andela, one of the notable players in the industry, laid off 135 staff members across five countries including Nigeria, with senior staff taking salary cuts of between 10 percent and 30 percent. It is not the first time Andela has laid off some of its staff in recent times. After the company raised $100 million in its 2019 Series D funding

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

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@Businessdayng

round, they ended developer training programs in Nigeria, Kenya, and Uganda, letting go of up to 400 people as part of the company’s restructuring plan.

The COVID-19 pandemic has also disrupted activities in the software engineering market. Decagon, for instance, had to suspend its training process as a result of the lockdown.

“The training is mostly done physically because we provide accommodation for everyone that gets into our program, feeding, laptop, and stipend. So we needed to really understand and follow the government guidelines,” Nwobi said.

The lockdown also disrupted recruiting in a lot of companies which in turn impacted the software engineer outsourcing market.

The main people that hire are people like banks and tech startups. For many of them, there was a temporary disruption in recruiting.

26

Thursday 25 June 2020

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

Spending Trends

How facemask use slows demand for makeup products, hits Nigeria’s $3bn cosmetics industry ENDURANCE OKAFOR

I

n a world of facemasks, restriction of public gathering above 20 people and the new normal of working from home, Nigeria’s beauty and personal care industry is taking a big hit from coronavirus pandemic.

Information Resources reported a 46 percent drop in sales of global make-up products as of mid-May, but the beauty industry in Nigeria may have seen a higher decline by more than 50 percent, according to analysis from BusinessDay survey.

Sarah Imafidon, a business development manager at one of Nigeria’s top oil and gas companies, usually spends about N50,000 on make-up products every month, but for the past two months, the 30-year-old said she has not bought or had the need to use the products.

“My position requires me to get clients for my company and so before COVID-9 outbreak in Nigeria, I would normally attend a lot of meetings and conferences but for almost three months now, I haven’t done any of those, so no need for make-up,” Imafidon said.

One month after Nigeria reported its first COVID-19 case on February 27, 2020, the government in Africa’s

most populous nation ordered the cessation of all movements in Lagos, Ogun and the FCT for 35 days to curtail the spread of the virus which has since affected 13,873 people with 382 deaths and 3,351 discharged.

While some other states also adopted the total lockdown with the exemption of essential service providers, businesses and several industries were disrupted with events, weddings, conferences, etc postponed indefinitely.

According to stakeholders in Nigeria’s beauty and personal care industry, the impact of COVID-19 has affected almost all the players in the beauty business as

the pause in activities for an industry like Nollywood has brought them a big loss.

“I do make-up for a lot of celebrities, either when they are going for video shoots or casting for movies. But since COVID-19 I have not had jobs and hence no need to buy new make-up products,” a Lagos-based make-up artist said on the condition of anonymity.

According to Beauty West Africa, the strong population growth – particularly of the young, urban, and female populations in Nigeria – means beauty and personal care in Africa’s largest economy has plenty of scope for growth, especially in terms of exciting new products.

“As part of the nation’s fast-growing middle class, young people are becoming more westernised through media exposure, and are expected to drive demand over the forecast period,” it quoted Euromonitor to have said.

Kosmetica World, a beauty company, believes that Nigeria has become a destination of choice for investment by international companies that aim to seize the opportunities presented by the beauty and personal care markets.

“This is due to the expected population growth and an impressive positive performance by the beauty and care products,” it said.

Estimates by Euromoni-

tor International, a business intelligence company, put the worth of Nigeria’s beauty and personal care market at $3 billion.

“The Nigerian is experiencing rapid and dynamic growth, providing lucrative opportunities for beauty businesses from around the region and beyond,” Euromonitor said.

Nigeria is reported to have been the catalyst for growth in the African beauty and personal care market which was estimated at $8.77 billion in 2012. According to the industry survey, the market currently increases between 8 percent and 10 percent per year against a global market growth rate of close to 4 percent. It was expected to have reached $12.60 billion in 2017 when the continent’s total population, the fastest growing in the world, passed 1.2 billion inhabitants.

While no one knows how long face covering will be required or advised in public spaces, it does seem like a feature that will be around for a while, even as Nigeria tries to get back to normal.

Industry experts see this COVID-19 preventive measure and the restriction on social gathering as some of the factors that will cut the expected industry growth.

In the space of one month of easing the five-week lockdown in the Federal Capital

Territory, Lagos and Ogun States, the Federal Government embarked on two phases of easing the restriction but the use of facemasks has been recommended as a compulsory item.

While announcing the guidelines for containment of COVID-19, the Presidential Task Force (PTF) on COVID-19 said, “Every member of the public is expected to use a facemask.”

“The use of facemasks which of course has been recommended by health experts is one of the reasons our customers said they don’t need to buy make-up products like foundation and lipstick,” a sales rep at the popular Mama Tega cosmetics shop in Yaba said.

While Nigeria is not the only country globally that has reported a drop in sales of make-up products, a survey by BusinessDay shows that beauty products like lipstick and foundation are naturally taking a larger hit than eyeliner or mascara as they are obscured by most masks.

According to a McKinsey report citing Stackline data, lip care and colour sales on Amazon dropped 15 percent in the four weeks ending April 11 from the year before, and Euromonitor estimates that the US lip product market specifically will shrink 6.5 percent this year to $3.59 billion.

Spending Trends

Consumers’ living standards shrink on pandemic - related shocks ...imminent recession on depressed demand ...potential rise in poverty rate BUNMI BAILEY

G

rowth of Nigeria’s per capita income, which has been on a negative trajectory since 2016 could plunge to a record low this year as the economic shocks of lower income and job losses impact household demand.

A recent survey on the socioeconomic impact of the covid-19 outbreak on livelihoods conducted by the National Bureau of Statistics revealed that 79 percent of 1, 950 house-

holds reported declined income since Mid-March 2020.

“A persistent decline in consumer income could result in economic recession’, said Ayorinde Akinloye, consumer analyst at Lagos-based CSL Stockbrokers. “With lower income, consumer expenditure and production and investment by firms will be impacted”.

The World Bank expects a 3.2 percent contraction in Nigeria’s Gross Domestic Product by end-2020, two basis points lower than 3.4 percent earlier projected by the International www.businessday.ng

Monetary Fund. However, the Central Bank of Nigeria is optimistic that the economy could escape a recession if fiscal and monetary stimulus packages are properly coordinated and implemented.

“Factoring the fallout of covid-19 shock on livelihoods, poverty could near 65% owing to decreased income and loss of jobs, from 40% earlier reported by NBS,” said Damilola Adewale, research economist at a Lagos-based policy advocacy institution.

Apart from the pandemic affecting income levels, 38

percent of households reported to have stopped working between April and May, due to the novel coronavirus pandemic with those in commerce sector worst affected.

“It means that purchasing power is getting weaker,” Abiodun Keripe, an analyst at Afrinvest Limited said.

The Nigerian economy is yet to recover fully from a recent recession as growth of the wider economy which printed at 2.27 percent in 2019 underperforms population growth rate estimated at some 3 percent. This indicates that

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Nigerians are getting poorer even as GDP per capita or income per head, a perfect proxy for living standard.

The World Bank expects per capita income to drop by 3.6 percent as millions of individuals slip below the poverty line.

Also, data from the National Bureau of Statistics on Gross Domestic Product (GDP) by Income and Expenditure approach at 2010 purchaser’s values show that consumption expenditure of households has been declining at varying pace since it rose by 1.5 per @Businessdayng

cent in 2015.

To avert a recession, Keripe suggests that household needs to adjust their budget and government must increase spending in the economy.

“Form a household perspective; they need to begin to adjust. If there are major expenditure that people need to embark on, they should how to restructure that expenditure in terms of time frame and they must avoid taking new debt, expect if you can generate income from that debt that will service and repay it,” he further said.

Thursday 25 June 2020

BUSINESS DAY

27

Corporate Social Impact

Onuwa Lucky Joseph Editor, (08023314782)

Promoting Nutrition, Health and Wellness:

Nestlé Partners LBS Sustainability Center to ‘Zoom’-Train Journalists ONUWA LUCKY JOSEPH

J

ournalism is the ultimate multi-faceted endeavour requiring expertise of practitioners in a cornucopia of fields.

The world is educated via journalism on an ongoing basis in every area via News and features on subject areas like Technology, Politics, Fashion, Sports, Law, History, Culture, Military, Civil Rights, etc. In the good old days, it was traditional mass media or what is now called mainstream media that catered to all of these in their publications and broadcasts. But the internet and social media have since gotten on the scene with an infinitely greater variety of offerings served from a variety of platforms, some specialised and some still working hard at being a hodgepodge of everything.

Incipient concerns notwithstanding, most people still trust the media and have it as their go to vehicle for ferreting out information on everything under and above the sun. As concerns what people like to read, the salacious and unserious invariably carries the day. Most readers, listeners and viewers tend to go for the titillating. There just is something about the sensational that tickles our fancy. Which is why a lot of the data on phones, laptops, and notebooks ends up being used for traipsing the net for info on celebrities and their lifestyles rather than the more serious issues of the day which impact on the life of the average citizen.

So, Nestle, the food giant, well aware of the trend but intent nevertheless on doing its bit to reroute attention to the serious matters of health, nutrition and wellness, partnered with the Sustainability Centre of the Lagos Business School to take journalists through an academic regimen that strengthens their knowledge base as well as writing and reporting on the subject matter. The workshop, which was conducted online, via zoom, from June 1st to 12th couldn’t have come at a better time than one when Covid 19 was hardly recessing as the main item on the news, thereby encumbering people everywhere with fear and anxiety.

And that’s why the course was a responsible undertaking by Nestle and LBS. It’s not enough to disseminate, it’s important to disseminate the right information at the right time and in the right proportion.

Journalists who were part of the programme, this reporter inclusive, were taken, by reputable lecturers, through a systematic process of study that included an intro to the concept of Shared Value, something Nestle practices and which is an improvement on the concept of corporate philanthropy. Prof Chris Ogbechie, using copious examples from organisations that have deployed it, posited that shared value was demonstrably a better way for corporates to meet the social needs of its community. Shared value being a rub-me-I-rub-you proposition where organisations, in a bid to further their own interests help

solve the underlying issues that enable their target community better serve the company thereby creating a win-win situation. Citing Nestlé’s insistence on local sourcing and doing the needful via improved seedlings and sharing of best practice methods, the farmers under the aegis of Babba Gona Farms, (one example), get a much better harvest, have a captive market, and are better able to solve the social issues of employment, education, healthcare, etc.

And the company: it gets the right input and raw materials with which to produce better and make more profit. In other words, it’s about solving social problems in a mutually profitable manner.

Other examples cited included those executed from the same conceptual viewpoint by Unilever, Equity Bank in Kenya, and Cisco Networking Academy.

Dr. Chioma Emma-Nwachukwu, who handled The Role of Nutrition in Pandemics, did a masterful job of dissecting the subject, one at the heart of the entire project.

Beginning with the World Health Organisation definition of health as “not merely an absence of disease, but a state of physical, mental and social wellbeing”, she also rendered the definition of Nutrition as “The process of taking in food and using it for growth, maintaining body functions, and repair”.

Nutrition and health is how people’s wellbeing is achieved and maintained. The Coronavirus pandemic is testament to this. With the right nutrition, the body is better protected against pandemics, be it the Bubonic Plague, Cholera, Small Pox, Influenza, SARS, etc. Those who survived those plagues and those who will survive the current one, are those who have an ongoing regime of good nutrition to thank for their good fortune.

The jurnos in attendance got the ABC of nutrition to ensure they pass www.businessday.ng

same to their respective audiences.

Dr. Nwachukwu spent good time elaborating on the immune system, how it helps checkmate illnesses, and how the system is boosted by good nutrition. It’s a wise person, she said, who makes sure stress does not compromise their immune system.

While listing the micro nutrients required for ensuring good health: Vitamin A, Vitamin D, Folate, Vitamin B12, Vitamin B6, Iron, Zinc, Selenium, the word to the wise is that no one particular food or nutrient alone is sufficient to boost the immune system. There has to be a good combination of the different food types and micronutrients to achieve the right nutrition for the body.

Professor Matilda Sterner Asiedu from the Department of Food and Nutrition of the University of Ghana also weighed in with her lecture titled “Iron Deficiency: A Public Health Challenge In Nigeria”. It was an eye opener on the underlying reason for the prevalence of anaemia, a condition suffered by 1-2 billion people globally, with two out of every five pregnant women globally suffering from it. The root causes identified are dietary inadequacy, infections and infestations, genetics, bleeding and poverty. Poverty of course is a key driver for dietary inadequacy.

Nigeria has a really bad case of anaemia prevalence. Going by a 2018 DHS Database report, at least four states were identified as having between 78–84% of their children suffering from anaemia, and with the situation being generally worse in rural areas nationwide.

With its well acknowledged adverse implications for national development, addressing it ought to be a national agenda matter. Fortunately, with the right plants and animals anaemia can be history. Prof. Asiedu counseled that those who want to be anaemia-proof should make sure to eat Organ Meat (liver, kidney etc.); Red meat (beef, mutton, and

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lamb), Pork; Fish; Poultry; Eggs; Bush Meat and Shellfish. The plant sources are Legumes: (Beans, etc.); Grains: (fortified Cereals, Brown Rice, Oatmeal; Nuts and Seeds: (Cashews, Groundnuts); Vegetables: (Cocoyam, Cassava, Sweet Potatoes, Bean Leaves, etc.).

There was quite a tickle when the lecturer alluded to iron being a strong factor for sexual performance. Not a few people in the class picked on that bit of information and extracted the juice from it and peppering the lecturer with questions which she was only too glad to answer. The iron/sex peg which some participants posted on social media also got the most reactions from their readers. Brings us back to the power of titillation to infuse a dour atmosphere with some colour and why man will go to the ends of the earth, if need be, to find it.

Dr. Patrick Enaholo’s ‘Data and Storytelling’ was, like others, a compelling class, in this instance because it focused on the heart of the craft of journalism. And it’s a big gap area.

Many journalists have a weakness for narratives that are not ably data supported. And with the job of a journalist being to inform, educate, entertain and persuade, it’s difficult for communication to be achieved if the audience cannot get out of the tunnel.

The good Dr. patiently took the students through the intricacies of mining for data which he described as gold. In a knowledge economy where data is king, he said Google ought to be a close friend, as should be other data laden domains like the World Bank, National Bureau of Statistics and others depending on the subject matter.

And for data analyses, he taught the class to ensure they get a hang of Microsoft Excel and Google sheets, same tools that can also be applied for visualizing data. However, even though the primacy of data is incontestable, the class was told to yet be @Businessdayng

careful in its application, especially where they have bosses who are not numbers or design savvy and who might not be enamored with too many graphs and diagrams.

To round off the two week session was Chidorum Nwakanma, a veteran practitioner and lecturer with the LBS School of Communication. His journalism experience was all evident as he cut through clutter with the deft incisions of a seasoned editor. His job it was to review and score students on the assignment ‘Corporate Action and Inaction and the Wellbeing of Citizens’. Not a few students went off tangent, doing the florid generalisations that seemed to be what the assignment required. What Chido did was to set the students back to the basic issues of context, content and relevance.

Ms. Victoria Uwadoka, Corporate Affairs Manager of Nestle, at the interactive session to round up the workshop, reiterated Nestlé’s position on Shared Value, declaring it as the way to go. While thanking the journalists and faculty for an excellent workshop, she affirmed Nestlé’s readiness to support journalists in whatever way possible to enable them get at the heart of a good story especially when it’s one that helps build the health and wellbeing of Nigerians.

The LBS Sustainably Centre crew ably helmed by Oreva Atanya and supported by Theresa Akpoveso, and with Gabriella Opara behind the scenes, acquitted themselves creditably. It sure was good to go back to school, and on a novel medium that now looks to be the way knowledge and professional interaction is negotiated in the foreseeable future.

(Kindly send feedback to 08023314782 / csrmomentum@gmail.com)

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30

Thursday 25 June 2020

BUSINESS DAY

FT

FINANCIAL TIMES

World Business Newspaper

Saudi Arabia makes play for Bundesliga TV rights

Kingdom’s move to secure German deal comes amid rivalry with Qatar over sports investments MURAD AHMED, AHMED AL OMRAN

S

audi Arabia has approached Germany’s Bundesliga over acquiring the football league’s television rights in the Middle East, in the latest move by the Gulf kingdom to seek new investments in international sport.

The body that runs German football’s top division is in exclusive talks with beIN Sports to renew the Qatar-based network’s $250m fiveyear deal to screen matches across the region, which runs out at the end of this season.

But a representative for the Saudi state recently contacted Bundesliga seeking to acquire the Middle East rights instead, according to people with knowledge of the situation.

The attempt to hijack the Qatari broadcaster’s talks with Bundesliga is Saudi Arabia’s latest play within the global sports industry, having spent hundreds of millions of dollars in recent years to stage European football matches, heavyweight boxing bouts and motor racing events in the country.

It also shows how big sporting competitions must navigate the rivalries between the Middle East’s absolute monarchies, which have spent their petrodollars on sporting events and groups while also being entangled in political and economic

Crown Prince Mohammed bin Salman. Saudi Arabia’s de facto ruler, is also leading a proposed £300m takeover of English football club Newcastle United © REUTERS

battles.

The Public Investment Fund, the Saudi sovereign wealth fund steered by the country’s de facto ruler, Crown Prince Mohammed bin Salman, is also leading a proposed £300m takeover of England’s Newcastle United Football Club.

That deal requires approval by the Premier League, the body that runs the top division in English football. The process has been complicated by a World Trade Organization ruling last week that the Saudi government has “infringed” international trade agreements due to the country’s involvement

with beoutQ, an Arabic language TV network.

BeoutQ has been streaming content rightfully owned by Dohabased beIN, which has paid billions of dollars for exclusive rights to major sporting events, including Premier League and Bundesliga matches.

Saudi Arabia denies involvement in the pirate network, which emerged in 2017 shortly after Riyadh and three Arab allies cut diplomatic and transport links to Qatar.

This week, beIN pulled coverage of Italian Serie A league matches “for legal reasons” in 35 countries.

The Qatari group has previously

been aggrieved when the Italian league decided to hold exhibition matches in Saudi Arabia.

Separately, beIN also holds rights to screen Bundesliga matches in other countries, including France, Australia and New Zealand.

Weekly newsletter Scoreboard is the Financial Times’ new must-read weekly briefing on the business of sport, where you’ll find the best analysis of financial issues affecting clubs, franchises, owners, investors and media groups across the global industry.

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Saudi authorities have com-

plained about beIN’s ability to secure exclusive sports rights in the region and has shut down the Qatari TV network in the country. But speculation about intent to launch a Saudi-owned sports network has not materialised into a serious plan.

Saud al-Qahtani, a powerful former aide to the crown prince, told CNN Arabic in 2018: “What we are focused on is that television rights for global sports competitions are awarded fairly in a way that doesn’t allow any country to take advantage of its monopoly to deliver political messages.”

The Saudi government did not respond to a request for comment.

A report in a Saudi newspaper on Wednesday stated that Bundesliga had sold the Middle East broadcast rights to its matches to KSA Sports, the kingdom’s statebacked sports channel, for three seasons.

Referring to this report, Bundesliga said “these rumours are not correct”, but otherwise declined to comment.

On Monday, Bundesliga announced that European pay-TV network Sky and online service DAZN would pay €4.4bn to screen matches in Germany for four years from the 2021-22 season.

The domestic rights deal was €200m less than its previous contract, in the first sign that the market for live sports has weakened because of the coronavirus crisis.

US considers new tariffs on EU gin and fashion goods Announcement deepens trade tensions between Washington and Brussels

JIM BRUNSDEN AND AIME WILLIAMS

T

he US has lined up $3.1bn of European products, ranging from German beer to British biscuits and gin, for further punitive tariffs as it considers its next move in a dispute with the EU over aircraft subsidies.

Initiating a consultation on how to proceed, the Office of the US Trade Representative on Tuesday issued a draft list of 30 different types of goods that could be hit with additional duties, including olives, pastry and cakes, beer and liquors such as gin and vodka, all imported from either France, Spain, Germany or the UK. Until now, Washington has not taken full advantage of its right to impose additional levies of as much as 100 per cent on $7.5bn of European goods — the result of a World Trade Organization decision last year that the EU had failed to eradicate illegal support for Airbus aircraft.

Since then, the US has increased the punitive duties in stages, starting with additional

The US has the right to impose additional levies under the terms of a WTO decision last year on illegal EU support for Airbus © Bloomberg

tariffs of 10 per cent on aircraft, which it raised to 15 per cent last February, and 25 per cent on a range of European and British goods, ranging from food to tools and apparel.

Although USTR raised tariffs on plane imports in February, it then decided against a further increase of the 25 per cent levies placed on other goods, prompting relief from European diplomats.

Even before Tuesday’s announcement, USTR had a list of items that could potentially be www.businessday.ng

subject to tariffs, including highvalue items such as the kinds of cashmere clothes produced by French luxury brands and hardware products. While single-malt Irish and scotch whisky imported from the UK are already subject to tariffs, USTR is considering hitting non-single malt whiskies from the UK with tariffs.

The US finds itself in an advantageous position in the dispute because the WTO has yet to rule in a parallel case brought by Europe on US subsidies for Boeing. Brussels had hoped that the

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WTO would reach a decision this month on how much retaliation the EU can take against the US, but trade officials said that the decision may now not come until September.

Some of the new US proposals for punitive tariffs specifically target France, Germany, Spain and the UK, including beer and gin. European non-alcoholic beer is also in the USTR’s crosshairs.

The comment period on the additional duties is open until July 26.

Although the US has yet to decide on how to proceed, the announcement complicates an already tense trade environment between the EU and Washington.

Efforts by Brussels to reach a settlement with the US on aircraft subsidies have made little headway, and broader talks on a trade mini-deal briefly flickered into life earlier this year only to be shunted off the agenda by the coronavirus pandemic.

US officials have frequently lamented America’s goods trade deficit with the EU, which has risen from $146bn in 2016 to $178bn in 2019, according to data from the US Census Bureau. @Businessdayng

The mood darkened last week after the Trump administration withdrew from international talks on how to tax technology giants, even while threatening to hit countries that imposed a digital services tax with further punitive tariffs.

Earlier this month, US trade officials launched a so-called section 301 investigation into a string of countries that are adopting digital services taxes. A section 301 probe is the same process used by the US in its trade war with China and can result in steep levies on countries Washington decides are engaging in unfair trade practices.

European diplomats consider the Airbus-related tariffs more acceptable because they were authorised by the WTO. Respondents to the consultation should assess whether the additional tariffs would “cause disproportionate economic harm to US interests, including small or medium-size businesses and consumers”, the USTR said.

The European Commission declined to comment immediately.

Thursday 25 June 2020

BUSINESS DAY

31

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Stocks fall sharply in wake of new coronavirus flare-ups Several US states report record cases and New York imposes quarantines JOSHUA OLIVER, PHILIP GEORGIADIS AND HUDSON LOCKETT IN HONG KONG

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lobal markets dropped on Wednesday as rising US Covid-19 cases and new quarantine measures fuelled fears that the virus could derail an economic recovery.

Markets in the US and Europe slid, with the FTSE 100 and the Euro Stoxx 50 both closing 3.1 per cent lower. On Wall Street, the S&P 500 was down 2.8 per cent and the Nasdaq Composite 2.4 per cent lower by lunchtime trading, while the dollar rallied.

Stocks extended losses after the governors of New York, New Jersey and Connecticut announced that travellers coming in from states that have a high infection rate must quarantine for 14 days. The restrictions came after Florida reported its biggest daily increase in Covid-19 cases.

Renewed trade friction between the US and Europe also knocked investor sentiment.

Washington launched a consultation on new tariffs on $3.1bn of European products — ranging from German camera lenses to British biscuits and French wine — in a move that would broaden a transatlantic dispute over aircraft subsidies.

Traders are scrutinising the latest coronavirus figures as the global case count tally rises above 9m and more than 450,000 deaths

have been reported.

Anthony Fauci, a leading member of the White House coronavirus task force, warned Congress that the US was experiencing a “disturbing surge” in Covid-19 cases as the country on Tuesday recorded its largest daily jump in two months.

“The next couple of weeks are going to be critical in our ability to address the surges we’re seeing in Florida, Texas, Arizona and other states,” Dr Fauci said. Those states were among the first to loosen lockdowns in an attempt to restart economic growth that had stalled.

“There is no need for official ‘stay at home’ orders for economic activity to take a hit,” said Oscar Muñoz, a macro strategist at TD Securities. “People can become risk-averse and consumer confidence can be dented as infections rise.”

Other countries have faced rapid rises in their infections as well, with India’s densely populated capital New Delhi on Tuesday reporting 4,000 new cases in a record rise. Brazil is also a virus hotspot as authorities have struggled to contain the pandemic.

However, the three months to

June is set to be the best quarter for the S&P 500 in 45 years, according to Bloomberg data, marking a rebound from the 20 per cent dive in the first quarter when Covid-19 began to spread worldwide.

“It will take more than a slow grind higher in daily new Covid-19 cases to deliver a meaningful market adjustment,” said Robert Carnell, head of Asia-Pacific research at ING. “There are plenty of options open to countries like the US short of reimposing lockdowns,” he said, such as enforced mask wearing.

Oil prices dropped after US

data showed a much bigger than expected increase in crude oil inventories last week. Brent crude, the international benchmark, sunk 5.2 per cent to $40.42 a barrel while West Texas Intermediate, the US marker, dropped 5.4 per cent to $38.21.

A stronger dollar meant gold trimmed earlier gains to hold steady at $1,765. That is still close to an eight-year high as investors flee to perceived safety during times of turmoil. The metal has advanced more than 20 per cent since March.

Nikolaos Panigirtzoglou, analyst at JPMorgan, said the markets were balancing signals of economic recovery against fears of a widespread second wave of coronavirus cases. “Outbreaks in the US in the south and west have shown signs of growing momentum, as well as in some parts of [Latin America],” he said.

However, global data suggested a second wave “might not be as extreme as [the] first”.

The picture in Asia was mixed on Wednesday. Hong Kong’s Hang Seng index closed down 0.5 per cent, while China’s CSI 300 benchmark rose 0.4 per cent and Australia’s S&P/ASX 200 added 0.2 per cent.

South Korea’s Kospi climbed 1.4 per cent after North Korea said it had suspended plans for military action against the country, marking a de-escalation in recent provocations.

Philippine authorities search for Wirecard’s number two in fraud probe Payments group wins short reprieve from creditors over possible termination of €2bn loan JOHN REED, OLAF STORBECK AND STEFANIA PALMA

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hilippine authorities are searching for Wirecard’s former number two executive Jan Marsalek as part of a broader probe into the payments group, which is battling to survive after acknowledging €1.9bn was missing in a potential fraud.

Menardo Guevarra, the Philippine secretary of justice, told the Financial Times on Wednesday: “I have ordered our National Bureau of Investigation to investigate certain persons here who are allegedly involved in the Wirecard fraud. We are also trying to find out if the Wirecard COO, Jan Marsalek, is in the Philippines. If he is found here, we shall include him in the investigation.”

Mr Marsalek, who was fired as chief operating officer on Monday, may have travelled to the Philippines, a Süddeutsche Zeitung report said on Tuesday evening, citing his “friends”.

Those sources told the German newspaper that Mr Marsalek was

A German news report said Jan Marsalek, who was fired as Wirecard’s chief operating officer on Monday, may have travelled to the Philippines © Bloomberg

not on the run but was trying to obtain documents that could help shed light on the matter.

Munich prosecutors and Mr Marsalek’s lawyer on Wednesday did not immediately respond to a request for comment.

Markus Braun, Wirecard’s former chief executive, was arrested in Munich on Monday and prosecutors said they were investigating the rest of the management board.

Mr Braun was released on €5m bail www.businessday.ng

after spending one night in police custody.

The Philippines was the supposed location of €1.9bn of cash that had been reported on Wirecard’s balance sheet but which it said last week was “missing” before saying that it probably does “not exist”.

Wirecard’s auditor EY had been shown documents purporting to show €1.9bn held at two leading Philippine banks on behalf of Wirecard by a local trustee.

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However, Benjamin Diokno, Philippine central bank governor, denied that the money had ever entered the country and the banks — BDO Unibank and Bank of the Philippine Islands — said the paperwork was bogus.

Meanwhile, Wirecard won a brief reprieve from creditors after banks postponed by a few days a decision on whether to terminate €2bn in loans. Restructuring experts at FTI Consulting hired by the creditors are assessing if the struggling Germany payments company can be rescued, according to people briefed on the matter.

The loans can be terminated as Wirecard last week missed a crucial deadline for the publication of audited 2019 results. The company has warned investors that it previously misrepresented large parts of business activities and accounts for prior years may be inaccurate.

Moody’s last week downgraded Wirecard to junk and on Monday withdrew its credit rating altogether.

Shares in Wirecard have fallen more than 80 per cent in less than a week. @Businessdayng

According to people familiar with the discussions, a majority of Wirecard’s banks earlier this week agreed not to pull the plug on the once high-flying German company immediately.

Instead, the lenders mandated FTI Consulting to conduct a quick assessment of Wirecard’s financial situation and its odds of survival.

The result is expected by the end of this week and will be the basis for the decision to issue a waiver for Wirecard or not.

Restructuring specialist Houlihan Lokey, which was appointed by the Dax 30 company last week, is working on a restructuring plan that entails the sale of assets, the closure of operations and cutting jobs. “The result would be a radically smaller Wirecard,” a person briefed on the matter told the FT. The Aschheim-based company, FTI Consulting and Commerzbank, which is co-ordinating the bank consortium, declined to comment.

In previous days, Wirecard repeatedly said it was in a “constructive dialogue” with its banks.

32

Thursday 25 June 2020

BUSINESS DAY

POLITICS & POLICY Edo: Why removal of Ogbeide-Ihama’s hurdles excites PDP, supporters ZEBULON AGOMUO

…His escort is still intact - Nigeria Police

T

he battle line in Edo State’s offseason gubernatorial election was formally drawn on Monday, following the emergence of Osagie Ize-Iyamu as the standard bearer for the All Progressives Congress (APC). With that development, all eyes are now on the People’s Democratic Party (PDP). Many had expected a war of attrition of a kind to break out in the umbrella organisation. The Governor of Edo State, Godwin Obaseki had last weekend dumped the APC and declared allegiance for the PDP. Tongues wagged that the governor was going to face an uphill task picking the ticket of his new party, as the “landlords” may not be comfortable with him getting the ticket.

As expected, Omoregie Ogbeide-Ihama, one of those who nursed the ambition of contesting the primary, went to court, challenging Obaseki’s eligibility to contest the primary election, which holds today.

That was Monday. By yesterday, the story changed.

For Governor Obaseki, the apparatchik in the PDP and their supporters, yesterday was a beautiful day indeed. The apprehension that appeared to have been high on the political turf, following the development is now diffused with the ruling by the court, allowing Obaseki to contest the primary slated for today.

This followed the out-of-court settlement of the suit filed by Ogbeide-Ihama at the High Court, Port Harcourt, Rivers State, seeking the court to exclude Obaseki from participating in the PDP primary election.

He had argued that only aspirants who purchased the party’s nomination forms and were screened within the stipulated time should be allowed to contest in the primary.

In the recent volte face, Ogbeide-Ihama said: “My action is not an affront to the party or its leadership as some people may decide to interpret it, but rather a last attempt to save the party from making a major blunder that could lead to series of lawsuits with a possibility of disqualification of the party from participating in the September 2020 Edo Governorship Elections.”

With the development yesterday, watchers of political developments in the country, say that Governor Obaseki is on his way to return to the Government House.

Although they speak in tandem that IzeIyamu is not a push over in Edo politics, noting that his outing in the 2016 gubernatorial election attests to his astuteness in politics, they strongly believe that Edo is a PDP state.

“2019 Presidential and senatorial election results favoured the PDP. For instance, whereas Muhammadu Buhari of the APC polled 267,842, Atiku Abubakar of the PDP scored 275,691,” an analyst pointed out.

They also noted that PDP won two senatorial seats out of the three seats in the state.

The senators were re-elected to represent their various senatorial districts. The senators re-elected on the platform of PDP are Clifford Ordia, representing Edo Central Senatorial district and Mathew Orhoghide, re-elected for the Edo South Senatorial district.

The People’s Democratic Party was in

Ondo deputy guber: Ajayi raises alarm over alleged withdrawal of his police escort KORETIMI AKINTUNDE, Akure

O Godwin Obaseki

Omoregie Ogbeide-Ihama

control of Edo State from 1999 to 2017 when Adams Oshiomhole of the defunct Action Congress of Nigeria (ACN) in alliance with the Labour Party (LP), through a court ruling took over the state. Oserheimen Osunbor had been declared winner of the gubernatorial election by the Independent National Electoral Commission (INEC), which was upturned through legal processes.

The bickering and disturbances among the prominent political actors in the state since 2016 have riled many indigenes. The political impasse worsened last year when the gulf between Oshiomhole and Godwin Obaseki widened.

The rumpus culminated in the defection last Friday to PDP of Governor Godwin. He was screened weekend by the party’s leadership for the ticket to stand for the gubernatorial election. If the feelers are anything to go by, whatever the party machinery is doing appears to be a mere fulfillment of righteousness as the party is set to hand the flag to Obaseki. It is a fait accompli.

PDP is really hopeful to return to the Government House in Edo. The defection of Obaseki seems to have brightened that aspiration and the party would not mind to “sacrifice” anybody to pave the way for the governor. The thinking here is that he is bringing to the party great value.

“There was no progress without a sacrifice; that the governor joined the party was God’s great answer to the party and his aspiration,” Gideon Ikhine, one of the governorship aspirants on the platform of the PDP, who stepped down for Obaseki, said.

Observers say that Obaseki’s defection may have sealed the hope of the APC from returning to the seat of power on September 19.

A political analyst, who spoke on condition of anonymity, said: “If you have been following developments in Edo, you will agree with me that it may be pretty difficult for the APC to win the election. For instance, unlike in the case of Ambode in Lagos where the entire state chapter of the party, all the local government chairmen, many of his commissioners and political associates abandoned him, Obaseki has with him all the local government chairmen, his cabinet and support of all his aids and those of the members of the splinter APC members.”

According to the analyst, “Don’t also forget that the governor, knowing the way his

former party wins by force, he would have made his own plan to checkmate them. It is absolutely difficult to think that the APC would just run away with victory. I am not also saying that Obaseki will win on a platter.

By the way, he has internal opposition from some of the aspirants.

“He needs to make strong promises to the aggrieved aspirants in the party. He must agree to offset whatever they must have spent, and also enter into accord on what they should get in the event he wins the election. It should be put in black and white, and the agreement witnessed and signed by the national leadership of the PDP, to avoid fight tomorrow.”

Recall that Ize-Iyamu, who has now emerged the APC standard bearer, switched party recently. He moved from the PDP to the APC. He had also encountered some resistance from some aspirants in the APC who have seen his coming as denying them the opportunity of picking the ticket. Despite the opposition, Adams Oshiomhole had his way, having insisted that it is Ize-Iyamu or no other.

Alex Okocha, who claimed to follow the Nigerian political development, said it was going to be a serious battle for the APC and PDP candidates.

“Although Governor Godwin Obaseki has not been handed the PDP flag for the election, we all know where the pendulum is swinging to. Already, Ize-Iyamu has emerged as APC candidate. I have followed the pattern of elections in the country since the APC came onboard. So, going by that pattern which began in Ekiti, tested in Osun, and made full blown in 2019 general election, and moved to a notch higher in the Kogi governorship election, I can tell you that Obaseki should not go to sleep,” Okocha said.

“On the other hand, with a President that is not interested in who becomes the governor of any state or who is voted for, he is not likely to command the deployment of tanks and machine guns to get the votes by force. I think with the level of anger in the state against Oshiomhole in the crisis that led to Obaseki’s defection, it may be a tough game for Ize-Iyamu. What I see is a difficult contest that can go either way, depending on how the parties play their cards now,” he added.

www.businessday.ng

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ndo State Deputy Governor, Agboola Ajayi has raised an alarm over the alleged withdrawal of his Police escort on the order of the Commissioner of Police, Bolaji Salami.

The Deputy Governor in a statement made available to journalists in Akure on Wednesday through his personal Chief Press Secretary, Babatope Okeowo, said that the withdrawal of his Police escort is putting him, his family and staff in danger.

Recall that Governor Oluwarotimi Akeredolu on Tuesday had sacked all six aides attached to Ajayi which prompted the conversion of sacked staff to his personally-paid staff.

“This is the same Commissioner of Police that took the Deputy Governor hostage on Saturday 21st of June, 2020 for more than four hours at the Government House gate despite the fact that he enjoys immunity under the constitution of the Federal Republic of Nigeria.

“We are not oblivious of their surreptitious move to undermine the security of the Deputy Governor and strip him off his security apparatus to make him venerable in order to carry out their evil agenda.

“Should anything happen to the Deputy Governor, his family and staff, the Commissioner of Police in Ondo State, Bolaji Salami should be held responsible,” the statement issued by Okeowo read.

Agboola Ajayi

Ajayi however, called on the President Muhammadu Buhari, Inspector-General of Police, Adamu Muhammed and the Director-General of State Security Service, Yusuf Magaji Bichi to be aware of this latest ugly development in Ondo State.

But, the Police through Police Public Relations Officer, Ondo State Command, Tee-Leo Ikoro, denied the allegation via a phone call, describing the allegation as being unfounded, adding: “I am not aware of the withdrawal of the Police escort of the State Deputy Governor, this is not true.”

@Businessdayng

Thursday 25 June 2020

BUSINESS DAY

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@Businessdayng

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34

Thursday 25 June 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 24 June, 2020

Top Gainers/Losers as at Wednesday 24 June, 2020 LOSERS

GAINERS Company NAHCO ZENITHBANK

CAVERTON

CHAMPION AIICO

Company

Opening

Closing

Change

N2.51

N2.66

0.15

SEPLAT

N16.25

N16.4

0.15

GUINNESS

N1.9

N1.99

0.09

NB

N0.88

N0.95

0.07

GLAXOSMITH

N0.9

N0.96

0.06

PZ

Opening

Closing

Change

N428.8

N386

-42.8

N16.5

N15

-1.5

N36

N34.7

-1.3

N6.45

N5.85

-0.6

N4.5

N4.05

-0.45

ASI (Points)

24,655.05

DEALS (Numbers) VOLUME (Numbers)

3,364.00 189,253,004.00

VALUE (N billion) MARKET CAP (N Trn)

1.917

Global market indicators FTSE 100 Index 6,123.69GBP -196.43-3.11%

Nikkei 225 22,534.32JPY -14.73-0.07%

S&P 500 Index 3,045.78USD -85.51-2.73%

Deutsche Boerse AG German Stock Index DAX 12,093.94EUR -429.82-3.43%

Generic 1st ‘DM’ Future 25,240.00USD -780.00-3.00%

Shanghai Stock Exchange Composite Index 2,979.55CNY +8.93+0.30%

12.861

Seplat, Guinness, Nigerian Breweries, other stocks cause market’s new lows Iheanyi Nwachukwu

A

midst weak market sentiment, the Nigerian equities market extended days of capital depreciation to fifth consecutive sessions.

The negative close on Wednesday June 24 was in line with market watchers views amid dearth of positive news capable of spurring rally. Only 17 stocks gained as against 22 losers.

The record dip was driven largely by sell decisions on stocks like Seplat Petroleum Development Company Plc, Guinness Nigeria Plc and Nigerian Breweries Plc. Seplat dipped most after its share price moved from N428.8 to N386, losing N42.8 or 9.98 percent.

Guinness followed after its share price declined from N16.5 to N15, losing N1.5 or 9.09percent while Nigerian Breweries dropped from

L-R: Adedeji Ajadi, president, Chartered Institute of Stockbrokers‘ (CIS’), Registrar and chief executive; Olatunde Amolegbe, chairman, Governing Council, and Oluropo Dada, second vice president, at inauguration of Three Committees in Lagos.

Chartered Institute of Stockbrokers inaugurates three committees as growth strategy Iheanyi Nwachukwu N36 to N34.7, down by N1.3 or 3.61percent Unless there is significant upward movement in large cap stocks on Thursday, market watchers anticipate another downward performance.

Though, some fundamentally sound stocks look good enough to start seeing increased bargains due to their current price levels.

At the close of trading session on Wednesday, the Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased further by -0.38

percent while the negative return year-to-date (YtD) increased to -8.15 percent.

The NSE ASI decreased to 24,654.99 points from preceding day high of 24,750.06 points. In 3,364 deals, investors exchanged 189,253,004 units valued at N1.917billion. The value of listed stocks decreased to N12.861trillion, shedding about N50billion.

In this month of June, the stock market has decreased by -2.43 percent while week-to-date (WtD) its down by -0.69 percent.

Berger Paints grows revenue to N3.6bn as shareholders endorse performance Iheanyi Nwachukwu

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erger Paints Nigeria Plc has posted a revenue of N3.5 billion as against N3.3 billion in the preceding year, a modest increase of 6 percent, following its commencement of new growth strategy.

However, due to internal efficiency the company’s Operating Profit jumped by 196 percent between 2017 and the end of 2019 while it recorded an upward movement in all its key performance indicators in the review period.

Addressing the shareholders at 60th virtual Annual General Meeting (AGM) by proxy yesterday, the Chairman, Abi Ayida, ascribed the aggregate performance to the company’s re-refocusing on production of its primary products , corporate foresight and innovativeness and huge investment in auto-

mated factory, among others.

Ayida, who laid open the company’s comprehensive annual report before the shareholders, explained that the operating environment was challenging last year but the company was able to record upward movement across all its financial indices.

“The Board and Management faced increasingly hostile-business environment operating environment in 2019.

However, due to your company’s growth strategy, we we’re able to deliver an impressive performance. A review of financial results shows improved performance across all financial indices.

“Our revenue grew by 6percent from N3.377 billion to N3.585 billion but the gross profit for the year grew by 12percent from N1.480 billion to N1.664 billion while the profit for the year grew by 40percent from N320 million to an historic www.businessday.ng

N448.7 million.

“The moderate growth in revenue was intended as deferred scale achievement to maintain our focus on operational efficiency. We believe the numbers justify this approach.

Indeed, operating profit improved by 196percent between 2017 and end of 2019,” said Ayida.

Shareholders commended the company’s financial performance and its heavy investment in automated factory as an index of growth strategy. But they urged the Board and Management to increase the dividend of 25 kobo per share next year and also map out strategy to cope with the impacts of COVID-19 which has become inevitable.

A shareholder, Comerade Lawrence Oguntoye, described the company’s performance as excellent against the backdrop of tough operating environment last year.

A

s a strategic move to strengthen its internal structure for optimal performance, the Chartered Institute of Stockbrokers (CIS) has inaugurated three Committees, comprising standing one and two Ad Hoc. The standing Committee, Advocacy and Policy and the two interim, Review of CIS Membership Regulations and Code of Conduct 2005 and Governance and Establishment were inaugurated Monday to focus on these three broad areas: Brand positioning of the Institute through sustained awareness creation of its activities, ensure members‘ adherence to ethical codes and review of operations and pro-

cesses for global competitive edge.

A statement from the Institute indicates that members of the Committees cut across top class professionals in various sectors which are relevant to achieving its corporate vision. “ One of the cardinal objectives of the Institute is to devote more energy, resources and creativity to advocacy with the ultimate aim of elevating the status of the Institute and Securities and Investment profession in the scheme of things. This will enhance creation of more awareness of the Institute’s activities. “ The Institute has decided to set up a standing advocacy team that comprises key members located in various strategic institutions relevant to the Institute’s advocacy mission.

The Advocacy committee shall

be the Institute’s face, ear and voice in the Nigerian economy and shall ensure steady growth of membership. “ The Membership Regulation and Code of Conduct was approved in 2005. Consequently, several provisions in the regulation are now outdated and inconsistent with the current realities. For instance, only The Nigerian Stock Exchange existed when the membership regulations were adopted. However today, there are several securities exchanges in the Nigerian capital market with peculiar rules, processes and structures. “ The Institute is undergoing rapid changes. In order to position it for the current realities and the dynamism of the operating environment there is a need for constant review of its operations and processes.

Mutual Benefits records 214% growth in PAT, pays N21bn claims Modestus Anaesoronye

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utual Benefits Assurance Plc has announced its result for the year ended 2019 with profit after income tax of N3.61billion, achieving a 214 percent increase from N1.15 billion recorded in 2018.

According to the result of its audited account released on the floor of the Nigerian Stock Exchange (NSE), the Company’s gross premium written rose by 18 percent from N15.84 billion in 2018 to N18.7 billion in 2019. Net premium income stood at N15.29 billion, representing a 13 percent increase from N13.48 billion in 2018.

The Company also recorded a growth in Underwriting Profit of 77 percent, which rose to N5.4billion from N3.1 billion recorded in 2018 and a 13 percent increase in Net underwriting income from

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For the Non-Life Business, Gross Claims paid was N3.2 billion. Motor Claims being the highest was N1.22 billion, followed by Fire Claims at N859 million. Special Risks (Aviation/Oil &Gas) attracted N472.12 million Claims,

Femi Asenuga

N13.96 billion in the previous year to 15.77 billion in the year under review.

Shareholders’ Fund for the year under review stands at N13.43billion, a 50.33 percent increase from the previous year’s N8.94 billion, while To@Businessdayng

tal Assets grew by 14 percent from N59.4 billion in 2018 to N67.8 billion in 2019.

Mutual Benefits Assurance Plc. and its subsidiary, Mutual Benefits Life Assurance, paid combined claims amounting to N21billion in 2019. The General Business paid N3.2 billion, while Life Business paid N17.8 billion.

A breakdown of the claims paid by Mutual Benefits Life Assurance Limited indicates that Maturity Claims account for the highest Claims, at N8.00 billion, followed by Surrender Claims at N4.28 billion and Group Life Claims at N4.03 billion. Partial withdrawal stood at N1.26 billion with Credit Life, Individual Death Claims, and Annuity Claims accounting for N75.59 million, N105 million and N45.62 million respectively.

These represent a 12.1 percent decrease from the Total Claims of N20.25 paid last year.

Thursday 25 June 2020

BUSINESS DAY

35

Markets + Finance

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

Dangote Cement Plc: Resilient Q1 2020 results amid early impacts of COVID-19 BALA AUGIE

W

hile manufacturers have seen earnings go up in flames due to the devastating impact of coronavirus pandemic shocks, Dangote Cement is thriving as the largest maker of the building material has the financial strength to fend off macroeconomic headwinds.

Dangote Cement has added another superlative to its title, as it emerged as the most profitable manufacturer in Nigeria, thanks to cost control, and aggressive expansion plan across Africa.

Over the past few years, the company had been taking advantage of the country huge infrastructure deficit and rising middle class across the continent to add impetus to earnings.

For the first three months through March 2020, Dangote Cement posted a profit after tax of N60.59 billion, which is three times BUA Cement’s N19.75 billion net income; Nestle Nigeria, (N11.19 billion); Lafarge Africa (N8.06 billion); Flour Mills, (N5.89 billion); Dangote Sugar, (N6.72 billion), and Nigeria Breweries (N5.50 billion).

Dangote Cement’s revenue surged by 3.75 percent to N249.18 billion March 2020 from N240.15 billion the previous year, supported by higher volumes and realized prices in Nigeria.

The company’s Pan African operations are a major drive of Group margins even

despite the early effect of global macroeconomic shocks.

Pan Africa’s earnings before interest taxation depreciation and amortization (EBITDA) surged by 23.40 percent to N14.62 billion s at March 2020, supported by strong performance in Ethiopia and Senegal.EBITDA margin increased to 20.90 percent in the period under review from

16.90 percent as at March 2019.

The cement giant said that while its plant continued to operate during this period, it witnessed a reduction in sales.

“The temporary restrictions deployed in Nigeria continued subsequent to 31March 2020, with some amendments.

Nigeria sales volumes and values in April 2020 were trending lower than the volumes and

values realized during the same period last year,” said the company.

Dangote Cement recorded the highest first quarter (Q1) volume in the last four years of 4.0 million metric tonnes (MT), despite the absence of land exports.

With net cash generated from operating activities to the tune of N125.12 billion as at March 2020, the company has the financial strength to pay dividend, settle its debt and fund future expansion plans.

The company can honour its debt convent without putting pressure on cash flow, and its earnings can cover interest expense, which means it is not exposed to financial risk or beleaguered by debt.

Times interest coverage ratio is 10.54 times operating profit, while finance cost reduced by 23 percent to N9.01 billion as at March 2020.

Dangote Cement has a strong capital structure and robust balance sheet as debt to equity ratio fell to 31.42

percent in the period under review as against 39.13 percent the previous year. Total debt (short and long term) fell to N298.53 billion in the period under review from N351.43 billion.

The interest coverage ratio measures how many times a company can cover its current interest payment with its available earnings. The lower the ratio, the more the company is burdened by debt expense.

When a company’s interest coverage ratio is only 1.5 or lower, its ability to meet interest expenses may be questionable.

Despite the uncertainty caused by COVID-19 pandemic that paralyzed business activities across the country, Dangote cement successfully issued its N100 billion Series 1 Fixed Rate Senior Unsecured Bonds.

The proceeds of the N100 billion Series 1 Fixed Rate Senior Unsecured bonds due in April 2025-which was oversubscribed by investors- will be used to facilitate some cement expansion projects, support working capital and to finance company general project.

Including the bond issuance, DCPs debt to equity ratio is 42 percent (from 31 percent in Q1 2020), strengthening its capital structure.

The company received positive ratings on its debt from global ratings agencies.

On 23 January 2020, Global Credit Ratings affirmed the long term and short-term national scale issuer ratings of AA+(NG) and A1+(NG) respectively, assigned to DCP, with the outlook accorded as stable.

On March 24 2020, Moody’s assigned a (P)B2 local currency rating and Aa3.ng national scale rating (NSR) to the NGN300 billion domestic medium-term note program issued by DCP. There are tough times ahead for cement makers as Federal Government has reduced the amount budgeted for capital expenditure by 20 percent in the 2020 budget due to coronavirus pandemic shocks on revenue and crude oil price.

Constructions activities have been suspended across the country due to lockdown

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measures impose by government to curb the spread of the virus.

The International Monetary Fund says Nigeria’s economy is expected to shrink by 3.4 percent this year and Africa’s largest economy could face a recession lasting until 2021.

Insidious virus has shattered Nigeria’s economy as Brent crude oil fell from $70 per barrel at the dawn of 2020 to $20 per barrel as of April 22, 2020.

The Nigerian economy has been growing sluggishly since the country existed a recession 2016, and the renewed clashes between farmers and herdersmen (that has claimed thousands of lives contributed) undermined Agriculture GDP. As a result of a border closure imposed by Federal Government in order to curb smuggling of rice and other products, headline inflation rate spiked as price of food skyrocketed.

Investors’ apathy towards the equity market continues to gathered momentum in 2019 as they dumped shares due to lack of transformation policy on the part of government and poor corporate results.

Investors are still dumping shares and investing in more attractive emerging market countries with benign macroeconomic environment and stable foreign exchange policy.

Since the start of last year, yields began a precipitous drop, and the dip gathered steam in the last quarter of the year when the central barred individuals and local corporates from investing in Open Market Operations (OMO) auctions.

According to the Q1-2020 GDP report published by the National Bureau of Statistics (NBS) on 24 May 2020, economic growth slowed to a nine-quarter low of 1.87 percent yoy from 2.55 percent yoy in Q4-2019 and 2.12 percent yoy in Q2-2019.

Additionally, the statistics body added that capital importation for the first quarter (Q1) 2020-the total amount of foreign investment inflows into the Nigerian economydeclined by 31 percent year on year (y/y) to $5.85 billion in the first (Q1) 2020 from $8.51 billion in Q1 2019.

insight

BUSINESS DAY Thursday 25 June 2020 www.businessday.ng

The strength of China-Africa solidarity in defeating COVID-19 Zhou Pingjian

T

he COVID-19 pandemic is a major challenge to humankind, and is the most serious global public health emergency since the end of World War II. “In the face of COVID-19, China and Africa have withstood the test of a severe challenge,” said President Xi Jinping in his keynote speech, ‘Defeating COVID-19 with Solidarity and Cooperation’, at the Extraordinary China-Africa Summit on Solidarity against COVID-19 on June 17. “The Chinese people have put up a fierce fight and made enormous sacrifice to bring the situation in China under control.

Still, we remain mindful of the risk of a resurgence. In the same spirit, governments and peoples in Africa have put up a united front and, under the effective coordination by the African Union, have taken strong measures to effectively slow the spread of the virus. These are indeed hardwon results.”

The Extraordinary Summit via video link is a special gathering of Chinese and African leaders as the two sides are uniting efforts against the pandemic. It is a joint initiative between China, South Africa in its capacity as the Chair of the African Union (AU), and Senegal in its capacity as the Co-Chair of the Forum on ChinaAfrica Cooperation (FOCAC).

President Muhammadu Buhari of Nigeria, along with Presidents of Egypt, DR Congo, Algeria, Gabon, Kenya, Mali, Niger, Rwanda, Zimbabwe, Prime Minister of Ethiopia, and the Chairperson of the AU Commission, attended the Summit. The SecretaryGeneral of the United Nations and the Director-General of the World Health Organization (WHO) were invited as special guests to the Summit.

After cordial and in-depth discussions, leaders attending the Summit reached extensive consensus on supporting Africa’s COVID-19 response and strengthening China-Africa and international cooperation against the virus. The Summit issued a joint statement which reflects the common position of China and Africa on a series of major issues.

In the joint statement, African countries commend China’s major strategic gains in COVID-19 response and express high appreciation for its substantial assistance for Africa’s fight against the disease. China commends the solidarity and support extended by African countries, the AU and other regional organizations for China’s COVID-19

response and appreciates the establishment of the AU COVID-19 Strategy and the appointment of Special Envoys to mobilize international support for Africa’s efforts to address the economic challenges faced as a consequence of the pandemic, and further commends the resilience African countries have demonstrated and the positive results thus achieved in curbing the spread of the virus by adopting preventive measures.

China and Africa have always been a community with a shared future. We are good brothers who have shared weal and woe. Our peoples, having fought shoulder-to-shoulder for national liberation, are partners for common development. A few years back, we were together fighting Ebola. In the face of COVID-19, China and Africa have offered mutual support, fought shoulder to shoulder with each other, and enhanced solidarity and strengthened friendship and mutual trust.

China shall always remember the invaluable support Africa gave us at the height of our battle with the coronavirus.

Over 50 African leaders have expressed solidarity and support in phone calls, letters or public statements. By sending heartwarming sympathies and good wishes, the government and good people of Nigeria have firmly stood by us ever since the outbreak. As President Buhari noted in his statement of solidarity as early as February 2, “China’s efforts to contain the spread of the coronavirus have been exemplary, as well as the country’s collaboration with international agencies and other countries on the matter. With all the efforts being put in, we know that it is only a matter of time before this nightmare passes.”

Many African countries offered us funds or in-kind assistance despite their own limited resources. Moreover, at the most demanding stage of its outbreak response in China, many African brothers and sisters chose to stay put in Wuhan or other parts of China and did a good part in the battle against the outbreak with great understanding, solidarity and cooperation.

In return, when Africa was struck by the virus, China was

‘‘

China and Africa have always been a community with a shared future. We are good brothers who have shared weal and woe. Our peoples, having fought shoulder-to-shoulder for national liberation, are partners for common development

the first to rush in with assistance and has since stood firm with the African people. China has a long tradition of offering medical assistance to Africa. It sent its first medical team to Africa in 1963.

Since then 243,000 Chinese doctors and nurses have been sent to assist African countries and over 220 million African patients have been treated. After the Ebola outbreak in Africa, the Chinese government sent medical teams of over 1,000 military and civilian doctors to areas stricken most severely by the epidemic. In the battle against COVID-19, a total of 148 Chinese medical workers have been sent to 11 African countries including Ethiopia, Burkina Faso, Djibouti, Cote d’Ivoire, Zimbabwe, DR Congo, Algeria, the Republic of the Congo, Equatorial Guinea, Sudan, Sao Tome and Principe.

Comrades-in-arms indeed, China and Africa.

The COVID-19 is still affecting many parts of the world. Both China and Africa face the formidable task of combating the virus while stabilizing the economy and protecting people’s livelihoods. As President Xi stressed at the Summit, we must always put our people and their lives front and centre. We must mobilize necessary resources, stick together in collaboration, and do whatever it takes to protect people’s lives and health and minimize the fallout of COVID-19.

“The COVID-19 outbreak is a clear wake-up call for multilateralism,” said President Buhari in his speech delivered at the Extraordinary Summit. “We must stay committed to upholding multilateralism,” President Xi also pointed out. On June 18, President Xi further stressed

multilateralism in his message to the High-level Video Conference on Belt and Road International Cooperation, “All nations have their destinies closely connected and humanity is in fact a community with a shared future.

Be it in taming the virus or in achieving economic recovery, humanity cannot succeed without solidarity, cooperation and multilateralism.”

The friendship and brotherhood between China and Africa is rock-solid and unbreakable.

No matter how the international landscape may evolve, China shall never waver in its determination to pursue greater solidarity and cooperation with Africa.

China fully supports African countries’ efforts against COVID-19, and pledges to continue assisting Africa with supplies and medical experts and accelerate the construction of African CDC. China promises that once the COVID-19 vaccine is completed and put into use, African countries will be the first in line to benefit from it. China is willing to work together with the international community to step up support for African countries, particularly those that are hardest hit by the coronavirus and are under heavy financial stress, by such means as further extending the period of debt suspension, to help them tide over the current difficulty.

As comprehensive strategic and cooperative partners, China and Africa have offered mutual support and fought shoulder to shoulder in the face of COVID-19, setting a fine example for international cooperation against the virus and elevating China-Africa ties to a new height.

The strength of China-Africa solidarity in defeating COVID-19 will unleash strong, positive energy for the international community to secure an early victory against COVID-19 through solidarity and cooperation. We are convinced that emerging from the test of COVID-19, the bond between China and Africa will only become stronger and China-Africa friendship will strike deeper roots.

Pingjian is Ambassador of China to Nigeria

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