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Falling headline Inflation masks higher pricing power for NSE 30 firms

UK Eke (r), group managing director, FBN Holdings plc, receiving the Best Corporate Governance in Nigeria award on behalf of FBN Holdings from Paul Richardson, producer, World Finance, at the World Finance Awards 2019, held in London Stock Exchange Studio, London.

OLUWASEGUN OLAKOYENIKA & SEGUN ADAMS

Buhari rejects Malami’s plot to enforce judgment against oil firms P ISAAC ANYAOGU

resident Muhammadu Buhari has rejected a request from his attorney-general and minister of justice, Abubakar Malami, to enforce a consent judgment made by the Supreme Court against interna-

tional oil companies in Nigeria on the grounds that the said judgment was made in violation of the constitution. The attorney-general was also directed to immediately terminate a strange contract reached with a private firm, Trobell International Limited, for the purpose of collecting as much as $43.747

billion from the said oil companies who are commonly referred to as IOCs. Trobell had been given the power to make the recovery using whatever means at its disposal, including termination of contract and the exercise of the power of ‘shut-in’ and filing a complaint under the Foreign

Corrupt Practices Act in the United States of America and other related international protocols if the IOCs failed to pay. Buhari’s directives are contained in a one-page letter by the Chief of Staff to the President, Abba Kyari, to the attorneyContinues on page 50

igeria’s inflation rate is moderating, but the equities market suggests customers are paying higher prices on consumption. With the latest data from the National Bureau of Statistics (NBS), showing the nation’s inflation rate slowed year-on-year in February to a 3-month low at 11.31 percent, the country’s Monetary Policy Committee (MPC), other things being equal, might be tempted to ease benchmark rates. However, data from the equities market suggest a contrary trend in the general price level. Analysis on the 30 most-capitalized and liquid stocks on the Nigerian Stock Exchange shows that the companies have been able to successfully shift the burden of rising costs and wages Continues on page 50

Inside AMCON: Nigeria should look beyond the here and now P. 36

2 BUSINESS DAY NEWS

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Monday 25 March 2019

Multiple security checkpoints pile costs on port businesses ...Importers blame long cargo dwell time on cumbersome clearing procedure AMAKA ANAGOR-EWUZIE

ort businesses are bearing the brunt of multiple checkpoints mounted by security operatives along the roads leading to Apapa and Tin-Can Island Ports, Nigeria’s major economic gateways. The massive extortion of truck and tanker drivers by officers of the Nigeria Customs Service (NCS), Nigerian Navy, Nigerian Police Force (NPF), Nigerian Army and other security operatives along the port roads and the delay arising therefrom are weighing heavily on port businesses, adding significantly to the cost of doing business at the ports. Security operatives were originally stationed on the port roads by government to ensure sanity through proper control of traffic within Apapa metropolis, but that objective is becoming defeated as these officers now seize the opportunity to feather their nest. “Today, we have empty container truck checkpoints where an importer that discharges his or her container will be made to pay dearly before the empty container would be allowed into the port,” Tony Anakebe, managing director, Gold-Link Investment Ltd, told BusinessDay in an interview. “These checkpoints are sometimes more than 15 in number on one stretch of road. From Mile 2 to Apapa, we have over 15 checkpoints while from Western Avenue to Apapa has more than 10 checkpoints, and the truck driver must drop something before crossing the checkpoints,” Anakebe said. BusinessDay findings show that truckers are compelled to pay a minimum of N10,000 per truck before they are allowed access into the ports, while those who hesitate to pay are detained on the already choked roads. All the monies so col-

lected are not accounted for. Though the amount paid to the operatives depends on a trucker’s negotiating power, according to Remi Ogungbemi, chairman, Association of Maritime Truck Owners (AMATO), truckers pay as much as N80,000-N120,000 per truck on a single trip to the port. The presence of these checkpoints contributes to delay in cargo clearance and movement of goods out of the ports. This, invariably, results in longer cargo dwell time at the port, piling more costs on importers who have to pay demurrage and rent charges to both shipping companies and terminal operators. Collection of illegal fees by government agencies and existence of multiple checkpoints are major inhibitions to smooth trade across borders, according to a survey conducted in 2018 by the Task Force on ECOWAS Trade Liberalisation Scheme (ETLS) on doing business in Nigeria. The ETLS survey further revealed that civilians usually manage these checkpoints as the point men used in extorting and collecting ransom from truck drivers. “This is not helping businesses because it is one of the reasons truck drivers charge importers as high as N700,000 to N800,000 to move one 40-foot container from Apapa to warehouses in Lagos. It is now very exorbitant to transport goods out of the port,” Anakebe told BusinessDay. “Corruption will continue to thrive in our ports if these checkpoints are allowed to stay. It has become very absurd that when a Custom officer releases a container in Apapa, on getting to Area B, which is few metres away, the truck driver will encounter more than three Customs’ checkpoints and the cargo owner must grease their palm before passing,” he said.

•Continues online at www.businessday.ng

Low capital base, risky environment hindering PMBs from creating mortgages, giving housing loans …as operators canvass FG’s intervention as done in agriculture CHUKA UROKO

fter the consolidation and recapitalisation of the primary mortgage institutions (PMIs) leading to their name change and reduction in their number from 83 to 40 at the time, expectation was that their impact would be felt considerably in the housing sector. But even though the capital base of the PMIs which became primary mortgage banks (PMBs) was hiked from the statutory N100 million to N2.5 billion for those licensed to operate at regional level and N5 billion for those with national operating licence, Nigeria’s housing problem still persists. When the Nigerian Mortgage Refinance Company (NMRC) was set up by the Federal Government, part of its mandate was to increase liquidity in the mortgage market as a critical step towards increasing

housing affordability. Twice, the company has raised funds from the capital market, totalling N18 billion as at December 2018, to refinance mortgages originated by the PMBs. But only a few of them had mortgages for refinancing because, according to Kehinde Ogundimu, NMRC’s CEO, the PMBs that did not get refinanced were not viable. “We don’t refinance any PMB that is not doing well,” Ogundimu told BusinessDay. From the consolidation and recapitalisation time to this moment, however, many of the PMBs have been struggling, unable to originate mortgages or give housing loans. Not even the revised operational guidelines by the Central Bank of Nigeria (CBN), which stripped the PMBs of other business concerns and compelled them to focus on their core business of providing mortgages and

Continues on page 50

Aisha Buhari (2nd r), wife of the president of Nigeria; Tony Elumelu (3rd r), founder, Tony Elumelu Foundation (TEF); Awele Elumelu (r), trustee, TEF; flanked from extreme left, Ifeyinwa Ugochukwu, incoming CEO, TEF; Parminder Vir, outgoing CEO, and Shalom Ben-Shoshan, Israeli Ambassador to Nigeria, during the announcement of 3,050 entrepreneurs of the 5th cycle of Tony Elumelu Foundation Entrepreneurship Programme in Abuja, weekend.

Supplementary polls:

PDP wins Sokoto, Benue, as APC wins Plateau, Kano amid controversy …Court case prevents Bauchi declaration …Situation Room worried over conduct of security personnel

STEPHEN ONYEKWELU & OWEDE AGBAJILEKE, Abuja

he People’s Democratic Party (PDP) won the governorship seats in Sokoto and Benue States after the Independent National Electoral Commission (INEC) concluded supplementary polls in five states on Saturday. The ruling All Progressives Congress (APC) won in Kano and Plateau States. INEC held supplementary governorship election in the five states of Sokoto, Kano, Plateau, Bauchi and Benue on Saturday having declared the March 9 election in those states, as well as in Adamawa, inconclusive. Supplementary governorship election could not be held in Adamawa following an order of a State High Court sitting in Yola asking INEC not to conduct the exercise pending the determination of a counter affidavit filed by the electoral body challenging the statutory jurisdiction of the court to entertain a post-election matter. Following the conclusion of collation of results in the five states on Sunday by INEC, Sokoto State Governor Aminu Tambuwal of the PDP won reelection by a narrow margin, polling a total of 512,002 votes to beat Ahmad Aliyu of the APC who garnered 511,660.

In Plateau State, the returning officer, Richard Anande Kimbir, declared incumbent governor and candidate of the APC, Simon Bako Lalong, winner of the 2019 governorship election after he polled 595,582 votes to defeat his closest opponent, Jeremiah Useni of the PDP, who polled a total of 546,813 votes. The results of the March 9 election saw Lalong leading Useni with over 44,000 votes. Elections in 40 polling units across nine local government areas of the state were, however, cancelled. The total number of registered voters in the polling units where elections were cancelled amounted to 48,828 resulting in the declaration of the March 9 election as inconclusive. Results for the supplementary elections in the nine LGAs of the state saw Lalong polling 12,327 additional votes, and Useni polling additional 8,487 votes. Benue State Governor Samuel Ortom of the PDP won a second term in office, having defeated his closest rival, Emmanuel Jime of the APC, with 434,473 votes against 345,155 votes. In Bauchi State, Kyari Mohammed, the returning officer, announced that the PDP candidate, Bala Mohammed, polled a total of 6,376 while the APC candidate and incumbent governor, Muhammed Abubakar, polled 5,117 at Saturday’s

supplementary election in the state. The returning officer, however, said he was in no position to make a return because the case involving Tafawa Balewa Local Government Area is still in court. The Federal High Court in Abuja had on March 19 stopped the Independent National Electoral Commission (INEC) from proceeding with the collation, conclusion and announcement of the result of the March 9 governorship election in the state. In Kano, Abdullahi Ganduje, incumbent governor and candidate of APC, secured a second term in office in what may perhaps pass as the most controversial election of the season. Ganduje won with a margin of more than 8,982 votes after the collation of figures for the supplementary elections held on March 23, 2019. Before the elections were declared inconclusive after the March 9 governorship election, PDP was leading with 1,014,474 votes, while APC had secured 987,819 votes. But at the end of collation of results of Saturday’s supplementary elections held in 28 LGAs, PDP polled a total of 10,239 votes against 45,876 votes secured by APC. The total figures for APC stood at 1,033,695 votes

Continues on page 50

Stocks fail to entice buyers despite positive corporate earnings IHEANYI NWACHUKWU

igeria’s equities market has failed to show better performance lately, despite earlier projections by many market watchers that influx of positive corporate earnings and accompanying rewards will entice stock buyers. Though the market had advanced by 0.82 percent at the close of trading on Friday, a lingered six-day bear run on Custom Street became a major drag on the performance of the domestic equities market. Thus, the month-to-date (MtD) and year-to-date (YtD) losses widened to 1.84 percent and -0.93 percent, respectively, as at Friday.

Despite Friday’s positive close, Vetiva Research analysts highlighted that “the sentiment in the market still remains weak”. On the back of this, they expect seesaw trading this week “as the interplay between bargain hunting and sell-offs continues”. “Given the paucity of foreign portfolio participation in the local bourse, we anticipate that the lingering bearish sentiments would drive a negative close,” Afrinvest Research analysts had said in a March 18 note. Analysts at Lagos-based Cordros Research reiterated their view that “the blend of a compelling valuation story, together with positive macroeconomic picture, leaves scope for a market recovery in the medium term”.

“However, we guide investors to tread the cautious trading path in the short term,” said the analysts at Cordros Research. From a year-open high of N11.721 trillion, the value of listed stocks stood lower at N11.612 trillion on Friday, which implies that equity investors who chose to hold their stocks from beginning of the year till date lost approximately N100 billion. Chief on this list are stock investors in Academy Press plc (-28 percent); Africa Prudential plc (-0.5 percent); Berger (-4.1 percent); BOC Gas plc (-10 percent); Cadbury (-1 percent); Champion Breweries plc (-27.1 percent); Dangote Sugar Refinery plc (-8.2 percent); ETI plc

Continues on page 50

Monday 25 March 2019

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Monday 25 March 2019

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Monday 25 March 2019

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Monday 25 March 2019

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BUSINESS DAY

Technology, infrastructure upgrade can eliminate Apapa gridlock - logistics experts AMAKA ANAGOR-EWUZIE

orried by the econ o m i c impact of persistent gridlock in and out of Apapa and Tin-Can Island ports on cost of doing business, logistics experts have identified introduction of smart technology such as

Radio Frequency Identification (RFID) tag on trucks coming to Apapa as a sure means of eliminating gridlock. They also point to the need for Nigeria to rebuild its logistics infrastructure in order to salvage the economic losses of over N3.46 trillion per annum, according to the estimation of the Lagos Chamber of Com-

merce and Industry (LCCI), blamed on poor infrastructure, poor policy implementation and corruption. Speaking with BusinessDay on the sideline of the launching of the 2018 edition of the Nigerian Logistics and Supply Chain report, Obiora Madu, director-general, African Centre for Supply Chain (ACSC), publisher of the report,

says RFID tag has the ability to isolate trucks that have business at ports from those looking for business. “To address Apapa problem, we need to rebuild our road infrastructure. There has to be a way of isolating vehicles, which has business in the port and those looking for business. If we have Radio Frequency Identification (RFID) tag on

those trucks that have business, it will become easy to isolate them. This is happening practically everywhere and we really have a lot of work to do in Nigerian ports,” Madu says. Madu, who states that Nigeria is presently ranked 110 in the global Logistics Performance Index (LPI) published by World Bank in 2018 showing that many

small African countries are presently ahead, attributes the poor performance to poor access to port, delay in port transaction, and poor logistics infrastructure. “We got to where we are today because the roads were neglected and the rails actually died literally. Our aviation industry is obviously not the best. We killed our national line.”

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The black monk (2)

Bashorun J.K Randle

• Continued from last week

hat he did not disclose was that the Guest House was a two-storey building. Apart from the two Indian ladies who were in the ground floor sitting room, Abacha’s Nigerian (Ibo) girlfriend was waiting upstairs. Perhaps the most amazing scene in the film was how Al-Mustapha whose rank was only that of Major took complete control. Without letting the most senior military officers know that Abacha was dead, he invited them to a meeting at The Villa, ostensibly on the orders of Abacha. Once they were all inside, all that Mustapha needed to do to become Abacha’s successor was to hold the already disarmed officers to ransom with guns pointing at their heads. Had he pulled the trigger, there would have been no resistance. He must be regretting that he took BrigadierGeneral Mohammed Buba Marwa into confidence. Apparently, it was Marwa who quickly contacted former President General Ibrahim Babangida (IBB). IBB lost no time in outmanoeuvring Major Mustapha. What followed was an apparent deadlock over who should succeed Abacha. The controversy was over seniority by military rank or position in the government hierarchy. So, it was a tussle

Monday 25 March 2019

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between Lt. General Abdulsalami Abubakar who was the most senior military officer and Lt. Gen. Jerry Useni who was the “de facto” number two to Abacha although his official position was Minister of the Federal Capital Territory. Also, in contention was Major-General Ishaya Bamaiyi who was the Chief of Army Staff. Matters were interrupted in order to allow for the burial of General Sani Abacha. It was not until the following day that Lt. General Abdulsalami Abubakar was announced as the new Head of State and Commander-InChief of the Armed Forces of Nigeria. Lt. General Jerry Useni’s candidacy was certainly not helped by the fury of Abacha’s widow, Hajia Maryam Abacha who was alleged to have concluded that Useni was somehow complicit in the dalliance with and entertainment of various ladies by her departed husband. Regardless of his vigorous defence and protestation of innocence, Lt. General Jerry Useni lost out. Several scenes of the film are truly awesome. In one episode, Ibrahim Abacha was portrayed as the de facto Chief of Staff of his father. He had access to all the appurtenances of office – aircraft, cars, etc. Ministers as well as top government officials were at his beck and call. Once the son gave approval, the deal was done. Ibrahim took care of business plus the money trail – especially the huge sums that ended up in Switzerland, Lichtenstein, Luxemburg, Jersey, Guernsey and other exotic destinations. Ironically, General Sani Abacha never set foot in Switzerland where a large chunk of the looted funds were kept. Looming large in the transactions was Alhaji Abubakar Bagudu who is now the Governor of Kebbi State. Abacha’s loyal wife and widow declared that the funds were not stolen. They were only warehoused so that the American government would not

be able to seize the money! When Ibrahim died on 17th of January, 1996 along with his girlfriend Funmi, his friend Bello (a younger brother of Aliko Dangote), as well as fourteen other friends, and the crew in an air crash in Kano following a spur of the moment whim to head to the ancient city for the best “Suya” meat, his father and mother were devastated and utterly shattered. Thereafter, General Sani Abacha took to wearing goggles both day and night. Another gripping scene was when the trio of playwrights/authors Professor Wole Soyinka; Professor Chinua Achebe and Professor J.P. Clark visited General Ibrahim Babangida at Dodan Barracks to plead for amnesty for Major-General Mamman Jiya Vatsa who was a poet and former classmate of Babangida (IBB), they were warmly received by Babangida who reminded them that Vatsa was the Best Man at his wedding to Mariam. They left at about 4pm and gave a press conference which reassured those who had been anxiously awaiting the outcome of their intervention. Low and behold, on the National Television Authority (NTA) news at 7pm on5th March 1986, it was announced that Major-General Vatsa had been executed along with other coup plotters. One of the fascinating episodes in the film was how Major-General Olusegun Obasanjo who was the Chief of General Staff Supreme Headquarters (the number two in the military hierarchy) dodged assassination on Friday 13th February 1976. He owes his narrow escape to divine intervention through an unexpected visit from Colonel Olu Bajowa who turned up at Obasanjo’s Ikoyi residence to announce the safe delivery of his son Yomi and that the naming ceremony would be held that morning. He requested for permis-

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Abacha’s loyal wife and widow declared that the funds were not stolen. They were only warehoused so that the American government would not be able to seize the money!

sion to be late in getting to Dodan Barracks where he worked directly under Obasanjo. While this was going on, another officer, Colonel Reis Dumuje arrived and he waited patiently for Obasanjo to finish his discussions with Bajowa. In the meantime, Bajowa’s driver had left on an errand. When Bajowa was about to leave and his driver had still not returned, he pleaded with Dumuje to ask his driver to drop him at his home which was only a short distance away. Anyway, when Obasanjo finished his meeting with Dumuje, he was surprised to find that his visitor’s driver was nowhere to be found. Obasanjo offered Dumuje his official car to drop him and return to the house. Within a matter of minutes, the driver was ambushed in South-West Ikoyi. The assassins thought it was Obasanjo who was in the car and they opened fire. Dumuje was hit and badly wounded. Somehow the driver was able to dodge the bullets. He drove to the University of Lagos Teaching Hospital, Idi Araba where the Provost, Professor Ade Elebute quickly arranged for him to be wheeled into the emergency section of the hospital followed by surgery. For several weeks, the patient’s identity was a tightly guarded secret. Fortunately, Dumuje recovered and Obasanjo is still alive. As for Major Clement Dabang, after participating in the coup d’état he booked himself into the same hospital and claimed that he had been under surgery while the coup was going on. General Danjuma dismissed his story as cock and bull and he instructed that Dabang should face the Military Tribunal. He was subsequently executed by firing squad along with the other coup plotters on 11th March 1976. Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants

Taxes: Are paying, should pay more

Gregory Kronsten

hatever was proposed or not proposed at the meeting of senior officials with a Senate commission last week on the 2019-2021 MediumTerm Expenditure Framework, we all know that revenue generation is inadequate even for the modest aspirations of the FGN. Any progress is off a low base: federally collected revenue reached 7.4 per cent of GDP in 2018 according to provisional data from the CBN. The vice-president told an investor gathering in London in December that the next step would be 8 per cent. The Federal Inland Revenue Service (FIRS) has reported total collection of N5.3trn for 2018, below its budget but a record nonetheless. For a peer comparison for 2018, we see that the ratio was 25.3 per cent in South Africa. We can explain away the underperformance in many

ways: South Africa has a larger formal sector, and more large multinationals within its jurisdiction; its South African Revenue Service is well funded and began to raise its game on compliance in the 1990s; its counterpart, the FIRS, ‘saw the light’ rather more recently; and Nigeria is an oil producer, which should have greatly reduced the differential with its rival for the slot of Africa’s largest economy. We support a several-pronged approach as the FGN moves towards a tax/GDP ratio closer to South Africa’s. On the oil side, its battle is institutional, namely the sorry fate of the petroleum industry bill in the National Assembly for more than 10 years. If the executive is able to establish a good working relationship with the Senate president and other core officeholders in the next assembly, then we could see movement on the fiscal and non-fiscal elements of the bill. The inability of the authorities to review the industry’s production sharing contracts (PSCs) has been a missed opportunity, and a painful one as production under such contracts is now greater than the output of the oil joint-ventures. On the non-oil side, the challenge for the executive is to enhance compliance, reinforce the culture of paying tax and, we would argue, hike tax rates. The filing of tax returns saves time for all and funds for the collection agency, and is a boost to transparency. Electronic or not, however, taxpayers still have to want to submit accurate returns. They are more likely to do their patriotic bit

if they can see improvements to their lives, such as new/improved schools and roads that have been funded with taxpayers’ money. This is a very long-term solution, and it ducks the question of how the FGN generates the funding to make the investment to persuade reluctant taxpayers to open their wallets. One answer is responsible government borrowing for capital items. This has been the sensible policy of the current administration. However, it also requires patience because of the size of Nigeria’s infrastructure deficit. The authorities have to move more quickly in our view. The new national minimum wage has to be funded. More generally, Nigeria has a low government spending/GDP ratio because it has a low tax/GDP ratio in both the oil and non-oil economies. Government could accomplish so much more with additional revenue. We do not know what the FIRS executive chairman said to the Senate about the way to increase collection but we advocate a hike in tax rates, starting with VAT and including some domestic excise levies. A doubling of the standard rate to 10 per cent would generate close to N1trn gross for the three tiers of government, having made an allowance for non-compliance. It would be particularly welcome with the state governments as funding outside the monthly FAAC payout. Official resistance to a rate increase is misplaced, we feel: low-income (and all) Nigerians would surely benefit from a hike in public investment in the infrastructure. A higher VAT rate for luxury goods

would amount to the application of sticking plaster to the wound. This FGN proposal, however, brings us to a common view that high-income Nigerians and companies are not always pulling their full weight in terms of tax payments. Wealthy citizens already account for the vast majority of tax receipts in developed and developing countries, although for different reasons. That said, in Nigeria’s case the vast majority could be higher still through the reinforcement of existing policies such as the large taxpayers’ office, and a more selective approach to the granting of waivers and exemptions. While the impact on revenue is far smaller, there is scope to pursue the 67 million members of the labour force of 77 million who are not registered taxpayers. Most have no tax to pay but the SMEs that are liable are generally escaping the net because they cannot meet the documentary requirements of the authorities. It is worth noting that presumptive tax on small business has been a success in Kenya and Tanzania. Tax revenue, and therefore government spending is very low, while the infrastructure gap is very large. The official response should be dramatic in our view: a sizeable rise in the rate of VAT alongside tighter monitoring of large taxpayers, innovation in the taxation of SMEs and spreading the culture of paying taxes. Gregory Kronsten is the Head, Macroeconomic & Fixed Income Research FBNQuest

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A future stolen

Patrick Atuanya

ome 7 million children were born in Nigeria in 2018, according to estimates by the United Nations International Children’s Emergency Fund or UNICEF. They must have brought a lot of joy to their respective parents but unfortunately UNICEF also ranks Nigeria as one of the worst places to be born due to having one of the highest infant (under one month) and maternal mortality rates in the world from largely preventable causes. UNICEF notes that over 80 percent of new-born deaths are caused by premature births or complications during birth or infections, yet the deaths can be avoided if there is access to well-trained midwives during antenatal and postnatal visits as well as delivery at a health facility, along with proven solutions like clean water, disinfectants and breastfeeding within the first hour, among others. For Nigerian children that do make it past the first couple of months, the future is increasingly looking uncertain and bleak. They will be growing up in a country (Nigeria), which cannot insulate itself from the global economy (no matter how many imported goods it

tries to ban) but is woefully unprepared for the far reaching changes happening in the world today. The rise of automation, artificial intelligence, renewable energy, electric vehicles, self-driving cars, and application of new technology will impact the jobs market over the next 20 years, just as the youngest Nigerian citizens born in 2018 are coming of age. A 2018 survey by the World Economic Forum (WEF) of members all over the world, noted that global labour markets are undergoing major transformations due to technological breakthroughs. According to WEF four specific technological advances would drive change; ubiquitous high-speed mobile internet; artificial intelligence; widespread adoption of big data analytics; and cloud technology. “These changes if managed wisely, could lead to an era of good work, good jobs and improved quality of life for all. Otherwise, it could pose the risk of widening skills gaps, greater inequality and broader polarization,” the WEF report said. A cursory glance at the drivers of the coming changes shows that Nigeria is a laggard in many aspects and currently lacks the educational system or a coherent government policy to benefit from the rise of technology and tackle the potential job losses from automation even as its population is expected to continue to surge. The McKinsey Global Institute (MGI) estimates that between 400 million and 800 million individuals could be displaced by automation

and may need to find new jobs by 2030 around the world and learn new skills in the years ahead. MGI states that the shift could be on a scale not seen since the transition of the labour force out of agriculture in the early 1900s in the United States and Europe, and more recently in China. Nigeria meanwhile continues to run it’s largely oil fuelled (dollar earnings, FG and States budget) economy without a thought about the role of innovation, or where the next jobs will come from for its citizens. It is a curious state of affairs, given that Saudi Arabia which produces far more oil per capita (10 million barrels a day, for a 21 million population), compared to Nigeria (2million barrels a day, for a 200 million population) is already preparing for the end of the oil age. The Saudi government is pouring funds into education, health care and tourist resorts as part of a campaign called Vision 2030. Subsidies for citizens on basics like electricity have been cut, and more revenue is being raised with a value-added tax. Saudi Arabia has also announced plans to partly privatize its state-run oil company, Aramco, to help fund the transformation, with an IPO estimated to value Aramco at up to $2 trillion. The International Monetary Fund (IMF) in a report on the possible end of the oil age notes that a transportation revolution is underway that could completely transform the oil market in the coming decades, with the rise of electric vehicles and renewable energy, the way the coal market was transformed a century

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Nigeria’s main sovereign wealth fund (NSIA), has assets of only $2 billion for 200 million people

ago. The IMF working paper predicts that electric cars could represent 90 percent of the stock of cars in advanced economies and more than half in emerging market economies by 2040 (just some 20 years away), and by then oil will be much cheaper than it is today, with the equivalent of $50 per barrel seeming impossible high then. Amid all these, Nigerian leaders and economic planners continue with business as usual; exploring for oil in the Lake Chad Basin, pumping money into various intervention programmes with dubious outcomes, getting excited over tomatoes instead of a possibility of the next Apple Inc., coming from Nigeria, burning scarce resources to the tune of N1 trillion a year on fuel subsidies, and generally not having a clue about how to inspire the country to greatness. Saudi Arabia’s main sovereign wealth fund (PIF), currently has assets of about $400 billion with a target of increasing it to $600 billion by 2020, as part of the plan to reduce the economy’s dependence on oil. Nigeria’s main sovereign wealth fund (NSIA), has assets of only $2 billion for 200 million people. In the holy book, Proverbs 13:22, states: “A good man leaves an inheritance to his children’s children.” Perhaps a Few Good Men (in government) need to stand up and be counted, for the sake of generations of young and unborn Nigerians. Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

Inclusive: UN partners can join hands with African firms GrowthView

Christina Wehbe Small-Trade | Local Firms | SDG#8

“

ow can we make money and do good?” This is a question we ask ourselves. Today’s GrowthView article builds on the last “Prosperity and growth: how do they go hand in hand?”. These are opportunities for local Nigerian, and African small-scale businesses to grow equitably with the big players, and partner with the United Nations (UN). Economic growth theory refers to being inclusive as building a business that increases revenue (and profit) while including the poor and remote communities. A dilemma that corporates and now FinTech firms are facing, as the UN is requesting evidence on business inclusiveness - particularly to show results that align to the targets of the UN’s SDG #8 on economic development. So, what can corporates learn from small-scale entrepreneurs on what it means

to be ‘inclusive’? More simply put, how can we facilitate good money? There are two parts to the question (1) what role do we play as individuals in building these businesses? (2) what tools do we need, to make it happen? Local lens: In Nigeria and throughout Sub-Saharan Africa, the culture and customs have nurtured talented designers, artisans, agriculturists and tech innovators; from small-scale to larger scale exporters. So how can we see more growth in cross-border trade or local Nigerian partnerships with single or family-owned businesses? › First, what do I enjoy doing that sparks my enthusiasm? Creativity comes in many forms and what drives us can be money, satisfaction or the value we have in seeing others enjoy our product (self-fulfilment and pride). This is the inner catalyst that inspires someone to develop a new product or service. Most importantly, the aim that we are “all better off” is key. › Second, how can I put my idea into action? Start small and grow big. Whether you are a small business owner or a graduate, make use of the tools and infrastructure you have available now. Then, explore the bigger “deals”. This allows you to take minimal risk and you learn if it fails, and gain when it succeeds. Acting on the values is the second part. When we focus on ‘big’ enterprises, we may lose sight of opportunities right at our

door step. Niche business ideas in topics of research, tech, trade or services can also generate revenue today, and potentially be the inclusive as well as effective examples for the future, as examples. Global lens: As a CEO of a Forbes 100, the question on inclusiveness is his or her cross-road to equity. Do I invest in expanding to a new region without having any income benefit? Should I be inclusive although it is not my comparative advantage? Can I partner with a company or local organisation that can sell my products (affordably)? The solution is simple: your business is inclusive if it does right. Values and actions. The “good product” is one that makes lives better. Isn’t that the purpose of a product or service? Making our life more enjoyable, easier or healthier? Of course, there are products and services that are for leisure and distractions - that is still making it more enjoyable. Although, if this satisfaction is at the cost of others, then it defeats the point of equitable growth. › MSME in Nigeria: It is straight-forward for a local farmer, kiosk or family-owned shop in their community or health professionals in rural parts of Nigeria. They are inclusive and have direct access to their vicinity. › International retailer: Despite corporate goodwill, it is not simple for multinationals in emerging markets and rural parts of Sub-Saharan Africa. They could expand and access more segments.

Corporates face a tricky conundrum. Should I expand in parts of Nigeria where the customers are spread out and potential revenue low? The debate between values and economics comes into play. In sum, look around, share and interact with your community and society. It helps give perspective on local work, smallbusiness and the ideas you want to kick-start. We sometimes forget to open our minds and eyes to observe things around us, to the society we live and share our lives with. This explains why the term “inclusive” is a novelty for some corporates, as all they’ve learned or been exposed to is the game of “monopoly”. Key Take-Aways 1. Inclusiveness is a value 2. Equitable means greater gains for all 3. Your skills are asset 4. Partner locally and wisely 5. Try out your idea (small-scale and risk free) Stay tuned for the second part, which addresses the tools that can enable equitable and inclusive business ideas, especially in sectors such as fashion, retail, music and more. Wehbe is passionate about helping others and fighting poverty & injustice. She is the founder of GrowthView. She writes from Zurich, Switzerland.christina.wehbe@gmail. com Cell: +41 79 950 4760 https://www.urbanemerge.com/people https://www.qeh.ox.ac.uk/alumni/christina-wehbe

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Monday 25 March 2019

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Nigeria’s unsustainable debt service-to-revenue ratio

n our editorial of July 25, 2018, we warned of an impending debt peonage if the large scale of borrowings, at usually high interest rates, were not curbed by the government. In a poor attempt to defend the borrowings of the government, The Debt Management Office (DMO) wrote a rejoinder to our editorial, which we published on August 2, 2018, denying any debt crises and assuring the reading public that regardless of Nigeria’s high debt to service ratio, Nigeria’s borrowing is sustainable and that the “government has also embarked on several revenue boosting initiatives with a view to increasing the size of the revenue available to finance the budget and reduce the debt service to revenue ratio.” For added measure, when we advised the government to seek alternative loans from multilateral agencies with very low interest rates instead of approaching shylock investors and borrowers, the DMO accused us of a poor understanding of the

lending policies of multilateral agencies and that Nigeria could not approach these agencies because she has no balance of payment crisis. However, the chickens have come home to roost and the government is mulling approaching multilateral agencies for loans due to the high revenue to interest payments that is now clearly unsustainable. Bloomberg media quoted Pat Oniha, Director General of the DMO as saying the government will explore the option of borrowing from multilateral agencies to avoid the punishing interest payments associated with issuing bonds. “Our preferred option is to explore concessional sources. One of our major objectives is to reduce debt-service costs. The DMO puts Nigeria’s total (federal, state and FCT) debt stock, as at June 30, 2018, at N22.38 trillion (or $73.2 billion) representing 19 percent of GDP. This comprises external debt of about N6.75 trillion (or USD22.08billion) and domestic debt of about N15.629 (or USD51.12 billion). Based on the

debt to GPD ratio, the DirectorGeneral of the DMO, Pat Oniha, has not missed an opportunity to remind Nigerians that “Nigeria’s borrowing remains sustainable in the short, medium to long term levels, guided by the DMO objective of prudence” and has even gone ahead to review the self-imposed country specific debt limit from 19.39 percent to 25 percent in the medium-term of 2018-2020 thus providing scope for more government borrowing. The problem though is where Nigeria borrows from. The decline in oil prices has made it inevitable for Nigeria to borrow to finance public expenditure. However, rather than approach multilateral agencies for cheap loans, which usually come in at less than one percent interest rate, the government has chosen the expensive commercial loans principally to avoid the conditionalities and most importantly, accountability associated with multilateral loans. Consequently, the government sold bonds of $4.8 billion and $5.4 billion in 2017 and 2018

respectively and will most likely sell some more to finance this year’s budget deficit. But the federal government and the DMO have continued to rely on the low debt to GDP ratio to lull the country into a feeling of complacency that all is well whereas they have disgracefully led the country into another embarrassing debt trap. Data from the Office of the Accountant General of the Federation and the Budget Office for the period January to June 2017 indicate debt service to revenue ratio between January and June 2017 works out at about 70 percent and is set to increase to 82 percent by 2022, a figure quite high and unsustainable by global standards. It bears repeating that even as Oniha expressed preference for multilateral agencies such as the World Bank and the African Development Bank, she is clearly ruling out talking to the IMF. Sadly, Nigeria does not have a track record of judicious utilisation of loans and an IMF loan, accountability-wise, may have been the best for the country.

Bashir Ibrahim Hassan

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

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Monday 25 March 2019

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The man who would be prime minister

Too many challengers Too close to the Son

Benny Gantz must convince Israelis that he can protect them Binyamin Netanyahu is working hard to convince them otherwise

HE NEWS could not have come at a worse time for Benny Gantz, the main challenger to Binyamin Netanyahu, the prime minister. Less than four weeks before Israelis go to the polls it was reported that Mr Gantz’s telephone had been hacked by Iran and that stolen information may have included embarrassing images. While the candidate dismissed it as “political gossip”, some in his party blamed Mr Netanyahu for spreading the dirt. The prime minister shot back, “If Gantz can’t protect his phone, how will he protect the country?” Security is the overriding concern for voters in this election, which gives Mr Netanyahu an advantage. He has kept the country safe for a decade. But many Israelis dislike his divisiveness and alleged misdeeds. He faces a preliminary indictment for corruption, fraud and breach of trust. That leaves an opening for Mr Gantz, the towering, blue-eyed former chief of staff of the Israel Defence Forces. Though a political novice, his party, Blue and White, is running neck-and-neck in the polls with Mr Netanyahu’s Likud party. “The key to winning is taking the Mr Security title away from Netanyahu,” says a Gantz adviser. To do that Mr Gantz has enlisted two other former army chiefs, Gabi Ashkenazi and Moshe Yaalon, as running mates. As he launched his campaign, his party put out four videos, three of which highlight his toughness. As a general Mr Gantz led two wars in Gaza, in 2012 and 2014. The videos show neighbourhoods reduced to rubble and tally the number of “terrorists killed” and “targets destroyed”. “Parts of Gaza were returned to the stone age,” says a narrator. One clip shows footage of a leader of Hamas, the militant Islamists who run Gaza, being assassinated by a drone.

Monday 25 March 2019

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The Vision Fund needs more governance A $100bn bet has become a giant problem in transparency and accountability

L MO ST T W O years ago Masayoshi Son, a Japanese tycoon, broke all the rules of investing by setting up a new vehicle to back tech firms. The Vision Fund was unusual in several ways. Worth $100bn, it was enormous. Some $45bn of that came from Muhammad bin Salman, Saudi Arabia’s crown prince, who got the kingdom’s sovereign wealth fund to contribute. It took huge bets on trendy “unicorns”—unlisted firms worth over a billion dollars, such as Uber. And it gave almost total control to Mr Son. Many sceptics dismissed the

But those videos belie a less hawkish, more easy-going figure. When Mr Gantz commanded the elite paratroopers brigade he was nicknamed “Bennyhuta”, a play on his name and the Aramaic word meaning laid-back. Others called him “the prince” for his swift, seemingly effortless rise through the ranks. In some ways he was lucky. He was made deputy chief of staff as a compromise after the chief of staff and the defence minister failed to agree on a candidate. He became chief of staff after two other contenders were tainted by scandal. More than anything, he was seen as a safe pair of hands. “There’s no shame in striving for peace,” says Mr Gantz in the fourth ad, which seems more in keeping with his character. While bashing Gaza, he spoke of how his mother, a Holocaust survivor, told him to make sure the Palestinians got food. In meetings with Mr Netanyahu’s cabinet, while head of the armed forces, he opposed plans to attack Iran’s nuclear installations, though he did put the army on a war footing. His rivals grumbled that he achieved little yet somehow managed not to get

blamed for operational failures, such as Israel’s chaotic withdrawal from Lebanon in 2000, which Mr Gantz oversaw. Like many retired generals, Mr Gantz, whose father was prominent on the left of the Labour party, is a shade left of centre on Israel’s spectrum. “Hawkish on security, moderate on diplomacy,” as a party colleague describes him. He has privately endorsed a peace plan by the Institute for National Security Studies, a think-tank in Tel Aviv, that would increase Palestinian control of the West Bank and “build an infrastructure for a twostate solution in the long term.” His party’s manifesto is vaguer, calling for deeper separation from the Palestinians. But if he wins, he may seek to restart peace talks, cut off in 2014. That is one difference with Mr Netanyahu, who shuns the Palestinians. Another is the socalled nation-state law, which states that the right of national self-determination is “unique to the Jewish people”. Mr Netanyahu championed it. Mr Gantz wants to amend it to guarantee equal rights for all. But issues have been given

short shrift in a campaign largely about image. Mr Netanyahu brands his opponents as the “weak left”, in league with “Arab parties that oppose the Jewish state”. Mr Gantz’s slogan, “Israel before everything”, is meant to contrast his squeakyclean persona with the incumbent’s supposedly dodgy one. The tone of the contest is getting nastier. Mr Gantz has accused Mr Netanyahu of receiving 16m shekels ($4.4m) in a deal tied to the Israeli navy’s purchase of German submarines. Mr Netanyahu pushes back with the phone-hacking story. “Benny Gantz, what do the Iranians know about you that you’re hiding from us? What are the Iranians holding over you?” he asks. The race will ultimately come down to whether centrist parties, such as Blue and White, and leftwing parties, such as Labour, win more seats in total than Mr Netanyahu’s right-wing coalition. On this the polls suggest a tight race. But Mr Netanyahu has not seemed as vulnerable for years. “It would just be Benny’s luck to be there at the right moment, with Netanyahu ripe to fall,” says one of Mr Gantz’s former comrades-in-arms.

Vision Fund as a vast pot of tainted money squandered on hyped-up assets. And by October last year it looked as if they were right. The murder of Jamal Khashoggi, a journalist, cast Saudi Arabia and the fund into disrepute, while the shares of tech firms started to tank. Now, however, the Masa show is back on the road. The Khashoggi affair has receded and technology stocks have recovered. Several of the Vision Fund’s biggest investments are due to float on the stockmarket at racy prices. And Mr Son plans to raise as much as $100bn, for the Vision Fund 2 (see article). He will soon do the rounds of the world’s sovereign-wealth funds and pension giants, touting robots and artificial intelligence—and, once again, his own magic touch. These custodians of other people’s money should be on their guard. Mr Son’s relations with Saudi Arabia’s Public Investment Fund (PIF), which provided the $45bn, are reportedly strained. The reason is not the Khashoggi murder Continues on page 19

Monday 25 March 2019

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The future of big tech

Why big tech should fear Europe

To understand the future of Silicon Valley, cross the Atlantic

“

HE BIRTHDAY of a new world is at hand.” Ever since Thomas Paine penned those words in 1776, America has seen itself as the land of the new—and Europe as a continent stuck in the past. Nowhere is that truer than in the tech industry. America is home to 15 of the world’s 20 most valuable tech firms; Europe has one. Silicon Valley is where the brainiest ideas meet the smartest money. America is also where the debate rages loudly over how to tame the tech giants, so that they act in the public interest. Tech tycoons face roastings by Congress for their firms’ privacy lapses. Elizabeth Warren, a senator who is running for president in 2020, wants Facebook to be broken up. Yet if you want to understand where the world’s most powerful industry is heading, look not to Washington and California, but to Brussels and Berlin. In an inversion of the rule of thumb, while America dithers the European Union is acting. This week Google was fined $1.7bn for strangling competition in the advertising market. Europe could soon pass new digital copyright laws. Spotify has complained to the EU about Apple’s alleged antitrust abuses. And, as our briefing explains, the EU is pioneering a distinct tech doctrine that aims to give individuals control over their own information and the profits from it, and to prise open tech firms to competition. If the doctrine works, it could benefit millions of users, boost the economy and constrain tech giants that have gathered immense power without a commensurate sense of responsibility. Western regulators have had showdowns over antitrust with tech firms before, including IBM in the 1960s and Microsoft in the 1990s. But today’s giants are accused not just of capturing huge rents and stifling competition, but also of worse sins, such as destabilising democracy (through misinformation) and abusing individual rights (by invading privacy). As AI takes off, demand for information is exploding, making data a new and valuable resource. Yet vital questions remain: who controls the data? How should the profits be distributed? The only thing almost everyone can agree on is

that the person deciding cannot be Mark Zuckerberg, Facebook’s scandal-swamped boss. The idea of the EU taking the lead on these questions will seem bizarre to many executives who view it as an entrepreneurial wasteland and the spiritual home of bureaucracy. In fact, Europe has clout and new ideas. The big five tech giants, Alphabet, Amazon, Apple, Facebook and Microsoft, make on average a quarter of their sales there. And as the world’s biggest economic bloc, the EU’s standards are often copied in the emerging world. Europe’s experience of dictatorship makes it vigilant about privacy. Its regulators are less captured by lobbying than America’s and its courts have a more up-to-date view of the economy. Europe’s lack of tech firms helps it take a more objective stance. A key part of Europe’s approach is deciding what not to do. For now it has dismissed the option of capping tech firms’ profits and regulating them like utilities, which would make them stodgy, permanent monopolies. It has also rejected break-ups: thanks to network effects, one of the Facebabies or Googlettes might simply become dominant again. Instead the EU’s doctrine marries two approaches. One draws on its members’ cultures, which, for all their differences, tend to protect individual privacy. The other uses the EU’s legal powers to boost competition. The first leads to the assertion that you have sovereignty over data about you: you should have the right to access them, amend

them and determine who can use them. This is the essence of the General Data Protection Regulation (GDPR), whose principles are already being copied by many countries across the world. The next step is to allow interoperability between services, so that users can easily switch between providers, shifting to firms that offer better financial terms or treat customers more ethically. (Imagine if you could move all your friends and posts to Acebook, a firm with higher privacy standards than Facebook and which gave you a cut of its advertising revenues.) One model is a scheme in Britain called Open Banking, which lets bank customers share their data on their spending habits, regular payments and so on with other providers. A new report for Britain’s government says that tech firms must open up in the same way. Europe’s second principle is that firms cannot lock out competition. That means equal treatment for rivals who use their platforms. The EU has blocked Google from competing unfairly with shopping sites that appear in its search results or with rival browsers that use its Android operating system. A German proposal says that a dominant firm must share bulk, anonymised data with competitors, so that the economy can function properly instead of being ruled by a few data-hoarding giants. (For example, all transport firms should have access to Uber’s information about traffic patterns.) Germany has changed its laws to stop tech giants buying up scores of startups that might one day

pose a threat. Europe’s approach offers a new vision, in which consumers control their privacy and how their data are monetised. Their ability to switch creates competition that should boost choice and raise standards. The result should be an economy in which consumers are king and information and power are dispersed. It would be less cosy for the tech giants. They might have to offer a slice of their profits (the big five made $150bn last year) to their users, invest more or lose market share. The European approach has risks. It may prove hard to achieve true interoperability between firms. So far, GDPR has proved clunky. The open flow of data should not cut across the concern for privacy. Here Europe’s bureaucrats will have to rely on entrepreneurs, many of them American, to come up with answers. The other big risk is that Europe’s approach is not adopted elsewhere, and the continent becomes a tech Galapagos, cut off from the mainstream. But the big firms will be loth to split their businesses into two continental silos. And there are signs that America is turning more European on tech: California has adopted a law that is similar to GDPR. Europe is edging towards cracking the big-tech puzzle in a way that empowers consumers, not the state or secretive monopolies. If it finds the answer, Americans should not hesitate to copy it—even if that means looking to the lands their ancestors left behind.

Mar-a-Lago, massage parlours and selling... Continued from page 18

but the PIF’s (privately expressed) dismay about the Vision Fund’s governance. Looking in from the outside, the first problem is “key-man risk”. As with Prince Muhammad’s reign, Mr Son’s rule at the fund is absolute. If he views a startup as sufficiently world-changing, next to nothing will stop him betting big. His is by far the strongest voice on the Vision Fund’s three-member investment committee, which has the final say on what is bought. That is because the other two members are his employees. The PIF can veto investments only if they are for over $3bn. The second worry is the potential for conflicts of interest between the Vision Fund and SoftBank, a giant conglomerate listed in Japan that Mr Son founded and still runs. In deals where the Vision Fund’s investment process takes too long, Mr Son has in the past used SoftBank’s balance-sheet to buy stakes in young companies which are in turn transferred to the Vision Fund. Often SoftBank makes a profit, as with Didi, a Chinese ride-sharing company, which it bought for $5.9bn in 2017 and will soon transfer to the Vision Fund for $6.8bn. Very occasionally SoftBank makes a loss. SoftBank and the Vision Fund obey rules on investing and their fiduciary duties. The fund uses independent valuers, including big audit firms. And SoftBank has a big direct stake in the Vision Fund and thus an incentive to see it prosper. Nonetheless SoftBank has too much scope to manoeuvre unlisted investments in high-growth but loss-making firms. Worse is the scant disclosure on how investments are valued, or how much cash the Vision Fund’s firms are burning up. You do not need artificial intelligence to conclude that Vision Funds 1 and 2 need better governance. Both need independent boards. Bringing in a heavyweight technology executive to test Mr Son’s convictions would lessen the risk of dud deals. Transfers between SoftBank and the Vision Funds should stop. Investors must be told how positions are valued.

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Monday 25 March 2019 In Association With

An epidemic of violence

Why are Ebola clinics in Congo being attacked? Many locals distrust the state and misunderstand medicine

T DUSK ON February 27th a group of young men dressed as football players were kicking a ball around a pitch besides an Ebola treatment centre in Butembo, a city in the east of the Democratic Republic of Congo. Suddenly men with guns and machetes sprang out of the bush and handed weapons to those masquerading as footballers. Together, they charged into the centre. As the sick fled, along with health workers, the men splashed petrol around before tossing in lit matches. When nurses crept back later they found the smouldering remains of the pharmacy, archive room, handwashing station and vehicles. The province of North Kivu is no stranger to misery—it has long been home to some 120 militia groups that regularly rape and terrorise. Now it is also the site of the world’s secondlargest outbreak of Ebola, a virus that makes people gush blood from every orifice. Since being detected seven months ago, the virus has spread to nearly 1,000 people and probably killed 600. Its emergence in what is in effect a war zone makes it hard to contain. Health workers are often unable to isolate the infected, or to

vaccinate everyone who has touched them. Some villages are deemed too dangerous for vaccinators to visit. To cap it all, Ebola clinics are being attacked. In the past month alone four have been assailed. A male nurse was strangled in front of his wife. Experts from the World Health Organisation (WHO) were ambushed in their car, which was smashed up by men with sticks. A member of the team charged with burying corpses safely, so that they do not infect new victims, was slashed in the head with a machete. The attacks have prompted Méde-

cins Sans Frontières (MSF) to close a treatment centre and leave Butembo. They may also deter patients from getting treatment. Almost half of the deaths in this outbreak are occurring in villages, not clinics, suggesting many of the sick are not seeking help. “Security is still our number one concern and could reverse the gains we have made,” says the WHO. Some premeditated attacks have been blamed on Mai Mai rebels. This is such a vague term, referring to many local armed groups, that it sheds little light. Some attacks are spontaneous,

and by unknown perpetrators. What motivates them? Some, perhaps, are in search of loot. Aid workers are conspicuously richer than most locals, and present a tempting target. Another problem is that many locals see health workers as an arm of the government, which they detest. It does not help that the government keeps trying to force people into treatment centres where, since they are already sick, many die. “The response has often treated patients as a biosecurity risk, rather than as a patient with a choice about how they should manage their own illness,” says Alex Wade of MSF. The WHO says it regularly urges the government not to use force. It asks soldiers, police and UN peacekeepers to escort its staff to villages, but then stay on the periphery. This probably helps. Another problem is ignorance. Some locals think Ebola was introduced by white people who want to harvest organs. Justin Munyandele, a 24-year-old mechanic, lingering outside his garage in grubby overalls, says Ebola was brought in by the government to exterminate the Nandes, the biggest ethnic group in the region. Others say it is a fiction that was invented to prevent people

from voting in elections last year. The poll was suspended because of the outbreak in strongholds of an opposition candidate, Martin Fayulu. With hindsight health workers recognise that they should have done more to involve local people. “The response started badly,” complains a young motorbike-taxi driver in Katwa, on the edge of Butembo. “They came here with police escorts to be protected. That wouldn’t have been necessary if they had employed people from Katwa to work with them.” Progress has been made. The rate at which the infection is spreading is much slower than in the outbreak in west Africa that killed more than 11,000 people in 2013-16, possibly because of a new vaccine administered to more than 85,000 people. And efforts to fight myths about the virus are showing results. The WHO says it sees “pockets of mistrust, not a wall” and that 90% of people accept vaccination. William Perea, the incident manager for the WHO in Butembo, says that some once-hostile villages are now letting his teams in. “People are not stupid. They do not like to die like flies,” he says. To soothe tensions and keep the virus from spreading, the key is “to get as close as possible to the communities”.

Women and economics

Economics is uncovering its gender problem The dismal science has a dismal record

T THE HEART of economics is a belief in the virtues of open competition as a way of using the resources you have in the most efficient way you can. Thanks to the power of that insight, economists routinely tell politicians how to run public policy and business people how to run their firms. Yet when it comes to its own house, academic economics could do more to observe the standards it applies to the rest of the world. In particular, it recruits too few women. Also, many of those who do work in the profession say they are treated unfairly and that their talents are not fully realised. As a result, economics has fewer good ideas than it should and suffers from a skewed viewpoint. It is time for the dismal science to improve its dismal record on gender. For decades relatively few women have participated in STEM subjects: science, technology, engineering and maths. Economics belongs in this list (see article). In the United States women make up only one in seven full professors and one in three doctoral candidates. There has been too little improvement in the past 20 years. And a survey by the American Economics Association (AEA) this week shows that many women who do become academic economists are treated badly. Only 20% of women who an-

swered the AEA poll said that they are satisfied with the professional climate, compared with 40% of men. Some 48% of females said they have faced discrimination at work because of their sex, compared with 3% of male respondents. Writing about the survey results, Janet Yellen and Ben Bernanke, both former chairs of the Federal Reserve, and Olivier Blanchard, a former chief economist of the IMF, said that “many members of the profession have suffered harassment and discrimination during their careers, including both overt acts of abuse and more subtle forms of marginalisation.” To deal with its gender shortfall, economics needs two tools that it

often uses to analyse and solve problems elsewhere: its ability to crunch data and its capacity to experiment. Take data first. The AEA study is commendable, but only a fifth of its 45,000 present and past members replied to its poll. More work is needed to establish why women are discouraged from becoming economists, or drop out, or are denied promotion. More benchmarking is needed against other professions where women thrive. Better data are needed to capture how work by female economists is discriminated against. There is some evidence, for example, that they are held to higher standards than men in peer reviews and that they are given less credit for

their co-writing than men. And economics needs to study how a lack of women skews its scholarly priorities, creating an intellectual opportunity cost. For instance, do economists obsess more about labour-market conditions for men than for women? The more comprehensive the picture that emerges, the sooner and more easily action can be taken to change recruitment and to reform professional life. The other priority is for economists to experiment with new ideas, as the AEA is recommending. For a discipline that values dynamism, academic economics is often conservative, sticking with teaching methods, hiring procedures and social conventions that have been around for decades. The AEA survey reveals myriad subtle ways in which those who responded feel uncomfortable. For example 46% of women have not asked a question or presented an idea at conferences for fear of being treated unfairly, compared with 18% of men. Innovation is overdue. Seminars could be organised to ensure that all speakers get a fair chance. Job interviews need not typically happen in hotel rooms, a practice that men regard as harmless but which makes some women uncomfortable. The way that authors’ names are presented on papers could ensure that it is clear who has done the intellectual

heavy lifting. Instead of moving cautiously, the economics profession should do what it is best at: recognise there is a problem, measure it objectively and find solutions. If the result is more women in economics who are treated better, there will be more competition for ideas and a more efficient use of a scarce resource. What economist could possibly object to that?

Monday 25 March 2019

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Monday 25 March 2019

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Monday 25 March 2019

PZ, Okomu, Presco need more than cheap funds, inputs to survive Odinaka Anudu

a l m o i l ma kers, including PZ Wilmar, Okomu Oil Palm Company, Presco Plc and other players in the industry, need more than money and inputs to stay afloat. Last week, the Central Bank of Nigeria (CBN) held a meeting with governors of Abia, Akwa Ibom and Edo, as well as with chief executives of major firms on how to move the neglected industry forward. Godwin Emefiele, CBN governor, promised to provide funds at not more than nine percent per annum to identified core borrowers. He also said as part of the apex bank’s Anchor Borrowers Programme and its Commercial Agriculture Credit Scheme, the bank would work with large corporate stakeholders and smallholder farmers to ensure availability of quality seeds for this year’s planting season and agro-chemicals

in order to improve cultivation of palm oil. A chief executive of a palm oil milling plant commended the CBN for recognising the importance of the crop, which he claimed contributed more to the

economy than rice. Onyekachi Oguchi, a small-scale palm oil miller in Umuagwo, Imo State, said it was a sigh of relief for players in the value chain, adding that such funding would help them have more

High expectations as Adeboye becomes Cadbury Nigeria MD

adbury Nigeria Plc has appointed Oyeyimika Adeboye as the new managing director, effective 1st April, 2019. Adeboye takes over from Amir Shamsi, who moves on to a new role within Mondelez International, the parent company of Cadbury Nigeria. Adeboye is the first woman to be appointed managing director since the establishment of Cadbury Nigeria over five decades ago. Market watchers say she will bring her experience to bear and revivify Cadbury in a way that the company generates more revenue and profits as well as better returns for all stakeholders. Key to this is product diversification which will enable the beverage maker to meet expectations, experts say. A chartered accountant, she joined the board of the company in November 2008 as finance and strategy director, West Africa. During his tenure as managing director, Shamsi made invaluable contributions to the turnaround of the business, and drove Cadbury’s growth agenda with respect

to top-line, bottom-line, and talent. “Mrs. Adeboye’s appointment attests to the company’s commitment to promoting gender equality, diversity and inclusion,” a statement from Cadbury Nigeria said. Prior to joining Cadbury Nigeria, Adeboye was the director of finance and chief financial officer of Nigerian Bottling Company Plc. She previously worked at Arthur Andersen & Co as well as the United Kingdom-based Midgley Snelling & Co. Adeboye has an impressive track record in finance, strategy and business administration both in Nigeria and the United Kingdom. She is a fellow of the Institute of Chartered Accountants in

Oyeyimika Adeboye

England and Wales and a member of the Institute of Chartered Accountants in Nigeria. She has a Bachelor of Science honours degree in Economics and Social Studies from the University College Cardiff, Wales, and executive management education certification from the Institute of Management Development (IMD), Lausanne, Switzerland. Also, Ogaga Ologe, who is the company’s financial controller, has been appointed as the new finance director. Ologe, who succeeds Adeboye, joined Cadbury Nigeria in 2012, from KPMG Professional Services where he led the audit of the financial statements for many multinationals. He holds a Bachelor of Science honours degree in Physics from Delta State University, Abraka. He is a qualified chartered accountant from the Institute of Chartered Accountants in Nigeria (ICAN). Cadbury Nigeria Plc, a publicly quoted company, is the pioneer cocoa beverage manufacturer offering some of the most loved brands in the country.

plantations and expand their mills. However, the big elephant in the room is smuggling of cheap and substandard palm oil into Nigeria through Kano, say players. Market watchers say this

is not within the CBN’s purview, but the Customs, the police and Ministry of Industry, Trade and Investment. “CBN may do its part, but the biggest challenge is the market,” Ike Ibeabuchi, managing director of MD

Services Limited, a services and chemical manufacturing outfit, said. “If you give me money and seeds and I produce without selling, I may struggle to pay you back,” he added, urging the authorities to protect the borders and save the industry. In an earlier interview, Santosh Pillai, managing director, PZ Wilmar, had said that Nigerian supermarkets and traditional markets sold huge chunks of imported oil banned in the country. “The current policies are only aiding cross-border trade and smuggling. The leading domestic refineries in Nigeria are facing a crisis and many in the country are not operational,” he said. International data show that palm oil worth 400,000 tonnes per annum are smuggled into the country annually. Romanus Oguegbu, managing director of a palm oil mill in Uburu, a community in Imo State, said, “Many of my customers are buying smuggled products, which are cheaper but have health implications.”

MAN sees job losses if VAT is raised ODINAKA ANUDU

he Manufacturers Association of Nigeria (MAN) says any increase in the Value-Added Tax ( VAT) will have a negative consequence on the production capacities of factories, resulting in job losses. The association explains that it will lower the purchasing power of consumers. MAN is reacting to a recent report which gave an inkling that the government might be planning to increase VAT by 50 percent. A statement signed by Segun Ajayi-Kadir, director-general of MAN, says though this report has been denied by relevant authorities, the association still wishes to warn that such a policy is not manufacturing-friendly as the proposed increase appears not to have taken into cognisance the prevailing times and the ongoing government efforts to reinvigorate the economy. The association explains

that raising VAT will sharply reduce consumption, cut sales, lower government revenue,increase unemployment and stifle economic growth. “No controversy, the burden of the tax would be shifted to the Nigerian consumers that are already struggling. The economy would certainly experience demand crunch, inventory of unsold items would soar; profitability of manufacturing concerns would be negatively impacted; many factories will witness serious downturn or wind down operations,” the statement says. M A N s ay s t hat su c h an increase could send a wrong signal that the government is not sensitive to the plight of the low- and middle-income earners, who are clearly in the majority, as citizens will liken it to a case of government taking back what it gave through the National Minimum Wage. “This would also worsen the already high unemployment position of the

country which is above 23 percent as Nigerians currently employed by manufacturing concerns and other businesses may join the reserved army of unemployed and further bloat the unemployment rate in the country,” it says. The association says it acknowledges that the government needs huge revenue to fund developmental projects, but advises the authorities to tread with caution in the drive for improved revenue. “The economy just recently exited recession with the fragile growth rate of less than two percent recorded in 2018 and should be delicately managed,” MAN admonishes. MAN says a cross-reference of Nigeria, Turkey, Malaysia, China and South Africa shows that though Nigeria’s VAT is comparatively low, it also lags others on per capita income, national minimum wage and global competitiveness. MAN advises the government not to raise VAT but widen the tax net

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real sector watch

NB’s solar-powered brewery to lower production costs, create jobs ODINAKA ANUDU

igerian Breweries Plc (NB) and CrossBoundary Energy last week announced the signing of Heineken’s first solar project in Africa. With the agreement, CrossBoundary Energy will be installing and operating a 650 kW solar plant located at NB’s Ibadan Brewery. The solar energy plant will become operational this year. It is a fully-financed solar Power Purchase Agreement for a major Nigerian business customer. CrossBoundary Energy will operate the rooftop facility on behalf of Nigerian Breweries as part of a 15-year solar services agreement. Under the agreement, NB will only pay for solar power produced, receiving a single monthly bill that incorporates all maintenance, monitoring, insurance and financing

L-R: Uaboi Agbebaku, company secretary/legal director, Nigerian Breweries (NB) Plc; Femi Fadugba, head of business development, CrossBoundary Energy Nigeria Ltd; Martin Kochl, supply chain director, NB Plc, and Sade Morgan, corporate affairs director, NB Plc, at the signing of a power agreement with CrossBoundary in Lagos recently

costs. The solar plant will supply 1GWh annually to the Ibadan brewery at a significant discount to their current cost of power, while reducing the site’s CO2 emissions by over 10,000

tonnes over the lifespan of the plant. This means it will cut the overall operational/ production cost. “We are delighted to be a pioneer in the adoption of solar energy in Nigeria,” Jordi Borrut Bel, manag-

ing director of Nigerian Breweries Plc, said. “The solar plant will help power our world-class brewery in Ibadan, enabling us to deliver on commitments under our ‘Brewing a Better World’ initiatives and sup-

Meyer eyes higher productivity with Management Graduate Training Programme …focuses on new manufacturing technology ODINAKA ANUDU

aint maker, Meyer Plc, is targeting higher productivity and bigger returns with its recently launched Management Graduate Training Programme (MGTP) which began in January 2019. With eye on reducing unemployment in the country and satisfying the demand for quality paint, the company has announced successful graduates from its Class 1 Batch of the training programme. Erelu Angela Adebayo, chairman, board governance committee, said that the training initiative was in line with the company’s determination to deliver the expectations of its esteemed stakeholders. “At Meyer Plc, we are determined to be the industry leader in the provision of cutting-edge services that make business transactions seamless for our customers,” Adebayo said. “Our Management Training Programme is one of the initiatives established to promote employment opportunities for fresh graduates from universities and polytechnics. Over 50 candidates were shortlisted for the MGTP. After a rigorous selection process, which was coordinated by a

reputable and well-known consulting firm, we are glad to announce Meyer Management Training Programme Class 1 which comprises fifteen (15) successful graduates,” she explained. She said Meyer Plc was a prestigious brand, known as a good place to build an enduring career, adding that to sustain this position, the company decided to overhaul its recruitment process to attract the brightest minds among Nigerian youths. Speaking with journalists in Lagos, Kayode Falowo, chairman, board of directors, announced the appointment of Devashish Nath as the new managing director of the company. He said the new

MD would be presented for ratification at the next annual general meeting. “His experience as an astute business and quality assurance expert, conversant with the state-ofthe-art decorative and auto finish paint industry, spans over 26 years,” he said. Prior to his appointment, he was a general manager at Berger Paints India Limited. “The board is confident that Devashish, leading our management team, will bring to bear his vast wealth of experience in the industry and the fortunes of the company will be impacted positively in the near and long term,” Falowo said. He said to build a virile 21st century manufacturing company, leadership was critical

L-R: Toyin Okeowo, director, Meyer Plc; Devashish Nath, managing director; Kayode Falowo, chairman, board of directors, and Tony Uponi, director at the company, at the Meyer Plc Management Graduate Training Programme press conference held in Lagos recently

and human capacity would often make a lot of difference. He said the company would want to turn the training programme into an academy at some point in the future. “We have just done the first badge comprising 15 persons. We hope it will get to 30,” he said, stressing that it was a conscious investment by Meyer. He explained that there were specifications for the training, including being a young person below 26 years; graduating from specific courses such as Economics, Accounting, Microbiology and Chemical Engineering, among other professional disciplines; and coming from top-notch universities in the country. He further explained that Meyer sourced most of its raw materials from local companies, stating that the paint maker was embracing new manufacturing technology to cut costs and grow bigger. Habeebullah Bisiriyu, one of the management trainees, said he was able to acquire interpersonal and listening skills as well as cultural diversity, from the training. On her part, Adesola Adedinsowo, another trainee, said she became part of Meyer Plc because it was already an established firm and was not regimented.

porting Heineken’s global ‘Drop the C’ programme for renewable energy.” Heineken’s ‘Drop the C programme’ for renewable energy aims to grow its share of production-related energy sourced from renewables from the current level of 14 to 70 percent by 2030. “NB’s Brewing a Better World initiative has further targeted a 40 percent reduction in CO2 emissions by 2030,” said Martin Kochl, supply chain director, Nigerian Breweries Plc. Femi Fadugba, head of business development for CrossBoundary Energy said: “We’re excited to be helping Nigerian Breweries go solar and to be providing the site with cleaner, cheaper power with no upfront investment or technical risk. I’m also proud that this flagship project – the first of its kind in Nigeria – will be launched in my family’s hometown of Ibadan.” CrossBoundary Energy has commissioned TPN to

design and build the plant as well as perform operations and maintenance immediately after commissioning. Ruud van Milligen, general manager for TPN said: “We are grateful that we, as an energy solutions partner for Nigerian Breweries, and CrossBoundary Energy, can contribute to the renewable goals of Nigerian Breweries with our custom-made energy solutions and best-in-class operations and maintenance operations.” The plant will support the local employment of at least a dozen engineering, construction and maintenance professionals during installation and the 25+ year lifetime of the system, while helping the Nigerian Electricity Regulatory Commission’s (NERC) hit its target of having 2,000MW of power capacity from renewables by 2020, a statement signed by Sade Morgan, corporate affairs director, NB, said.

Promoting manufacturing through improved transport infrastructure Gbemi Faminu

nfrastructure is critical to manufacturers. A good transport infrastructure helps to reduce logistics costs and supports efficient delivery of products from factory to the market. Babatunde Fashola, minister for power, works and housing, said at a recent training session in Lagos that infrastructure was beyond buildings and constructions, being one of the parameters that defined the status of a nation. Nigeria’s manufacturers complain severely about the challenges faced in the transport sector, ranging from increased logistics costs, high cost of production and common cases of losses, especially in incidences of accidents and thefts. Babatunde Ruwase, president of the Lagos Chamber of Commerce and Industry (LCCI), recently said infrastructure deficit was creating problems for business owners, adding that a functional and modern rail network would facilitate movement of people and goods while reducing the cost of transportation and total cost of production. According to the Nigeria infrastructure report for 2017,

budgetary allocations for the transport sector was N19.5 billion in 2015, N424.27 billion and N365.1 billion in 2016 and 2017 respectively. At the just concluded Manufacturing &Equipment Expo, Francis Meshioye, executive director, JMG Limited, argued that adequate transport infrastructure would lead to high employment rate, faster and competitive market reach, high income level, as well as wider reach and connectivity. He advised the government to make huge investments in the transport sector as it would reflect on the other sectors of the economy. Mansur Ahmed, president, Manufacturers Association of Nigeria (MAN), said transport was critical to the manufacturing value chain. He said elimination of transport deficit would reduce cost of delivery of products by 30 to 40 percent, adding that use of rail transport would eliminate overdependence on road transport. Paul Gbededo, group managing director, Flour Mills of Nigeria, said private companies could form collaboration and support government to provide infrastructure. He added that seaports were underutilised while rails should be well maintained and structured for use.

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Monday 25 March 2019

Live @ The Exchanges Market Statistics as at Friday 22 March 2019

Top Gainers/Losers as at Friday 22 March 2019 LOSERS

GAINERS Company

Company

Opening

Closing

Change

INTBREW

N24.05

N26

1.95

DANGCEM

N188.1

N189.7

1.6

CADBURY

GUARANTY

N36.15

N37.5

1.35

OKOMUOIL

Opening

Closing

Change

N200

N196

-4

N11

N9.9

-1.1

OTAL

CCNN

N20

N20.9

0.9

NASCON

STANBIC

N45

N45.5

0.5

N80

N79

-1

N20.9

N20

-0.9

N11.25

N10.5

-0.75

ASI (Points)

31,139.35

DEALS (Numbers) VOLUME (Numbers)

3,253.00 231,234,377.00

VALUE (N billion) MARKET CAP (N Trn)

2.616 10.713

Global market indicators FTSE 100 Index 7,198.01GBP -157.30-2.14% S&P 500 Index 2,811.03USD -43.85-1.54% Generic 1st ‘DM’ Future 25,600.00USD -411.00-1.58%

Deutsche Boerse AG German Stock Index DAX 11,385.41EUR -164.55-1.42% Nikkei 225 21,627.34JPY +18.42+0.09% Shanghai Stock Exchange Composite Index 3,104.15CNY +2.69+0.09%

Stock market sees significant increase in foreign outflows …foreign transactions decline by N320bn in 4 years Stories by Iheanyi Nwachukwu

igeria’s stock market rec o r d e d sig nificant increase in the level of foreign outflows, which increased by 97.80percent from N27.81billion in January to N55.01billion in the trading month ended February 28, 2019. This level is against foreign inflows which increased by 91.24percent from N22.97billion to N43.93billion between January and February 2019. According to the Nigerian Stock Exchange (NSE) in its recently released report on domestic and foreign portfolio participation in equity trading, the total transactions at the Nigerian bourse in the review month increased by 54.06percent, from N122.08billion recorded in January 2019 to N188.08billion (which represents about $613.9million) in February 2019. The total transactions seen in the month of February 2019 when compared to that of February 2018 reveals a decline by 11.30percent year-on-year (yoy). The record total trans-

actions were executed by domestic and foreign investors, with domestic investors further categorised into retail and institutional investors. As at February 2019, the total value of transactions executed by foreign investors outperformed those executed by domestic investors by 6percent. The transactions executed between the review month of February and prior month (January 2019) revealed that total foreign transactions increased by 48percent, from N66.85billion in January 2019 to N98.94 billion in February 2019. Analysis of domestic transactions show that the value of the total transactions executed in the domestic market by insti-

tutional investors’ outperformed retail investors by 8percent. When compared to prior month of January 2019 transactions, it reveals that the total retail transactions increased by 38.26percent, from N29.66billion in January 2019 to N41.01billion in February 2019. The institutional composition of the domestic market also increased significantly by 88.15percent, from N25.58billion in January 2019 to N48.13billion in February 2019. This indicates a higher participation by institutional investors’ over their retail counterparts in February 2019. The Nigerian Stock Exchange’s domestic and foreign portfolio investment report is prepared on a

monthly basis, with trading figures from market operators on their domestic and Foreign Portfolio Investment (FPI) flows. These transactions are carried out by Domestic and Foreign investors. The foreign and domestic transactions trend shown in the report highlights the performance of the market over the last decade. Between 2011 and 2015, foreign transactions consistently outperformed domestic transactions. However, domestic transactions marginally outperformed foreign transactions in 2016 and 2017, and remained almost at par in 2018. Foreign transactions which stood at N1.539trillion in 2014 declined to N1.219trillion in 2018, representing N320billion decrease. Over the twelve (12) year period, domestic transactions decreased by 66.68percent or N2.37trillion, from N3.556trillion in 2007 to N1.185trillion in 2018. Total foreign transactions accounted for about 51percent of the total transactions carried out in 2018, whilst domestic transactions accounted for about 49percent of the total transactions in the same period.

Stock market records 0.01% week-on-week decline

eek-onweek (wow), the Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation depreciated by 0.01percent to close the week ended March 22 at 31,139.35 points and N11.612trillion respectively. Summary of price changes showed 32 equities appreciated in price during the review week, higher than 18 in the preceding week. Thirty-eight

(38) equities depreciated in price, lower than 45 equities recorded in the preceding week, while 98 equities remained unchanged lower than 105 equities recorded in the preceding week. All other indices finished lower with the exception of the NSE CG, NSE Premium, NSE ASeM, NSE Banking, NSE-AFR Bank Value, NSE AFR Div Yield, NSE Industrial Goods and NSE Pension indices which appreciated by 0.66percent,

0.27percent, 0.55percent, 3.82percent, 4.76percent, 2.97percent, 2.42percent and 0.71percent respectively. The market recorded total turnover of 1.198 billion shares worth N12.273 billion in 18,293 deals in contrast to a total of 1.113 billion shares valued at N13.465 billion that exchanged hands the preceding week in 15,036 deals. The Financial Services Industry (measured by volume) led the activ-

ity chart with 1.014 billion shares valued at N9.693 billion traded in 12,165 deals; thus contributing 84.63percent and 78.98percent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 58.049million shares worth N1.398 billion in 2,689 deals. The third place was Conglomerates Industry with a turnover of 46.272 million shares worth N103.316 million in 626 deals.

SEC says 2019 interesting for Nigerian capital market …to introduce rules on derivatives trading amid other initiatives

he Securities and Exchange Commission (SEC) said that the year 2019 promises to be an interesting one for the Nigerian capital market, “as we shall undertake a review of the 10-year Nigerian Capital Market Master Plan.” “This review is intended to align the master-plan with current realities on macroeconomic, political and market development fronts,” according to Mary Uduk, acting Director General, SEC at the first-quarter capital market committee meeting held last week in Lagos. She noted that the Commission has approved the rules on Green Bonds, and would in the nearest future introduce the rules on derivatives trading. “We believe all these are necessary to move our sector forward”, Uduk added. Last week stood out as a memorable one in the Nigerian capital market as it witnessed the Commission hosting its 1st Awards Night on Tuesday, March 19, 2019, themed committed partnership: capital market and economic development, where individuals who have partnered with the Commission to work in various Technical Committees towards achieving the initiatives in the SEC 10-year Capital Market Masterplan were recognized. “We equally had the 3rd in the series of our Budget Seminar where the roles of the capital market in effective budget implementation were discussed”, SEC acting DG added. Discussions at the first quarter Capital Market Committee (CMC) meeting fea-

tured updates, presentations from technical committees, Self-Regulatory Organisations (SROs) and observer groups on various capital market activities. The discussions and resolutions at the meeting include: the Commission has made progress in attempting to resolve the issues around transmission of shares related to the estate of deceased investors. This process has commenced with the Lagos State Probate Registry and the Commission, with the support of relevant stakeholders, shall carry out an engagement/enlightenment programme for the probate registry. The Commission will direct Public Companies to grant its representatives and Registrars at AGM Meetings, to address shareholders on the benefits of distributing annual reports electronically The Financial Literacy Technical Committee has developed and included financial literacy contents on dedicated web pages on the SEC website. We encourage investors to utilize these pages to learn more about the capital market. The discussions and resolutions at the meeting also included that as part of efforts to ensure successful implementation of the complaints management framework, the Commission ensured that all Trade Groups are duly registered. The Commission is therefore working on institutionalising periodic meetings with the Heads of Trade Groups to define their roles and address their challenges.

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COMPANIES & MARKETS

BUSINESS DAY

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Zola electric, Sterling Bank sign agreement to provide Nigerians 24 hour power Pg. 29

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

CONSUMER GOODS

Cadbury stock mirrors market inefficiency as price dip 10% despite impressive earnings DAVID IBIDAPO

he earnings season so far as failed to boost market performance as companies with impressive 2018 results and strong fundamentals have gotten trapped in investor’s irrational responses to the season, failing to reflect performance based on fundamentals. Cadbury not an exception dipped 10 percent to N9.90 as at the close of trading on Friday, after closing flat the previous day, underperforming the consumer staple sector despite impressive earnings report released the previous day. Cadbury recorded a whooping loss in value of N2.068 billion on Friday as market capitalization stood at N18.594 billion at the close of trading. This is however despite a second consecutive record and growth in profit after tax (PAT) since loss recorded in 2016, one would expect the bulls having upper hand than the bears on Cadbury stocks. ‘‘Investors are probably not confident in the sustainability of performance by Cadbury,’’ Gbolahan Ologunro, equity analyst

at CSL Stockbrokers. In consideration of the dividend yield on the stock, Ologunro explained that, ‘‘dividend yield on the stock is about 2.53 percent which is far below the market average of about 5 percent.’’ This he regards as a major drawback for investors who are looking for cash flows from dividend payments. Share price of Cadbury Plc rose 9.09 percent to N12 from N11 on investors’ response to impressive result released by the consumer goods firm in the early hours of Thursday; however gains reversed to N11 despite a significant increase in earnings for the period ended 2018. “Intense bargain hunting in the early hours of the day drove prices up,” Gbolahan Ologunro, equity analyst at CSL Stockbrokers explained, more so, “bears return into the market as profit takers cash in on opportunity as prices has long hovered around N10 and N11.” Since July 2018, share price of Cadbur y had moved between N10 and N11, while at points when prices hit N12, profit taking at that point causes a reversal in price. Cadbury recorded a surge in profit after tax (PAT) by 174 percent year

on year in 2018 as shown in its full year financial report released on the Nigerian stock exchange (NSE) on Thursday. Profit for the year ended 2018 stood at N823.08 million against N299.99 million recorded in the previous year. Meanwhile profit before tax (PBT) grew significantly by 249 percent to N1.22 billion from N350 million recorded in 2017. This was largely driven

by a 9 percent growth in revenue for the period under review to N35.97 billion from N33.07 billion in 2017. According to report, revenue growth was driven by a significant growth in export sales revenue by 33.68 percent to N4.93 billion from N3.69 billion, although larger chunk of revenue is realised from domestic sales. However, domestic sales for the pe-

riod grew marginally by 5.6 percent to settle at N31.03 billion from N29.38 billion in 2017. Recorded growth in revenue in 2018 however was a slowdown by 1 percent compared to 10 percent growth recorded in 2017 from 2016. In the last five years, Cadbury had grown its revenue at an average annual growth rate of 3 percent. In 2018 however, Cad-

bury recorded its highest revenue in the last five years. Since 2015, Cadbury had struggled to record a PAT of N1 billion as earnings entered the million zone after company recorded a loss after tax of N296.4 million in 2016. Our analysis shows that in the last 5 years, Cadbury plc has recorded an average annual growth rate of -17 percent; hence performance in the last 5 years has not been impressive. Analysis of a 5 year trend has shown that stock price of Cadbury is down 85.89 percent. Year to date analysis of Cadbury plc shows that stock is down 1 percent outperforming the consumer goods index which is down by about 6 percent YTD. Consider ing where Cadbury is coming from and future growth prospect in earnings, ‘‘prospect aren’t looking too bright when we compare them to the likes of Nestle and Unilever in the FMCG space,’’ Ologunro explained. Cadbury tend to have a more narrow product range and given current weak consumer spending, higher operating cost, ‘‘investors’ confidence on earnings prospect is bleak.’’ He concluded

TECHNOLOGY

Farmcrowdy secures $1m additional seed funding in expansion push …to focus more on drone utilisation, 3D mapping TEMITAYO AYETOTO

armcrowdy, Nigeria’s first digital agricultural platform which makes investment possible for proxy farmers has secured an additional seed funding of $1 million in its expansion push. This follows the company’s initial investments of $1 million in 2017. Foreign investors Cox Enterprises and Techstars, along with local investor Ajayi Solutions participated in the round as the start-up prepares for an upcoming Series A fundraising later in the year, a statement made available to BusinessDay said. The investment is expected to enable Farmcrowdy expand across Nigeria, covering 50 percent of all states in the country over the next 12 months. Onyeka Akumah, founder

and chief executive officer Farmcrowdy says the firm will now delve into the possibility of utilising drone services for field analysis, improve farmers yield with additional research and 3D mapping, as well as entering into formidable strategic partnerships that will grow the impact of its solutions. Access of financing is one of the top challenges confronting most smallholder Nigerian farmers, who are unable to mechanise agronomic activities, gain access to improved seed, efficient market linkage and stay competitive. But the digitisation of investment pooling for farming purpose has broadened their financing options, enabling farmers to reach funds outside harsh bank lending conditions. “Today’s announcement of

this additional funding marks another milestone for us as we amplify our presence in the country and explore new opportunities,” Akumah said. “We’re continually grateful that we have a group of investors who share and support our vision as much as we do. It is a great source of motivation for the entire team as we look to the next phase of growth as a company.” Cody Simms, a partner at Techstars which did a followon investment in this round said, expressed optimism about Farmcrowdy’s ability to deliver on the mandate of ending poverty in Africa, using a one-farmer-at-a-time model. “We first invested in the company in 2017 as part of Techstars Atlanta in partnership with Cox Enterprises. We are excited about the con-

tinued growth of the Farmcrowdy platform and thrilled to continue our support of the business with the most recent financing,” Simms said. In its bid to improve the management of Farmcrowdy’s farmers and farm operations, the start-up has also launched the Farmcrowdy TFS App, available to its Technical Field Specialists. This is expected to aid better profiling for farmers, management of inventory, as well as data collection and analysis from existing farmers. The firm’s transformation efforts also includes upgrading of its mobile app to optimise user’s experience which currently has over 90,000 users and farm followers. Since 2016, Farmcrowdy has empowered over 12,000 farmers across 14 states in

the Nigeria, reared close to 2,000,000 broiler birds as part of its poultry farm cycles and cultivated over 16,000 acres of farmland with over 35,000 farm units sold to date. With farm sponsors in

Edited by LOLADE AKINMURELE (loladeakinmurele@gmail.com) Graphics: David Ogar

Nigeria and across the diaspora, Farmcrowdy is effectively growing a community model that is set to continue the empowerment of local farmers and facilitate food production in Nigeria.

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Monday 25 March 2019

COMPANIES & MARKETS MARKET

Domestic transactions at the Lagos bourse slump 66% in 12 years …. as total transactions grew 54% in February 2019 ISRAEL ODUBOLA

omestic transactions at the Lagos bourse plunged 66.68 percent to N1.18 trillion in 2018 compared with N3.56 trillion recorded in 2007, the Nigerian Stock Exchange’s Domestic & Foreign Investment Portfolio Report has showed. Meanwhile, total transactions executed by domestic and foreign investors at the Customs Street at the end of February 2019 amounted to N188.08 billion, indicating a 54.06 percent increase over N122.08 billion reported in the previous month. Foreign and domestic investors executed transactions worth N99.68 billion and N88.4 billion respectively, with the former outperforming the latter by 6 percent. Analysis of the report revealed that the nation’s bourse recorded total inflows worth N89.14 billion in February, in which 54.06 percent came from domestic investors and the other 45.54 percent from foreign investors.

Total outflows from the bourse in February stood at N99.15 billion, N10.1 billion higher than total inflows. Domestic and foreign investors contributed 44.31 percent and 55.69 percent to total outflows in the review month. Foreign inflows nearly doubled in February, as it grew 91.24 percent to N43.93 billion compared with N22.97 billion in the preceding month. Also, foreign inflows spiked 97.80 percent to N55.01 billion compared with N27.81 billion in January. Further analysis showed that institutional investors outperformed their retail counterparts by 8 percent as they accounted for 54 percent of domestic transactions at the local bourse. Transactions undertaken by institutional and retail investors stood by N48.13 billion and N41.01 billion respectively, indicating 88.15 percent and 38.26 percent rise over N25.58 billion and N29.66 billion reported in January 2019 Domestic transactions

quadrupled foreign transactions between 2007 and 2011, with the former accounting for 80 percent of total transactions during the period. The Exchange recorded a total transaction of N9.22 trillion between 2011 and 2015, while the share of foreign and domestic transactions stood at 57 percent & 43 percent respectively. Between 2016 and 2018, the Lagos bourse recorded cumulative transactions worth N6.08 trillion, with 52 percent from domestic transactions and 48 percent are foreign-related. At the close of Friday’s business, the benchmark index notched up by 83 basis points to end its six-day losing streak, and dip 0.01 percent week-on-week and 0.92 percent year-to-date. Industrial sector (+1.72%) emerged the best performer, trailed by insurance (+1.46%) and banking (+1.37%), only oil & gas (-0.36%) ended the day’s trading in red territory. International Breweries emerged the top-performing stock with N1.95 gain after

MARKET

Expert calls for financial literacy to improve the Capital Market pecially as it concerns colle ctive investment he Managing Di- schemes. rector, PAC Asset While commenting on Management Lim- the impact of PACAM on ited (PACAM), Mr. Dele the financial market, Dele Ige has called for greater expressed that PACAM financial literacy to help has consistently provided boost growth in the Nige- different funds for the rian capital market. benefit of investors. ‘‘The role of financial ‘‘S i n c e 2 0 1 2 , w h e n literacy in powering the we got our license to do capital market cannot be Funds and Portfolio Manover emphasized,’’ Ige ex- agement from SEC, we plained, during the sign- had introduced 3 funds, ing ceremony of PAC As- namely; PACAM Balance set Management Limited Fund in 2015 and PA(PACAM), Equity Fund CAM Money Market Fund and PAC Asset Manage- alongside PACAM Fixed ment Limited (PACAM), Income Fund in 2016,’’ he Eurobond Fund in Lagos. explained. He further explained The PACAM Balanced that, “It is important that Fund, for example, from more and more investors inception till date has reare knowledgeable about turned about 50 percent to opportunities in the capi- investors, so people who tal market to enable them invested N1m at introbecome better positioned duction now enjoy a net to make informed invest- worth of N1.50m today, ment decisions.’’ in a similar vein the fixed This therefore stresses income fund has also rethe need for more aware- turned about 25 percent ness about the capital to investors since its inmarket for retail investors troduction. to evaluate the choices PACAM introduced adavailable to them, es- ditional funds into the DAVID IBIDAPO

market, PACAM Equity Fund and PACAM Eurobond Fund; the two funds serving different concerns in the market. For instance the equity fund is said to solve the need for professional investment management for investors seeking stock market exposure whereas the Eurobond markets provides an outlet for investors to hedge against forex volatility and earn superior returns on their forex stock. The funds will cater to both retail and large investors. The introduction of the new funds will take our number of funds to five in total” he added. PAC Asset Management, a PanAfrican Capital Holdings Company, has used technology to drive awareness about its various financial markets’ products, participants and processes which is crucial for the development of any country’s economy and is essential especially for Nigeria’s emergence as a top 20 global economy by the year 2020.

L-R: Bolorunduro Saliu, head, life retail business; Olubunmi Adeleye, head, corporate services; Tinashe Muyambo, general manager, life business, and Oluwafemi Adebayo, head, sales and distribution, life business, all of Leadway Assurance Company Limited, during the unveiling of the ‘See-finish Campaign’ for the launch of the Leadway Family Benefit Plan Plus in Lagos. Pic by Olawale Amoo

Friday’s session. The advancers table also featured Dangote Cement, Guaranty Trust Bank, CCNN and Stanbic IBTC with N1.6, N1.35, N0.9 and N0.5 gains respectively. The laggards table was

topped by two oil firms – Total and Forte with N4 and N2.15 losses respectively. Tier-lenders - Access, Zenith, GTB and UBA, and Sterling led the activity chart on Friday as 153.9 million shares

worth N1.86 billion were transacted on Friday. These five stocks contributed 67% and 71% to the total equity turnover volume and value respectively after the day’s trading.

Monday 25 March 2019

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COMPANIES & MARKETS ENERGY

Zola electric, Sterling Bank sign agreement to provide Nigerians 24 hour power KELECHI EWUZIE

eading distributed renewable energy brand in Africa, ZOLA Electric and Sterling Bank Plc, a most financial institution in Nigeria have signed a memorandum of understanding that will see the renewable energy company provides an opportunity for more Nigerians to enjoy reliable 24-hour power supply with ZOLA’s power solutions via loans from the bank. Bill Lenihan, chief executive officer, ZOLA Electric speaking shortly after the signing of Memorandum of Understanding between the company and Sterling Bank in Lagos said this would provide opportunity for households and organisations who are desirous of reliable 24 power supply to own its unique power solutions. Lenihan explained that the MOU was a significant step in the right direction in view of the energy access crisis confronting Nigeria, which has seriously

stalled economic growth, resulted in health hazard as well as climatic challenges to the environment. Abubakar Suleiman, Chief Executive of Sterling Bank Plc, stated that the bank considers the MOU as a significant step towards finding lasting solution to one of the major challenges affecting economic growth in Nigeria, explaining that it would go a long way to facilitate easy acquisition of the solutions by Nigerians who are fed up with power supply crisis from both the national grid and other energy sources. “I think the problem of energy crisis in Nigeria is not a problem a state government or company can deal with. I think it is a crisis that has had a massive impact on every person that does business in Nigeria. If we don’t solve for power, we cannot solve for economic growth. If we don’t solve for power, we cannot solve for employment and have any chance of solving for security. It is one of the big problems of our time”

“We are not expected to solve for power in everyone’s home but have to find a model that is viable that solve for power in Nigeria. We like to call ourselves as being on ground zero to solve for power”, he said. In his welcome address at the event held at Four point by Sheraton, Lagos, Abdallah Khamis, managing director, ZOLA Electric Nigeria, opines that the company remains the No.1 power solutions pioneer, successfully delivering clean, affordable and reliable power solutions across Africa with success stories in Tanzania, Rwanda, Côte d’Ivoire, and Ghana. “We are super delighted to bring our clean, affordable and reliable 24 power solutions available to Nigerian homes, business and organizations. And while financing has been identified as one of the key limitations for consumers to acquire renewable power solutions, we have can now offer through this MOU with Sterling Bank, product financing to interested customers.”

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BUSINESS DAY

Business Event

Abdul Samad Rabiu, executive chairman/CEO of BUA Group (r), and Magnus Miemoi, head of Africa, Wartsila Oy, signing the contract to build a 48mw power plant for Sokoto Cement Line 3.

COMPANY

Vitafoam assures quality products to enhance customer’s welfare MICHEAL ANI

itafoam Nigeria has reiterated its commitment towards the health sector by providing quality innovative products that would enhance the well-being of Nigerians. The Commercial Director, Sola Owoade, stated this during the commemoration of the 2019 World Sleep Day to sensitize Nigerians on the health benefits of quality sleep as he assures customers of the company’s commitment in producing innovative products that guarantee healthy sleep for them. According to him, having good quality sleep is a major priority for Vitafoam which necessitated the array of quality products that support quality sleep and rest. Owoade quoted from Erik St

Louis of Mayo Centre for Sleep Medicine in Rochester, Minnesota saying “for most adult, getting 7 to 8 hours of sleep tonight might be the most important thing you can do to improve you are future physical and mental health. “Children need even more sleep for optimal learning and play. Recent research shows the importance of adequate amounts of sleep for brain health since, during sleep, the brainwashes away toxins that can potentially damage the ageing brain that accumulate during the day while we’re awake. Sleep also keeps the brain working at their best, especially when learning and remembering new things from earlier in the day”, he said Corroborating Owoade, a consultant on mental health and sleep physician with the

Federal Neuro-Psychiatric Hospital, Yaba, Adeoye Adefemi, urged Nigerians to strive to get adequate sleep daily by ensuring that the duration, continuity and depth of their sleep should be at a minimum of eight hours. According to him, quality sleep helps restoration of body functioning, boost immunity and helps in the conservation of energy. “Sleep should be deep enough to be restorative. And when you wake up, you should feel well -rested. Quality sleep plays a critical role in learning and memory. It helps to identify what is essential and aid retentive memory. “, said Adefemi Speaking further, Adefemi noted that one should exercise regularly advised that in preparing for a good sleep, one should avoid caffeine six hours before going to them.

ENERGY

BUA, Wartsila Oy of Finland signs 48MW Power project for Sokoto Line 3 SEYI JOHN SALAU

UA Group has signed a contract with Wartsila Oy of Finland for the construction of a 48 megawatt power plant for Sokoto Cement line 3 in Sokoto State. This is coming two months after BUA announced that it has signed a contract with world’s renowned cement manufacturing company, CBMI, for the construction of a new cement line in Sokoto State. The Executive Chairman/ CEO, BUA Group, Abdul Samad Rabiu, signed on behalf of the group while the Head of Africa, Wartsila Oy, Magnus Miemois signed for the multinational company known to provide

services for power suppliers, marine, cement and mining industries. In his remarks, Abdul Samad Rabiu disclosed that BUA was attracted by the incredible track record of Wärtsilä who has provided 1000 megawatt of power in Africa and has 70 GW of installed power plant capacity in 177 countries around the world. Abdul Samad who expressed confidence in the construction of the ultramodern power plant said Sokoto Cement lines when combined now has a total of about 100 megawatt of power captive. According to Abdul Samad, “We can’t compromise on our quality. We are known to provide quality products and ser-

vices to our customers and we are assured that Wartsila aligns with this vision of ours. They have an impeccable and intimidating track record and we are confident that they will deliver on their mandate. BUA is the Nigeria’s second largest cement producer by volume with key focus on solidifying its leadership positions in the North West, South-South and South-East Markets as well as the export markets in West Afica. BUA’s current cement assets include the 6million MTPA Obu Cement I & II plants in Okpella, Edo State and CCNN’s 1.5million MTPA Kalambaina Cement Plant; and 500,000 Sokoto Cement Plants.

L-R: Emmanuel Musa, head of operations, Hall 7 Real Estate; Mukhtar Oyewo, team lead, strategic communications, Hall 7 Real Estate; Maimuna Sanusi Suleiman, landscape architect, Hall 7 Real Estate; Olayinka Braimoh, CEO, Hall 7 Real Estate, and Ibrahim Ashafa, head of architecture department, Hall 7 Real Estate, during the company’s Tree Planting exercise for International Day of Forests.

L-R: Opeyemi Adojutelegan, chairman, Association of Chief Compliance Officers of Banks in Nigeria (ACCOBIN); Kayode Asanmo, deputy director, banking supervision, Central Bank of Nigeria; Kofo Salam-Alada, director, consumer protection department, Central Bank of Nigeria; Loretha Joseph, Advisor at OECD-Fintech and Regulatory Advisor FCS Mauritius, and Joseph Gana, deputy director, financial policy regulation department, Central Bank of Nigeria, at the 2019 Chief Compliance Officer’s Annual Retreat in Epe.

L-R: Bamgboye Abiodun, permanent secretary, ministry of the environment (Lagos State); Oluchi Odimuko, executive secretary, Manufacturers Association of Nigeria (MAN); Aderemi Adewoye, plant manager (Ikeja), Nigerian Bottling Company (NBC) Limited; Aghosa Anikwe, assistant director, Lagos State Environmental Protection Agency (LASEPA), and Muminu Badmus, chief executive officer, Lagos Water Corporation, at a stakeholder interaction forum organized by Nigerian Bottling Company Limited to mark 2019 World Water Day in Lagos. Pic by Olawale Amoo

BUSINESS DAY

Monday 25 March 2019

BUSINESS DAY

Monday 25 March 2019

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Government Enterprise & Empowerment Program

UN commends TraderMoni as programme scales with technology, reaches 30,000 new beneficiaries

he goal to provide financial inclusion for all Nigerians regardless of social class and economic status has made giant strides across the country as countless traders, artisans and farmers continue to laud the Federal Government for giving them a way to access credit for their businesses through the Government Enterprise and Empowerment Program (GEEP) The singular vision for GEEP has been to use its various economic empowerment products to take financial inclusion down to the grassroots, considering how invaluable the contributions of petty traders, artisans, and other trade types are to economic development. Their inability to get loans through traditional banking means has only served to show the importance and usefulness of the various GEEP products in order to spur an increase in income generation for this demographic. The added benefit of these loans being interest & collateral free and requiring just a mobile wallet/BVN is a testament to the Federal Government’s commitment to removing all barriers to financial inclusion. The first phase of the roll out of various GEEP products has seen Tradermoni reach over 1.2 million beneficiaries while Marketmoni has reached over 350,000 beneficiaries. Not relenting on the target of at least 30,000 beneficiaries per state and the Federal Capital in the first phase of the TraderMoni roll out, the GEEP team continued its mandate with successful ramp ups across 10 states (Abia, Adamawa, Bayelsa, Borno, Ebonyi, Edo, Ekiti, Enugu, Imo & Kebbi). The market activations in these states have allowed another 30,000 new traders come onboard the program as they take the first step

Executive Director, Micro Enterprises Division, Bank of Industry delivering a presentation to participants at the 63rd Session of the UN Commission on the Status of Women in New York .

Mrs Maryam Uwais (SA to the President on NSIP) answering questions at the UN Event

towards boosting their businesses through GEEP. The successes of these micro credit interventions by the Federal Government has not gone unnoticed by the international community and at the 63rd UN Commission on the Status of Women, the Executive Director of the Micro Enterprise Division of the Bank of Industry, Mrs Toyin Adeniji delivered a presentation which showed how GEEP is being deployed using technology and how beneficial it has been for empowering women who make up about 53% of beneficiaries across the various GEEP products. Speaking on how GEEP is using technology to scale, Mrs. Adeniji explained that GEEP does not use paperforms. Beneficiaries are registered via mobile forms on tablets and mobile devices. This enables real-time data quality check and verification and ensures that there are no errors in input and consequently, in interpretation. The complete elimination of

paper-based registration has enabled the program scale fast; registering over 7m micro enterprises in less than 2 years. Furthermore, through data integration with multiple third-party data sources, GEEP is able to immediately validate over 43 data points for each beneficiary including but not limited to facial recognition, BVN, and store location. In addition to the foregoing, Mrs Adeniji explained that TraderMoni disbursements are made to beneficiaries via mobile wallets, thus, allowing last-mile credit delivery to recipients in the most rural areas. This is in addition to working with an agent network of over 4,000 persons that are monitored with technology using geofencing. GEEP also uses technology to drive repayments; working with the Central Bank of Nigeria (CBN), and the Nigeria Interbank Settlement System (NIBSS), GEEP implemented the first successful application of the BVN as a digital collateral. The presentation was made during a side event FinTech as a Driver of Gender Inclusion - hosted by the Bank of Industry in partnership with Eyowo, Ford Foundation, GSMA and the International Chamber of Commerce (ICCWBO). This event was a major part of the UN’s Global Compact initiative which brought together over 600 business leaders and stakeholders to promote gender equality and women’s economic empowerment. The Nigerian delegation which also included the SA to the President on NSIP, Mrs Maryam Uwais highlighted that over 53% of GEEP beneficiaries were women. Nigeria was commended on its laudable efforts in driving financial inclusion and access to affordable credit via Social Investment programs like GEEP.

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BUSINESS DAY

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Faces of GEEP When it comes to measuring the impact that these micro credit interventions have had, there is no one better to tell the story than the beneficiaries themselves. All over Nigeria, the impact stories could fill up an entire encyclopedia and there would still be so much left over. We begin from Marna Market in Sokoto where we spoke to Mallam Amidu: “My name is Amidu. I sell local household utensils such as mortar, pestle, calabash etc. The day I heard about Tradermoni, we just came into the market and we saw people registering fellow traders. We were curious so

we had to go and ask the people registering what Tradermoni was about. The people registering told us it was a scheme by the Federal Government to empower traders and they asked us if we would like to register. We said yes and we got registered. I was so sure that I was going to get the money and when I finally got the money, I told all my friends. I was so shocked because no government has ever come to our aid like this. It will definitely empower my business, buy more stock and make more sales. I really have nothing to say to the Federal Government rather than to say I am very grateful. When

Mallam Amidu; TraderMoni Beneficiary in Sokoto

“My name is Bello Mohammed. I sell local rice in Birnin Kebbi central market. I heard about Tradermoni right here in the market. When the Tradermoni team came, they registered many traders in the market. To our amazement, we got the loan the next day. I thought it wasn’t real till I saw the loan in my bank account. We were well informed

Mallam Bello, Tradermoni beneficiary in Kebbi

that the initiative is a way to strengthen petty traders so I am definitely going to payback. After the repayment, I am sure of getting an increment of 15,000 naira and 20,000 naira afterwards as long as I comply with the repayment. I am grateful for being a part of the Tradermoni initiative. My thanks to the Federal Government.”

Mrs Jumai Bello, MarketMoni beneficiary in Bauchi

“I am Mrs Jumai Bello. I am a merchant of perfumes, air fresheners, scents and ointments. I learnt about the GEEP Marketmoni scheme through my association, the Development Exchange Centre (DEC) in Bauchi State. In my business, I have people who help me sell. I keep detailed records of every product. I applied for the

Marketmoni loan and I got a loan of 50,000 Naira. I have used the loan to purchase more raw materials for my scents in bulk rather than buying in bits like I used to. There is not much else to say but to thank the Federal Government for this program. I hope to see more of this kind of people-oriented programs.”

“Before receiving GEEP Marketmoni, if I request for a 100,000 naira loan, I will have to deposit 7,500 naira before the loan is released. Aside from the high deposit, the interest on the 100,000 naira would be almost 22,000 naira. By the time I am done paying back the loan, my goods would have reduced drastically and it stops me from growing the business. Then I heard about the Federal Government loan and I applied through my cooperative. Before I got a Marketmoni loan, I would have little to no stock when customers request for products like detergent. I was given a

I was registering, they told me it was a loan and I must pay back by making weekly deposits into the Tradermoni bank account. When I pay back, I get a higher loan. I am so grateful to the Federal Government.

Mrs Sherifat (aka MamaKwara), MarketMoni beneficiary in Kwara

form to fill. After that I went through the process of registration, after which I received a confirmation text through my phone. Within 2 weeks, I received an alert that the loan had been granted. The loan has been of tremendous help in growing my business. With

this loan, I have peace. There was no stress in accessing the loan. It was easy. I thank the Government for this loan and I am looking forward to accessing the higher level of loan once I have fully repaid this loan.” - Mrs Sherifat aka Mama Kwara

BUSINESS DAY

Monday 25 March 2019

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INSIGHT

Monday 25 March 2019

AMCON: Nigeria should look beyond the here and now Bashir Ibrahim Hassan

t is ten years ago that Nigeria was engulfed in a financial crisis of unprecedented proportion. Proof that Asset Management Corporation of Nigeria (AMCON) is the pillar of Nigeria’s financial stability mechanism is provided by the fact that During the period Nigeria is able to cope with one bank in crisis here and another blue chip company going bust there without momentous quiver of our financial-cum-banking system. Indeed, it is testament to the fact that AMCON has lived up to the expectation of its establishment – it is playing its role as effectively as envisaged. AMCON’s impressive performance is as a result of hard work by many players. The visionary leadership provided by a throughbred banker Ahmed Kuru has been a fundamental factor. So has the close cooperation of key financial regulatory institutions and very important stakeholders Federal Ministry of Finance, CBN, NDIC and SEC. Underpinning the success of AMCON has been the adoption of a liquidation option that safeguard depositors’ funds and reassure investor confidence have aided the success recorded in the management of our financial crises. Whenever there is a crisis in any of our money deposit banks, NDIC is likely to be the first to uncover it. CBN will then move to reorganize the bank’s management, If the crisis persists, it may revoke the bank’s license, and NDIC will return to give a prescriptive remedy—nowadays a bridge bank liquidation option— whereupon AMCON is called to assume the bank’s liabilities, inject funds and set in motion how to recover the taxpayers’ funds invested in the bank and find new investors to take over the bank. So what is AMCON’s mandate in this collective approach to managing Nigeria’s financial system? AMCON was established to fulfill the following objectives: Assist eligible financial institutions to efficiently dispose of eligible bank assets; Manage efficiently and dispose of eligible bank’s assets acquired by it; and Obtain the best achievable financial returns on eligible bank’s assets or other assets acquired by it. The corporation came at the right time in 2010 when the banking sector had undergone, for the first time, massive structural reforms, which involved bank consolidations, recapitalization and managerial changes at some

Ahmed Kuru, managing director, AMCON

banks, and portfolio clean-ups. These reforms provided a solution to the banking crisis that Nigeria experienced few years ago. In the end, the soundness in the banking sector was restored. AMCON then contributed a lot in stabilizing the economy through acquiring the Non-Performing Loans (NPLs) of some of the distressed banks, providing financial accommodation to others, which engendered financial stability in the banking system. AMCON’s initial achievements were tremendous. In an unprecedented move AMCON acquired about 13,774 Non-Performing Loans (NPLs) worth N3.6 trillion from 22 commercial banks. That move saved our banking system, while its provision of financial accommodation of N 2.2billion protected about N 4.7trillion of depositors’ funds and interbank takings as well as saved approximately 14,000 jobs. With the settlement of about 56 percent of the total N3.7 trillion (about N2.072 trillion) bad debts AMCON is not doing badly with recovery efforts, putting into consideration the historical success of other AMC’s in other climes with even much better working environments. This feat is commendable if one looks at the fact that the country went into recession in 2016-2017. During this period Nigeria experienced a very sluggish growth in the economy, which was aggravated by inadequate supply of foreign exchange and accentuated by a fallin the price of oil, the nation’s

main FX earner, accounting for about 75% of its export revenue. Conveniently out of the recession the renewed efforts at non-oil revenue collection are helping to reduce fiscal vulnerability caused by oil price shocks. Thanks to the reforms pursued by the Buhari administration to lay a foundation for renewed growth, increased revenues from the non-oil sector are also helping the country. The enforcement of the treasury single account (TSA) blocked financial leakages. Renewed efforts also went into enforcement of tax compliance, which increased the ratio of capital to recurrent expenditure to 30:70. Above all, there has been continuous support for agencies saddled with the responsibility of stabilising the financial system such as Assets Management Corporation of Nigeria (AMCON) are fast yielding results. I can see similarities in the path taken by Nigeria and Europe in

“

managing the financial systems in the post-crises period, including the role of institutions like AMCON. Europe implemented three fundamentals policies in the post 2008/9 financial meltdown. Firstly, it implemented massive reforms and some of the countries that received financial assistance from the European Financial Stability Facility (EFSF)/European Stability Mechanism (ESM), such as Spain and Ireland, have among the highest growth rates in Europe today. Secondly, closer economic policy coordination between the euro area countries now makes it harder to repeat the mistakes that led to the crisis in the first place. Today there are concerted efforts for a Banking Union through the establishment of the Single Supervisory Mechanism, which now oversees the 130 systemically important banks at the European level, and the Single Resolution Board, which was set up to wind down failing banks across Europe. Thirdly, I liken the European Stability Mechanism (ESM) to AMCON. This institution serves as a rescue mechanism for euro area countries that have lost market access. Like AMCON, ESM were not there at the beginning of the crisis, but the ESM is today a permanent institution ready to fight the next crisis when it comes. The ESM has disbursed a total of €279 billion to programme countries. Funding these programmes has made ESM a key market player. ESM has issued more than 100 benchmark bonds and 130 bills over the last seven years (2010-2017). Like the achievements of Nigeria’s AMCON, these achievements by ESM would have been unthinkable only a few years back, but, as a result, the euro area economy is now back on track and rapidly growing again. Through AMCON, Nigeria is making the best out of the situation of its banks’ toxic loans, which are at the heart of many a banking crisis. Nigeria is quite lucky to have at the driver’s seat of AMCON in the last three and half years a risk management expert of widely

I can see similarities in the path taken by Nigeria and Europe in managing the financial systems in the postcrises period, including the role of institutions like AMCON

acknowledged repute-Ahmed Lawan Kuru—humble, disciplined and firm. Since his arrival on the scene he has further entrenched professionalism in the way and manner AMCON operates. His idea of assets management partners (AMP), from example, is helping AMCON’s recovery efforts. The move is AMCON’s strategy to resolve over six thousand accounts with loan balances of N100 million and below. Ahmed played at the top echelon of Bank PHB as executive Director overseeing critical areas like Risk Management, Compliance, Commercial Banking, Northern Operations, Public Sector, Multilateral Agencies and the West Coast, East and Central Africa expansion programme of the bank. Before assuming his current position of MD/CEO at AMCON, Ahmed was the MD/CEO of Enterprise Bank Limited. He was also Executive Vice Chairman, Emeritus Capital Limited, a financial service firm with speciality in international business development focusing in sub-Saharan Africa. Meeting the obligations of the AMCON consists of supporting businesses with a view to enhancing their productivity. More than that, it includes transforming their NPLs to RPLs (Re-performing loans). Doing this provides liquidity to the banks, which in turn help them meet their own obligations as well. I will be quick to add here one of the famous quotes of the AMCON’s CEO which is “that debt in itself is not always a bad thing. The problem of debt arises when there is default”. So the question is always how do we avoid defaults, and if they eventually happened, how do we manage the crisis that follows? There is no one-size-fitsall answer to these questions. Every nation studies its economic peculiarities and adopts the best approach that will mitigate the potential for a catastrophe. AMCON is Nigeria’s stabilisation mechanism of choice and it is the serving the nation. Europe sees the ESM as a permanent institution moving forward ready to fight the crisis of the future. Why shouldn’t Nigeria take a similar, long-range view and allow AMCON to remain for many years to come? At its establishment, it was designed to last for just 10 years. With the benefit of hindsight, and considering the effective stabilizing role it is playing in our economy, our next National Assembly will do well to amend and extend the term of AMCON for it to continue with its good work, which is in tandem with the global best practices. Hassan, a financial analyst, wrote from Abuja.

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BUSINESS DAY

Start-Up Digest Adewale Aladejana on a mission to help Africans ‘smell good’

In association with

Josephine Okojie

igerian entrepreneur Adewale Aladejana created his business venture, Sapphire Scents, to produce affordable perfumes for the African continent. Seeing the gap in the market for affordable and quality body fragrance, the start-up manufactures and retails range of perfumes to meet the needs of Nigerians and Africans at large. Apart from identifying a gap in the market, Adewale was inspired to establish Sapphire Scents in 2015 by his passion to provide effective and life-enhancing solutions that ensure people smell good always. “I love perfumes and I always ensure people smell good around me. If I smell a perfume once and I know the name and I meet someone wearing that same perfume in five years’ time, I would be able to tell you exactly what you are wearing,” the young entrepreneur explains. Adewale started his business with N30,000 in 2015 and the business has grown tremendously and it is now a multi- millionaire enterprise.

Adewale Aladejana

The business made a million naira in its first three months of establishment, Adewale tells Start-

Nigeria’s agritech start-up makes YC 2019 winter batch Josephine Okojie

hrive Agric, Nigeria’s agritech start-up, has been selected for the Y Combinator’s Winter 2019 class. The start-up is among the 200 companies selected for the winter batch out of over 12, 000 start-up applications received for the programme during the period. “We are grateful to have come this far and we believe with the support of YC we will build a continent that feeds the world and itself and the future of sustainable African agriculture using technology,” the start-up says in a statement. Thrive Agric says that being part of the Y Combinator programme will enable the business

reach a million farmers across the African continent by 2022. “We have worked with about 14,000 farmers and the goal is to reach one million farmers across Africa by 2022,” Thrive Agric. Thrive Agric helps smallholder farmers in Nigeria access loans to help scale their production; provides them with best practices, and supports them with sales of their produce to premium markets. The Y Combinator (popularly called YC) is a start-up seed accelerator programme headquartered in Mountain View, California, USA. All selected start-ups for the batch goes through a three-month programme in Silicon Valley to help them grow, improve and ultimately secure funding. It has backed some of the biggest billion-dollar companies in tech including; Airbnb (YC W2009) valued at over $30 Billion; Stripe (YC S2010) valued at over $20 Billion; Cruise (YC W2014) valued at over $14 Billion; Dropbox (YC W2007) valued at over $10 Billion, and more.

Up-Digest. “We started with N30,000 and in three months, we have made a

million naira.” Adewale uses various social media platforms in advertising his business and showcasing its range of Sapphire Scents. According to him, Nigerians outside Abuja, where his business is located, make orders online for his products after seeing them on various social media platforms. “Daily, I would post pictures of our perfumes and when anyone buys them, I would post client reviews and appreciations. I will post it on social media every morning and then people will make enquiries and if they are not in Abuja, I will deliver the products to them through transport lines,” he says. Th e you ng e nt re p re n e u r sources raw materials used in manufacturing his perfumes both locally and from abroad. He currently has 30 employees working directly with him and 1,000 distributors spread across 32 states in the country, the United Kingdom, US, Canada, Cyprus, Ireland, South Korea and most neighbouring West African countries. When asked what he is doing different that has made the business survive since 2015, Adewale says that his focus of creating an affordable and qual-

ity African body fragrance has helped the business stay afloat and grown. Speaking on some of the business expansion goals, the masscommunicator-turned-entrepreneur says that the business aims to open its stores across major cities in Africa. “We are opening stores all over Africa. We are already at Lennox Mall at Lekki and Jabi Lake Mall in Abuja. Our next store is going to be Abidjan, Cote d’Ivoire by God’s grace,” he says. When asked what the biggest challenges confronting his business are, Adewale says that finance remains the big issue. He urges the government to provide more funding opportunities for start-ups in the country. Similarly, he explains that poor power supply and tough business environment are also some of the challenges confronting his business. When asked his advice to younger entrepreneurs, Adewale says they should be focused and ensure adequate research is carried out about any business before venturing into it. “Do not give up, keep your head up. There is a high consumer rate in Africa. If you are a producer, you will make a lot of money,” he says.

Itanna opens applications for 2019 accelerator programme Gbemi Faminu

oneywell’s venture platform, Itanna, has commenced the 2nd edition of the fourmonth accelerator programme for start-ups aimed at boosting the growth of technology start-ups. In a statement, Itanna says beneficiaries will be increased to 10 start-ups as against four in its 2018 maiden edition while the seed fund will also be increased by 20 percent from $25,000 to $30,000. The Itanna platform was launched as a venture capital investing platform by the Honeywell Group in order to provide financial aids, mentorship and access to people-network for African tech start-ups which gives them influence in the competitive market. While this is the second edition, recipients of the maiden edition were given $25 000 for

investments as well as trainings and mentorship in the form of user interface/user experience (UI/UX) sessions, and legal and human relations (HR) workshops. Recipients of the 2018 editions were: Accounteer, which was an all-round solution provider for accounting problems; KoloPay, an online cashless target savings mobile; Tradebuza, an online platform for managing and brokering commodities sourcing and outgrower scheme, and PowerCube, a company which provides affordable power supply using renewable energy. Itanna is a platform to support technical start-ups through investment and mentorship programmes, nurturing their ideas, visions, expertise as well as resources. Around $300,000 would be invested in 10 start-ups across Africa. Tomi Otudeko, director of Itanna, said, “This year, Itanna is also looking forward to receiving hundreds of applications from

tech-enabled start-ups across Africa. Applications for the 2019 accelerator programme are open from March18 to April 19, 2019.” “The programme will run from June 2019 to September 2019 and will also culminate in a demo day where the cohort companies will pitch their start-ups to investors,”Otudeko added.

Start-Up Digest Team Odinaka Anudu Editor

odinaka.anudu@businessdayonline.com 08067478413

Reporters Josephine Okojie Bummi Bailey Gbemi Faminu Joel Samson Graphics

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Nigerian start-ups close big deals as entrepreneurs eye new markets ODINAKA ANUDU & GBEMI FAMINU

enture capitalists, angel investors and peer-to-peer lenders are finding Nigerian start-ups more attractive by the day as they enter into luscious deals worth millions of dollars with them. While some of these deals are equities, others are either loans or grants. Such deals are enabling startups to eye global opportunities and new markets, competing with the best across the globe. ibakatv is a platform sells online Nollywood movies to Africans in the Diaspora who pay in dollars. After an initial N100 million pumped by investors, the firm got $2 million in equity, amid other deals. It now boasts of over one billion views on both YouTube and its own platform. “We are already ‘millions-dollar’ company,” Blessed Idornigie, chief executive officer of IbakaTV, told BusinessDay in a recent interview. “We will get there in the next couple of years, looking at what we have on ground,” he added. Already, Nigerian fintech startup, TeamApt, has raised $5.5 million funding in a Series A round. The funding round was led by Quantum Capital Partners owned by Zenith Bank founder, Jim Ovia. Market watchers say the fund will enable TeamApt to launch AptPay app and position it to compete in Africa’s financial space. A report by Techpoint Africa says that Nigerian start-ups raised $178.44 million in 166 deals in 2018. Sectors that received fund-

ing from investors included tech, fintech, e-health, and agribusiness, among others. While Cellulant, a fintech got $47 million, Mines, another similar company, received $13 million. Paga and Paystack secured $10 million and $8 million respectively. Lidya, an online lending firm, received $6.9 million, enabling it to fund more petty traders and other emerging sectors such as technology firms. PiggyVest got $1.1 million in 2018. FarmCrowdy, an agritech firm, secured $325,000, just as Asoko Insights, an investment information provider, received $3.6 million. Similarly, LifeBank, a health start-up, garnered $362, 000, just as Tibexi, an internet service pro-

vider, secured $3 million. More so, Google gave $2 million to 12 Nigerian start-ups in late 2018. Another report by Disrupt Africa said 58 Nigerian start-ups secured $94.91 million in funding in 2018. The report said Nigeria was tops, followed by South Africa, which had 40 businesses raising $59.97 million. The Tony Elumelu Foundation has picked 1,000 beneficiaries for the 5th edition of its empowerment programme for the year 2019. The programme, which disburses a non-refundable $5,000 to business owners, has a 12-week training programme, business promotion, access to mentors and many other opportunities. Honeywell’s Itanna has opened

applications for the 2nd edition of its four-month accelerator programme for start-ups. Ten beneficiaries will receive $ 30,000 as well as trainings and other opportunities. Also, Y Combinator provides seed funding for start-ups at the earliest stage of venture funding and pays expenses for the business while starting. A recent Venture Capital report by WeeTracker, a global tech media platform that monitors startup ecosystem across countries, claimed that investment deals in Nigeria in 2018 increased to 136 in 2018, from 34 deals in 2017. Analysts say Nigeria is gradually becoming a major tech hub in terms of start-ups generation and

entrepreneurs’ preferred location for investments. “Digital companies in Nigeria have created thousands of jobs and activities within the ecosystem and this is striving to consolidate the nation’s status as a top-notch international hub by attracting investors and stimulating entrepreneurship in the country,” Oo Nwoye, executive director, Tech Circle, said. Nwoye stated that Nigeria was transitioning into a dynamic ecosystem offering start-ups a platform to potentially grow into million- dollar businesses. “Last year, tech companies such as Paystack and FlutterWave received huge funding from abroad to strengthen their mobile payment solutions,” he said. Kola Aina, co-founder, Venture Platform, said Nigeria was going to witness the emergence of numerous fintech start-ups, with investments coming in from both public and private investors. He explained that there were growing opportunities in IT, biotech and other fields, drawing young, educated professionals who became entrepreneurs. Ibrahim Tajudeen, head of research, Chapel Hill Denham explained that the demography of Nigeria was helping to attract startup investments. Uche Aniche, the convener of StartupSouth, said that the Nigerian eco system had undergone a transformation in recent years. “Thanks to the wave of fresh young talents. Lots of start-ups and small businesses have taken off, creating a surge of co-working spaces and a collaborative spirit vital for the success of innovation hubs,” Aniche said.

Exclusion of textile importers from FX market will hurt fashion designers—LCCI Odinaka Anudu

he Lagos Chamber of Commerce and Industry (LCCI) says exclusion of all forms of textile materials from the foreign exchange market in both official and unofficial windows has grave implications for businesses in the fashion, tailoring, fashion accessories and garment industry. The chamber is reacting to the recent pronouncement by Central Bank of Nigeria (CBN) placing a restriction on the sale of foreign exchange to importers of textiles and other clothing materials in the country. In a statement, Muda Yusuf, director-general, LCCI, said the fashion and design industry was one of the fastest growing sub-

sectors, creating many opportunities for young Nigerians to express their creativity and innovation. He said the sector was estimated at N5 trillion and had created about 500,000 jobs, providing significant value addition to fabrics, whether imported or domestically produced. “Trading in textiles is a major economic activity in the country, both in the northern and southern part of the country,” Yusuf said. “It is a market that responds to changing tastes and fashion trends in the country and beyond. Hundreds of thousands of women and men make a living in the marketing of textiles. The policy makers cannot afford to ignore this segment of economic players,” he cautioned. He stated that the traders were the bridge between the producers and the consumers, urging policy

makers to take into account consequences of policies and collateral outcomes. “Today, Nigeria is clearly the leader in Africa as far as the fashion industry is concerned. Currently the range of fabrics produced by the Nigerian textile industry cannot support the fashion industry in terms of the quantity and quality. This vibrant industry should not be sacrificed on the altar of textile industry regeneration.” Yusuf said the starting point was to strengthen the capacity of domestic industries, enhance their competitiveness, and reduce their import dependence as espoused in the Nigeria Industrial Revolution Plan (NIRP). More importantly, he added, energy issue needed to be addressed as fast as possible. He recalled that the textile

industry had been a beneficiary of several fiscal incentives and protectionist measures over the years, yet it had remained in stagnation. “Some of them have even gone into receivership as they could not repay their loans. The lesson is that we should deal with the fundamental issues of production competitiveness in our economy. The textile industry needs to be saved from the excruciating burden of high operating and production cost. Meanwhile, and in the spirit of the executive order of the President, all uniforms of military and paramilitary institutions should be made from Nigeria produced textiles. This is a low hanging fruit that could be explored while the issue of high production cost is being addressed,” he recommended. He said compelling the citizens

to pay exorbitantly for systemic inefficiency was not an appropriate policy option, stating that such disposition would impose high welfare cost on the citizens, promote unethical practices in the economy, support the growth of underground economy, lead to loss of revenue to government and job losses. “The key to sustainable industrialisation is to focus on competitiveness, anchored on resourcebased industrialization,” Yusuf said, adding that robust incentives and concessions should be made available to industrialists. “The move to create special economic zones in the six geopolitical zones in the country is a step in the right direction. The Bank of Industry has also done a great deal to provide funding for industries, textiles inclusive. But we need to deal with the fundamentals.”

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Start-Up Digest

‘My love for shopping inspired Dozen Price’ Omowunmi Olalere is the chief executive officer of Dozen Price, an online retail store. In this interview with Endurance Okafor, she speaks on her business and what inspired it. Tell me about yourself and your company. am the CEO of Dozen Price, one of the subsidiaries of my group company, Numero Groups, which also comprises Numero Homes and Numero Farms. Dozen Price is an online retail store where we sell home groceries, household items, and personal care products on bulk purchases using a flexible payment pattern. This service is available to people in corporate organisations, especially those in paid employment. Living in Lagos is hard enough, so stocking basic needs shouldn’t make it harder. Lagosians spend a chunk of their salaries on transportation. Why let shopping and its logistics eat into what’s left? It is a platform that allows you to purchase products online, have it delivered to your doorstep, then pay instantly or later. This way, you don’t deprive yourself of essentials until payday. You also save money and time spent in traffic while trying to visit the supermarket. Basically, Dozen Price is designed to make shopping easier for professionals and homemakers. Customers can choose from a wide range of items such as groceries, personal care, drinks, fresh meat, fish, vegetables, baby products, Nigerian ingredients and many more. Delivery will be made within 24 hours.

actually buy your own groceries, your own items and then pay after a certain time. You can pay at the end of the month or we give you two months to pay. So, it’s easier for us to use people in the paid employment so that we could guarantee our source of repayment from their salaries, from their employers. Their employers or the HR pay us at the end of the month. So, it gives our clients the comfort that they can actually come online, shop for their items and pay us at a later date. We are currently working on a platform that will allow every salary earner to shop on our online store without us having any form of arrangement with their management or HR and still be able to enjoy the ‘buy now pay later’ services that we are currently offering our customers.

Omowunmi Olalere

What inspired you to start Dozen Price? Dozen Price is my passion. I love shopping and also realised early that there was a demand gap to be filled in providing people with stress-free shopping platform. I therefore resigned from the bank to start my own company. I was inspired, first, because of my love for shopping, and second, my professional experience. The credit service initiative introduced into Dozen Price is as a result of

what I practised while was in paid employment. I was offering credit facility, personal loans, salary advance and all that. So, the two mixed together. It was as a result of the mixture of passion and professional experience. Why is Dozen Price only for the working class? The flexible payment initiative is one of the qualities that distinguish Dozen Price from other online stores and supermarkets. When we say flexible payment, you can

How empowerment will end unemployment in Nigeria SIKIRAT SHEHU, Ilorin

outh unemployment and poverty are, no doubt, endemic in Nigeria. Analysts believe that empowerment is a panacea to eradicating or reducing unemployment. Although Nigerians at home and those in the Diaspora have been proffering solutions to this scourge, there is still a need for more commitment on the side of the government, non-government organisations (NGOs) and other well-to-do citizens to curtail it. In studying Lukman Salaudeen, a shoemaker who started his business ten years back, it was discovered that his brother in

Lukman Salaudeen

Ogbomosho, Oyo State, helped to train him in the trade. Today, he has excelled in shoemaking. Lukman says that after his secondary school, he wanted to further his education but his brother convinced him that entrepreneurship would pay more than white collar jobs. Descr ibing how lucrative the business has been so far, he explains that he makes at least N50,000 monthly and enjoys good patronage. He also says that his clients patronise him on wholesale basis while some are distributors, making his work of getting to the final consumers easy. Lukman explains that the materials for making shoes of different

kinds are accessible to get in Ilorin, Kwara State, and Lagos State. The upcoming craftsman says he dreams high, adding that what he sees makes him thank God. He says that the gains outweigh his challenges as is expected in every business. He hopes that better days are ahead of him. He laments that high cost of raw materials is the only challenge he faces. The entrepreneur explains that he makes males, females and children shoes and as well repair them with different price ranges. Male shoes cost between N2,500 and N3,000 (new ones), while females ones go between N2,000 and N2,500. Children shoes are sold for N1,000, depending on quality of materials used. He asserts that being an entrepreneur is one way of seeking a lifelong independence. Salaudeen advises that youths should not rely solely on government jobs which are not readily available, charging them to combine their studies with vocational training for them to be employers of labour after school rather than job seekers. He calls on the affluent in the society to support youths in embracing entrepreneurial activities in order to reduce youth restiveness and poverty.

How does your ‘pay at the end of the month’ initiative work? Our customers provide us with some form of information. Since we are registered with Corporate Affairs Commission (CRC), we do credit checks on them to find out their eligibility. What we do is to write proposals to corporate organizations. They call us for presentation and then they sell it to their staff members. Often times, companies approach us, especially those that have heard how our platform works. This helps to assist their staff to relieve them of stress

from shopping in the ever-busy city of Lagos. So, we have not been having issues of default. Considering it’s a new initiative in this part of the world, what is the level of reception? It is promising and I think the selling point is actually the flexible payment. People love access to credit facility so it’s easier for them. That has been selling the brand more than having to just go online and pay upfront. If we had remained on ‘cash before service’, we probably wouldn’t have been where we are at this time, but the idea of having to pay afterwards has really helped us to promote the brand. What are some of your expansion plans? In 2019, we want to break even because we haven’t really got to where we want to be at the moment. We are still trying to stabilise because the company is still very young, but we’re making profits. So, we intend to achieve milestones at the end of 2019. What advice do you have for other young businesses? I just want to encourage them to be steadfast, to continue to do what they know best and seek knowledge because they need to research all the time. They need to try to brace up, they need to continue to strategise and at the end of the day.

Topside holds master class for music entrepreneurs Gbemi Faminu

opside, a brass band from the United States Naval Forces Europe, conducted a master class for upcoming musicians and instrumentalists in Lagos. The event was hosted by the United States Consulate, Lagos. Mathew Anderson, assistant director, United States Naval Forces Europe Band, said the Nigerian music industry was wonderful, disclosing that for many years it influenced music in the United States, especially jazz. He also said the background on which the history of Nigerian music was built was shared by American music. The Topside Brass Band moves round the world to share musical message as it brings people together irrespective of backgrounds and bridges the communication gap between people and countries. “Communicating through music and sharing cultures is a special thing and this is an opportunity to do that,” Anderson said. The band also travels and shares the message and opportunities with people such as music students.

Anderson said, “The Topside Brass Band remains committed to sharing travelling, meeting people and interacting sharing culture.” Afolaranmi Abiodun, administrator of Eko Brass Band, said the master class was an excellent programme that should occur regularly to train those in the musical space. He disclosed that Nigerian music lacked dynamism and balance, advising that the American style of music was worthy of emulation. Seyi Kehinde, a music lecturer and band leader at the University Of Lagos. said the demonstration of performance showcased unique things including adaptability, innovation and creativity which he said should be emulated in Nigeria. He said it was impressive that the topside brass band was able to interpret Nigerian music using western musical instruments. He said Nigeria needed to be flexible and be in vogue with global trends. Andrew Okon , a student of the University of Lagos and a participant at the master class, said the class was amazing. He learnt that there had to be a bit of dynamism in music which would give it an easy flow as well as generate good music.

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L-R: Polycarp O. Didam managing director/CEO, Veritas Kapital Assurance Plc making a presentation to Yusuf Abdulahi, head of depar6tment, Insurance & Actuarial Science ABU Zaria, during a book presented to Ahmodu Bello University Zaria, ABU, by management of Veritas Kapital Assurance Plc in Zaria

L-R: Gabriel M. Obiang Lima, minister of Mines and Hydrocarbons of Equatorial Guinea and Ken Aghoghovbia, deputy managing director/COO, Africa Reinsurance Corporation (Africa Re) during a visit to the Lloyd’s of London where the minister made strong case for oil companies to comply with local laws

How inclusive insurance is helping to On the money! boost economic growth, well-being Modestus Anaesoronye

ecent building collapses in Nigeria’s largest economic city, Lagos, resulting deaths and economic losses for households and communities are clear indications that there are huge gaps that insurance can fill to make life more meaningful and protected. Furthermore, the devastating fire, which according to Micro Insurance Network report, swept through Nairobi’s Toi market recently, destroying hundreds of stalls and causing thousands of dollars in damage, is a timely reminder of the insecurity faced by many people trying to make a living. It is unlikely that many of the market traders had insurance cover. This is the case across Africa and the emerging economies, where countless millions of informal traders, micro-entrepreneurs and small businesses in developing countries live with the daily risk of falling back into poverty because they either can’t access or can’t afford

insurance. Risk management and insurance are vital for building the resilience that underpins the Sustainable Development Goals (SDGs). Inclusive insurance has the potential to be a significant weapon in the fight against poverty (SDG 1), to ensure good health and well-being (SDG 3) and to achieve decent work and economic growth (SDG 8). Re c e n t re s e a rc h i n Ghana, Nigeria, Kenya and Rwanda by MiN member Cenfri, in partnership with the World Bank – a fellow member of the Network - the UK Department for International Development (DfID) and FSD Africa suggests that insurance contributes to inclusive economic growth in three specific areas: building household resilience, building business resilience and developing capital markets. Insurance can boost the welfare of individuals in households by building resilience to financial shocks caused for example by illness or unemployment, and by providing peace of mind even when life is smooth. A payout after a shock can

greatly reduce or even eliminate the risk of sliding back into extreme poverty. Knowing that their risks have been transferred to an insurer allows individuals and households to focus on their “productive expertise” to earn and invest more. Insurance also opens up access to other services such as credit, health and education. Insurance also improves business resilience. Micro and small entrepreneurs - such as those hit by the Nairobi market fire - can transfer the financial impact of a risk, thus enabling them to bounce back from shocks. In addition, insurers may well require a business to put risk management strategies in place to reduce risk in the first place, thus encouraging more responsible business behaviour and practices. Significantly, insurance also enables businesses to access credit and other financing such as mortgages and leasing. Insurance reduces the risk of a business defaulting on a loan which in turn allows for more credit to be extended on better terms.

Finally, insurance can help develop the depth and efficiency of capital markets to support growth in emerging economies. It does this in four ways: mobilising capital through premiums, pensions and business investment; creating large investment funds pooled from numerous small investors and savers; allocating capital more effectively, more productively, at greater scale and over a longer period than individual investors can; and building professionalism, governance and investor and business confidence. Taken together, these impacts create a powerful case for inclusive insurance as a crucial tool to boost economic growth and wellbeing. Insurance results in welfare improvements for households, growth and investment for businesses, and long-term, large-scale investment such as infrastructure by capital markets. However, illness, accidents and fires are just some of the risks faced by individuals, families, businesses and communities in developing countries.

The big five animals in africa can offer us some tips on money management hen it comes to money matters, very few people can claim to have mastered it all. From the middle income earners to high networth individuals, everyone experiences some degree of financial difficulty at a point in their lives, despite their education or know-how. Interestingly nature demonstrates key learnings on how we can manage our finances. For example, understanding the secrets of the Big Five Animals found on the African continent provides many lessons: 1. The Lion: Save for future protection: Saving is one habits many people find difficult to develop, people often ask; “How can I save when I don’t have much money to begin with?” The answer can be found in the secret of the Lion. The Lion pride allows its oldest male to eat first from the prey after a hunt. This is so because the pride leader needs enough strength to protect its pride from any danger. When you save some of your income as soon as it is received, you are paying yourself first before you do anything else with your income. That money you have set aside assures that

your future financial situation is protected just like the lion protects its pride. 2. The Leopard: Create a plan for your future: Have you ever watched Leopards hunt? They climb up on a tree or hill from where they survey the land, never letting their prey out of their sight and focusing in on one target. The Leopard is always devoted to the hunt and seeks its prey diligently. We can learn from this by being focused and by creating a financial plan based on insights discovered from having a broad picture constantly keeping our eyes on the goal. 3. The Elephant: Keep track of what you spend: Elephants are known for their great memory by making visual notes of sources for food and water along their migration paths. This is a good lesson on how we can manage our money better if we learn to take studious notes of our expenses and make proper allocations for our purchases. Budgeting involves keeping a record of what you earn, what you owe and what you spend. For more information on how best to manage your money, call Old Mutual on 01 271 9393 or send an email to customercare@oldmutualnigeria.com to request this free (5 part series) of our Financial Education workshop.

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Will IFRS 9 help shine more light on insurer’s balance sheets? BALA AUGIE

he full implementation of IFRS 9 for Nigerian insurers will help shine more light on their balance sheets and allow investors know the true state of their operations. Investors could for instance determine more clearly if firms are deploying enough capital to undertake more risks. The new standard is also expected to mandate insurers to disclose specific information relating to the adoption deferral in their financial statements. Experts say the global accounting standard has brought a lot of transparency in spite of the fact that the regulator has not implemented the risk-based capitalization requirements. “A lot of insurance companies cannot pay claims because the money isn’t there and equity is high which means capital is not well utilized,” said Ola Gam Ikom, an Insurance expert and Founder, Third Party Media Ltd. “The standard will give investors better picture on how insurers allocate their capital to the risk they handle,” said Ikom. Ikom said the recapitalization exercise of 2007 was a mere paper exercise because money did not exchange hands. “Of all the countries in the Africa, Nigeria has the highest capital level for insurance companies and yet a lot firms cannot pay claims.” For the year ended December 2017, Leadway Assurance had a sharehold-

ers’ fund of N55.30 billion while it generated a net premium income of N69.81 billion, which translated in a premium to surplus ratio (PSR) of 1.26 times. In the same period under review, First Bank Insurance with a shareholders’ fund of N20 billion, generated a net premium income of N10.58 billion, translating in a premium to

surplus ratio (PSR) of 1.89 times. In the same reporting period, AIICO Insurance with a shareholders fund of N17.50 billion, generated N10.54 billion in net premium income, which translates to premium to surplus ratio of 1.65 times. Mutual Benefit Assurance has a shareholders’ fund of N11.46 billion, it

generated net premium income of N8.10 billion, translating in PSR of 1.41 times. On the flip side Universal Insurance with a shareholders fund of N10.41 billion, generated N583.74 million in net premium income, translating in a PSR of 0.056 times. Prestige Assurance with a shareholders’ fund of

N7.50 billion, generated net premium income of N1.44 billion, translating in a PSR of 0.19 times. Wapic insurance with a shareholders’ fund of N17.95 billion, generated net premium income of N5.65 billion, translating in PSR of 0.31 times. Law Union and Rock Insurance with a shareholders’ fund of N6.46 billion,

generated N2.61 billion in , translating in a PSR of 0.40 times. Premium to surplus ratio is net premiums written divided by policyholder surplus. Policyholder surplus is the difference between an insurance company’s assets and its liabilities. The premium to surplus ratio is used to measure the capacity of an insurance company to underwrite new policies. An actuarial scientist who did not want his name mentioned said that the full implementation of the IFRS 9 will help put insurers’ bloated management expenses in check. Rising management expenses, claims cost, and underwriting expenses have made it practically difficult for top line impressive performance to translate into bottom line (profit) growth. Little wonder margins have been deteriorating as investment income is too weak to add impetus to the slim underwriting profit, but firms like Leadway Assurance, First Bank Insurance, and Zenith Insurance, with strong investment income, recorded improvement in return on equity and profit margin. The cumulative management expenses of 23 largest insurers stood at N64.25 billion as at December 2017. However Ikom said that the full implementation of the new accounting standard will be challenging because a lot of firms do not have the knowledge and they do not have the resources to employ IFRS consultants who will help them implement the new standards.

Veritas Kapital Assurance donates insurance books, research materials to A.B .U Zaria Abdulwaheed Olayinka Adubi, Kaduna

s part of its Corporate Social Responsibility, Veritas Kapital Assurance Plc has donated books to the Department of Insurance /Actuarial Science of the Ahmadu Bello University, Zaria. Speaking shortly after the

presentation of the books and research materials to the department on Friday, Polycarp Didam, managing director of Veritas Kapital Insurance Plc, said the donation is to share the success of his company with the university . He added that the donation will go a long way to help the students of the department access insurance books

for their studies and other relevant research materials. Didam also said “This is our constituency, and whatever is needed to improve manpower development for the industry is our priority. “We believe that books are not only the first key to knowledge, but possess the power to advance the minds of our citizens and develop critical thinking among the youth”.

He further explained that the goal of the company is to contribute to the manpower development of the industry and the donations of the books is intended to meet that goal. “We hope that undergraduates of the insurance department of this institution will now and in the future benefit from the gesture”, Didam said.

Didam who is a product of that department, urged that the materials be used accordingly for the benefit of the institution. Responding to the gesture, Yusuf Abdullahi, head of Department, Actuarial Science and Insurance, commended the efforts of the Veritas Kapital Assurance for giving back to the society. Abdullahi who sought

partnership with the company said other insurance companies have also been giving helping hands to the institution. “These gestures have continued to boost the morale of the students and staff of the department”, he said. He enjoined the organisation to continue in the direction of giving back to the society, just as he promised proper use of the materials.

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Why businesses are becoming more vocal in support of LGBTQ rights JESSICA SHORTALL

or many years, businesses have been working to improve their brands and their internal practices on LGBTQ issues, investing in culture, benefits and marketing to welcome LGBTQ workers and customers and to telegraph inclusion and openness. Political activism has been slower in coming. In recent years, however, something has shifted: More companies are speaking up on public policy affecting the LGBTQ community, putting their brands and political relationships on the line. This increased public activity is largely the result of rapid opinion shifts, and millennials and Generation Z are often at the leading edge. Sixty-seven percent of young adults

in the U.S. do not believe that small-business owners should be allowed to refuse service to LGBT people for religious reasons, compared with 60%

of Americans overall and 53% of older citizens. LGBTQ inclusion is good for the economy, and as more and more businesses make this con-

nection, they are stepping forward to make the economic case for nondiscrimination protections and against discriminatory laws. And they are not

doing it alone. They are turning to coalitions to ensure they have strength in numbers, resources and messaging alignment. These coalitions serve more than a convening role. First, they reduce political risk by building critical mass. If a business is joined by its peers, the risk of being an isolated target drops significantly. Second, coalitions centralize resources and expertise, such as political intel and data on the economic effects of discrimination. On their own, businesses are less likely to have the expertise to recognize and thoroughly analyze these bills and connect them back to their economic and business risks. Coalitions provide outsourced expertise and give businesses the chance to partner with state and national equal-

ity organizations that can bring their own resources to bear. Lastly, coalitions help their members develop a clear and unified message that, in turn, makes their case for nondiscrimination more powerful to lawmakers and the public. Nationally, and in individual states where proor anti-LGBTQ legislation is proposed, businesses have a real opportunity to make a difference. When nondiscrimination legislation passes, businesses can be vocal in their praise and celebration of these efforts as vital to investing in a forward-looking, inclusive economy.

(Jessica Shortall leads the newly launched America Competes coalition.)

Why AI underperforms and what companies can do about it MIHNEA C. MOLDOVEANU

hy is the gap between companiesâ&#x20AC;&#x2122; artificialintelligence ambition and their actual adoption so large? The answer is not primarily technical. It is organizational and cultural. A massive skills-andlanguage gap has emerged between key organizational decision-makers and their AI teams. The problem is that most executives are selected for their ability to talk to other people. Those who develop machine-learning solutions to business problems are selected for their ability to talk to machines. These two groups cannot, do not and will

not speak to each other in productive ways. We need to bridge this gap. Organizations need people who can talk to both people and machines, and they need people in their upper echelons who specialize in talking to machines. The current lingua franca of business is part of the problem. The proliferation of economists in business school faculties since the 1960s has contributed to the production of a common language system that executives use to plan their actions and justify their decisions. In an age where competition depends on algorithms and massive, distributed data sets, this language is inad-

equate. To catch up, companies need to change how they communicate and how they frame problems. They need to offer their non-

technical executives training in computational and algorithmic thinking. Equally important, organizations must develop the relational and commu-

nicative skill base of their technical team members. Functioning competently in a top management team or board meeting is about much more than

* Strictly by invitation

accurate reporting, valid reasoning, critical thinking or decision-making. It is about finding successful modes and means of expression. These so-called soft skills are among the hardest to develop and wield. But they are as important for technical employees as for anyone else. AI strategies fail because AI is a means, not an end. But for companies to get past the hype and focus on the real potential that AI offers, theyâ&#x20AC;&#x2122;ll have to start with how they communicate.

(Mihnea C. Moldoveanu is an assistant professor at the Rotman School.)

Monday 25 March 2019

Harvard Business Review

C002D5556

MondayMorning

BUSINESS DAY

In association with

A big step toward giving patients control over their health care data DAVID BLUMENTHAL

he seeds of a consumer-driven health care revolution, one that could turn the U.S. health care system on its head, were sown in early March. This potential disruption comes from an unlikely source: two proposed rules from the Department of Health and Human Services that could have consumers and America’s biggest tech firms joining forces. The rules, from the Office of the National Coordinator for Health IT (ONC) and the Centers for Medicare & Medicaid Services (CMS) are both focused on allowing consumers free and easy access to their health data and letting them opt to share that data with big tech or whomever else they choose. The ONC rule would require that health care providers and electronic health record (EHR) vendors make patients’ health data easily and cheaply avail-

able to them electronically. The CMS rule aims to liberate patients’ data from another critical source: insurers. How can all this technical mumbo jumbo revolutionize health care? Because it has the potential to open up the health care marketplace to consumer-driven competition in ways

never seen before. One reason that health care markets are so flawed and inefficient is that consumers and patients lack the knowledge to make good choices. In particular, they lack data about their own health and about the health and economic consequences of their decisions. The

EHR and these new federal rules could change that fundamentally, by giving patients unprecedented access to the information they need to be wise consumers of health care. Even with data liberation, however, there is a substantial gap between theory and

practice. Many consumers are ill-equipped to make sense of the reams of detailed information that populate their EHRs and their claims repositories. They need help organizing those data and interpreting them in light of their own histories, the scientific literature and the health care resources available to them in their own communities. The solution: Consumers could rely on informationcompanies to collect, manage and refine the data on their behalf. Other obstacles to a consumer-driven health care revolution remain. Threats to patient privacy and security abound when third parties are authorized to access patients’ data. Nevertheless, with the publication of these rules, and likely further public and private actions to come, doors are opening to a health care system that may look dramatically different from the status quo.

(David Blumenthal is president of the Commonwealth Fund.)

How Boeing should have responded to the 737 Max safety crisis these crashes, and can satisfy ourselves and all the global regulators that the plane is safe to fly again.” Framing is a tool to be used consciously. Done well, it can make an enormous difference in inspiring responsible action and trust in the judgment and values of the company, even if the problem turns out to not be totally solved, and needs to be addressed again.

SANDRA J. SUCHER

s all of us watch, shocked by the human consequences of two crashes of Boeing 737 Max jets in just five months, it’s hard not to wonder: Why did Boeing resist efforts to ground the jets? The second jet, an Ethiopian Airlines flight, crashed on March 10. Politicians weighed in, and Dennis Muilenburg, CEO of Boeing, called President Donald Trump to reassure him about the safety of the company’s planes following Trump’s tweet complaining that airplanes were becoming too complex. By March 13, more than 40 countries had grounded the jets. We could have avoided much of the turmoil had the company’s leaders done a better job of framing the situation. Frames shape the way we think about problems (and also opportunities). They tell us what category of problem we are dealing with, and because they identify a type of problem, they also contain the seeds of action and response.

(Sandra J. Sucher is a faculty fellow and a professor of management practice at Harvard Business School.)

Boeing CEO Muilenburg is reported to have insisted that the aircraft are safe. We heard about the training that is designed to help pilots identify and override the automatic controls on the plane if those controls are mistakenly guiding its nose down. So Muilenburg’s frame appears to be: “This is a technical problem that we can

correct with pilot training.” It’s a common enough frame for a product malfunction, but we still don’t know if the similarity in the two crashes is a coincidence or the sign of a systematic problem that needs to be corrected. Moreover, the frame seems to miss the point that hundreds of human lives have been lost, that more may

be at risk and that regulators in many countries have grounded the planes. So what could Boeing have said? A better frame would be: “This is a technical problem that we do not fully understand. In light of that uncertainty, we recommend grounding the 737 Max 8s and 9s until we can be sure we know what is causing

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Monday 25 March 2019

Access Bank Rateswatch Market Analysis and Outlook: March 22nd – March 29th, 2019

KEY MACROECONOMIC INDICATORS Indicators

Current Figures

Comments

GDP Growth (%)

2.38

Q4 2018 — Higher by 0.57% compared to 1.81% in Q3 2018

Broad Money Supply (M2) (N’ trillion)

27.07

Decreased by 14.38% in Dec’ 2018 from N31.79 trillion in Nov’ 2018

Credit to Private Sector (N’ trillion)

22.72

Decreased by 1.54% in Dec’ 2018 from N23.08 trillion in Nov’ 2018

Currency in Circulation (N’ trillion)

23.29

Increased by 10.93% in Dec’ 2018 from N2.1 trillion in Nov’ 2018

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

11.31

Decreased to 11.31% in February 2019 from 11.37% in January 2018

Monetary Policy Rate (%)

Raised to 14% in July ’2016 from 12%

Interest Rate (Asymmetrical Corridor)

14 (+2/-5)

Lending rate changed to 16% & Deposit rate 9%

External Reserves (US$ million)

42.51

March 20, 2019 figure — an increase of 2.81% from March start

Oil Price (US$/Barrel)

66.03

March 22, 2019 figure— an increase of 2.3% from the prior week

Oil Production mbpd (OPEC)

1.74

February 2019 figure — a increase of 0.58% from January 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

Friday

22/03/19

15/03/19

31,139.35

31,142.72

(0.01)

11.61

(0.01)

Volume (bn)

0.23

0.21

10.31

Value (N’bn)

2.62

3.33

(21.40)

NSE ASI Market Cap(N’tr)

Change(%)

MONEY MARKET NIBOR Tenor

Friday Rate

Change

(%)

(Basis Point)

22/03/19

15/03/19

OBB

14.25

11.17

308.0

O/N

14.83

11.67

316

CALL

Indicators

22/03/19

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) Agriculture Cocoa ($/MT) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Gold ($/t oz.) Silver ($/t oz.) Copper ($/lb.)

1-week Change

YTD Change

(%)

67.55 2.78

2.30 (2.46)

4.79 (9.03)

2147.00 95.00 77.25 12.56 469.75

(3.33) (2.36) 3.34 0.72 4.16

10.90 (27.04) (0.32) (18.07) 8.36

1311.66 15.47 288.60

0.68 0.65 (0.60)

(0.45) (10.01) (11.96)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS Tenor

Friday

Change (Basis Point)

14.83

12.00

283.3

(%)

30 Days

9.84

10.38

(54)

22/03/19

15/03/19

90 Days

13.18

12.63

55.9

FOREIGN EXCHANGE MARKET Market

8.91

11.90

18 (21)

6 Mnths

13.75

13.96

1 Month

9 Mnths

14.44

14.34

(N/$)

Rate (N/$)

12 Mnths

14.74

14.41

22/02/19

15/03/19

306.90

306.95

306.80

Inter-Bank (N)

360.43

360.61

361.48

0.00

360.00

Parallel (N)

9.60 12.08

Friday

22/03/19

BDC (N)

1 Mnth 3 Mnths

Friday

Official (N)

ACCESS BANK NIGERIAN GOV’T BOND INDEX

Indicators

BOND MARKET AVERAGE YIELDS Tenor

Global Economy In the US, the Federal Reserve left the target range for the federal funds rate at 2.25%-2.5% unchanged during its March meeting. It also lowered its forecast for US economic growth. Policymakers lowered its 2019 growth forecast to 2.1%, compared to 2.3% previously estimated; and that for 2020 was also cut to 1.9%, compared to 2%. The 2021 growth forecast remained unchanged at 1.8%. Fed officials now expect rates to remain at current levels at least until the end of the year, compared to December's projection of two rate hikes. Elsewhere, the Bank of England's Monetary Policy Committee voted unanimously to leave its benchmark interest rate constant at 0.75% during its March policy meeting. It also reaffirmed its pledge to gradual and limited rate rises over the forecast period, despite persistent concerns about Brexit. Policymakers also noted that softening in global GDP and trade growth has continued, while CPI inflation is expected to remain close to the 2% target over coming months. In a separate development, Japan's consumer price inflation was recorded at 0.2% year-on-year in February 2019, unchanged from the previous month's 15-month low figure according to statistics office of Japan. Prices of food and transport fell for the third month in a row, while cost of housing was flat after declining for 34 consecutive months.

Friday

Change

(%)

(Basis Point)

Index

Friday

Change

(%)

(Basis Point)

22/03/19

15/03/19

2800.11

2801.05

(0.03)

22/03/19

15/03/19

Mkt Cap Gross (N'tr)

8.40

(0.04)

3-Year

0.00

0.0

Mkt Cap Net (N'tr)

5.28

(0.17)

5-Year

14.63

14.62

1.0

YTD return (%)

13.99

14.03

(0.04)

7-Year

14.38

14.30

8.2

YTD return (%)(US $)

-41.80

-41.78

(0.02)

10-Year

14.38

14.42

(4.8)

20-Year

14.34

14.23

10.3

TREASURY BILLS (MATURITIES) Tenor

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

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

91 Day 182 Day 364 Day

Amount (N' million) 3,000.00 8,385.20 37,176.06

Rate (%) 10.3 12.2 12.345

Date 20-Mar-2019 20-Mar-2019 20-Mar-2019

Local Economy The Federal Government said it will prioritise borrowing from concessional lenders such as the World Bank and African Development Bank (AfDB) as it seeks to curb interest payments. According to the Director-General, Debt Management Office (DMO), the preferred option is to explore concessional sources if FG is to issue Eurobonds. One of the major objectives of the 2019 budget is to reduce debt-service costs, and it envisaged the government issuing about N1.65 trillion ($4.6 billion) of new debt, half of which would be in foreign currency. In separate development, the CBN governor at a postelection economic agenda conference last week described the foreign capital inflows to the bond market as an indication of investors' continued confidence in the strength of the economy. This he said, is a knock-on effect of the successful conduct of the general election, with the inflow of over $6 billion into the local bond market. Nigeria's bond market remains one of the most attractive investment destinations in the Bloomberg Emerging-Market Local-Currency Government Bonds index, which covers major emerging markets, including Nigeria, South Africa and Argentina. The apex bank chief said Nigeria's bond continue to top the chart due to the stability of the Investors' & Exporters' Forex rate and the yields being high by emergingmarket standards. He also projected that Nigeria's inflation post-election is expected to rise to 12% and subsequently ease, while the monetary policy is projected to be maintained at its current level. Stock Market Indicators at the local bourse were bearish for most of the week as intense profit taking was seen in the market. However, on the last day of the trading week, the market returned to positive territory with lots of buying interest in the banking industry, leaving the market virtually unchanged from the previous week. The All Share Index (ASI) eased by 0.01% to 31,139.35 points from 31,142.72 points the preceding week. Similarly, Market capitalization contracted by 0.01% to N11.61 trillion from N11.61 trillion the prior week. This week, we envisage market volatility will also continue as investors and fund

managers reposition their portfolios, with eyes fixed on earnings reports. Money Market Money market rates trended upwards as the central bank conducted several open market auctions last week thereby causing liquidity levels to decline. Accordingly, short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates climbed to 14.25% and 14.83% from 11.17% and 11.67% respectively the previous week. Conversely, longer-tenured interbank rates, such as the 30- and 90-day NIBOR declined to 10.38% and 12.63% from 11% and 13.03% the previous week. This week, Retail Secondary Market Intervention Sales might likely drive rates higher. Foreign Exchange Market The naira appreciated against the dollar across most market segments last week. At the Investors' and Exporters window, it gained 18 kobo to settle at N360.43/$ from N360.61/$ the previous week. Similarly at the official window, it appreciated by 5 kobo to settle at N306.9/$ compared to N306.95/$ the prior week. The parallel market remained unchanged at N360/$ from the prior week. The appreciation and stability recorded in the parallel and official market segments may be attributed to the apex bank's regular efforts to boost FX liquidity and alleviate dollar shortages. This week, we envisage the stability in the market would continue due to consistent FX liquidity injections by the CBN. Bond Market The Bond market remained quiet with minimal activity across the curve, this is evidenced by the negligible change seen in bond index price weekon-week. Yields on the five-, seven- and twenty year- debt papers closed higher at 14.63%, 14.38% and 14.34% from 14.62%, 14.30% and 14.23% respectively the preceding week. The Access Bank Bond index reduced slightly by 0.94 points to close at 2,800.11 points from 2,801.05 points the previous week. This week, we expect activity to pick up in view of the scheduled bond auction. Commodities Market Oil prices were propped up by an unexpected 9.6 million barrel (mmb) crude oil withdrawal from storage last week according to the Energy Information Administration. This is the third consecutive week of decline in US crude inventories. Bonny light, Nigerian benchmark crude, gained $1.52 to close at $67.55 a barrel, 2.3% higher from the previous week. In a similar vein, precious metal prices edged up for the second consecutive time due to a surprisingly more dovish tone coming from the FOMC statement. Consequently, gold prices notched up by 0.68% to $1,311.66 per ounce last week. Silver prices also edged up by 10 cents, or 0.7%, to $15.47 per ounce. This week, oil prices will largely depend on the outcome of the U.S. and Chinese trade negotiations. For precious metals, prices are likely to trend around current level buoyed by present sentiments of the US key interest rate halt.

MONTHLY MACRO ECONOMIC FORECASTS Variables Exchange Rate (NAFEX) (N/$) Inflation Rate (%) Crude Oil Price (US$/Barrel)

Mar’19

Apr’19

May’19

364

365

11.5

11.55

11.6

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

Monday 25 March 2019

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Nigerian Banks might be nearing end of bad loan tunnel BALA AUGIE

or Nigeria’s four largest banks by assets, provisions to cover potential losses have likely

peaked. Data gathered by Markets and Intelligence shows lenders’ impairment on assets have fallen to a record low, adding impetus to bottom line (profit) amid low yield environment. This could mean that most problem loans like the oil and gas NPLs are behind the banks, thanks to improving macroeconomic variables. Hitherto, operators in the industry suffered deteriorating asset quality as a precipitous drop in oil prices of mid 2014 hindered valued customers from honouring their obligations. United Bank for Africa (UBA)’s impairment charges were down 86.23 percent to N4.53 billion as at December 2018 from N32.89 billion as at December 2017. However, the chart below shows UBA’s loan loss expense surged by 447.85 percent to N27.68 billion as at December 2016. Zenith Bank’s impairment charge dipped by 81.29 percent to N18.37 percent as at December 2018 from N98.22 billion as at December 2017, this compares with a 106.15 percent surge to N32.35 billion as at December 2016.

While the lender’s Non Performing Loans (NPLs) increased to 4.98 percent in December 2018 from 4.70 percent the previous year, the

figure is lower than the 5 percent threshold. Access Bank’s impairment charges were down 57.47 percent to N14.65 billion in the

period under review as against N34.47 billion as at December 2017, this compares with 54.33 percent increase in loan loss expense to N21.95 billion in December 2016 from N7.72 billion as at December 2015. The lender’s NPL ratio fell 230bps to 2.5 percent in the period period under review, largely due to repayments from an obligor in the Telecom sector, leading to a reduction to 0.9% (Dec’17:57.6%) in the information and communication sector Guaranty Trust Bank’s impairment charge fell by 59.68 percent to N4.90 billion as at December 2018 as against N12.16 billion as at December 2017, this compares with a 426.19 percent surge in loan loss expense to N65.29 billion in December 2018 as against N12.40 billion the previous year. “The implementation of the IFRS 9 made banks take a one time charge on their Non Performing Loans (NPLs) from equity,” said Onyeka Ijeoma - Research Analyst - Vetiva Capital Management Ltd. “The successful takeover

of Etisalat by Teleology was a boon to lenders. For instance, GTBank wrote in a note to its financial statement that they have received first tranche of payment from teleology,” said Ijeoma. The cumulative impairment charge of the four big banks dipped by 76.15 percent to N42.46 billion as at December 2018 as against N177.75 billion as at December 2017. Analysts at Vetiva said given that the Banking sector remains highly exposed to the Oil & Gas sector, they see the potential for renewed uptick in non-performing loans driven by a weaker cashflow for oil borrowers to better service their borrowings. “On a positive note however, we expect a reprieve for asset quality in the banking sector from conclusions of loan restructurings that started since 2017. Notably, following the successful completion of the Etisalat sale to Teleology Holdings, we believe banks with exposure to the telco will begin to record loan recoveries,” said analysts at Vetiva.

Crude oil price rally, safe election sends Treasury yields crashing in Nigeria IFEANYI JOHN

t has been an expensive start to year for the Nigerian government still reeling from spending over a quarter of a trillion to hold the now controversial general elections in the country. But the government can now breathe a sigh of relief as a 25 percent rally in crude oil price this year has increased demand for government securities, sending treasury yields crashing by 280 basis points thereby reducing the cost of borrowing for the government seeking to fund half of its N1.9 trillion budget deficits through

local borrowings. “There were major concerns for the economy earlier in the year about the government finances and the size of its revenue deficit because crude oil price was fluctuating around the budget benchmark price of $60 while crude oil supply was well below the projected 2.3 million barrels per day,” said Jeremiah Ejemeyovwi, Lecturer in Economics Department at Covenant University. “However, since crude oil price began to increase coupled with the peaceful completion of the general elections, treasury yields have declined significantly. This is a big win

for the government who can now keep raising about N800 billion to fund its budget deficit at a lower interest rate,” said the economist. While economists agree that the fall in treasury yields is good for public finances, there is no consensus about the major reason why yields are falling rapidly. While some point to crude oil prices, others point to political stability and even inflation. Obinna Uzoma, Chief Economist at EUA Intelligence told BusinessDay that “I wouldn’t say the decline in treasury yields is due majorly to the 25 percent rally in crude oil prices, if anything, the ef-

fect was minimal. I think the drop-in treasury yields is due to a decrease in the country risk premium after the safe completion of what we feared could have been a very violent election. And you can see it in the numbers as treasury yields only began contracting rapidly in the last three weeks.” Since February 25, treasury yields have sunk by around 271 basis points buttressing the argument by EUA Intelligence that the security stability in the country since the general election may be the main reason for the decline in treasury yields. Although there were pockets of violence in the

country during the election, it didn’t lead to instability in the country, helping to strengthen investor’s confidence in the local economy. “Whether the fall in treasury yields is due to crude oil price or not, a further rally in crude oil price and continued decline in inflation will certainly keep treasury yields declining all year long,” said Uzoma. Crude oil price closed on Thursday around $68 after opening the year around $55 while Treasury yields fell to around 14.5 percent at market close on Thursday after opening the year around 17.38 percent.

P.E

SHORT TAKES 11.31% The consumer price index (CPI) slowed to 11.31% in February 2019 which is 0.06 percent points lower than 11.37% recorded in January 2019. On month-on month, headline index increased by 0.73% in February 2019, lower by 0.01% from 0.74% in January. Kebbi (13.78%) & Taraba (13.57%) are states with the highest inflation rate in February.

N15.13 trillion The total value of credit allocated by banks to the private sector in the fourth quarter of 2018 stood at N15.13 trillion. Oil & gas and manufacturing sectors received N3.55 trillion and N2.23 trillion respectively.

N145.30 Average price paid by consumers for premium motor spirit (petrol) fell by 15.8% year on year and 0.3% month to N145.30 in February 2019 from N145.70 in January 2019. States with the highest average price were Oyo (N146.50), Plateau (N146.55) & Taraba (N150.55)

BusinessDay MARKETS INTELLIGENCE (Team lead: BALA AUGIE - Analyst: Dipo Oladehinde, ENDURANCE OKAFOR, BUNMI BAILEY Graphics: FIFEN FAMOUS)

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Email the BMI team patrick.atuanya@businessdayonline.com

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Monday 25 March 2019

Markets Intelligence

Dangote Cement’s attractive valuation allures investors David Ibidapo

earish trend witnessed in the Nigerian equity market space has seen stocks like Dangote cement perform at a P/E ratio of 8.31x below previous levels of about 20x in P/E, hence, presenting to investors an opportunity to take position now that stock is cheap. With impressive performance in full 2018 recorded by the most capitalised company on the exchange, opportunities abound for investors to take position as stocks are trading below intrinsic value. As at full year 2017, Dangote cement traded at a P/E and EV/ EBITDA of 22.8x and 12.2x compared to Bloomberg Middle and East Africa peers at 20.9x and 11.3x respectively as reported by ARM securities in its equity research report March 2018. The bearish trend witnessed in 2018 saw Dangote Cement stock price dip by about 20 percent losing about N8 billion in market cap

despite strong fundamentals. Now the P/E ratio of Dangote is down to 8.31 times placing Dangote cement as a value stock, trading lower compared to its

fundamentals. As at close of trading on Friday, the company closed at N189.70 to make its year to date performance flat as prices closed also Decem-

Global markets take fright as fears of a slowdown intensify

tocks lose almost 2%, Bunds turn negative and US Treasury yield curve goes inverted Fears of a deepening economic slowdown rattled global financial markets on Friday as stocks fell, German government bond yields turned negative and a widely followed US Treasury market indicator raised fears of a recession. Investors scrambled for the safety of sovereign debt after figures showed that Germany’s manufacturing sector had tumbled into contraction, stung by slowing demand for cars. Coming two days after a much more cautious tone from the US Federal Reserve, the gloomy European news prompted investors to consider whether this year’s muscular rebound in riskier assets had been built on shaky foundations. Stock prices followed bond yields lower as a result, with the S&P 500 closing down 1.9 per cent in New York to just above 2800, and the Stoxx 50, which tracks Europe’s biggest companies, closing down 1.8 per cent. “The big one was the German data,” said Myles Bradshaw, head of global aggregate fixed income at investment house Amundi. “The global growth outlook has come into question and people are taking profits.” Ten-year German Bund yields sank below zero for the first time since 2016, showing that fund managers are happy to take a nominal loss on their holdings in return for the safety of the continent’s most rock-solid debt. In the US, three-month Treasury

yields surpassed those on 10-year debt — a kink that has preceded every US recession since the second world war and last occurred before the global financial crisis in 2007. The yield on the benchmark 10-year Treasury note fell by 10.4 basis point to 2.44 per cent, down from 3.26 per cent in October. US Treasury yields have been falling as investors fret over the outlook for the US economy following a U-turn by the Federal Reserve on Wednesday. The central bank shelved plans to raise interest rates this year and said it intended to halt the wind-down of its balance sheet by September. The so-called inversion of the three-month and 10-year yield curve is not an infallible leading US economic indicator, but it was enough to spook analysts and investors, and suggests some believe a cut in US interest rates could be on its way. “When bonds rally as much as they have over the past few days, you have to suspect there is something much larger going on,” said Tom di Galoma, managing director at Seaport Global Securities. “We are looking at very tepid growth this quarter and it could rapidly deteriorate from there. We could be on our way to another crisis here.” A weaker than expected survey of US factory-industry executives added to the sense of unease. IHS Markit’s index for the sector dipped to 52.5 in March, a 21-month low, from 53 the previous month. Wall Street economists had forecast a pick-up Emerging-market currencies

took a heavy hit, led by the Turkish lira The UK’s FTSE 100, weighed down in addition by nerves over Brexit, shed 1.8 per cent. The sudden drop in equities and rush towards haven assets stands in sharp contrast to the rapid rebound in risky bets since the start of the year, noted Mr Bradshaw at Amundi. Still, the market pullback encapsulates a debate that has been gripping investors since the Fed’s confidence in the US economic outlook waned in late January: has the central bank retuned the American economy to a safe equilibrium or is it beginning to fundamentally deteriorate? Markets fell heavily at the end of last year, but recovered when the central bank first indicated it would pause further rate rises. While stocks have rallied, bonds have held firm, showing that investors are not prepared to give up on hedges for a downturn. That mismatch — a jumble of growth fears and confidence in corporate earnings — is a “fragile equilibrium”, said David Riley, chief investment strategist at BlueBay Asset Management. The coming days will bring manufacturing data from China, which should help to give investors guidance on whether the European weakness is an outlier. “We are not going into recession in the next quarter but we are approaching the end game of this cycle rather quickly,” said Jon Hill, an interest rate strategist at BMO Capital Markets. “It’s a very precarious position right now for the global economy.”

ber 2018 at N189.70 Earnings per share, which measures the portion of a company’s profit allocated to each share of common stock stood at N22.82

as at the close of trading on Friday. As Dangote Cement celebrates its best ever financial year after declaring record revenue and profit after tax (PAT) for full year 2018 at about N901.2 billion and N390.3 billion respectively, shareholders of the company have the most to celebrate as they are set to receive a windfall profit through record dividends estimated around N272 billion. The total amount of dividends to be paid out by the company after approval by shareholders currently exceeds its total profit after tax earned in full year 2017 which was around N204.2 billion. Dangote delivered earnings growth of around 91 percent as PAT climbed to N390.3 billion from N204.2 billion. However, most of the growth in profit is thanks to a tax credit from the government. Dangote was finally awarded pioneer status, enabling the company collect up to N89.5 billion in tax credit for the year 2018. However, analysts expect the tax credit to a one-off and the company will resume paying taxes this year.

US stocks sell-off as growth concerns prompt hefty rally in Treasuries

S stocks staged their biggest one-day drop since early January as concerns about global growth spurred the biggest rally in Treasuries in 10 months and closely watched indicators pointed to a coming recession. Friday’s sharp sell-off erased a weekly gain for stocks, but ended up as one of the biggest weekly gains for benchmark Treasuries since June 2016, as yields tumbled. A dour set of German economic data unsettled European markets and drove the yield on the 10-year Bund below zero for the first time since 2016. The negative sentiment carried west over the Atlantic where, notably, one indicator of a coming recession flashed red. The gap between the yield on the US 3-month T-bill and the 10-year Treasury turned negative for the first time since 2007. An inverted yield curve, as this phenomenon is known, has preceded every US recession since the second world war. On Friday, the yield on the benchmark 10-year US Treasury was down 10 basis points at 2.439 per cent in its biggest one-day drop since May 2018. For the week, 10-year yields dropped 15 basis points, the largest weekly drop since June 2016 and keeping yields on track for their biggest March quarter drop since that same year. The S&P 500 dropped 1.9 per cent to close almost at its session low on Friday in its biggest fall since January 3. That sent the benchmark 0.8 per cent lower for

the week. The Nasdaq Composite ended a five-day winning streak with a 2.5 per cent drop, while the Dow Jones Industrial Average fell 1.8 per cent. At its polic y meeting on Wednesday, the Federal Reserve said it no longer expected to raise interest rates this year and lowered its growth outlook for the year. That initially sparked a relief rally that lasted from Wednesday afternoon to closing bell on Thursday, which had the S&P 500 then on track for its biggest March quarter gain since 1987. On Friday, the benchmark is up 11.7 per cent for the quarter, now eyeing its best start to a year since 2012. The tougher growth outlook weighed heavily on some sectors. On Friday, basic materials were the worst-performing S&P 500 sector with a 3 per cent drop, while energy, financials, tech and industrials notched declines of more than 2 per cent. Also notable, the KBW bank index dropped 8.3 per cent this week — with nearly half of that fall coming on Friday — for its largest weekly drop since early June 2016. The dollar climbed on Friday as the weak German data weighed on the euro. The DXY index, which tracks the buck against a weighted basket of global currencies, pushed 0.2 per cent higher to 96.642. Investors also sought shelter in gold, which has a reputation as a haven asset in times of market stress, pushing its price 0.3 per cent higher to $1,312.99 an ounce on Friday.

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Monday 25 March 2019

CITYFile

Look to retirement with pride, Ambode, Utomi tell Lagos’ workers JOSHUA BASSEY overnor of Lagos State, Akinwunmi Ambode and Pat Utomi, a political economist, have encouraged intending retirees from the Lagos civil service to look forward retirement with pride. Both spoke at a two-day training for intending retirees, saying while retirement might bring daunting challenges, civil servants in Lagos have nothing to worry about. According to Ambode, who was represented at the event Benson Oke, his commissioner for establishments, training and pensions, the intending retirees having served a state that had made provisions for their future, have nothing to fear. Ambode said the government has continued to remit money into officers’ retirement savings accounts and that everyone should be proud to retire. “While many employers of labour and indeed, many state governments do not see the need to prepare their employees for a new life, this administration, however, is a people-oriented one and we have resolved that everyone who has worked diligently for the state has to be recognised, paid his/her dues and assisted to prepare for future challenges. “Therefore, with the benefit of the knowledge of a responsive and responsible employer in the Lagos State government, I urge you to embrace the coming change with confidence. Without doubt, there are other challenges inherent in facing a period of retirement. Let me advise you not to be apprehensive about these. Change is built into the fabric of our lives,” he said. Utomi, who facilitated in the training, said the Contributory Pension Scheme (CPS) was meant to give civil servants hope in retirement, a scheme, he said, was better than the former ‘pay-as-yougo’ scheme. He said he was happy that the state government had increased its contribution into staff’s RSA from 7.5 percent to 10 percent.

Sympathisers at scene of fire incident at Gombe Main Market in Gombe.

NAN

NDLEA uncovers suspected cannabis warehouse in Benin

he National Drug Law Enforcement Agency (NDLEA) has uncovered a suspected cannabis (also known as Indian hemp) warehouse in a residential area in Benin, the Edo State capital. Buba Wakawa, the state commander of NDLEA, who disclosed this to newsmen, said a three-bedroom apartment, located in the ancient city, was being used by suspected drug barons as a warehouse; and which stored about 4,100 kilogrammes of substance suspected to be cannabis

sativa. According to Wakama, the illegal warehouse was discovered at Owosiegbo Street, in the Ovah area, Egor local government area of the state. The commander further disclosed that the drugs were packed in 248 bags, adding that the evacuation of the drugs to the agency’s state command took many hours. “Drug barons are unpredictable because without intelligence report, it is difficult to imagine that such a residential building will be used for the storage of cannabis sativa,’’ the commander said,

Police launch manhunt for killers of NYSC members in Bayelsa SAMUEL ESE, Yenagoa

he p olice in Bayelsa have launched a manhunt for the killers of two National Youth Service Corps (NYSC) members in the

state. Suspected cultists last week attacked the residence of corps members along School Road in Yenagoa, killing two and injuring another critically. Spokesperson of the police Bayelsa, said “on March 20, 2019, at about 2200hours, armed robbers numbering about seven, attacked the residence of one Jerry Yeseme Moses, proprietor of a school at Swalli, Yenagoa. “The armed robbers instantly shot and killed one corps member, Oluwatobi Popoola, male, 30 years; they also shot one George Onokpoma, male and Anthony Dada.

“The victims were rushed to the Federal Medical Center, Yenagoa, where George Onokpoma was confirmed dead, while Anthony Dada is responding to treatment.” Meanwhile, the police said they rescued an eight-year girl, Dora Diekidie who was also kidnapped by another twoman gang operating with a motorcycle. The spokesman said operatives pursued the kidnappers and killed one while two locally fabricated AK47 guns were recovered in the nearby bush. In another incident, police operatives on surveillance at Swali arrested a notorious ritualist, 17-year Precious Egbo, in possession of a locally made pistol and one live cartridge. The police said the suspect has confessed to being a member of a cult group and volunteered useful information while investigations were ongoing.

at the weekend. He further told reporters that the house had been sealed by NDLEA operatives and the agency was taking legal action for the forfeiture of the building. According to him, preliminary investigations have shown that the illegal substance belongs to a suspected drug syndicate that cultivates cannabis. Wakawa said though no arrest was yet to be made, efforts, however, were ongoing to apprehend suspected members of the syndicate.

Resident doctors value money more than human lives – CMD MIKE ABANG, Calabar he Chief Medical Director (CMD) of the University of Calabar Teaching Hospital (UCTH), Thomas Agan, has taken a swipe at the ongoing strike by members of the association of resident doctors, UCTH branch, describing them as people who value money more than human lives. The resident doctors are on strike to protest alleged unpaid skipping allowances from 2014- 2016. But Agan said that the doctors did not take into cognizance the impact of the strike on patients who have been left unattended due to the strike, saying “it is not supposed to be so.” The CMD in an interactive session with journalists in Calabar over the action of the resident doctors, said that

administration in the tertiary hospital was a difficult one, as no teaching hospital is self-sufficient. “What the resident doctors have done in view of the assurance given, means they are not interested in the sanctity of human lives,” he said, adding that the welfare of the patients ought to be given a priority. Agan explained that the N100 million approved for the skipping allowance in December 2018, disappeared from the server of the federal ministry of health, a development he said he has reported to the relevant authorities in Abuja and being currently addressed. The CMD therefore wondered why the resident doctors would take a rash action to the detriment of lives of patients on admission in the hospital.

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Politics & Policy Atiku congratulates Tambuwal, Ortom ...Sends solidarity messages to the people of Bauchi, Kano

Atiku Abubakar

ity with Bala Mohammed and Abba Kabir Yusuf, who have made a great showing in Bauchi and Kano states, respectively. Victory is within reach. They have shown that they are men of the people and we are convinced that much good will come out of these men of enviable talents and leadership ability. He congratulates the People’s

Democratic Party and all its members on these gains. He affirms that PDP is the true bastion of democracy and should be encouraged by these victories. According to him, with unity within its midst, it will together continue to extend the boundaries of democracy and shrink the space occupied by tyranny.

Edo leads in developmental strides among APC-controlled states in January – report

do State has been ranked as the state with the most developmental strides among All Progressives Congress (APC)-controlled states in the country for the month of January on account of Governor Godwin Obaseki’s drive to bring development to Edo people. The feat is contained in the January 2019 Progressive Strides – Tracking Developmental initiatives in APC States, a publication of the Pro-

gressive Governors’ Forum (PGF). The report revealed that the Edo State government recorded 17 strides in the forum’s parameters covering health, education, infrastructure, security, welfare, environment, sports, capacity building and empowerment. Director-general of the PGF, Salihu Moh. Lukman, who signed the report, said, “The entries for the edition witnessed more improvement as regards developmental strides collated from the Forum’s

Oyo: I will review all contracts from march 11, 2019, Seyi Makinde vows Akinremi Feyisipo, Ibadan

eyi Makinde, Governore l e c t o f O yo st at e ha s promised a radical review of all contracts awarded in the immediate wake of the March 9 gubernatorial election and others that are linked to it. Makinde said that events of the past two weeks have shown characteristics of targeted contract awards that were compiled in haste and randomly awarded to empty government purse before the May 29th swearing-In date. In a release signed on his behalf by Dotun Oyelade, said that while the government remains in place till May 28, awarding a N30billion new set of contracts in one day as was the case during last wednesday’s Executive meeting was curious and an abberation, especially when debts, as old as 2011 are left unpaid. The Governor elect pointed out that information from Civil Servants who have the interest of the state at heart suggested a grand

plan to distrupt the smooth take off of the In-coming administration by mopping up all available funds. In the new contracts of N30billion which money is to be paid on Monday, March 25, 2019, a large chunk of money was allocated as Consultancy fees and Design to outsiders even when the Ministry of Works and Housing has qualified engineers. The Governor elect said though he had promised not to probe the out going administration, civil servants who connive in illegal and strange contract awards would have themselves to blame in the next few weeks. Makinde specifically mentioned Permanent Secretaries and the office of the Accountant General as well as banks to be wary. According to him, there are also plans to mischievously increase the wages of Tertiary Institutions staff for the next two months without actually paying them before May 29 thereby leaving the new administration to grapple with the burden.

States in 2018-2019. The information collated was readily available on public platforms and some reported to the Secretariat. “In general, there is an all-round increase in the pattern of initiatives introduced by the states with Edo State recording the most initiatives for this month with 17 strides, spreading across health, education, infrastructure, security, welfare, environment, sports, capacity building and empowerment.”

Monday 25 March 2019

Supplementary poll: INEC declares APC candidate winner of Ibeju-Lekki Constituency I Iniobong Iwok

Akinremi Feyisipo, Ibadan

he Presidential Candidate of the People’s Democratic Party and former Vice President of Nigeria, Atiku Abubakar says victories of the candidates of the PDP in both Sokoto and Benue states is an acknowledgement from the Nigerian people that it is the only truly national party in Nigeria. Abubakar congratulates His Excellency, Governor Aminu Tambuwal on his re-election and assures the people of Sokoto state that they have made the right decision that will see them continue on the path to peace, progress and prosperity. He also congratulates Governor Samuel Ortom of Benue state over his very well deserved re-election. “Ortom is not just a credit to the PDP, he is also an epitome of servant leadership which he urges all and sundry to emulate. With him again at the helm of affairs in Benue, the people of the Breadbasket of the Nation can look forward to times of refreshing and deliverance,” he said. Atiku Abubakar shares solidar-

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he Independent National Electoral Commission (INEC) has declared the All Progressives Congress (APC) candidate for Ibeju-Lekki Constituency I, Fatai Mojeed, as winner of Saturday’s supplementary election in the constituency. Following the conclusion of the supplementary poll, Mojeed won with a total of 9,484 votes to defeat his closest rival from the People’s Democratic Party (PDP), Tare Oliver, who got 1,901 votes. The Returning Officer for the Ibeju-Lekki State Constituency, who is Professor, Rasheed Ojikutu, announced the result for the State House of Assembly Election at the Collation Centre located in INEC office in IbejuLekki council Saturday evening. INEC had conducted supplementary election in nine polling units of Ibeju-Lekki State Constituency I for the Lagos State House of Assembly seat, as it had declared the March 9 poll exercise in the constituency inconclusive due to over-voting in the affected polling units covering two Registration Areas (Ward) of the constituency. Ojikutu, who first reeled out scores of each political party in the March 9 election, before announcing votes scored in the supplementary poll, said the APC candidate had polled 8,525 votes, PDP, 1, 786; SDP, 63; ADP, 54; Accord, 50; AD, 59; while other political parties scored less than 40 votes each.

“I, Prof. Rasheed Kola Ojikutu, hereby certify that I was the returning officer for the constituency I of Ibeju-Lekki in the election held on the 23rd Day of March 2019. “I declare that Mojeed Fatai Adebola of APC, having satisfied the requirements of the law and scored the highest number of votes is hereby declared the winner and he is returned elected,” Ojikutu said. Speaking further, the returning officer said Accord Party scored 51 votes, AD polled 60 votes, ADC polled 26 votes, SDP got 64 votes, AAC polled 27 votes, ADP got only 55 votes while others got less than 10 votes each. According to him, the total registered voters was 122, 442 while the total accredited voters for the election was 12,245. The party agents took turn to sign the results. Earlier, Adeola Afonja, the Collation Officer for Ibeju Ward I, reeled out the scores obtained by each of the parties in the six polling units where supplementary election was held in the ward. According to Afonja, APC polled 520, PDP scored 43 votes, ADC got 2 votes, Accord and ADP got one vote each while other parties got less than 0 vote. She said that the total number of registered votes of the six polling units where the supplementary election took place was 3,98, adding that the total number of accredited voters was 592, with total valid votes being 567, adding that rejected votes were 22, while the total number of votes cast was 589.

Obaseki, elected legislators mull new template for even spread of developmental projects in Edo ...gov says Edo people will not accept borehole, VIP toilets as constituency projects

do State governor, Godwin Obaseki, and the newly elected legislators on the platform of the All Progressives Congress (APC), have agreed to deepen synergy between both arms of government to ensure projects are not duplicated across the state. The consensus was reached during a reception for members and supporters of the APC, after the thanksgiving service organised by the state government, to celebrate the success of the general elections in the state. Addressing members and supporters of the party at Government House, Obaseki stressed that his administration will no longer accept boreholes and toilets as constituency projects from members of the national and state assemblies. “I will not accept boreholes and VIP toilets as constituency projects any more. Edo people have spoken that they want real change and we must deliver the change to them.

“For the elected members of the House of Assembly, every constituency you represent must have something meaningful in the budget on a yearly basis. “I will not accept N40 million constituency projects, if you are not able to appropriate between N500 million to N1 billion, then you are not working for your constituency,” the governor said. He added that duplication of projects would not be allowed, to ensure for the efficient use of the state’s resources. Obaseki further said that he would be holding interactive sessions with the party members in the national assembly on a monthly basis to review their projects, noting that the elected APC legislators have no reasons not to deliver good governance to Edo people who gave them the mandate to serve. Responding, Hon. Peter Akpatason, the House of Representatives member-elect for Akoko Edo

Federal Constituency, thanked the governor for the massive support he gave all candidates of the APC during the elections, adding that Obaseki spurred them to victory. Akpatason promised to attract the support of the federal government to the state and said that a better synergy between the state house of assembly, national assembly, state and local governments on project execution will ensure the judicious use of the state’s resources. Speaking on behalf of the newly elected state House of Assembly members, Hon. Washington Osifo, said they would ensure the executive succeeds in its endeavour. “I want to assure you that you will enjoy our support and you will be happy at the end of the day that you have all the 24 seats in the state assembly. “We will ensure that as you are working for the good of Edo people, we will give you all our support,” he said.

Monday 25 March 2019

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BUSINESS DAY

50 BUSINESS DAY NEWS

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Buhari rejects Malami’s plot to enforce... Continued from page 1

general as well as the secretary to

the government of the federation. The letter is a response to an 8-page memo dated January 7, 2019 which had emanated from the minister of justice. In the letter in question, the attorney-general had drawn the attention of the president to an October 17, 2018 judgment of the Supreme Court in suit number SC.964/2016 brought by the attorneys-general of Rivers, Bayelsa and Akwa Ibom States against the attorney-general of the federation for failing to enforce provisions of section 16(1) & (1) of the deep offshore and inland basin production sharing contracts which states that the share of the Federal Government shall be adjusted under the production sharing contracts anytime the price of crude oil exceeds $20 per barrel. Instead of fighting the case, the attorney-general was “compelled to concede to the claims of the states in the suit”, having carefully considered the merits of the case and the reliefs sought by the states and “bearing in mind that the adjustment of the share where the price of crude oil exceeds the twenty dollars benchmark is beneficial to the Federal Republic of Nigeria, particularly the benefits of the recovery of the outstanding and unpaid difference inclusive of interest over the years”. According to the attorney-general,

“From the calculations of a team of experts, the additional revenue recoverable as at December 2017 plus accrued interest on the outstanding amount calculated up to the end of December 2018 stands at $43,747,120,957.” Claiming that the “most effective mode of ensuring enforcement and execution of the judgment in the utmost interest of the Federal Republic of Nigeria is a quasi-judicial/ administrative approach”, Malami then sought the blessing of Buhari as both president and petroleum minister to “implement the recovery by whatever means possible including but not limited to directing a lien on all available profit oil or the accounts due and or receivable by both contracting parties (international oil companies and Nigerian National Petroleum Corporation jointly or severally) immediately or instalmentally until full payment”. Malami in his letter berated the NNPC, saying the state-owned oil company as “contracting party on behalf of the Federal Government of Nigeria has over the years been derelict in its responsibility and obligation to the Federal Republic of Nigeria in this regard”. In his swift response, President Buhari rejected the two key prayers by the attorney-general and also “directed (the) Honourable attorneygeneral of the federation to terminate the recovery contract the Ministry

of Justice has signed with Trobell International Limited”. The president directed his economic management team (EMT) “to review the current state of affairs and harmonise a government position to resolve the issue including setting aside the consent judgment on the basis of its violation of section 4 of the 1999 constitution as amended”. The EMT was given until March 31, 2019 to “revert with concrete steps towards unwinding the issue”. Analysts say the present economic realities and the need to encourage investment may have weighed heavily on the president’s decision as the Deep Offshore provides for the relief sought by the attorney-general. “In my view, the president may have been acting not to scare away investors,” said Ayodele Oni, partner at Bloomfield Law firm. The president’s position on the legality of the attorney-general’s plot raises questions over how the attorney-general, who is the custodian of the laws of Nigeria, will enter into a consent judgment that is in violation of the country’s constitution and also how it came about that justices of the Supreme Court, the highest court in the land, will make a judgment in flagrant violation of the constitution. BusinessDay learnt that some of the IOCs had been advised by lawyers and diplomats representing their countries to seek redress at the World Bank had the attorney-general gone ahead to enforce the judgment.

Monday 25 March 2019

Stocks fail to entice buyers despite positive... Continued from page 2

(-4.3 percent); Etranzact plc (-33.2 percent); First Aluminum plc (-16.7 percent); Flour Mills plc (-18 percent); and Forte Oil plc (-3.5 percent). Other notable stocks that contributed to the over N100 billion lost this year from the market include GlaxoSmithKline Consumer plc (-25.5 percent); Guinness Nigeria plc (-11.1 percent); Honeywell Flourmills (-6.3 percent); International Breweries plc (-14.8 percent); May & Baker plc (-2 percent); Mobil Oil plc (-8.4 percent); MRS (-18.9 percent); and NAHCO (-6.8 percent). Considering the overly bearish theme that has dictated the pace of the market recently, it may likely see a rebound in the trading week to March 29 as investors take advantage of badly-beaten stocks on the Exchange. “We expect the equities market to record a stronger performance in March. The following factors should drive performance of the equities market: release of corporate earnings and actions; temporary drop in the yields on the fixed income securities, political stability; stability in the foreign exchange (FX) market,” said FSDH research analysts in their March financial market outlook. “The performance of the equities market in the last six years shows that the market usually appreciated between February and March, ex-

cept in 2014 and 2018. The equities market may appreciate in March after peaceful elections,” the research analysts added. FSDH analysts had asked investors to position in stocks that have good fundamentals that are currently trading below their fair value and take position in stocks that have a history of good dividend payment, noting that they see opportunities in the banking, consumer goods, building materials and oil and gas sectors of the market. However, these earlier projections by the analysts have yet to come true as the market is down by 1.84 percent month to date and the value of many listed stocks has stood lower. Further checks on the year-todate decliners list show Nigerian Breweries (-18.7 percent); Neimeth (-20.5 percent); NEM Insurance (-13.3 percent); Northern Nigeria Flourmills (-10.4 percent); PZ Cussons (-13.2 percent); Resort Savings (-60 percent); Seplat (-14.1 percent); Stanbic IBTC (-5.1 percent); Total (-3.4 percent); Transcorp Hotel plc (-11.5 percent); Transcorp (-3.8 percent); UAC of Nigeria plc (-17.9 percent); UAC Property Development Company (-11 percent); Unity Bank plc (-24.3 percent); University Press (-15.1 percent), Vitafoam (-9.8 percent), and Zenith Bank plc (-4.3 percent).

Low capital base, risky environment... Continued from page 2

L-R: Udo Okonjo, founder, Inspired Women of Worth (iWOW)/CEO, vice chair, Fine and Country; Chichi Okara, entrepreneur and marriage counsellor; Laila Matthew Daniel, clarity coach; Clare Omatseye, founder/MD, JNC International Limited (JNCI); Audrey Joe-Ezigbo, co-founder, Falcon Corporation, and Chinyere Okorocha, iWOW trustee, partner and head of sectors, Jacson, Etti & Edu, at the 9th Annual Global Possibilities Summit 2019 themed ‘The Year of Power Woman - Together We Soar Higher’ in Lagos, at the weekend. Pic by David Apara

housing finance for home-ownership and other forms of property acquisition, has helped matters. “The problems of mortgage banks revolve around their small capital base and so there isn’t much they can do. For all the money I have, unless I raise additional capital, I don’t think I can do 1,000mortgages,”AyodeleOlowookere, CEO, Omoluabi Mortgage Bank, told BusinessDay in an interview. “I think mortgage banks need to do self-enlightenment and education to grow the industry,” he added. Olowookere explained that over time there has been a wrong perception of the mortgage industry which, according to him, was understandable because a lot of mortgage banks had also done what was not right, like

Falling headline Inflation masks higher... Continued from page 1

through prices to households in 2018 compared to the preceding year.

Gross margins (the percentage of revenue a company keeps after the costs of producing the goods and services they sell) for NSE 30 companies which have released their full-year 2018 financials so far indicate that efficiency for turning revenue into profit among all the 12 companies examined rose year-on-year. For instance, gross margins of the companies rose to an average of 37.92 percent in 2018 from 37.90 percent in the previous year, while the firms’ average cost of goods sold also increased by 8.50 percent in the review year. The ability of companies to increase, albeit marginally, their gross margin in spite of increasing wages and expense in the balance sheet is proof of the pricing power of the firms. With an uptick in inflationary pressures evident in companies’ balance sheets, gross margins are

expected to plummet as high cost of production would bite on the top line, while increases in wages and salaries would weigh on the companies’ bottom line except customers are bearing the brunt of pricing power. This explains why their average revenue jumped 6.54 percent, indicating they shifted the increased costs – which someone has to account for - to their customers. Out of the twelve NSE 30 companies that have released their 2018 audited financial results as at Friday, only three including tier-one lenders, Guaranty Trust Bank and Zenith Bank, and Nigerian Breweries recorded decreases in the their costs, while other nine (9) companies grew costs in 2018 compared to the previous year. “Over the period, Nestle reported 11% YoY increase in gross profit while gross margin expanded 156bps YoY to 44%, driven by a slower increase in cost of sales (+4.3% YoY) relative to topline growth,” ARM Research said in a recent note. Seplat Petroleum Development

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PDP wins Sokoto, Benue, as APC wins... Continued from page 2

Company led other companies having grown gross margin to 52.43 percent in 2018 from 46.91 percent with 47.98 percent surge in the cost of goods sold and over 65 percent sales increase, while figures from Nascon Allied Industries’ results show the company was not successful in making the customers pay for its high costs. Despite 5.38 percent increase in the cost of goods sold to N17.99 billion by the salt refiner, sales plummeted by 4.78 percent to N25.77 billion as against N27.06 billion recorded a year earlier, causing its gross margin to slow to 30.20 percent in 2018 compared to 36.93 percent achieved in the previous year. Naturally, when inflation increases, firms would try to manage their costs by employing the most efficient technology to use, but would also try to increase the cost of their products so they remain profitable. Since consumers would normally reduce quantity demanded when price increases, the ability of firms to still secure demand in event of a price hike is seen as a successful transfer of costs to consumers.

collecting money from people and not giving back. A lot of people say they will never go near mortgage banks because of such unethical conducts. Though Rose Okwechime, CEO, Abbey Mortgage Bank plc, attributes some people’s apathy to mortgage banks to the “newness” of the mortgage system, Olowookere insisted that it was as a result of lack of selfeducation by the operators. Besides, analysts observe that some of these PMBs are not doing well because the Nigerian business environment is both hostile and risky. So, if these banks are not originating mortgages or giving housing loans, it could be for either of two factors or both.

against 1,024,713 votes secured by PDP, meaning Ganduje won with a margin of 8,982 votes. Before the final declaration of results by INEC, Sanusi Bature Dawakin-Tofa, spokesperson to PDP gubernatorial candidate in the state, Abba Kabir Yusuf, had in a statement alleged “a gang-up against democracy” by APC, INEC and the security agencies “who connived attempting to orchestrate broad daylight robbery of the people’s mandate”. “We want to categorically state that any desperate attempt by the already compromised INEC officials to declare Governor Abdullahi Umar Ganduje as the winner of this rerun will plunge Kano into an unprecedented political crisis. The attempt would be resisted,” he had said, calling on all relevant stakeholders to prevail on INEC to declare Yusuf as the winner of the election. Meanwhile, the Nigeria Civil Society Situation Room on Sunday expressed concern over the conduct of security personnel in the March 23 supplementary elections in some states of the federation.

The group, which deployed observers for the supplementary governorship elections in five states of Bauchi, Kano, Benue, Plateau and Sokoto, condemned what it called “voter intimidation and insecurity” in some states where the exercise held. “Early reports received from the collation process in Gama Ward in Nasarawa Local Government Area of Kano State showed that observers were denied access to the collation centre contrary to INEC Regulations and Guidelines. By Paragraph 48 of the Guidelines, accredited domestic and foreign observers shall be allowed access to collation centres,” Clement Nwankwo, convener of Situation Room, said at a press conference in Abuja. Nwankwo said while there were reports of widespread vote-buying in Kano and Bauchi States, Sokoto and Plateau States recorded under-aged voting. He called for the cancellation of results in Gama Ward of Kano State following widespread incidents of violence, thuggery as well as abuse of the electoral process.

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BUSINESS DAY

OPINION

Agenda for economic growth and business confidence

Godwin Emefiele

have been called upon to present a keynote address on setting the Agenda for Economic Growth and Business Confidence following the successful conduct of elections in February 2019.Making projections four years down the line in an economy is sometimes a difficult task, due to the ever changing dynamics and variables that one may not be able to account for in presenting his outlook on the economy. Nevertheless, as a policymaker, I hope to identify some of the key issues relevant to the growth of the Nigerian economy and some of the risk indicators that we ought to make provisions for, in setting a policy agenda on the economy. In doing this, I hope to address the following issues; (i) CBN’s efforts towards driving economic growth and reducing inflation; (ii) Global and domestic challenges that we faced in seeking to achieve this objective; (iii) The countervailing steps that have been taken to address these challenges; (iv) An assessment of policy measures that we may need to consider in the future, in order to enhance economic growth, drive local productivity and create jobs for a vast majority of Nigerians. In my inaugural address to Nigerians after assuming office as the Governor of the Central Bank of Nigeria in June 2014, I indicated that my mandate would be to ensure that the Central Bank of Nigeria is more people focused, as its policies and programs would be geared towards supporting job creation and fostering inclusive growth, in addition to key macroeconomic concerns such as inflation and exchange rate stability. This idea of a people focused central bank was put to task when the Nigerian economy was affected by a series of external headwinds between 2014 - 2017. These headwinds required an unconventional approach by the Central Bank in order to contain its effects on the Nigerian Economy. As some of you may know between 2014 – 2018, the global economy witnessed several adverse shocks, three of which were significant in shaping the trajectory of the Nigerian Economy, namely: i. Widespread and rising geopolitical tensions along critical trading routes in the world. Beginning in March 2014 with the United States’-led sanctions on Russia for its annexation of Cremia and alleged role in precipitating the crisis/conflict in Ukraine. Other areas of tension included the face-off between the United States and Iran in 2018, Britain’s desire to pull out from the European Union, and rising trade tensions between the United States and China. All of these factors had attendant implications on global trade and capital flows. ii. The 60 percent drop in oil prices exposed the structural vulnerabilities of oil dependent economies like ours. In July 2014, global crude oil prices began a sharp descent. The price of Bonny light, Nigeria’s crude, plunged from about US$115 per barrel in June 2014 to as low as US$31 per barrel by January 2016. iii. Normalization of Monetary Policy by the United States’ Federal Reserve System, which led to an acute capital flow reversals especially in emerging markets and increased financial fragilities in these countries. Beginning in December 2015, the Federal Reserve began to normalize its balance sheet through a gradual increase of interest rates. From a near

zero level, its key interest rate was increased nine times over a 3-year span. The most recent hike was carried out in December 2018, with the key interest rate increased again by 25 basis points to 2.25 - 2.5 percent. Impact on the economy Although the Nigerian economy initially showed uncommon resilience at the onset of these shocks, when compared with other key emerging market economies, it eventually succumbed to the strong headwinds. For our economy, the most important external factor was the drop-in commodity prices. The country’s overdependence on crude oil for over 60% of government revenue and 90% of its foreign exchange inflows meant that shocks in the oil market were transmitted entirely to the economy via the FX markets as manufacturers and traders who required forex to purchase their inputs as well as goods, were faced with a depleting supply of foreign exchange in the country. For example, average monthly inflows of foreign exchange into the CBN fell from over US$3.4 billion in June 2014 to as low as US$500million in October 2016. The decline in foreign exchange earnings was further complicated by the foreign capital flow reversals from emerging markets due to the interest rate hike in the USA. The impact of this decline on our economy was evident in the rise in the value of the US Dollar relative to the Naira; and a rise in inflation due to the increase in the cost of imported inputs and goods. As a result of these external shocks, the Nigerian economy went into a recession in the 1st quarter of 2016. Gross Domestic Product (GDP) growth contracted for five consecutive quarters bottoming out at -2.34 percentage growth in Q3 2016. The exchange rate at the parallel market rose from N200/$ in August 2015 to N525/$ in January 2017. Inflation also rose from 9% in January 2016 to 18.72% in January 2017. Our external reserves fell from about $31bn in April 2015 to $23bn in October 2016, and activities in the Manufacturing sector witnessed a lull as manufacturers struggled to get access to key inputs needed in the production process. Our financial institutions were also affected by their exposure to the oil and gas sector in addition to reduced access to foreign exchange to support the needs of their customers. This indeed was a challenging period and it also called for a major reflection on the direction we intend to pursue as a nation. Should we continue on the path where our country’s progress is determined by changes in the price of crude oil? Or should we set a new course for our country, where economic progress and job creation is determined by the productivity of Nigerians as opposed to an economy driven by consumption of imported items? The predominant view at the Central Bank was that we ought to place a stronger emphasis on enabling the buildup of a productive base for the country that will support growth in critical sectors of the economy. Under this scenario efforts will be made to support local production of goods and services that can be produced in Nigeria. This would help toreduce our dependence on foreign goods, as well as generate alternative sources of foreign exchange for the country. As a result of this paradigm shift in govern-

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If global growth is subdued in 2019, we may expect to see downward pressures on crude oil prices, barring any other unforeseen circumstances

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ment, we decided to institute several measures as path of our efforts to enable the Nigerian economy recover from the recession. These include: • Monetary Policy - Over the intervening period between 2015 - 2016, the CBN embarked on a cycle of tightening which culminated in hike in the MPR from 12 percent to the prevailing 14 percent in July 2016. This decision was expected to rein in expected inflationary pressures that may result from exchange rate pass-through to domestic prices, and ensure that inflation expectations are well anchored. It was also expected to set off increased capital inflows to the country, which should improve accretion to reserves. • Conserving our foreign exchange - We introduced a demand management approach in order to conserve our reserves. In this regard, we analyzed our import bill, and encouraged manufacturers to consider local options in sourcing their raw materials, by restricting access to foreign exchange on 41 items, which we later increased to 43 items. • Risk based supervision - The weakening of the Naira, impacted somewhat on the balance sheets of domestic banks. To guarantee financial stability the CBN took a number of steps, including: a) Monitoring compliance of supervised institutions with the foreign exchange management framework issued in June 2016 through our risk-based supervision methodology, which also involved reviewing international trade and foreign exchange operations of local banks; b) Monitoring the financial position and performance of supervised institutions; c) Assessment of the risk profile and governance management practices of banks d) In the event of major deteriorations on any key risk indicator, we engaged with the affected bank in order to mitigate concerns and shore-up their capital base. • Investors and exporters window - As the pressure increased in the foreign exchange markets, the CBN in April 2017, announced a strategy to further liberalize the market with the introduction of the Investors and Exporters Window. This step was designed to increase transparency in the market and eliminate inordinate demand for FOREX. • Development Finance Intervention - We increased our lending to the agricultural and manufacturing sectors, through targeted intervention schemes such as the Micro Small and Medium Enterprise Development Fund(MSMEDF), Anchor Borrowers Program, Commercial Agricultural Credit Scheme and the Real Sector Support Facility. In particular we sought to improve domestic supply of four commodities (rice, fish, sugar, and wheat), which consume about N1.3 trillion annually in our nation’s import bill. Furthermore, to spur bank lending to highimpact sector, the Bank, at its July 2018 MPC, pledged to refund CRR to banks under certain conditions. Banks that bring proposal for funding of new projects or expansion of existing ones in agriculture and manufacturing sectors will, accordingly, qualify for CRR refund of up to 100 percent. It was our expectation that banks would use this opportunity to expand credits to the manufacturing sector • Power—In conjunction with stakeholders in the power sector, we established a Special Purpose Vehicle, in the form of a low interest facility, to discharge existing legacy gas debts that had undermined gas supply to generating power plants in the country. This is aimed at improving investment and production in the power value chain. Result of CBN’s measures on the Economy GDP - After five quarters of uninterrupted GDP contraction (beginning from 1st Quarter of 2016), the economy exited from the recession during the second quarter of 2017. The recovery has been sustained for seven consecutive quarters though fragile. The pace of quarterly

GDP growth has improved from .5 percent in the second quarter of 2017 to 2.38 percent in the fourth quarter of 2018. The short-term outlook continued to strengthen with average growth projections of about 3 percent for 2019, up from 1.81 percent in 2018. The recovery has been driven largely by improved non-oil activities especially the agriculture sector which expanded consistently by about 3.5–4.3 percent (even during the recession), reflecting government’s efforts at diversifying the economy. This was nonetheless, reinforced by the pickup in the oil sector as oil prices rallied in 2017. The gradual re-orientation of the economic structure towards the agriculture sector reflects the diversification drive of the government which was supported by the development finance initiatives of the CBN. Inflation - Following the implementation of a tighter monetary policy regime and improved FX inflows as a result of the introduction of the I&E window, inflation began to decline, from its peak of 18.7 percent in January 2017; it currently stands at 11.31 percent as at February 2019. Interestingly for the first time during a general election cycle, our inflation rate declined from 11.37 percent in January 2019 to 11.31 percent in February 2019, due to our measures aimed at containing liquidity and supporting improved production of staple food items. Exchange Rate - Since the establishment of the I&E Window in April 2017, we have recorded about US$35 billion in autonomous inflows through this window alone. As a result, exchange rate pressures eased considerably across all markets as the rates converged to about N360/ US$ and the distortive premium almost eliminated. At the BDC segment, we saw a significant appreciation of the Naira from over NGN525/US$ in February 2017 to about NGN360/US$ today. Rates at the I&E window also appreciated from nearly NGN382/ US$ in May 2017 to just over NGN360/US$. In addition, exchange rate pressures normally witnessed during general election cycles appeared to have abated in February 2019, as the exchange rate remained stable at N360/$ during and after the general elections. This stability in the exchange rate reflects improved confidence in the naira by investors and the general public. External Reserves - At the height of drop in crude oil prices, our FX Reserves had declined to US$23.7 billion in October 2016. With the implementation of the tools mentioned above, the stock of our external reserves has recovered steadily and has risen to US$44.8 billion as at March 19,2019. Agricultural Sector - The Government’s Anchor Borrower Programme (ABP) has ensured that Nigeria emerged from being a net importer of rice to becoming a major producer of rice, supplying key markets in neighboring countries. To give one example, data from the Thailand’s Rice Exporters Association indicate that in 2012, about 1.2 million Metric Tonnes of rice was exported to Nigeria. However, in 2016, which was the first full year of implementation of our policy, rice exports to Nigeria had fallen by 99 percent to only 784 Metric Tonnes. The significant reduction in imports of rice from Thailand represents a saving of over US$600 million to Nigeria in 2016 alone. It is heart-warming to note that this fall in imports have been largely filled by a boost in local rice production. As at October 2018, a total number of 862,069 farmers cultivating about 835,239 hectares, across 16 different commodities, have so far benefited from the Anchor Borrowers program, which has generated 2,502,675 jobs across the country.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Emefiele, CON is the governor of the Central Bank of Nigeria

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This is M NEY A guide to your Personal Finance

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Monday 25 March 2019

• Savings • Travel • Debt & Borrowing • Utilities • Managing your Tax

Learn. save. earn MONEY MATTERS

Nimi Akinkugbe

lobal Money Week (GMW) is a campaign aimed at inspiring our children and youth to learn about money, saving, creating livelihoods, gaining employment, and becoming an entrepreneur through interactive and engaging activities. The Campaign’s slogan, “Learn, Save, Earn,” conveys key messages that empower children and youth to learn to manage their money wisely, save and invest for their futures, and to help them transfer their knowledge to their families and to entire communities. Money management is not in the school curriculum; thus the onus falls upon parents, teachers and guardians to take proactive steps to ensure that their children are equipped with at least the basic concepts of personal finance before they step out into the world. Sadly, most parents don’t deal with their children’s money issues until their children are adults. By then, any money problems can be both costly and emotionally charged as parents resent having to constantly bail their teenagers and young adults out of financial woes. When bad money habits are formed, it is hard to shake them off and can be the beginning of a lifetime of financial troubles. Here are some ways to set your children on the path to long-term financial security. Be a role model The best way to create good citizens is to demonstrate with our own positive behavior. Action speaks louder than words; your children will pick up what you do faster than what you say. Parents thus have a great opportunity to encourage good financial habits in young children. Indeed, a Cambridge University research report revealed that money habits are formed as early as the age of 7. This means that the earlier we start to introduce our children to the basic financial concepts, the better. Fortunately there are several teachable money moments that can be introduced from home. Parents and guardians are the biggest influence and children will typically develop their attitudes and habits through the examples they see at home. They are more likely to be good savers if their parents set a good example. It is

thus important to realize that our behavior will have a long lasting impact on our children’s money personalities, which affects how they spend, save, invest, borrow, and give. Give them some The best way to teach children to manage money is to give them some. Money gifts, pocket money or an allowance are usually a child’s first experience with money. This provides parents with an opportunity to teach budgeting and saving. Children should understand that they have a finite amount of money, which they need to manage in order to be able to afford the things that they want. Distinguish between Wants versus Needs If your child has been eyeing a new device or gadget, don’t just pay for everything that they want, as this sends the wrong signal. Giving children everything that they want often instills a sense of entitlement that can erode their ambition, drive and motivation. If they want something, encourage them to save towards at least part of the cost; you might then supplement their savings and make up the difference and provide valuable lessons from this teachable moment. You can agree on a target amount that they should save themselves; there is a sense of fulfillment that comes with making an effort to reach a savings goal. Learning to earn Chores teach discipline and responsibility and should not necessarily be paid for. But if a child is particularly helpful in completing chores around the house that are outside what they would ordinarily be expected to do, consider rewarding them for the work done. Penalties and fines may also be imposed where work is neglected or done shabbily. Part time jobs and vacation jobs also give children a practical understanding of the effort and

time that is needed to earn an income. Their performance at these jobs sets an early impression with employers about a child’s work ethic and discipline. Some of these early experiences are the start of a valuable network. Take them seriously. Some children display entrepreneurial skills very early. If your child is showing significant skill in a particular area you might encourage them to start a small business. This is a great opportunity to teach them about money and also sows the seeds of entrepreneurship. Apart from earning income it will begins to instill a solid work ethic they will benefit from throughout their lives. Save regularly As soon as children have access to money from pocket money, chores, vacation jobs, they can begin to save. They should try to save at least 10% of all their pocket money in a piggy bank; subsequently a savings account should be opened for them at a reputable bank. Birthday money and any other income they may be given should be deposited. A savings account with some restricted access will help to teach them the discipline of saving. Without regular withdrawals, they will quickly learn the concept of compound interest. A growing balance is an incentive to save more as they can see the direct benefit over time. Play money games Gaming provides a powerful teaching opportunity. Board Games such as Monopoly and Cash Flow for Kids are great tools to teach children about the important concepts of banking, real estate, saving, taxes, budgeting, earning, investing etc. There is something special about board games; not only are members of family spending precious quality time together, but they are also learning invaluable life lessons at the same time. Utility Bills

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If you as a family introduce the concept of making an impact on your community or your environment as a way of life, children begin to see the positive impact that they can have

There are some every day expenses that children often take for-granted; utility bills that they seldom see. They constantly request for your car to drop them at a friends’ house with no idea about the cost of petrol, and they demand constant electricity without giving diesel costs a second thought. Such everyday actions such as using electricity or data which they value so much, will make them appreciate them if they are aware of the costs. Talk about money saving habits like turning of lights or air-conditioners when not in use; if they actually see the bills, these will become practical real life lessons that will help them to make better money-saving decisions. Teach them about debt If they are old enough to understand the concept, talk about the difference between good and bad debt. You should explain that sometimes it’s suitable to borrow money for example for a home. Going into debt for things that do not improve your networth such as vacations, clothes, eating out etc, can undermine their financial goals. The sooner your teenager understands the concept of debt, its advantages and its pitfalls, the better. Making an impact A valuable lesson about money is that giving is as important as receiving. If you as a family introduce the concept of making an impact on your community or your environment as a way of life, children begin to see the positive impact that they can have. Discuss with your children, a cause which they would like to support and make it possible for them to visit and understand what a difference their donations of either money, some of their belongings, or their time and talent can have. Financially literate children have a much better chance of becoming financially independent adults and attaining future financial security. Be part of GMW 2019 to help our children and youth to secure their financial futures. ‘Learn. Save. Earn.’ Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance. For more personal finance tips, contact Nimi: Email: info@moneymatterswithnimi.com Website: www.moneymatterswithnimi.com Twitter: @MMWITHNIMI Instagram: @MMWITHNIMI Facebook: MoneyMatterswithNimi

Monday 25 March 2019

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Monday 25 March 2019

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Deep Blue project to end piracy, other criminality on our waters - Amaechi AMAKA ANAGOR-EWUZIE

inister of transportation, Rotimi Chibuike Amaechi, has restated the Federal Government’s commitment towards ridding the Nigerian territorial waters of criminality through the Integrated Security and Waterways Protection Infrastructure, also known as the Deep Blue Project. Amaechi said this last week in Lagos at the graduation ceremony for participants of the C4I Intelligence System Operator Course for the Deep Blue Project. According to Amaechi, Nigeria’s 853km long coastline and her location in the Gulf of Guinea made it strategic for both maritime activities and inherent security issues such as piracy, oil theft, sea robbery, and other crimes. Amaechi, who was represented by director, Maritime Safety and Security, Federal Ministry of Transportation, Dajuma Dauda, said the project was a con-

scious effort towards addressing illegality on our territorial waters and, indeed, the Gulf of Guinea. Dakuku Peterside, director-general, Nigerian Maritime Administration and Safety Agency (NIMASA), said the project would drastically reduce criminality in the region. “What we are doing is fulfilling the training aspect of the project and this will also be complemented by acquisition of assets, such as fast intervention vessels, surveillance aircraft, and other facilities, including a command and control centre for data collection and information sharing that will aid our goals of targeted enforcement,” Peterside said. The project is geared towards building a formidable integrated surveillance and security architecture that will comprehensively combat maritime crime in Nigeria’s waterways up to the Gulf of Guinea, he said. Tthe Agency, in collaboration with the National Assembly, is also taking steps to ensure that the Anti-piracy Bill is passed soon, he disclosed.

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Parah Family launches project to provide CBN to create PVS 2020 as ATM transactions rise by 196% free fertility treatment for families SEGUN ADAMS

arah Family Foundation (PFF), a nongovernmental organisation, has set out to alleviate the sufferings of families by unveiling plans to assist at least 100 families with free Assisted Reproductive Technology (ART). Dayo Odukayo, the visioner of PFF, made this known last week as she discussed the challenges of getting fertility treatment in Nigeria. According to Odukayo, funding is a major challenge to a lot of families due to lack of government financial support for medical intervention and unavailability of infertility treatment for citizens, as is the practice in the United Kingdom through NHS (National Health Scheme). “HMO in Nigeria does not support fertility treatment while some developed countries give at least 1 to 3 free attempts of fertility treatment in public hospitals,” she said. However, the Parah Foundation, which provides psychological and financial support for families experiencing infertility, has started a project to further the cause.

‘One of the fundraising initiatives of PFF is called #100FAMILIES4ART, an initiative to support at least 100 families with free ART (Assisted Reproductive Technology), saying it has only succeeded with 20 families to date. With the launch of ‘Journey to Parah,’ a book written to help a lot of people living in ignorance, she hopes to raise more funds to finance the project. This is the reason for the launch of the book “Journey to Parah,” she said. “The funds realised from the sales of the book will be channelled toward assisting families that cannot afford the treatment in order to achieve the objective of the project #100FAMILIES4ART.’’ The book was put together covering the major areas of life that Infertility is affecting in families. PFF was birthed as a result of divine instruction after the visioner’s eight years fertility challenge. The organisation has recorded much success so far, and hopes it would keep intensifying efforts to break the ‘myth’ around infertility, reach out and help more families in Nigeria.

... PoS transactions rise by 3,076% HOPE MOSES-ASHIKE

entral Bank of Nigeria (CBN) is proposing a refreshed Payment System Vision (PSV) strategy tagged PSV 2030, as it is undertaking a review of the PSV 2020. The PSV 2020 was created to provide a sound regulatory framework that supports innovation, protects consumers and promotes financial stability. This is coming as ATM transactions rose by over 196 percent to 875 million in 2018 compared with 295 million in 2013. Point of Sale transactions increased by 3,076 percent from 9 million in 2013 to 285.89 million in 2018. Also, electronic transfers via web went up by 2,440 percent from 2 million in 2013 to 50.8 million in 2018. “We are clearly heading in the right direction,” Aisha Ahmad, CBN’s deputy governor, financial system stability, weekend in Lagos, said at the 2019 Electronic Payments Incentive Scheme Efficiency Awards, created by the Electronic Payments Incentive Scheme (EPIS)

organised by the Nigeria Inter-Bank Settlement System (NIBSS) and the CBN. This award ceremony, she said, brings together diverse participants in the ecosystem, responsible for achieving these milestones, whilst the categories of the awards reflect the Bank’s aspirations for the payment system, recognising leaders in both bank and non-bank categories in the critical areas of driving cashless, platform efficiency, innovation and customer experience. “Despite the progress recorded we are not yet at the goal,” she said, adding that electronic transactions are not yet at desired levels, increasing digitisation heightens cyber security threats while policy makers are faced with the twin but often conflicting objectives of fostering technological innovation whilst managing the risks to financial stability. The payments system has changed significantly and continues to evolve. New technologies and a growing number of Financial Technology companies in the markets are supporting faster payments and settlements.

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Monday 25 March 2019

Oando, Canadian Government, Accountability Lab Bayelsa community goes to court to stop Aiteo OML 29 lease champion the SDG 16 Innovation Challenge 2019 Federation, Minister of Pe- ments to the “2nd DefendSAMUEL ESE, Yenagoa

n 2016, the United Nations introduced the Sustainable Development Goals (SDGs) as part of the Resolution 70/1 of the United Nations General Assembly on transforming our world: the 2030 Agenda for Sustainable Development. The 17 goals are built on the successes of Millennium Development Goals, including new areas such as climate change, economic inequality, innovation, sustainable consumption, peace and justice. Of all the SDGs, Goal 16 on peace, justice and strong institutions have been considered both an end in itself, and a crucial part of delivering sustainable development in all countries. It has in fact been seen by many commentators as being the transformational goal and key to ensuring that the UN SDGs agenda can be accomplished. To create conditions that would lead to inclusive decision-making and improve the rule of law, the private

sector are playing more coordinated roles by championing initiatives that would increase active citizenship and prevent corruption. One of such initiative is the SDG 16 Innovation Challenge Nigeria, recently championed by Accountability Lab, an advocacy nongovernmental organisation (NGO), focused on establishing change-makers to develop and implement positive ideas that promote integrity within their communities. The organisation, which prides itself for catalysing a new generation of active citizens and responsible leaders around the world, partnered Oando plc, Nigeria’s indigenous energy solutions provider and the Canadian Government. The SDG 16 innovation challenge is an initiative to find creative solutions for SDG 16 on justice. The competition supports young men and women ages 15 – 35 years to develop ideas, build skills and connect with others

working towards a shared goal of strengthening accountability, the rule of law and access to justice for Nigerians. The top 40 ideas submitted for the innovation challenge were invited to a 3-day workshop in Abuja and Lagos respectively. In Abuja, twenty finalists were hosted to have a 3-day mentorship, training and brainstorming session to further refine their concepts. In the Lagos edition, 20 finalists were hosted by Oando at the company’s head office located at the Wings Office Complex, Victoria Island, Lagos, from March 6 to 8, 2019. The finalists were opportune to engage with Oando’s chief compliance officer/company secretary, Ayotola Jagun. She spoke extensively on leadership and introduced the contestants to the idea of servant leadership; she went further to highlight the core skills required to be a leader, which include emotional intelligence, being future oriented and having the disposition to serve.

he people of Nembe-Bassambiri in Nembe Local Government Area of Bayelsa State have asked the Federal High Court sitting in Yenagoa, the state capital, to stop the lease of OML 29 to Aiteo pending the outcome of a substantive suit before the court. BusinessDay reliably gathers that the development is the result of plans by the Minister of Petroleum Resources to go ahead with the lease of OML 29 to Aiteo for $82 million without regard to the position of the community in Suit No. FHC/YNG/CS/62/2015. The plaintiffs are Ikaonaworio Eferebo-Igoma, Iyerite Chiefson AwululuAtubu, Ayebaesin Edoghotu-Omoh, Markson Amaegbe-Orutari, B. C. Benwari-Yousuo and Doibo Evans representing OML 29 communities. The defendants are Attorney-General of the

troleum Resources, Federal Ministry of Environment, The Shell Petroleum Development Company of Nigeria, Aiteo Exploration and Production Limited, Attorney-General of Bayelsa State and The Deeds Registrar, Bayelsa State Ministry of Lands. In an 18 paragraph motion on notice, the third plaintiff, Ayebaesin Edoghotu-Omoh said the plaintiffs had filed an application for an interlocutory injunction on June 29, 2017 seeking an order restraining Minister of Petroleum Resources from granting any application for the renewal of OML 29 “beyond the subsisting 30-year term that will expire on the 30th day of June, 2019 pending the hearing and determination of the substantive suit.” Edoghotu-Omoh also averred that without allowing the court to decide on the interlocutory injunction, the 5th Defendant went ahead to make pay-

ant through the Department of Petroleum Resources.” He said the $82 million payment was made in five tranches of $18,455,000.00, $ 9 , 2 7 7 , 5 0 0 . 0 0 , $ 9 , 2 7 7 , 5 0 0 . 0 0 , $6,866,468.23, $20 million and $18,230,000.00 on 22nd January, 2018, 22nd January 2018, 6th November, 2018, 14th November, 2018, 18th December, 2018 and 22nd January, 2019, respectively. According to EdoghotuOmoh, “the conduct of the 5th Defendant/Respondent in ignoring the suit to make payments for the renewal of the OML 29 is capable of generating unprecedented violence in our Kingdom within the OML 29 acreage.” When the matter came up on Friday, March 22 in Court 2, Federal High Court, Yenagoa, the trial justice, Awogboro Abimbola fixed April 11 for hearing on the motion on notice while urging both parties to make more efforts in ongoing settlement moves.

Air Peace battles FAAN’s rejection of delivery of another aircraft IFEOMA OKEKE

L-R: Akinsola Akeredolu, vice chairman, Association of Stock Broking Houses of Nigeria; Henry Rowland, acting executive commissioner, corporate services, Securities and Exchange Commission (SEC); Mary Uduk, acting DG, SEC, and Isyaku Tilde, acting executive commissioner, corporate services, SEC, at the post QI Capital Markets Committee (CMC) press briefing on the resolutions reached during the meeting in Lagos. Pic by Pius Okeosisi

Nigeria’s revised TP regulation to earn greater compliance among taxpayers HOPE MOSES-ASHIKE

igeria will expect increased Transfer Pricing (TP) compliance going forward as 72 percent of respondents in Andersen Tax survey believe the revised TP regulations will enhance their ease of compliance. Nigeria first introduced TP regulations in 2012 but was repealed in 2018. Transfer pricing, according to Seyi Bickersteth, chairman, Andersen Tax Africa, is the utilisation of pricing policies between head offices and subsidiaries of multinational companies to achieve defined commercial tax ob-

jective, and usually the tax objectives are the minimisation of tax liabilities. In its maiden edition of the review of Transfer Pricing Development in Africa, Andersen Tax, Nigeria, described TP as a major tax consideration for Multinational Enterprises (MNEs) across the world. The firm conducted a country TP profile review by examining the TP compliance requirements; key TP developments and the TP audit experiences of MNEs operating in selected sub-Saharan African (SSA) countries including Ghana, Kenya, Nigeria, South Africa, Tanzania and Uganda. “Our aim basically is to

help both parties, to help multinationals who come into particular situations, especially SSA to understand the transfer pricing environment so that they can comply better. At the same time, we also want to help the host country to better understand the models that the multinational companies are bringing to determine what their pricing policy is and why it is very necessary for them to do that,” Bickersteth said. Transfer pricing in Africa is life because there is a lot of demand for cash revenue, most government in SSA countries will continuously be tweaking in order to be able to get the tax revenue

they need for developmental objectives, he said. Speaking at the official unavailing of the report in Lagos, Josh Bamfo, partner and head, transfer pricing services, Andersen Tax, said the key objective was to try to help multinational enterprises coming to invest in SSA region. “We know that this is a destination that a lot of foreign direct investors will like to come into,” Bamfo said. The only source of worry is some of the uncertainties in the sub-region, he said. One of such uncertainties has to do with taxation, and because transfer pricing is an international tax issue, it pertains across sub regions.

hat was supposed to be a moment of jubilation was turned into sadness for Air Peace, an indigenous carrier, last week during the arrival of its latest Boeing 777 into Nigeria. The aircraft, which was supposed to touch down at the Murtala Muhammed International Airport (MMIA) Lagos by 3pm from Dallas, the USA, was stopped from landing 30 minutes to its arrival by the Federal Airports Authority of Nigeria (FAAN) over alleged ‘no parking space’ at what is supposed to be the largest airport in Nigeria. Victoria Shin-aba, the airport manager, who refused to come out to resolve the problem, asked the airline to go and park the aircraft at Enugu or Port Harcourt airport and claimed that she was out of the office, even when she was sighted at the airport. Under her instruction, FAAN’s Aviation Security (AVSEC) refused to allow journalists to go to the airside to cover the arrival of the aircraft until Chris Iwarah, the head of communication of Air Peace, called Henrietta Yakubu, the general manager, corporate of affairs of FAAN, who intervened. According to FAAN, Air Peace did not notify the agency in time about the arrival of the aircraft, but Iwarah said the aircraft

was supposed to arrive three days earlier and the agency was aware about the delay and the subsequent arrival of the airplane that Wednesday. FAAN unofficially complained to journalists that Air Peace had earlier brought Boeing 777 and parked them at the airport, but Iwarah said that the agency was aware that the aircraft were being prepared for international operations and were going through procedures with the Nigerian Civil Aviation Authority (NCAA) before they would be inducted as part of Air Peace fleet so that they would be used for international service. Iwarah said the aircraft (this new arrival made it the third) were not just parked there but were used for demonstration flight for several hours in order to meet NCAA regulation for the airline to conduct international operations. He disclosed that the demonstration flights took the aircraft to Sharja in United Arab Emirates, Johannesburg, Dakar, Senegal, Kano, Freetown, Port Harcourt, and they were used everyday for training between Lagos and Abuja. After arguments and negotiations between FAAN and Air Peace, the agency asked the airline to land the aircraft at the cargo section of the airport instead of the terminal where commercial passengers flights land and park.

Monday 25 March 2019

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NCC concludes process for subsidy disbursement to infrastructure companies JUMOKE AKIYODE-LAWANSON

N L-R: UK Eke, GMD, FBN Holdings; Ibukun Awosika, chairman, First Bank; Oba Otudeko, group chairman, FBN Holdings; Adesola Adeduntan, CEO, First Bank, and Bayo Olugbemi, MD/CEO, First Registrars and Investors Services Limited, at the thanks giving Service in commemoration of the First Bank 125th anniversary in Lagos. Pic by Pius Okeosisi

Confidence needed for viable power sector in Nigeria - experts OLUSOLA BELLO

... sector requires $445bn investment

or Nigeria to enjoy unrestrained power supply that can boost economic activities, the country will require investment of about $445 billion, the bulk of which must come from the private sector, financial experts say. With the Gross Domestic Product (GDP) of Nigeria in 2017 put at about $450 billion, which is not enough to finance the power sector, they argue that it is mandatory for Nigeria to seek the intervention of the private sector to help finance the sector. Anthonia Okoh, director, project and export finance, Africa, Standard Chartered Bank, who spoke at the Centre for Petroleum Information (CPI) Energy Finance Forum, stresses the need for the country to move from

the current 12,522MW to 180,000MW to realise its fullest industrial potential, adding that the average household in the country receives approximately three hours of power a day from the grid. She states that the investment will cut across the whole value chain of the power sector, such as meeting the cost of gas exploration, processing, pipeline transportation, generation, transmission and distribution. Giving a breakdown of the cost of each of the segments that make up the value chain, she says an estimated $56 billion would be needed for gas exploration, gas processing $67.5 billion, pipeline transport, $3 billion, power generation $270 billion, transmission $9 billion and distribution $40 billion.

Nigeria has large gas reserves estimated at 192 trillion cubic feet (Tcf ), but the lack of regular gas availability has been a major contributing factor to the problems of grid-connected power plants. Distribution companies need to improve their network in order to better segment their customers and channel power while Technical and non-technical losses are occurring at the distribution level due to poor network infrastructure. She however says the country can realise the objective of giving her citizens adequate power supply if it is ready to partner with many international banks. “Many international banks, ECAs and DFIs investors are willing to fund limited/non-recourse projects in Nigeria. This al-

lows them to manage and diversify their existing asset and liability portfolios and invest in a strategic sector. Partnerships with renowned international developers/ contractors/operators unlock liquidity from their relationship commercial banks in their home country as well as tied and un-tied ECA financing.” Nigeria, she notes, has an opportunity to leverage its progress in developing an enabling regulatory environment to attract institutional investors. Victor Eromosele, chief operating officer of ME Consulting, says there are huge gas resources in the Niger Delta, but notes that much of this should have ended up in form of power in our various homes if the necessary investments had been made.

World leaves Nigeria behind in driving tax revenue from digital transactions ENDURANCE OKAFOR

…Facebook, Instagram, YouTube, others to start VAT remittance to S/Africa

umphrey Imafidon, a 28-year-old manager at an outsourcing firm in Lagos, recently bought a laptop from Amazon, despite the numerous shops selling the item in Computer Village Ikeja, in the heart of Nigeria’s commercial capital. He paid $1,000 for the fancy and trendy laptop which was delivered to him through a courier service after seven working days. In this transaction, the Federal Inland Revenue Service (FIRS) was denied the $50 (5 percent of the cost of the laptop) that would have accrued to the Nigerian government in form of Valued Added Tax (VAT). Like Imafidon, many Nigerians today are on Alibaba, Facebook, Instagram, You-

Tube or Netflix shopping, loading carts, paying for ads or subscribing to stream movies. Nigeria has 98.39 million internet users, according to a new report by social media marketing platform Hootsuite. Out of these, 78 percent are Facebook users, 57 percent use Instagram, followed by FB Messenger at 54 percent, and YouTube at 53 percent. E-payment channels in Nigeria recorded a growth of 32 percent year-on-year to N138.67 trillion in 2018, from N104.67 trillion in 2017, according to figures from National Bureau of Statistics (NBS). The report also shows that NIBSS Instant Payment (NIP) transactions dominated the volume of the transaction recorded with 228,209,423, valued at N23.57 trillion in Q4 2018.

But while Nigeria seems at a loss regarding how to explore the opportunities available in its large digital economy in growing its tax revenue, tax authorities all over the world are tweaking models to plug tax leakages in cross-border transactions. South Africa, for instance, has updated the definition of its digital services subject to VAT which, according to the country’s regulator, will be effective from April 1, 2019. “Should you be a foreign supplier of any electronic services to a South African resident who has an address in South Africa and payment originates from a South African bank, then where the value of your electronic supplies exceeds ZAR 1 million per annum, you will be required to register as a VAT vendor in

South Africa and levy VAT on those services going forward,” said Fasken, an international business law firm, explaining the updated tax policy by South Africa. “Clearly government sees the supply of electronic services by foreign companies as an area that should fall within the South African VAT net and the draft regulations go a long way in achieving this,” it said. Europe has been bullish about taxing the digital economy since 2015. All telecommunications, radio and television broadcasting, and electronically-supplied services rendered to a non-taxable person have been subjected to tax in the Member State in which the customer resides, regardless of where the taxable person supplying those services is established.

igerian Communications Commission (NCC) says it has concluded plans and will soon start disbursing subsidies to the six-licensed technology Infrastructure Companies (InfraCos) as part of its plans to boost broadband penetration in Nigeria. Subsidy arrangement for these companies is part of the digital transformation agenda, which the NCC has put in place for actualisation, as it will augment the InfraCos’ capital expenditure (CAPEX). Umar Garba Danbatta, executive vice chairman of the NCC, disclosed this at the weekend when he received a delegation from the United States Trade and Development Agency (USTDA) at the Commission’s headquarters in Abuja. The USTDA team led by Thomas Hardy, its ag. country director, was received at the instance of the NCC board members and senior management of the Commission, where Olabiyi Durojaiye, chairman, NCC board, called on USTDA to work with the Commission towards addressing deployment challenges being faced by some InfraCo licensees in the South-South geo-political zone due to the riverine, swampy nature of the region. While providing updates on the Commission’s broadband infrastructure

development project, especially the licensing of InfraCos each in the six geo-political zones and Lagos, which is carved as the seventh zone, Danbatta said InfraCo scheme had a public-private partnership (PPP) arrangement with a subsidy component that is being worked out for the licensees to fast-track deployment in their respective zones. “The licensees are expected to play some roles and NCC too is to play some roles to encourage broadband infrastructure deployment by the licensees. Currently, we have seen the licensees’ CAPEX, we have negotiated the CAPEX and we have arrived at percentage of subsidies based on the negotiation that we have had with them. However, the subsidy will be paid to them by the Commission upon attainment of reasonable milestones by the licensees in their zones of deployment,” Danbatta said. The already licensed six InfraCos include MainOne Limited for Lagos Zone, Raeana Nigeria Limited for South-South Zone, O’dua Infraco Resources Limited for South-West Zone, Fleek Networks Limited for North-West Zone, Brinks Integrated Solutions for North-East Zone, and Zinox Technologies Limited for the South-East Zone while the remaining seventh licence for North Central Zone is being processed.

Abuja tech solutions expo showcases technology of the future SEGUN ADAMS

n March 28, 2019, five of the world prominent technology crusaders are coming together to showcase their strides in digital transformation to public sector and financial services community in Abuja. Microsoft, Sophos, Huawei and Avaya are creating pact with Reliance Infosystems to hold the first ever Abuja Technology Solutions Expo. The event is pulling together top corporate and government executives and business leaders unto unfettered immersion into game-changing digital strategies, technologies and deeper understanding of digital transformation use cases for their sectors. The event is scheduled to hold at the NAF Conference Centre, Kado, Abuja. Abuja Tech Solutions Expo will create spotlights on how organisations traditional organisations can

be digitally transformed to gain operational efficiency and competitive advantage by fully understanding what and how to digitise. Thought leaders from public sector corridor will get guidance on where their organisations are on the digital transformation curve, how they can gain competitive posture through digital security, the secret to transforming workforce towards business excellence and how to improve business productivity by automating operations. Eligible participants include C-Level executives across sectors like government agencies and parastatals, corporate firms, NGOs and StartUps. Amidst the networking opportunities, the sessions will also feature Microsoft foundational pillars on which organizations can build their growth and solutions for piloting businesses towards industry lead.

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Only 33% of Lagos residents have access to potable water from State Corporation DANIEL OBI

nly 33 percent of 22 million estimated population of Lagos State residents have access to potable water from the Lagos Water Corporation, CEO of the Corporation, Muminu Badmus, says. This leaves the remaining 15 million residents relying on boreholes or streams for drinking water, bathing and laundry activities. Badmus, speaking at the celebration of World Water Day with global theme ‘Leaving no one behind’ organised by Nigerian Bottling Company (NBC) last weekend in Lagos, blamed epileptic electricity supply and destruction of its underground infrastructure by road contractors as part of reasons for the inability of the corporation to supply more residents water. “We are demanding that the contractors restore damaged under-

ground infrastructure. We are asking them to go back and restore the facilities destroyed during road construction to enable many more people access potable water,” Badmus says. The CEO of the Water Corporation, who showed determination to ensure many more Lagosians have access to potable water, says the state was presently pumping less than 300 million gallons daily and the organisation wants to take it to 492 million gallons per day in the next four years to meet increasing demand for water. To avoid water borne diseases, he advises those using boreholes to ensure that the water is treated. He however frowns against wastage of potable water, saying it denies others of the resource, as the board has introduced metering to control use of water. On plans to achieve the 492 million gallons per day distribution, he says there are strategic plans towards that goal.

“Today, many countries are going through water stress, and the world is jittery about the imminent scarcity that might descent on us in the nearest future. However Nigeria is not sitting on the fence, as the country has made the issue of water stress a matter that requires urgent attention as evidenced by the state emergency declared on the nation’s water and sanitation sector in 2018. This informs us that we must continue to double our efforts towards providing water in sufficient quantity,” he states. In Nigeria, according to WaterAid, 59 million people don’t have clean water and an unfortunate outcome of this is that 59,500 children under 5 die every year due to poor water and sanitation Speaking for the NBC, the plant manager, Aderemi Adewoye, says World Water Day, is about tackling the water crisis by addressing the reasons so many people are being left behind.

NLNG, NCDMB sign Nigerian Content Plan for Train-7 project FRANK UZUEGBUNAM

he Nigeria LNG Limited (NLNG) and the Nigerian Content Development and Monitoring Board (NCDMB) on March 22, 2019, in Abuja, signed a Nigerian Content Plan for Train-7. The collaboration between the regulator and operator is seen as an epic demonstration of how to foster compliance with legal requirements and encourage win-win relationships that will outlive project delivery timelines and milestones. The Train-7 Nigerian Content Plan provides for 100 percent engineering of all non-cryogenic areas incountry. The total in-coun-

try engineering man-hours is set at 55 percent, which exceeds the minimum level stipulated in the NOGICD Act. The Train-7 scope is expected to deliver 100 percent in-country fabrication of the Condensate Stabilisation Unit, pipe-racks, flare system, and non-cryogenic vessels. Site civil works on roads, piling and jetties will keep businesses occupied. There will be 100 percent local procurement of all LV cables and HV cables, all non-cryogenic valves, protective coatings, all sacrifice anodes and 70 percent of all non-cryogenic pumps and control valves will be assembled in-country. “We have maintained a deliberate focus on Nigerian Content development in all

aspects of our operations, long before the enactment of the NOGICD Act 2010. As we progress on the FID and eventual execution of Train 7, Nigeria LNG looks forward to a synergy with the NCDMB that delivers the utmost benefit to the Nigerian economy. The signing of the Nigerian Content Plan for the Train 7 works will strengthen this commitment,” Tony Attah, managing director/chief executive, NLNG, said. Other spin-off opportunities include logistics, equipment leasing, insurance, hotels, office supplies, aviation, haulage, and many more. With the increased number of trains in NLNG, there is also huge scope for local businesses to build capabilities in the mainte-

FG seeks collaboration with India on skill acquisition JOSHUA BASSEY

he Federal Government is seeking to collaborate with the government of India to boost Nigeria’s skill acquisition centres, aimed at enhancing job creation, as India has disclosed it would be exploring the possibility of direct flight to Nigeria. These were part of the discussions between Nigeria’s minister of labour and employment, Chris Ngige, and the Indian High Commissioner to Nigeria, Abhay Thakur, when the later vis-

ited the minister in Abuja. According to Ngige, over 5,000 skill acquisition centres are currently scattered across Nigeria and their resuscitation would assist the Nigerian government create more jobs and entrepreneurs. He said the Indian government could partner Nigeria to achieve, by keying into the local content capacity programme for a winwin; jobs for Nigerians and profits for Indians. The minister called for the revival of the labour capacity building programme, an exchange programme between Nigeria and India, which

trained a lot of Nigerian labour officers in Indian labour institutes, as part of technical assistance to Nigeria, which was rested in 2013. Ngige also urged the Indian government to protect Nigerians working in India by providing labour protection and ease of doing business for Nigerians living in India. “Nigeria and India have a lot in common and a robust relationship that has span many years in the area of trade, education, labour, foreign affairs, and there is need to further strengthen the bilateral relationship,” he said.

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Monday 25 March 2019

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Quit as oil minister in 2nd term, PENGASSAN tells Buhari JOSHUA BASSEY

S L-R: Victor Etuokwu, executive director, personal banking, Access Bank plc; Roosevelt Ogbonna, group deputy managing director; Herbert Wigwe, GMD/CEO, and Ade Bajomo, executive director, IT and operations, at the opening ceremony of Access Bank’s Digital Innovations Gateway (DIG) in Lagos. Pic by Olawale Amoo

Uneasy calm at Mobil Producing as union kicks against ‘violation of human rights and dignity’ OLUSOLA BELLO

neasy calm pervades the operational environment of Mobil Producing Unlimited as one of the workers unions, Petroleum and Natural Gas Senior Staff Association of Nigeria has accused the management of actions that negate the spirit of Nigerian content development in the oil and gas industry. In a petition written to Paul McGrath, managing director and lead country manager, by the union, the union alleges that the company engages in what it described as “Systemic depletion, deNigerianisation and intimidation of national workforce through special reviews.” But when the company was asked to state its own

position on the issue, Ogechukwu Udeagha, manager, media and communications, Mobil Producing Nigeria Unlimited, said: “There is no evidence to support these claims. It is Mobil Producing Nigeria (MPN)’s policy to provide equal employment opportunities in conformance with all applicable laws and regulations, and provide a work environment that fosters mutual employee respect and promotes diversity and inclusion.” He said 96 percent of the company’s Nigerian workforce was made up of nationals, and that a significant percentage held top management positions, including ones previously held by expatriates. The petition which was signed by the secretary of the union, Kingsley Udoidua stated that: “We are not

unmindful of the ripples of the major irregularities uncovered in Logistics department in 2016 and the need for company to safeguard its operations and insulate them against unethical activities. While we support any due process or procedure which will lead to eradication of every form of irregularity in the company, we frown at one which potentially or directly violates human rights and dignity.” The letter also accused the management of the company of activating a ‘special review’ the same time a department is undergoing its routine audit borders on some suspicious effort duplication. It added that this duplication amounted not only to misuse of manpower and resources, but an attempt to witch-hunt national employees and lay the foundation to bring in expa-

triates to take over Nigerian jobs, as had happed in Security department. In that department, the union alleged, Travis Cummings, who led the Marine ‘special review’ had recommended that Security department personnel including the general manager be flushed out, only for him to become general manager of the department. “How such an unshrouded, unprecedented conflict of interests was not only tolerated but also endorsed by Exxon Mobil remains a fount of grim concerns.” When Kingsley Udoidua was asked at the weekend whether the union still stood by its position of November 17, 2018, which was the date the petition was written, he said, yes, despite the fact that there was a committee that had been meeting to review the expatriate placement in the company.

Half of Generation Z moves to online media, entertainment consumption - PWC … nearly 40% surveyed are moving from consuming through traditional form ENDURANCE OKAFOR

bout half of Generation Z, the generation after Millennials or those born from the mid-1990s to the early 2000s, are moving away from traditional forms of media and entertainment consumption, according to a report by PricewaterhouseCoopers (PwC). The move is part of a global trend which shows that consumers are increasingly using digital technology for more than just shopping as they are moving away from the traditional form of entertainment and media consumption, PricewaterhouseCoopers (PwC) 2019 consumer survey shows.

The PwC’s Global Consumer Insights Survey assesses behaviour, habits and expectations of over 21,000 online consumers in 27 territories. The survey also showed that on news, 25 percent of consumers now go to social media first to hear about current events. According to PWC “given how pervasive social media is today, this likely doesn’t come as a surprise.” PWC noted that social media-placed ads allow consumers to interact with a brand, and according to the multinational company, social media ad is now ranked as the third-most effective form of advertising. And among millennials, it is the most popular form of adver-

tising - beating out traditional television ads. Edafe Erhie, PwC Nigeria’s Consumer Markets Leader, said the key to a great end-to-end customer experience isn’t just about the shopping and retail experience – “it spans across industries. Consumers are looking for a seamless and easy purchasing journey, and companies can achieve this by using a blend of both physical and digital approaches. The result is a greater return on experience with the customer and more lasting results for businesses.” The study found that consumers bombarded with a multitude of choices are constantly seeking tools to help simplify their purchasing de-

cisions. In addition to using digital technology, they are looking to their trusted communities and other experts.

enior oil workers under Petroleum and Natural Senior Staff Association of Nigeria (PENGASSAN) want President Muhammadu Buahri to separate his office from that of the minister of petroleum resources by appointing a substantive minister in charge of the all-important sector in his second term in office. Francis Johnson, president of PENGASSAN, who stated this while speaking with journalists at the end of the National Executive Council (NEC) meeting of the union, in Lagos, weekend, said it was the belief of the oil workers that separating the two offices would allow for a more efficient management of the oil and gas sector. For about four years now, President Buhari, towing the path of former President Olusegun Obsanjo, has combined his position as President with that of minister of petroleum resources, while Ibe Kachukwu remains minister of state for petroleum resources, with limited powers. Stakeholders have consistently argued that the combination of the office of President and minister of petroleum resources was not in the best interest of the economy, as the President was too bogged down with enormous tasks to pay adequate attention to a sector that remained the mainstay of the nation’s economy. “There is urgent need for the appointment of a substantive minister of petroleum and mineral resources; the ideal candidate for this should be someone who has the necessary knowledge, experience and competence, and who would directly oversee the affairs of the ministry and report regularly to the Mr. President. “That position is too important to the economy to be subsumed as one of the many offices or portfolios of the President and Commander-in-Chief. Of course, the position of the minister of state for petroleum and min-

eral resources should continue to exist as a junior minister in the ministry,” Bobboi Kagaima, president, Trade Union Congress (TUC), had also said in 2016. Johnson, who fielded questions from newsmen, shared the view, saying the association would also between May and June this year, release a roadmap on how to further strengthen the oil and gas sector. Reading the communiqué issued at the end of the NEC meeting, PENGASSAN, however, commended Buhari on the fight against corruption, and called for it to be sustained. “NEC-in-session believes that the fight against corruption should not be allowed to shrink but rather sustained to cover all sectors and maintain the gains already made,” he said. The NEC also demanded the government to make all effort to see that recovered looted funds were accounted for and reinvested into the economy to reduce unemployment.” On human capital and labour issues, the NEC-in-session urged the government to channel the human capital potential of Nigerians citizens towards optimising productivity and economic growth. The union vowed to confront all industrial issues with seriousness, warning “all recalcitrant companies violating the Nigerian laws to brace up for a rude awakening.” On national security, the NEC in-session demanded more funding and support to release $1 billion earmarked for fighting insurgency and the acquisition of modern and sophisticated equipment for the various security agencies involved in providing adequate security for the country. “We encourage the deployment of modern technological equipment intelligence information gathering, in crime fighting and preventions, as no amount of resources expended on securing human lives is a waste,” the communiqué read.

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Monday 25 March 2019

ABUJACITYBUSINESS COMPREHENSIVE COVERAGE OF NATION’S CAPITAL

Fire outbreak: FCT Minister, Bello warns against storage of inflammables in homes, business premises JAMES KWEN, Abuja

inister of the Federal Capital Territory, FCT Muhammad Bello has warned residents of the FCT - Abuja against storing highly inflammable products in their homes and places of business to avoid fire outbreaks. Bello gave this warning in Abuja during the commissioning ceremony of operational vehicles and other equipment refurbished by FCT Fire Service at the Service Command.

He directed that the Fire Service should embark on an aggressive enlightenment campaign to sensitize residents of the FCT on the dangers of storing highly combustible materials in their homes and business premises. The FCT Minister who commended the management of the Service for taking the initiative to refurbish the vehicles and equipment said that, “your actions have not only saved the FCT Administration substantial sums of money but have also freed -up much needed resources which will now be

channelled into equally important and pressing areas such that will ultimately be beneficial to the people of the FCT”. Bello urged other Departments and Agencies of the FCTA to emulate the actions of the FCT Fire Service and Department of Development Control that had also carried out a similar exercise of refurbishing grounded operational vehicles. According to the Minister, dwindling resources have made funding for some of the more critical social service sectors such

as education, health and emergency service providers such as the fire service quite difficult, stressing that the need to effectively utilize and properly maintain available assets has become quite imperative. Why decrying the poor maintenance culture of government of assets which many believe is nobody’s property, Bello said this attitude must change for the simple reason that government can no longer afford to continuously replace its assets on accounts of faults in equipment that can properly be managed.

Taraba: CSDP constructs 119 manual boreholes, 6 motorized boreholes, others NATHANIEL GBAORON, Jalingo

he Taraba State Community and Social Development Project (CSDP) has constructed 119 manual hand pump boleholes, six solar motorized boreholes, two water source harnesses and two line wells across the state. Iremia Danjuma, CSDP General Manager made this known Friday in Jalingo while speaking on this year’s world water day celebration with the team ‘Leave no one behind’. Danjuma explained that the projects which have direct bearing on the masses were to compliment the efforts of Governor Darius Ishaku who takes adequate

water supply in the state as his topmost priority. The General Manager added that the Agency which has been directed to key into the efforts of the governor by providing adequate water for the good people of the state was working tirelessly to achieve her goal. “As we celebrate world water day today, you know that water is life and it is in this regard that this agency has constructed 119 manual hand boleholes, six motorized solar boleholes, two water source harnesses and 2 line wells. All to make sure there is enough water in Taraba state. The governor takes water supply his topmost priority, that is why we have been directed to compliment his efforts”, he stated.

FCTA to promote entertainment industry JAMES KWEN, Abuja

L-R: Gado Shehu, director, business names, Corporate Affairs Commission (CAC); Godfrey Ike, head, public affairs CAC, and Fred Brains Idehai, chairman, Commerce and Industry Correspondents Association of Nigeria (CICAN), during a retreat on ‘Role of Media in the Ease of doing Business’, held in Abuja. Pic by Tunde Adeniyi

inister, Federal Capital Territory (FCT) Muhammad Bello has said that the FCT Administration would continue to provide the enabling environment for the promotion of the entertainment industry in the territory -Abuja. Bello who gave the assurance when he received the Managing Director, Nigerian Film Corporation, Chidia Maduekwe and his team on a courtesy visit to his office, said his interest in the Corporation grew after witnessing the last Zuma Festival held in Abuja. According to the Minister, the Corporation is doing well and the FCTA will endeavor to provide the needed environment for the success of its mandate. Earlier, the Managing Director of the Corporation, Maduekwe who solicited partnership with FCT Administration for the annual hosting of the Zuma Film Festival, said the FCTA needed to hold the host sta-

tus for the festival rather than the guest role it had played in previous events. Maduekwe particularly requested that the FCTA secure for use, the International Conference Centre Abuja for the week-long event scheduled to hold in December. Maduekwe who described the Nigeria entertainment industry as robust, said “the creative industry is currently contributing 2.3 per cent of the nation’s Gross Domestic Product (GDP) and there is no reason why we cannot get to 10 per cent. It is possible and in line with President Muhammadu Buhari’s drive to diversify the nation’s economy”. He stressed the need to showcase Abuja as an entertainment destination in the film industry, adding that the Corporation is working to ensure that Nigeria is listed in the World Calendar of film festivals and proposed a quarterly training of youths in the FCT on various areas in the creative industry to ensure that they become selfreliant as well as employable.

Improving healthcare is a priority for the Buhari Government – Udoma CYNTHIA EGBOBOH, Abuja

domaUdoUdoma, Minister of Budget and National Planning, on said improving healthcare is a priority for the Government of President Muhammadu Buhari, as can be seen in the prioritization of health related expenditures in all the national budgets. The Minister while declaring open the Value for Money in Health Sector Workshop in Abuja,

said in spite of the very tight revenue constraints and the demands of other competing sectors, the health sector has continued to receive increased allocations. He explained that even with a reduction by 3.2% of the aggregate Federal Government expenditure, from N9.120trillion in the 2018 Budget to N8.83 trillion in the 2019 budget proposal, an increase of 8% was proposed in the 2019 Budget over the amounts allocated for health

in the 2018 Budget. “This workshop will focus on how we can improve value for money. As we are able to demonstrate and show improved healthcare outcomes for the money we are currently spending, governments at all levels will be encouraged to further increase funding to the health sector”, he said. While indicating that government will continue to be supportive of increased funding to the health sector, and would like the workshop

to examine and advise on innovative ways of doing so, he stated that, “it is even more critical that we institute key reforms to maximize the values derivable from the allocations to the healthcare sector through improved efficiency in the use of budgeted funds”. He stressed that the workshop is to enable the participants to deliberate on how to achieve better outcomes for expenditure in the health sector. “This is an important is-

sue as most developing and middle-income countries, particularly those like Nigeria with large and rapidly growing populations, need to find more effective and efficient ways of delivering quality health services to their citizens”, he added. “The Buhari Administration places a very high premium on improving health care delivery and social welfare of the people, this is why in the Administration’s economic blueprint, the Economic Recovery and Growth

Plan (the ‘ERGP’) one of the three principal objectives of the Plan is “Investing in our People”. “In particular, in the ERGP the Federal Government commits the country to investing in health and education in order to meet the international targets set under the UN’s Sustainable Development Goals (SDGs). Under the ERGP the country is committed to improving ‘the accessibility, affordability and quality of healthcare”.

Monday 25 March 2019

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Donald Trump faces legal peril beyond Mueller probe Prosecutors in New York’s southern district are poring over the president’s affairs JOSHUA CHAFFIN

onald Trump appeared to dodge a legal bullet on Friday after special counsel Robert Mueller concluded his investigation and made clear that he would not be filing further charges. But any relief may be shortlived: Mr Trump’s presidency and business empire are still threatened by separate investigations being carried out by an array of state and federal prosecutors. Many of the cases are based on evidence unearthed by Mr Mueller but which fell outside the narrow scope of his probe into possible collusion between the Trump campaign and Russia. They touch on various aspects of Mr Trump’s world — from his tax filings to his charitable foundation and expensive presidential inauguration. Depending on their progress, the legal peril unleashed by Mr Mueller’s 22-month probe could stalk Mr Trump for years to come, say legal experts. “He’s a long way from out of the woods,” said Roland Riopelle, a New York defence lawyer and former prosecutor. “I think these investigations are more likely to cause legal trouble for him and his family than Mueller.” Jacob Frenkel, a partner at Dickinson Wright, said the most potentially damaging cases included the state mortgage fraud charges filed earlier this month by the Manhattan district attorney against Mr Trump’s former cam-

paign chairman, Paul Manafort. Those charges, Mr Frenkel said, “demonstrate that the president, his associates and even his companies remain in active legal jeopardy”. A sitting president cannot be indicted on federal charges, according to Department of Justice guidelines. Yet Mr Trump would be vulnerable after he left office, and his associates and business partners do not enjoy similar protection. Of greatest concern to them may be the US attorney for the southern district of New York. Based on a referral from Mr Mueller, the Manhattan-based office in August won a guilty plea from Michael Cohen, the president’s personal lawyer, in what may have been prosecutors’ biggest victory in the affair. Mr Cohen — who once boasted that he would “take a bullet” for his boss — pleaded guilty to campaign finance violations stemming from “hush money” payments he arranged for two women who claimed to have had affairs with then-candidate Trump. At his sentencing, Mr Cohen insisted he was acting on Mr Trump’s orders. He appeared to bolster that assertion during an appearance before Congress last month when he presented a copy of a cheque with Mr Trump’s signature. It was reimbursement, Mr Cohen claimed, for the illicit payments. Mr Cohen has also opened a window into Mr Trump’s business dealings. As part of the southern

Deutsche staff banned from selling shares during merger Top bankers told deferred stock is on ‘no-sale’ list until Commerzbank talks resolved STEPHEN MORRIS AND LAURA NOONAN

eutsche Bank’s top managers have been banned from selling any stock they own in the lender while it explores a merger with Commerzbank, another blow for employees who saw the value of their deferred-share pay more than halve last year. Bankers who tried to sell stock after a compulsory lock-up period ended this month were blocked by compliance and told they were “contravening employee trading policy” because the shares have been added to Deutsche’s “internal conflict list,” several insiders said. This occurred after the two German banks revealed they had entered formal discussions last Sunday. “A bank-wide restriction on employee share dealing in Deutsche and Commerzbank stock was put in place when talks were announced, to ensure full compliance with relevant regulations,” a spokesman said. “This is standard practice for these situations and guidance was provided to employees. The restrictions have since been narrowed to a smaller group.” More senior staff that may be involved in the deal’s due diligence or have access to sensitive information have been told the ban for them is indefinite and Deutsche’s equity will remain on the “no-sale” list until the merger is resolved either way, the people said.

The long-rumoured, yet controversial, Deutsche-Commerzbank deal reached its end game last week after mounting pressure from the government, which is concerned about the stability of the country’s banking system. The deal would create the eurozone’s secondlargest lender with €1.9tn in assets, 140,000 employees and €845bn in deposits. While the lock-up is standard procedure for any M&A deals Deutsche is involved in, the ban is stoking unhappiness among the top ranks who have seen their take-home pay fall dramatically in recent years. Since the financial crisis, the majority of bankers’ bonuses have come in the form of stock deferred for as long as seven years. Deutsche shares fell 58 per cent last year and are down more than 90 per cent since the start of 2008. Almost all bonuses were cancelled three years ago as the lender made a substantial loss, was hit with billions in misconduct fines and embarked on a painful restructuring round. Meanwhile, it emerged this week that most Deutsche executives more than doubled their 2018 pay. Its investment bank boss Garth Ritchie has also been receiving an extra €250,000 a month to oversee the group’s Brexit plans, which could see him earning an extra €9m by the end of 2020.

President Donald Trump is not out of the legal woods following the end of the Mueller inquiry. He faces separate probes into presidency and business affairs © AP

district’s investigation, the FBI last year raided his offices, hauling away thousands of pages of documents and prompting Rudolph Giuliani, Mr Trump’s lawyer, to denounce the agents as “storm troopers”. Meanwhile, the southern district has also opened a probe of Mr Trump’s record-breaking $106m inauguration. It is believed to be focused, in particular, on whether foreign interests used donations — some channelled through Mr Cohen — as a way to gain access to the new administration. “The greater peril to Mr Trump

and his family is coming from the southern district,” Mr Riopelle concluded. Federal prosecutors in New York’s southern district are renowned for handling historic US cases, involving terrorism and financial fraud. It prides itself on its independence, and is less legally confined than Mr Mueller’s investigation. “If there’s a case to be made there, you can be confident they’ll make it, whether it’s a Democrat or a Republican running the office,” said Mike Shepard, a partner at King & Spalding who once worked

for Mr Mueller. Still, Mr Shepard cautioned that campaign finance cases were often difficult to try before a jury. He also noted that testimony from Mr Cohen — and any other Trump associates who had pleaded guilty — would be treated with “a fair amount of suspicion”. A potentially pivotal player in the Trump investigations will be Audrey Strauss, a veteran prosecutor and corporate lawyer who came out of retirement last year to re-join the southern district where she began her career 46 years earlier.

Senior ministers rally behind May ahead of Chequers meeting PM to meet Eurosceptic critics at her country residence after Tory MPs push for her to quit HENRY MANCE

heresa May has summoned key Eurosceptic critics to a meeting at Chequers on Sunday afternoon as the prime minister battles to save both her premiership and Brexit deal after Tory MPs urged her to stand aside. Senior cabinet ministers publicly rallied around Theresa May ahead of the meeting at her official country residence, where she is expected to seek support ahead of a crucial set of votes in parliament next week that will define the UK’s departure from the EU. The meeting will be attended by Brexit-supporting MPs such as Boris Johnson and Jacob Rees-Mogg. However, her own position as prime minister has also come into question after cabinet ministers started to discuss the possibility of a caretaker — such as David Lidington or Michael Gove — taking over from Mrs May. A growing number of Tory MPs have put pressure on her to resign this weekend — or at least set a timetable for her departure — after a stormy week in which she alienated MPs and was humiliated at a key EU summit. Mrs May has been helped by three of the potential candidates — Mr Lidington, the de facto deputy

prime minister, Philip Hammond, the chancellor, and Mr Gove, the environment secretary — all publicly warning against a change of leadership with just weeks before the UK is due to leave the EU. Mr Lidington backed Mrs May to remain as prime minister and disavowed any interest in stepping into the role. He told reporters on Sunday morning that he believed the prime minister was doing “a fantastic job” and he remained committed to getting her Brexit deal with Brussels passed by the Commons this week. “If there’s one thing that working closely with the prime minister does it’s cure you completely of any lingering shred of ambition to do that task,” Mr Lidington said. Mr Gove said Mrs May had his support, adding that it was a time to focus on winning approval for her Brexit deal. Mr Hammond said it would be “self-indulgent” to change the prime minister just weeks before Brexit, although he did not deny that he had been asked to help topple Mrs May, admitting that “people are very frustrated”. But he told Sky News on Sunday: “Changing prime minister wouldn’t help us . . . We’ve got to address the question of what type of Brexit is acceptable to parliament.” The backing of her closest cabi-

net members did little to drown out the growing chorus of Conservative MPs calling for her to resign with just three weeks left before a new EUmandated Brexit deadline, and her policy under attack from all sides. George Freeman, a Europhile MP and former chair of Mrs May’s policy board, said on Saturday: “I’m afraid it’s all over for the PM . . . We need a new PM who can reach out and build some sort of coalition for a plan B.” Mrs May has already been told by Graham Brady, chair of the backbench 1922 committee, that Tory MPs want her to step down. Mr Lidington’s supporters, including leading Europhiles, argue that he would be able to negotiate a longer delay to Brexit and oversee a process whereby MPs vote on different Brexit options. A donnish 62-year-old, Mr Lidington is also seen as unlikely to take part in a subsequent leadership election, making him more palatable to ambitious peers. But the Mail on Sunday reported that Eurosceptic cabinet ministers feared Mr Lidington would pave the way to a soft Brexit, and so were rallying round environment secretary Michael Gove. Iain Duncan Smith, a leading Eurosceptic MP, said the reported leadership manoeuvring was “appalling”.

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FT London march calls for final say on Brexit

US imposes sanctions on Congo election officials

Organisers say protest exceeded expectations with estimates of more than a

TOM WILSON

SEBASTIAN PAYNE

he US has imposed financial sanctions on three members of the Democratic Republic of Congo’s electoral commission, citing allegations of corruption linked to last year’s discredited presidential and parliamentary polls. The sanctions against the president of the electoral body, known as the CENI, and two of his deputies are the strongest punitive measures taken against Congolese officials since Felix Tshisekedi was named president in January after a vote that was marred by fraud. “This action follows persistent corruption by senior officials within the DRC’s National Independent Electoral Commission and the former Kabila government to obstruct and delay preparations for credible and inclusive elections,” said Sigal Mandelker, US Treasury Under Secretary for Terrorism and Financial Intelligence, in a statement on Thursday. According to Washington, the officials — CENI president Corneille Nangaa, vice-president Norbert Katintima and his son and CENI adviser Marcellin Basengezi — embezzled government funds, blocked election preparations and in at least one case bribed constitutional court judges to uphold a decision to delay the vote by seven days. In the run-up to the polls the US repeatedly warned Congolese officials against interfering in the electoral process. In the event, when regional governments did not sanction Mr Tshisekdi’s victory despite evidence of massive vote rigging, Washington appeared to backtrack and the US ambassador quickly welcomed the new president’s inauguration. Ms Mandelker said the election result did not reflect the votes cast but she stopped short of questioning the legitimacy of Mr Tshisekedi’s victory, despite evidence published by the Financial Times that showed another opposition candidate, Martin Fayulu, was the real winner. “Following the presidential election, CENI continued to obstruct the democratic process and failed to ensure the vote reflected the will of the Congolese people” she said. By imposing sanctions on those responsible for the election but continuing to work with Mr Tshisekedi, the US is trying to draw a line under the past and build a constructive relationship with the new administration, according to Hans Hoebeke, a Congo expert with the International Crisis Group. “The US has been looking for an opening and it’s clear the opening is there” Mr Hoebeke said. “It understands very well that [Mr Tshisekedi] will need this international support to keep Kabila in some kind of a corner.” A l t h o u g h Jo s e p h K a b i l a stepped down has head of state in January after 19 years in power, his coalition won a large majority in parliament and — through a backroom deal allegedly negotiated with Mr Tshisekedi in the days following the election — has sought to maintain influence over the new leader.

Measures are strongest punitive action taken since presidential vote marred by fraud

undreds of thousands of people took to the streets of London on Saturday to call for another Brexit referendum in a demonstration that organisers said had exceeded all expectations, with some estimates putting the number of protesters at more than a million. The Put It To The People march, which looks set to be one of the biggest protests in the UK, took place ahead of an expected series of votes in parliament next week to test support for alternatives to Theresa May’s Brexit deal. A second referendum is likely to be one of the options MPs will vote on, although a parliamentary majority for another vote is seen as unlikely. Michael Heseltine, the former Conservative deputy prime minister, delivered one of the most powerful speeches of the rally, lambasting Mrs May’s efforts to pin the blame on parliament for the chaos surrounding Brexit. Invoking Winston Churchill and his long career in frontline politics, Lord Heseltine said “I was appalled by Theresa May’s speech on Wednesday evening. It will rank among the biggest affronts on parliamentary democracy in our history.” Tom Watson, deputy leader of the Labour party, said he was reluctant to be campaigning for another referendum but he was left with no other choice. He told Mrs May: “I’ll support your deal through parliament, or a tweaked deal if you’ll work with my party. But I will only let a deal through if you let the people vote on it too.” Other politicians who addressed the rally included Conservative Dominic Grieve, the Labour party’s Jess Philips, Anna Soubry from the Independent Group and mayor of London Sadiq Khan. Estimating the size of protests in major cities is notoriously unreliable. The organisers said that the turnout was more than double the previous second referendum protest. They did not, however, claim to beat the all-time of record of the 2003 protest against the Iraq War, which was claimed to be close to 2m. The crowd, which was diverse in age, gender and ethnicity, was awash with EU flags and placards displaying a dry British sense of the humour. Former Ukip leader Nigel Farage, Conservative MP Jacob Rees-Mogg former prime minister David Cameron were lampooned, alongside slogans calling for Article 50 to be rescinded. Many of the protesters expressed anger at the prospect of leaving the EU, even if they were unsure whether a second referendum would take place. Joanna, a fundraiser with the Teenage Cancer Trust charity, brought her son Charlie on his first march. “The whole of the vote was based on lies. Now we’ve got a better picture,” she said. “Where do you start? The government’s doing a dreadful job. Jeremy Corbyn’s shit. The people need to have their voices heard. It’s as simple as that.” Andrew, who was marching under the banner Veterans for Europe, said that he hoped the march would move British politics to “the point where there will be a reconsideration of where we are so we can rectify a historic wrong.”

US attorney general William Barr leaving his home on Saturday. He is expected to brief members of Congress on the Mueller report this weekend. © Getty

US waits on findings of Mueller report in to Trump Russia ties Justice department says no more indictments to come from special counsel KADHIM SHUBBER, DEMETRI SEVASTOPULO AND COURTNEY WEAVER

he US Congress was waiting to receive the conclusions of Robert Mueller’s investigation into links between Donald Trump’s 2016 election campaign and Russia, following the end of a 22-month probe the US president has repeatedly slammed as a “witch hunt”. The White House had still not been briefed on the contents of the special counsel report on Saturday, said Hogan Gidley, deputy spokesperson for the president. William Barr, the US attorney-general, was reviewing the report and would not be releasing its conclusions until at least Sunday, justice department officials said. Since Mr Barr received the confidential report on Friday evening from Mr Mueller, a former FBI director who was tapped as special counsel for the Russia probe, Washington has been rife with speculation about its findings. Democrats on Saturday debated how to respond to the report once its conclusions were known, and repeated their demands for full transparency.

In a letter to key members of Congress, Mr Barr said he might be able to provide lawmakers with the conclusions of the report “as soon as this weekend”. He added that he was “committed to as much transparency as possible” and would keep Congress “informed as to the status of my review”. A justice department official said Mr Mueller had not recommended any further indictments, and it was unclear on Saturday what conclusions Mr Mueller had reached about Mr Trump. Justice department guidelines prevent federal prosecutors from indicting a sitting president. Mr Mueller — who was appointed after Mr Trump fired James Comey as FBI director — ended his investigation without bringing any public charges alleging a conspiracy between the Trump campaign and the Kremlin. As part of his inquiry, Mr Mueller also investigated whether Mr Trump attempted to obstruct justice by trying to pressure Mr Comey to drop parts of the initial probe and then by firing Mr Comey. Mr Trump has faced continuing suspicion because of his odd relationship with Russian president Vladimir Putin. The US president

has repeatedly refused to criticise the Russian leader even though American intelligence has concluded that Mr Putin ordered interference into the 2016 US election. Congressional Democrats and many of the Democratic presidential contenders for the 2020 election called immediately for Mr Barr, who was recently appointed by Mr Trump to replace Jeff Sessions, to release the report to the public and to provide lawmakers with any underlying documents. “Attorney-General Barr must not give President Trump . . . any sneak preview,” said Nancy Pelosi, the Democratic Speaker of the House of Representatives, and Chuck Schumer, the top Senate Democrat. “The White House must not be allowed to interfere in decisions about what parts of those findings or evidence are made public.” Mr Trump, who has spent two years attacking the Russia probe, remained uncharacteristically silent, spending Saturday playing golf with musician Kid Rock in Florida. Mr Mueller had attempted to interview Mr Trump in person but the move was blocked by the president’s lawyers who would only allow him to submit written answers to questions.

Huawei ramps up foreign university investment despite US pressure Chinese telecoms group reveals it spends $300m a year on academic partnerships YUAN YANG

uawei is ramping up investment into foreign universities, despite US lawmakers pressuring academic institutions to cut ties with the Chinese telecoms group. “Our collaborations with universities, especially in basic research, not only will not stop, but will increase,” Huawei board director William Xu said in an interview on Friday, disclosing for the first time that Huawei spends more than $300m per year on university funding and partnerships. Several elite universities in the US and UK, including Stanford and Oxford, have cut ties with Huawei and refused funding in recent months after the US government issued a criminal indictment accusing Huawei of stealing American technology and breaking US sanctions against Iran. The US has also issued a ban on government agencies buying equipment from the Chinese company

and called on allies to do the same, arguing that the technology could be used by Beijing for spying. Huawei has denied such allegations and is suing the US government over the ban. Mr Xu played down the impact of universities cutting ties with the company on Friday, saying they had faced “interference” and “although they think co-operation is win-win with Huawei, they are temporarily suspending co-operation”. “Scientific research should be the joint knowledge creation of human beings, and should not have any geographical labels and political labels,” he added. Earlier this month, Jim Banks, a Republican Congressman from Indiana, proposed US legislation that would increase intelligence agencies’ scrutiny on research partnerships with Chinese companies such as Huawei and its competitor ZTE, who he described to the Washington Post as “snakes in the grass”. But Mr Xu said that more than

80 per cent of its investment in US universities was categorised as “gift money” or “funding money” for basic research, with no conditions attached. “Huawei does not need results and does not need ownership rights,” he said. “Huawei does not require students to join Huawei after graduation either. We are completely open.” He said that the rest of Huawei’s research funding was for joint research ventures on “key technologies or innovations”, with intellectual property rights divided among the relevant parties. Mr Xu pointed to Huawei’s joint partnership with BT and researchers at Cambridge university, describing it as “a very good model” for academic partnerships. When Cambridge announced the £25m partnership in 2017, it said researchers were “expected to focus on projects relating to photonics, digital and access network infrastructure and media technologies”.

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Goldman disturbs Rajat Gupta’s post-prison calm Ex-McKinsey managing director still has a bone to pick with Lloyd Blankfein SUJEET INDAP

fter serving two years in prison on insider trading charges, Rajat Gupta maintains he is a man at peace. But the former McKinsey managing director’s calm quickly dissipates when the conversation turns to Goldman Sachs. Mr Gupta was convicted of passing secrets he learnt in September 2008 as a Goldman director to hedge fund manager Raj Rajaratnam, who traded on the information about Warren Buffett’s rescue investment in the bank and its earnings. Now 70 and the author of a new memoir — Mind without Fear — Mr Gupta remains angry at Goldman and its chief executive at the time, Lloyd Blankfein. Proclaiming his innocence, Mr Gupta portrays himself as a fall guy of the financial crisis, whose travails distracted attention from the Wall Street figures who caused the meltdown and the prosecutors who failed to bring them to justice. “My speculation, and I have no way to prove it, is that [Goldman was] currying favour with regulators and the justice department,” Mr Gupta told the Financial Times in an interview timed to coincide with the release of his book on Monday. In Mr Gupta’s telling, he wanted to leave the Goldman board in early September 2008, but stayed to help the bank weather the financial storm and wound up watching its chief executive, Mr Blankfein, testify against him in court. “I cannot believe that a busy CEO like Lloyd would come and spend so much time testifying and so much time preparing with the prosecution,” Mr Gupta said. “There are so many examples of where what he should

have said was ‘I don’t remember, I don’t know’. Instead, what he kept saying was, ‘Oh, it’s my practice to discuss earnings’.” Goldman said in a statement that any accusations of quid pro quo between the bank and the Department of Justice were “absurd” and that “it is common knowledge that the board regularly receives updates on earnings”. Another target of Mr Gupta’s ire is Preet Bharara, the US attorney in Manhattan who brought charges against him. In his book, Mr Gupta wonders whether Mr Bharara, a fellow Indian immigrant, held special contempt for him because of their shared heritage, noting that he was arrested on the Diwali holiday in 2010 and was sentenced in the Dussehra holiday in 2012. “[Mr Bharara] couldn’t do what he was put in the job to do,” Mr Gupta said. “How can you have the perpetrators of the financial crisis, which is all the banks and the housing finance companies, and he couldn’t bring one person to justice? “I can tell you that basically the incentives are misaligned. Most prosecutors have political ambitions. They want to win at any cost . . . if an innocent person is proven not guilty or the jury say not guilty, it’s a win for the prosecutor. They shouldn’t take it as a loss. What they did [was] to spin a story which they knew was wrong.” When asked for comment, a spokesperson for Mr Bharara referred the FT to his recent memoir, Doing Justice. There Mr Bharara wrote that accusations about hostility towards a fellow Indian were “comical” and “absurd”. He also said finding intent of wrongdoing made pursuing Wall Street executives too difficult.

‘Eyebrows raised’ over Eurotunnel cable finance disclosure Tunnel owner insists wrangle on consents does not threaten to derail energy project JOSH SPERO

etlink, owner of Eurotunnel, raised hundreds of millions of euros in debt last year to fund a project running a power cable through the tunnel but did not tell investors it no longer had full consent for the scheme because of safety concerns. In September 2018, Getlink announced it had issued €550m of bonds in large part to finance Eleclink, which would create a 1,000MW electricity interconnector between France and the UK through the Channel tunnel. The transmission capacity is enough to power 1.65m homes, according to the company. But the Anglo-French Channel Tunnel Intergovernmental Commission (IGC), which oversees the tunnel, had suspended part of the €580m project’s consent in October 2017 because of “outstanding issues to be resolved” about safety. In July 2018, the IGC specified Eleclink could not install the cable in the tunnel without this consent. Getlink said the consent only related to the “cable pull through the rail tunnel” because the IGC wanted to verify its safety procedures. It said it had submitted expert reports and expected the IGC to soon recognise that it had met safety conditions. The company confirmed that it

had not disclosed the suspension of consent to investors because work had continued independently of the cable draw: “At this stage, we believe that the suspension of the draw does not call into question the current 2020 commissioning target. Therefore, this does not entail any change and does not require investor disclosure.” An official in Whitehall familiar with the matter said that “eyebrows on both sides of the channel were raised” about the bond issue because of the IGC “raising serious safety concerns and suspending consent for the Eleclink project”. There have been several fires in the Channel tunnel, including on heavy goods vehicles in 2008 and 2015. Eleclink is part of Getlink’s programme to diversify its activities beyond passenger and truck shuttles and rail freight services. Getlink, whose shares are trading at near-10year highs, had revenue of €1.08bn in 2018 and earnings before interest and tax of €393m. The Department for Transport said: “The safety of passengers through the tunnel is of paramount concern to both the UK and French governments. We would expect the Channel Tunnel Intergovernmental Commission to only consent to projects which do not compromise the safety of the public.”

Rajat Gupta: ‘Sometimes I think it was my destiny to be going through this, and what does reputation matter’ © Pascal Perich/FT

ING chief claims Dutch bonus rules hurting in race to lure bankers European capitals vying for financial services jobs expected to leave London DAVID CROW

he chief executive of ING, the largest lender in the Netherlands, has claimed the country will miss out in the race to win post-Brexit investment banking jobs due to its strict bonus rules. Amsterdam is among several European capitals — alongside Paris, Frankfurt and Dublin — vying for a share of financial services jobs currently based in London that are expected to move after Britain leaves the EU. However, Ralph Hamers, chief executive of ING, said “there are quite a lot of limits in Dutch law” to deter global investment banks from moving to the country’s capital, referring to rules that limit bonuses for bankers to 20 per cent of their fixed pay. That is much lower than the EUwide limit, which caps bonuses at 100 per cent of fixed pay or 200 per cent with shareholder approval. “If you believe investment bankers, people working in financial markets, are incentivised by

variable pay then . . . Amsterdam is not a natural place to expand,” said Mr Hamers in an interview with the Financial Times. ING has repeatedly clashed with politicians in the Netherlands over the country’s limits on bank bonuses. Last year, the bank abandoned attempts to award Mr Hamers a 50 per cent pay rise after the Dutch finance minister accused the lender of acting like a “cookie jar” for its chief executive. Mr Hamers said that ING was “proud to be Dutch” and that the bank recognised that “remuneration is a sensitive topic in Dutch society”. But he insisted the bank would continue to make the case that the country’s bonus rules put it at a competitive disadvantage. He said it was important for banks across the EU to have harmonised rules on pay, tax and capital as politicians attempted to create a single market for European banking. “We are always pointing out that if you want European banking

union there has to be a level playing field,” Mr Hamers said. Clifford Abrahams, chief financial officer of ABN Amro, the third-biggest bank in Holland, said: “I don’t see the [bonus] rules changing to encourage trading floors. Amsterdam is not going to become a hub for trading, but it might yet become a hub for other parts of financial services.” Royal Bank of Scotland is the only bank to have set up a sizeable banking hub in Amsterdam through its NatWest Markets NV entity, which will employ between 120 and 150 people in the Dutch capital. The UK-based lender will start moving about 30 per cent of its customers to the Dutch entity and will begin servicing them there from March 25. Harm Bots, chief executive of NatWest Markets NV, said: “We think the bonus cap is manageable for us given that we have a mix of roles on the ground in Amsterdam, and most were hired from the local market.”

Ex-Treasury chief says HS2 would fail cost-benefit analysis Nick Macpherson also warns technology likely to be outdated by time it becomes fully operational SYLVIA PFEIFER AND GILL PLIMMER

he former Treasury top civil servant who was in the role when ministers approved Britain’s high-speed rail project HS2 has said the £56bn plan would now fail “a rigorous cost-benefit analysis”. Nick Macpherson, who was permanent secretary at the Treasury from 2005 until March 2016, also said the rail scheme was based on technology that was likely to be outdated by the time it became fully operational at the start of the next decade. His intervention will add to the mounting questions over the future of HS2, one of the most controversial infrastructure projects in recent history and one beset by delays and concerns over poor management. “HS2 has always had a low economic return compared to other transport projects,” Lord Macpherson told The Sunday Telegraph. “Its costs are rising. And it is based on technology which looked advanced in 1980s France but is likely to look

a little obsolete when it is fully on stream in the 2030s, not least because of the transformational effect of driverless cars.” He added: “Public investment will be critical to driving up performance in a post-Brexit UK. But resources are limited. And so it needs to be allocated on the basis of rigorous cost-benefit analysis. HS2 fails that test.” Lord Macpherson has previously said HS2 was a “political decision”— it was championed by former prime minister David Cameron’s government, including his chancellor George Osborne. In a speech in the House of Lords last week he said public investment needed to be focused “on projects that yield the highest return”. “That probably means more expenditure on roads and, although I know I am in a minority of around three, that also suggets that we should cancel HS2.” The scheme is designed to run trains at 400km/h from London to Birmingham by 2026 and then to

Leeds and Manchester from 2033. A third of the government’s £6.4bn support for rail in 2017-18 was spent on HS2, according to the Office of Rail and Road’s annual statistical release. The Department for Transport has insisted HS2 will keep within its £56bn budget. However, a report by the National Audit Office, parliament’s spending watchdog, found last year that the cost of buying land for phase one, between London and Birmingham, had tripled in six years to more than £3bn. The NAO warned the cost could rise further. The Treasury’s own Infrastructure and Projects Authority has given HS2 an “amber/red” rating for each of the past six years, meaning there is a “high risk” of it not delivering value for money. HS2 Ltd said the scheme was “expected to generate around £92bn in benefits to the UK economy, helping Britain compete on the global stage by increasing economic growth, productivity and tourism and supporting hundreds of thousands of jobs”.

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ANALYSIS Italy endorses China’s Belt and Road Initiative Rome seeks to revive economy but move is likely to rankle its allies MILES JOHNSON

Abattoir economics: Trump’s immigration policy tests Iowa Meat industry needs migrant labour at a time Washington’s rhetoric is hostile to outsiders GREGORY MEYER

orth-west Iowa is “the number one porkproducing district in all the United States of America,” Steve King, its US congressman, boasted to constituents last week. A few days earlier, after meeting pork lobbyists, he posted a photo of himself smiling with a man dressed as a bacon rasher. Mr King is better known for his hardline views on immigration. The Republican has provoked outrage with statements such as “we can’t restore our civilisation with somebody else’s babies” and “cultural suicide by demographic transformation must end,” which he tweeted beside a photo of himself with rightwing European politicians Frauke Petry, the former leader of Alternative for Germany, and Geert Wilders, the Dutch populist. He backs President Donald Trump’s border wall against illegal immigrants. Being friendly to the state’s $36.7bn pork industry and hostile to immigrants is becoming an awkward position in Iowa, where 23m hogs massively outnumber 3m humans. With unemployment at 2.4 per cent, the lowest in the nation, pork processors cannot find enough local people to cut up pigs. Just under half of Iowa’s meatpacking jobs were held by immigrants in 2017, according to data analysed by the Migration Policy Institute. “If you have a close-by population of Americans who don’t want [the jobs], you have to fill them somehow,” says Ron Prestage, a senior executive at Prestage Farms. Expansion in the US pork industry is running at record levels, says Steve Meyer, an economist at Kerns and Associates. On March 4, the first hogs walked to the kill floor of a $325m plant that Prestage built outside Eagle Grove, Iowa. The aim is to slaughter 10,000 animals a day once the first shift has its full complement of 920 people, says Jere Null, chief executive of Prestage’s Iowa foods division. It is the second new pork plant in two years to open in Mr King’s sparsely settled district of grain fields and ethanol refineries. In the old stockyards town of Sioux City, Iowa, Seaboard Triumph Foods’ $335m facility is still hundreds short of the 1,800 production workers it needs to reach capacity of 20,400 pigs a day, executives say. The labour squeeze will worsen as the US poultry industry adds seven plants nationally in the next two years, according to Watt Global Media. To sell more $4.99 rotisserie chickens, the retailer Costco Wholesale is hiring 800 workers to dispatch 2m birds a week at a new complex west of Iowa

in Nebraska, says Jessica Kolterman of Costco’s Lincoln Premium Poultry division. Construction is on track despite catastrophic floods in the area last week. The plants are a big bet on the US as the world’s low-cost supplier of animal protein. American meat consumption will average 220.8lb per person in 2019, nearing a peak reached 15 years ago, says Shayle Shagam, economist at the US department of agriculture. Demand for meat in developing countries is irrepressible: last year, US pork exports fell just 0.5 per cent despite retaliatory tariffs in China and Mexico, while broiler chicken exports rose 4 per cent and beef exports shattered records. A solid US economy — national unemployment fell to 3.8 per cent in February — is creating tight labour markets all over the country. But meat is in a class of its own for lack of career appeal. The disassembly line is bloody, smelly, repetitive and loud. “No matter how much you pay, work in a hog plant involves killing animals and cutting them into parts. Those are not skills that schools teach to prepare students for ‘jobs of the future’,” Mr Meyer, the economist, wrote in an industry magazine. Production employees must “constantly reach”, “constantly bend” and “constantly stand on concrete” for up to 12 hours a day, Seaboard Triumph job adverts say. The working week is often six days long, says George Solo, vice-president of human resources. Pork and beef slaughter workers record occupational illnesses — such as carpal tunnel syndrome and tendinitis — 13 times more often than average, according to government data. Turnover of jobs at the largest meat and poultry plants almost doubled last year to 2-2.5 per cent a week, sacrificing hundreds of millions of dollars of profit due to the cost of replacing line workers, estimates Rabobank animal protein analyst Christine McCracken. Employers are thus scraping the bottom of the labour pool. Seaboard Triumph has recruited in towns stunned by factory closures. It approached Puerto Ricans displaced by hurricanes. “Hey, if you’re looking for a place to be for a year or two, Iowa’s a good place and we don’t have hurricanes,” says Mark Porter, who was Seaboard Triumph’s plant chief operating officer until he lost his job in a management restructuring last month. The company hired J & L Staffing & Recruiting, a Sioux City employment agency, to find workers. Among them was a man with a face marked by tattoos who waited in J & L’s office one afternoon to be driven to Seaboard Triumph’s rendering department, which processes offal, blood, bone

and fat, to begin his shift. “I just got out of prison,” he says when asked his previous career. Automation has taken over some tasks. Powerful robotic arms slice open carcasses. Jets of flame singe off hair and vacuums suck away blood. Yet manual labour remains crucial. At Prestage’s plants a person with a knife still makes the lethal incision. About 400 workers will staff its cutting floor, wearing coats in the refrigerated air as they use a combination of hand tools and machines to attack shoulders, midsections and hams rattling down three conveyor belts. Starting pay for production work is about $16 an hour, better than Iowa’s minimum wage of $7.25. The arrival of Seaboard Triumph and Prestage forced other packers to raise wages, even at plants covered by union contracts. Along a roadway in Eagle Grove, two billboards sharing a pole advertised rival pay packages at Prestage and Tyson Foods, the largest US meatpacker, which owns a pork plant 70 miles away in Storm Lake, Iowa. “We’re not beating the unemployment rolls. We’re going straight after people that are working. We want quality people,” Mr Null says. “But everybody I hire creates a deficit for somebody else.” The tight labour market has revived the debate over the effects of immigrant labour on wages in lowskilled jobs. The Trump administration wants to halt what it calls “chain migration”, when an immigrant can sponsor family members, arguing it depresses Americans’ pay. Meatpacking, requiring no English language skills and based in far-flung towns, is an option for recent immigrants who are mobile, says Jeanne Batalova, senior policy analyst at the Migration Policy Institute. Yet the foreign labour supply is not increasing. The state department issued 534,000 immigrant visas to people outside the US in fiscal year 2018, down from a recent peak of 618,000, and fewer still have been issued in 2019. Incoming refugees — long a source of industrial labour — dropped from 85,000 in 2016 to 23,000 in 2018, as the Trump administration lowered a federal cap on arrivals, Ms Batalova says. Government crackdowns on companies have also sent a clear message not to hire illegal immigrants. In November, one of Seaboard Triumph’s two owners, Seaboard Corporation, agreed a $1m fine to settle claims that its Oklahoma plant used unauthorised workers. “Many of these actions, particularly in the Midwest, have been focused on meatpacking because of the nature of their workforce,” says Amy Peck, an immigration lawyer at the Jackson Lewis firm in Omaha. “It just becomes more difficult for employers to hire.”

taly has become the first G7 nation to endorse China’s Belt and Road Initiative in a move Rome hopes will bring investment to a stagnant domestic economy but which has rankled with its allies. In a ceremony held on Saturday as part of a three-day state visit to Italy by Chinese president Xi Jinping, the Italian government signed a memorandum of understanding to support the investment programme. Luigi Di Maio, deputy prime minister and leader of the anti-establishment Five Star party which makes up the largest bloc in Italy’s coalition government, signed the document with He Lifeng, chairman of China’s National Development and Reform Commission at the Villa Madama in Rome. Mr Xi and Italian prime minister Giuseppe Conte were in attendance ahead of the Chinese president flying to Palermo later on Saturday, along with Italian finance and foreign ministers and a Chinese delegation. Mr Xi, who travelled to Italy with a 500-strong entourage, has been received in a style normally reserved for visiting royalty, including cavalry guards escorting his limousine into the presidential palace, and a state banquet on Friday evening closed by the Italian Italian tenor Andrea Bocelli. Yet the trip, and Rome’s endorsement of the controversial Belt and Road Initiative, have caused conster-

nation in Washington and Brussels, which have voiced concern about China using the initiative to gain influence or control over strategically important assets across the world. On Friday French president Emmanuel Macron, who will be receiving Mr Xi in Paris on Tuesday, declared that the “time of European naïveté” towards China had ended, and called for a robust and co-ordinated response by the EU towards Beijing. Mr Macron has surprised the Chinese delegation by inviting German chancellor Angela Merkel and European commission president Jean-Claude Juncker to join the meeting with Mr Xi at the Elysee. Earlier this year the European Commission and the EU’s diplomatic service branded Beijing a systemic rival and threatened to introduce stricter rules on China’s investments in Europe. Italy and China also announced a number of agreements between companies in sectors including energy and steel. Rome did not make public the exact size of the agreements but the Italian government had earlier indicated they would be worth more than several billion euros. The embrace of China by Italy has not been universally welcomed by Italian politicians, with Matteo Salvini, leader of the anti-migrant League party which shares power with the Five Star, saying that investment should only be allowed on “equal terms”. “Don’t tell me China is a free market,” Mr Salvini said at an event on Saturday.

Lawmakers await conclusions of Mueller report but president faces further legal risks Demetri Sevastopulo, and Kadhim Shubber MILES JOHNSON

ongressional Democrats vowed on Sunday to continue probing President Donald Trump’s connections to Russia, as lawmakers awaited the conclusions of the 22-month investigation completed by special counsel Robert Mueller. Jerry Nadler, the chair of the House Judiciary Committee, said lawmakers would pick up the investigation where Mr Mueller left off. He added that the Democrats were prepared to take their fight to the Supreme Court if the justice department refused their demand that lawmakers be provided with the entire Mueller report. “The job of Congress is much broader than the job of special counsel”, Mr Nadler said. William Barr, attorney-general, was due to provide Congressional leaders with a summary of the conclusions that Mr Mueller reached in the high-profile investigation that President Donald Trump has long called a “witch hunt”. Mr Mueller handed his “comprehensive” report to Mr Barr on Friday after completing his two-year investigation. Mr Trump, who is spending the weekend at his Mar-a-Lago resort, has not been briefed on the Mueller report, his deputy spokesperson said on Sunday. After a record 40-hour period of silence on Twitter, Mr Trump on Sunday morning tweeted: “Good Morning, Have A Great Day!” and “MAKE AMERICA GREAT AGAIN!” Ahead of the release of the conclusions — which Mr Barr on Friday

said he would aim to release over the weekend — many Republicans welcomed a statement from a top justice department official that Mr Mueller would not bring any more indictments. Mr Mueller was appointed as special counsel in May 2017 after Mr Trump fired James Comey as FBI director. He took over an existing investigation into Russian efforts to influence the 2016 election, including possible collusion with the Trump campaign. His team also investigated if Mr Trump attempted to obstruct justice by urging Mr Comey to drop some elements of the Russia probe and then firing the FBI chief. Under justice department guidelines, Mr Mueller was required to provide a report on his probe to the attorney-general, who on Friday said he would aim to give Congress a summary of the main conclusions this weekend. Earlier this month, Mr Trump said he would welcome the release of the report. “Let it come out. Let people see it,” he said. The justice department statement that the special counsel would not bring more charges cemented the view that — regardless of what he uncovered — Mr Mueller would not try to charge Mr Trump due to departmental guidelines that a sitting president cannot be indicted. But Mr Trump still faces a slew of probes. This includes scrutiny from Democratic-held committees on Capitol Hill, and investigations by other prosecutors such as the office of the US attorney for the southern district of New York, which is famed for its handling of numerous highprofile cases over the decades.

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BUSINESS DAY

Personal Finance

Real Estate

Cover Story

Fixed Income

Where to invest N1m right now

Higher transparency required to boost investors’ confidence in SSA property markets

FT Cocoa Processor, a diamond in the rough, needs investors to survive

What investors need to know about Eurobond

Tunde, a 24-year-old man, has made repeated attempts to win big in one of the popular online sports betting platforms, but his efforts were fruitless as none of his guesses were correct enough to secure him that big win he desired.

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Although property market in SubSaharan Africa (SSA) has been making gradual progress in the area of market transparency, progress in the region is yet to pace up with growing expectations of investors, businesses and communities.

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In response to the federal government’s call on diversification of the nation’s revenue, and more active participation in the cocoa value addition to the agricultural exports...

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Investors are currently rushing government securities and going by the oversubscriptions that followed each of the Eurobonds issued in Nigeria by both the Federal Government and corporate organisations...

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Personal Finance Where to invest N1m right now OLUWASEGUN OLAKOYENIKAN & GBEMI FAMINU

unde, a 24-year-old man, has made repeated attempts to win big in one of the popular online sports betting platforms, but his efforts were fruitless as none of his guesses were correct enough to secure him that big win he desired. But while he was busy gathering information and relevant statistics to make informed decisions on likely outcomes of football matches, he failed to plan for what he would do with a million naira he hoped to garner should his predictions become right someday. Just like every other day with fruitless attempts, the young man, who has been unemployed for more than two years after completing the one-year mandatory national youth service programme, approached a nearby online betting shop to make bookings for an upcoming football match. As a reward for persistence and determination, the outcome of the matches came as he predicted, implying a one million naira win for Tunde. “Yes! I did it,” the 24-year-old graduate said with a happy expression to show his delight for the sum. “While I was rejoicing, I was at the same time confused on what I would do with the money.” Tunde’s case is one of many cases where people earn their first one million naira from betting big, sale of assets, rewards for loyalty, or willed benefits from deceased loved ones but have no idea on how to effectively use the money to make it work for them. To help those in this category grow their money, BusinessDay sampled peoples’ opinions on the street to know their take and also spoke with four experts who revealed promising investment options for substantial sums. What are Nigerians saying? Tobiloba Adefala, a Lagos-based banker, said she would divide the sum into four parts comprising N250,000 each. Tobiloba prefers to save the first N250,000 in a fixed-deposit account and use the second N250,000 to set up a mini “mama put” shop.

“I know a bit about cooking and its returns,” she said. “The business would return an average of N5,000 profit a day, that’s not bad for a starter.” The young lady explained that since everyone needs money and the available Automated Teller Machines could disappoint, she would invest another N250,000 in point-of-sales (POS) business and reserve the remainder to mitigate the effect of possible shocks. Alani Adesina, an entrepreneur, prefers to invest the one million naira into importation of mobile phones and accessories, as he believes starting a business with it would generate more income, while Ity Cyril, a telecoms engineer, who had long heard about the opportunities in mutual fund investment, went for mutual funds which he believes has a favourable projection and would provide more returns.. What are the experts saying? Ayodele Ebo, Managing Director, Afrinvest Securities Ltd. It depends on the person’s age, if the person is young, he can make 60 percent investment in equities and 40 percent in fixed income. If the person is between 50 or 60 years

old, it is advisable to invest probably 70 percent into fixed income and 30 percent into equities. This is because fixed income will provide consistent cash flow and guarantee capital. Ayo Akinwunmi, Head of Research FSDH Merchant Bank If the person is a novice in the investment space, it is advisable to invest in mutual funds that will be managed by an

‘

The federal government savings bond is also a good idea as it will give the person interest coupons every six (6) months and depending on individual’s preference, the person can embark on the 2, 3 or 4-year tenure

’

expert which will provide higher returns. The federal government savings bond is also a good idea as it will give the person interest coupons every six (6) months and depending on individual’s preference, the person can embark on the 2, 3 or 4-year tenure. This is a good option for a novice in the investment space who would not want to make losses. Johnson Chukwu, Chief Executive Officer, Cowry Asset Management Ltd. If the person falls under the category of the unemployed, it is advisable to divide it into different areas, as a single form of investment is not feasible enough. 20 percent could be used to set up an enterprise that would keep the person busy while providing returns, another 20 percent could be used for liquid assets and 60 percent should be invested in a secure FG Bond. Basically, the person should invest half of the money in securing federal government savings bond. The other half should be further divided into two, the person can invest N300, 000 in fixed deposits which will bring in additional income and N 200,000 can be used to set up a business venture.

About BD Money: This finance supplement is targeted at investors and other readers keen to make their money work harder. Team Members: Lolade Akinmurele (Lead); Hope Moses Ashike; Segun Adams; Oluwasegun Olakoyenikan; Temitayo Ayetoto; Israel Odubola; Olufikayo Owoeye; David Ibidapo; Graphics: Fifen - Famous

Monday 25 March 2019

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Real Estate Higher transparency required to boost investors’ confidence in SSA property markets ISRAEL ODUBOLA

lthough property market in Sub-Saharan Africa (SSA) has been making gradual progress in the area of market transparency, progress in the region is yet to pace up with growing expectations of investors, businesses and communities. Highly transparency markets account for 70 percent direct real estate investment with about 75 percent of it being cross-border investment according to Jones Lang La Salle (JJL), an Americanbased real estate investment company. Market transparency is the foundation that allows investors and corporate occupiers to operate and make decisions with confidence. It ensures government and public agencies function efficiently and helps create a more productive and competitive environment. A report titled “The Path to Real Estate Transparency across Sub-Saharan Africa” compiled by JJL Investment Inc. revealed the region registered the least growth in transparency compared with other regions in the world. Two-third of the markets in the region including Nigeria, Ghana,

and Rwanda has low transparency or opaque, with the average transparency index points standing at 3.86. Nnnenya Awoyokun, lead consultant at Awoyokun Consulting, hinged SSA underperformance on lack of authentic data that covers every activity in the industry, saying this brings uncertainty which is a disincentive to investors. “There are no data to help investors make informed decisions. Data on real estate transactions are unavailable. Even the available ones are not reliable. Data is critical for investment decisions” said Awoyokun. Sub-Saharan Africa remains the global region with the least level of market data availability behind Europe, Asia-Pacific, and America. According to JJL, challenges for data collection in the region range from the absence of industry forum for sharing information, meagre public listed real estate investment trust (REIT) and few independent research firms. The Global Real Estate Transparency Index (GRETI) is an essential guide for cross-border investors, developers, and occupiers of real estate as well government and international bodies seeking international benchmarks.

The index assesses 100 countries and 150 city markets on a score of 1 to 5 based on six broad indicators namely performance management, market fundamentals, governance, regulatory, sustainability and transaction process. Higher transparency level relates to low index points. Damilola Ijalade, real estate broker at PWAN Homes, positioned that region lags because a regulatory mechanism is weak. “Using Nigeria as a benchmark for others, regulations are not strong enough. This is why you find dealers selling a piece of land to three or four people, without sanctions or appropriate penalties” The SSA region is yet to leverage its rapidly growing population and urbanization to attract foreign investment. According to the United Nations, about 472 million people reside in the urban areas in the region and are expected to double in the next 25 years. Also, the global share of urban residents in the region is projected to grow from 11.3 percent in 2010 to 20.2 percent in 2050. Based on city analysis a significant number of cities in the region including Lagos, Accra, Luanda, and Kigali are either low transparent or opaque.

fund Hedging necessary for N8.23trln pension fund HOPE MOSES-ASHIKE

he Plain vanilla derivatives is seen to protect pension funds, which stood at N8.23 trillion as at second quarter (Q2) 2018, revenue flows and prices among others, and help to push financial stability. Plain vanilla is the most basic or standard version of a financial instrument, usually options, bonds, futures and swaps. Derivatives are primarily risk management instruments that enable participants to price and transfer (“hedge”) financial risks such as market/price risk, foreign exchange risk, and interest rate risk. The size of pension Assets Under Management (AUM) stood at N7.89 trillion as at December 2017. Fixed Income accounts for 85.05 percent of the fund, equity 10.33 percent, and other assets account for 10.18 percent according to a presentation by Bola Onadele Koko, managing director/ CEO, FMDQ OTC Securities Exchange. Top three Pension Fund Administrators (PFAs) account for 53.97 percent of the fund, top five PFAs 66.64 percent, and top 10 PFAs account for 88.0 percent. According to Koko, inflation risk on held to maturity assets, as well as market risk on trading assets remains a challenge to preventing standard of living risk of contributors at their retirement. However, he said exchange traded derivatives market will go a long way in helping PFAs diversify and hedge pension pension portfolios, as well as create a fair basis for performance monitoring and benchmarking. “What we are preaching now is plain vanilla derivatives to protect your pension, to protect your price, Nigeria can protect its revenue flow in future by buying futures or put options, come two years’ time, so the understanding of this product is not only for business, even Nigeria today can create system stability by having these products’, said Koko, said. Koko spoke on ‘The Need for Derivatives in the Nigerian Finan-

cial Market and FMDQ’s Product Roll Out in 2019’ at a financial markets workshop organised by the Financial Market Dealers Association (FMDA) especially the Swap and derivative workgroup of the association, in Lagos. He said the most liquid product in FMDQ market today is the treasury bills trading, adding that the FMDQ will by third quarter of 2019 launch the treasury bills features, while the interest rate features would be introduced into the market by 2020. Samuel Ocheho, president of FMDA, said the level of adoption of hedging in Nigeria is still very low as most people don’t understand why they need to hedge. “I understand the reason is cost. The God also come to play. Nobody things about how to plan, hedging gives you a better way for planning”. “In Nigeria we do not want to lose revenue. One way to ensure that our oil price remain high is by creating a hedge product for the oil price”, Ocheho added. Responding to why adoption of derivatives is low in Nigeria, Koko said, “we have to follow the evolution of the market. There are some basic elements of the market that are needed before you get to derivative stage. People need appreciation of market risk factors - volatility. “We need to have a repo market that is supported with collateral management and then the corporate, buying side, the corporate institutions buying foreign exchange must have that appreciation because they are the ones that will demand these products. Pension funds must understand the impact of interest rate that was 17 today and suddenly become 11. The regulators must be comfortable and must carry everybody along, all the stakeholders. Nigeria is getting to that point”. He noted that Central Bank of Nigeria (CBN) brought naira settled OTC FX futures, which now everybody is able to hedge and plan. “The CBN sells 12 month dollar naira today. If you want to buy February 2020 and know that that is the rate that will apply, can’t you see that the market is no long nervous”.

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Cover Story

FT Cocoa Processor, a diamond in the rough, needs investors to survive OLUFIKAYO OWOEYE

n response to the federal government’s call on diversification of the nation’s revenue, and more active participation in the cocoa value addition to the agricultural exports, many cocoa processing companies have tried to up their game, yet struggling to find their feet in the market. Sadly, instead of the desired returns on investment, many investors and shareholders have suffered huge losses and indebtedness as a result of the harsh operating environment in Nigeria. FT Cocoa Processors Plc. a Nigeria-based agro-allied company, listed on the Nigerian Stock Exchange is currently in deep water. In a statement released to the Nigerian Stock Exchange, the company gave reasons for its inability to organise its Annual General Meeting for the

past two years, let alone declare dividends to its esteemed shareholders. According to the management, this was due to the “unfavourable conditions of the company and non-availability of the required working capital to produce Cocoa beans” When FTN Cocoa Processors Plc was listed on the Nigerian Stock Exchange (NSE) in 2008, it came with very bright prospects. The enthusiasm with which the company was received by investors was huge and considering the products it produces, Cocoa. The cocoa company lamented that despite all efforts to secure working capital both locally and internationally, it has not yielded any result. More worrisome is the fact that its major investor, Transmar Commodity, in the United States of America ran into financial problems and went into liquidation. The Deal with Transmar In 2015, Transmar Commodities Group LLC signed an off-take agreement with FTN

Cocoa guaranteeing a market for all FTN products up to installed capacity for the next 5 years and renewable. The company was also meant to provide technical support especially in areas of machines, spare parts, and quality control, the agreement allows Transmar to own 40 percent of FTN shares. Sadly the fortunes of Transmar went bad when two former executives at the company were accused and charged to court for defrauding banks to win a $400 million credit line for the New Jersey-based cocoa trading company. Financial performance An analysis of FT Cocoa’s result shows that the company has performed poorly since its listing on the NSE. A year after its listing, which was 2009, the company posted a profit after tax of N260 million. This dipped to N64 million the following year. It slipped into a loss position in 2011, ending that year with a loss of N243million. The loss worsened to N405 mil-

lion in 2012 but improved to N286million in 2013. However, the loss further worsened to N577million in 2014 and another loss of N201million in 2015. Further analysis of the company’s performance showed that investors’ hope for a profitable year in 2015 after the Transmar deal did not come to a realisation. The loss ballooned to N847 million in 2016 and dropped slightly to N762 million in 2017, its half-year result for 2018 for the period ended June 2018 shows that loss stood at N211million. Way Forward While speaking with BusinessDay, Mike Odunlami, a player in the Agri-business industry noted that FTN Cocoa has been faced with several challenges ranging from delays in the disbursement of the export expansion grant, the general problem of poor power supply. According to Odunlami, these challenges are common to most Agric-businesses in the country.

“Other challenges include imposed duty on processed cocoa in the international market; high-interest rates; and the lack of competitiveness of processed cocoa when compared with raw cocoa in the export market, under-utilization of installed capacities,” he added. The principal activities of the company are the processing of cocoa beans and palm kernel into cocoa liquor, cocoa cake, cocoa butter, cocoa powder, palm kernel oil, and palm kernel cake Shareholders are waiting for the Abiola Aderonmu-led board of FTN Cocoa Processor to turn things around. To achieve this, it must seek a strategic partnership with confectioneries companies such as Cadbury and Nestle by acting as a supplier. Also, the Government must provide the much-needed support for companies engaged in the value addition of cocoa beans by providing low finance scheme for them to thrive and compete on the global stage.

Monday 25 March 2019

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Financial Planning Here is what Standard Chartered wealth management clients are most worried about MICHEAL ANI

nvestors who put money into Standard chartered Wealth management business are mostly worried about “volatility”, chief executive officer, Wealth Management, an arm of Standard Chartered Nigeria said. “In terms of maximizing wealth, the issue of volatility is what our clients are most worried about”, Simpa Adaba, head, Wealth Management Nigeria for Standard Chartered told BusinessDay in Lagos. “If you have invested in something, it is only natural that when you see the price move in a different way, you tend to worry” he added. Adaba explained that despite this worry in the mind of investors, the firm through its

expertise has been able to proffer sound investment advice to ease them. According to him, the last thing an investor would ever wish for is to throw their money somewhere without speaking to

an investment professional. “I think we have demonstrated strongly our investment advisers through our relationship managers in speaking to clients, giving them necessary context that because something is going

down differently as expected, does not mean you will have to jump out”. Nigerian stocks are experiencing their worst time as investors pile into the fixed income space neglecting equities despite impressive earning results coming in from publicly listed companies. Nigerian equities have been trading on a negative trajectory of 0.93 percent this year. The rush into risk-free instrument has helped send yields to lower lows. Yields on one year and 10 years bonds averaged 14.12 percent, according to FMDQ data. “I think it is a natural reaction, that in times of volatility and uncertainties, you see people moving to where they consider safe to a great extent and the fixed income is a surer bet. Also, so many of them have

a history of the equities market in Nigeria so there is a flight to safety”, Adaba said. However, he noted that focus always remains not just on the product but the clients making them have easy access to our product. “We basically don’t manufacture our products, we focus more on partnering with fund houses to try and get best in class on what our clients have an appetite for,” he explained On the outlook for the bond market, Steve Brice, Global wealth management CEO, Standard Chartered said, the environment looks positive in the short run for bond investors in emerging markets due to the Federal reserve plans of reversing their expectation of a rate hike this year along with the US and China’s plan to strike a deal on the trade dispute in April this year.

OPINION

‘Lack of impetus to spur private sector growth fuels investors’ apathy in equities’

ontrary to expectations of the Nigerian equity market in 2019 following the bearish trend of the all share index (ASI) in 2018 which saw the market dip by 18 percent, the first quarter of the year has experienced a further decline by 1.26 percent in market performance as at the close of market on Friday. There were high expectations from the political side as many investors expected a change of government and began taking positions. Major reason being that the orientation of the Buhari led government during the first tenure tilted the economy more towards a socialist oriented economy, which was gov-

ernment dominated, likewise saw the private sector struggle through. However, apart from those in the banking industry who made profits due to a high interest environment, those in the consumer goods sector and other sectors, struggled during the first four years of the led administration. From the economy blue print the APC major opponent revealed, fixated on a private sector driven economy, investors anticipated with high hopes, a change of government knowing fully well that this was needed to drive rapidly growth in the economy. However, their expectations were cut short with the

re-election of the incumbent administration. Foreign portfolio investors have a wide array of countries to invest in with expectations that their investments will be safe. In a report published by the CEO of the Nigerian stock exchange on the outlook of the market for this year, he anticipated a market recovery in the third quarter of the year. However, my take is that this attitude of ‘‘sit down and look’’, ‘‘watch first’’, ‘‘let’s be sure’’ will continue for a long while as investors wait to see what the government at the federal level tends to do this second term. Will they come with the same attitude? Will sanctions contin-

ue? Will there be change in attitude towards the private sector? These are the questions in the hearts of investors. If the investors don’t see any prospect during this second term, we may not see any significant recovery of the market going forward. What is keeping the market now is the earnings season, as investors bargain hunt and seize profit taking opportunities. When investors begin to see that there isn’t demand pressure on stocks both from FPIs and local institutional investors like PFAs, we may see strong apathy in the stock market even in the second quarter of the year. Although some stocks may

still outperform the market, but this will be selected cases largely on special happenings in that industry or company such as tender offers, mergers and acquisitions etc. Generally, I do not expect so much from the market except there is a change in attitude of the government and its dominance over the economy. In the last three to four years, most stocks listed on the stock market have been struggling however with the exemption of some banking stocks especially Tier one bank. Paul Uzum is a stock broker on the floor of the Nigerian stock Exchange

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Monday 25 March 2019

Fixed Income What investors need to know about Eurobond OLUFIKAYO OWOEYE

nvestors are currently rushing government securities and going by the oversubscriptions that followed each of the Eurobonds issued in Nigeria by both the Federal Government and corporate organisations, one may not be wrong to say that Eurobonds seem to have become a household name and a darling of bond investors in Nigeria and those that want to take advantage of the relatively high yield environment in Nigeria. Even those who are not investors in the Eurobonds are wondering what Eurobonds are and how they can join the growing list of investors. Eurobonds are simply bonds that are denominated in a currency other than that of the issuer. They are not necessarily denominated in Euros as the name implies. For example, the Federal Government of Nigeria’s (FGN) 6.75 percent $500 million January 2021 Eurobond is a bond issued by the Federal Government of Nigeria in Nigeria but denominated in US Dollars. Those who buy do so in dollars, with the interest and principal repayment conducted in equally in dollars. Choosing between corporates and Government Eurobonds Worthy of note is that Eurobonds come from government and corporate sources. As such, a prospective investor has to decide whether to buy FGN Eurobonds (government) or Cadbury and Access Eurobond (corporate). Corporately issued Eurobonds may offer higher interest than government issued ones, but they also offer higher risk, implying that the higher the risk, the higher the returns. How to invest in Eurobonds The process of investing in Eurobonds in Nigeria does not differ from that of an ordinary bond. Basically, FGN bonds and indeed, FGN Eurobonds

can be bought at the primary market at the initial offer level or at the secondary market for an existing bond. The process entails completing the Tender for Federal Government of Nigeria Bonds’ form, submitting same through any of the authorized dealers and making the required payment when the bid is successful. However, like every other investment, buying Eurobonds should be a well thought out process and not a mere avenue to join the bandwagon of Eurobond investors. It is advisable to review and understand the risk profile of any Eurobond being considered for purchase. Usually, when bond issues open as primary issues, the relevant document contains a list of the banks or brokers that have been contracted to sell the bonds. In Nigeria, FGN issued bonds are purchased via Primary Dealer Market Makers (PDMMs). There are banks appointed by the Debt Management Office of Nigeria, (DMO),

to act as authorised dealers in FGN bonds. Each of them has its operational strengths and weaknesses including the turnaround period, responsiveness to clients, and client service excellence. The banks or brokers may differ in their commissions and other charges as well; so, pay attention to that as you evaluate which one to put your deal through. Doing some research on some of the brokers or banks, if you have not dealt with them before, will be helpful in selecting which to use for

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your bond trade. Having selected the broker or bank, it is time to complete the required purchase order forms and instructions on what account to debit for the purchase. The last process then is waiting and getting a confirmation from your bank or broker that your purchase has been successful. Invest According to Risk Appetite Different bonds (Eurobonds inclusive) have different risks characteristics, just like different investors have different

Like every other investment, buying Eurobonds should be a well thought out process and not a mere avenue to join the bandwagon of Eurobond investors

risk appetite and tolerance. A prospective buyer of Eurobond should weigh the risk characteristics of the Eurobonds in relation to the amount of risk he or she is willing to stomach. Government bonds are backed by the full faith of the government. Most Eurobonds come with credit ratings, which act as a measure of their quality and risk profile. An AA rated bond is of higher quality than A-rated bond. An AA rated bond, in all intents and purposes, offers more security and stability and, therefore, pays lower interest than an A-rated bond. Hence a new investor must pay attention to the credit rating of the issuer and the bond itself as well as the credibility of the rating agency giving the rating. Eurobonds present advantages to both the issuers and investors alike. By issuing Eurobonds, government and corporate issuers get access to international markets that would not ordinarily have been accessible. It also helps corporate issuers especially, to manage their balance sheet in that it allows them to obtain funds in foreign currency which helps them create foreign currency denominated liability that could be used to match their foreign currency denominated assets. Eurobonds present investors with the benefit or possibility of achieving a higher yield on investments, and with yield in Nigeria being so high in relation to other countries, this advantage stands to be proven. There are disadvantages that go with Eurobonds, the major of which is foreign exchange/currency risk. This is the risk that an asset or investment denominated in a foreign currency will lose value as a result of unfavourable exchange rate fluctuations between the investment’s foreign currency and the investment holder’s domestic currency.

Monday 25 March 2019

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Data

Federal government eurobond Yields on Eurobonds fell week on week by c.146bps to an average of 6.72 percent compared to 6.82 percent last week as global and domestic factor continue to favour the Nigerian market. Meanwhile Neighbouring Ghana would work with the market to determine the tenure of possible longer-dated bonds for a future debt issuance after raising $3 billion last week, Ken Ofori-Atta, Finance Minister of Ghana told Bloomberg. Morgan Stanley last week said it forecasts oil price to reach $75 per barrel at the end of third quarter of 2019 on OPEC cut and US sanctions on Venezuela and Iran.

Corporate eurobond Across board, yields on Nigerian Corporate Eurobonds fell by an average of c.98bps to an average of 8.43 percent even though in the preceding week average yield was 8.43 percent. Last week Diamond and Access Bank crossed the final hurdle in the long anticipated merger of the two banks, Yields on Diamondâ&#x20AC;&#x2122;s Eurobonds which have been declining in the past few weeks rose 62.86 percent to double digits at 14.25 percent.

Monday 25 March 2019

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Commodities Three soft commodities investors should not miss this wet-season Temitayo Ayetoto

aize, Ginger and Soybeans are some of the soft commodities investors looking to diversify their portfolio with agricultural commodities can’t ignore this season for two reasons. Their cultivation thrives under rainfed condition as: Ginger planting occurs from March to April; Soybeans June to July and Maize, March to May. Second, their prices have not only been stable enough to guarantee offtaking deals according to commodity traders, ample return on investment could be generated when harvest begins. Investing means that farmers lacking finance would be able to access adequate input supply to guarantee qualitative and quantitative yields. With the commencement of wet-season, Nigeria’s smallholder farmers have begun tilt-

ing the land but many will, as usual, be confronted by fundamental needs of input supply and mechanisation services. No gainsaying that the success of a farming season lies heavily on the ability of a farmer to access quality inputs as

and when due. A good approach is to work with farmers under partnership with some of the structured digital agricultural platforms like Farmcrowdy, ThriveAgric or AFEX Commodities Exchange Limited. “By facilitating access

Week Ahead

to financing for smallholder farmers to obtain quality inputs, it is an avenue for people interested in diversifying their investment portfolio. When farmers have these accesses,” Obianuju Okafor of AFEX Commodities Exchange Limited said.

“It means they can plant at the right time and get high yield. When they get their yield, it’s traded on the platform again and investors can get their return on it. It is a great way for investors to invest as we enter the input disbursement.” AFEX Commodities Exchange Limited, for instance, pools funds from investors to foster planting activities, which afterwards generates commodities for trading on the platform. By harvest period when farmers would be hedging their produce for spot and futures trading, investors would also be set profiting. Through AFEX wet and dry Season Input Program in 2018, which saw partnerships with LAPO Microfinance Bank, Dangote Rice, Thrive Agric, Farmcrowdy, OCP, and Syngenta, inputs worth $3.8 million was provided across eight states in the 2018 wet season to over 16,000 farmers. A total volume of 277 metric tonnes was traded

on the exchange in the week launching March, with paddy rice accounting for 88 percent of most of the total volume traded. The exchange sees demand for the key agricultural commodity’s driving continued growth, envisaging similar growth of Maize, Soybeans and Ginger. Also, activities on the exchange have been on the uptick in terms of volume of soybeans and maize trading. Maximum prices for maize were recorded Kwara, Kaduna, for Soybean and Ginger respectively. According to AFEX, market stability has been returning to the market in the aftermath of the election, suggesting that less uncertainty will surround the market. The exchange commodities Index averaged 171.84 points this month, indicating 4.51 points higher than February and is expected to sustain the momentum in the coming weeks. For those who identify it, this is one of the best periods to invest.

Chart of the week

Week Ahead (Monday, 25th March – Friday, 29th March, 2019) Commodities Grains – Corn prices is expected to be bullish in the coming weeks on the expectation of China’s import of US Corn. Sugar- Diversion of Brazilian cane mills to ethanol production to boost prices. Fixed Income Commercial paper with description “Dangcem CP II 25-Mar-19” issued by Dangote Cement Plc with 13.96% issue yield will mature on Monday, March 25, 2019. 199-day Open Market Operation (OMO) bill sold for N21.7 billion at 12.5% stop rate will mature on Thursday, March 28, 2019. Currency It is expected the naira will trade within current rates in all market segments as the Central Bank of Nigeria continues to supply foreign exchange. Data Release The National Bureau of Statistics to release data on Federation Account Allocation Disbursement (FAAC) for February 2019 on Friday, March 29, 2019. Event The board and management of FBN Holdings will pay a courtesy visit to the Exchange as part of activities lined up to commemorate the company’s 125th anniversary and they will be honoured with a Closing Gong ceremony on Monday, March 25, 2019.

At present, only four out of the five tier-1 lenders have released their earnings scorecard for 2018. The graph showed that the lenders reported an increase in their aftertax profit (PAT) in 2018. Access had 58% growth in PAT, the largest among peers, followed by Zenith (11.30%), Guaranty Trust Bank (11.15%) and UBA (1.37%).

Monday 25 March 2019

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Insight

Nigeria can’t prosper with its president’s ‘small means’ ethos global Perspectives

OLU FASAN

he vice president, Yemi Osinbajo, is President Buhari’s man Friday. He is loyal, and always takes it upon himself to vouch for Buhari before Nigerians. He tells them about Buhari’s selfless love for this country; he tells them that Buhari goes to bed every night thinking about Nigerians. Recently, he was telling Nigerians about Buhari’s modest means and his probable descent into further poverty. Addressing his party’s campaign volunteers, Osinbajo said: “When I looked at his (Buhari’s) asset declaration form in 2015, I said to him, ‘Mr President, I am so much richer than you, it is an embarrassment’”. He then added that Buhari “is probably poorer than when he became president in 2015”. For a start, it’s not clear why Buhari would be poorer, given that, as president, he is fully maintained by the state, with a salary and other emoluments, and that his 2015-level assets could be legally managed to increase in value. Surely, the Nigerian Constitution doesn’t envisage that a president would leave office poorer than he entered it. But the undertone of Osinbajo’s statement was clear. Basically, he was saying that Buhari is a man of modest means, who doesn’t care about financial matters, who is not concerned about making money or creating wealth. For him, living modestly, with limited means, is a virtue! In 2015, Buhari declared that he had N30m in his bank account, in addition to five homes, two mud houses and farms, as

well as 270 cattle, 26 sheep, five horses, a variety of birds, shares in three firms, two underdeveloped plots of land and two cars. The BBC said at the time that Buhari’s assets were “a fortune for the vast majority of the population but probably the equivalent of loose change for the many working in the dizzy world of Nigerian politics”. The BBC was right. With 92.1% of Nigerians living at below $5.5 a day and nearly 90m (about 45%) living in extreme poverty, Buhari is not poor by the standards of most Nigerians. But he is a ‘pauper’ by the standards of most Nigerian politicians. However, saying that Buhari is poor by the standards of the average Nigerian politician or retired general doesn’t mean that every wealthy Nigerian politician or retired general is corrupt. Surely, the vice president, who declared N94m and $900,000 in bank accounts, in addition to four houses, one of them in the UK, is not corrupt. So, it’s quite possible, philosophically, for Buhari to be wealthy without being corrupt. But, that’s the point: Buhari doesn’t have that philosophy, that wealth-creation worldview. For instance, when Osinbajo expressed his embarrassment at being so much richer than Buhari, the president’s reply, very instructive, was: “I am only a soldier; you are a big lawyer”. First, allow me to digress. Why does Buhari, a retired general, always insult his fellow soldiers by associating them with dullards? Not long ago, he said “I am a very slow reader”, and then added, “maybe because I’m an ex-soldier”. In another comment, referring to the vice president, Buhari said:“youth and intellect are squarely behind him, while age and purely military experience is behind me”. Note the word “purely”, as if someone with a military experience can’t have intellect. Why, despite the evidence to the contrary, does Buhari always think that an ex-soldier can’t run a business successfully and be rich or can’t read fast and understand complex and technical arguments? Of course, most soldiers are intelligent and aspirational, many of them autodidacts,

but desiring to better themselves. Money making and wealth creation arecertainly not dirty words to most ex-soldiers. But, apparently, they are to Buhari! He retired from the army at the age of 41, following the overthrow of his military regime in 1985. Yet, 30 years later, at the age of 72, when he became president, all he had in assets were small enough to embarrass his vice president. Buhari blamed that on being an ex-soldier, but, in truth, the problem is philosophical; it’s about the lens through which he views the world. Put simply, Buhari is a socialist or even a Marxist, who values modest means and a Spartan lifestyle. He sees himself as the hero of the poor, and has built a cult following around what the journalist David Hundeyin recently described as “the socialist politics of envy”, which shaped the outcome of the recent presidential election, in which Buhari successfully set the poor against the rich, with the message that, as Hundeyin put it, “poverty is a virtue because only the ‘corrupt’ are able to live well”. Sadly, the poor are often beguiled by populists claiming to be fighting for them. Osinbajo once said that “the common man is Buhari’s priority”. He said President Buhari once told him: “Look, I have been a salary earner all my life. I have never done any business; the only thing I have ever done is government work, either as a soldier or as a head of state”. Now, think of it. Here is a president who has never run a business in his life, who has always been maintained by the state, but who wants to help the common man. How would he, philosophically, want to do that? Of course, he would favour a statist approach of social interventions and use socialist policies as a tool of governance. However, as experience shows, that’s bad economics, which would perpetuate poverty. Socialist governments like to tax and spend to “help” the poor, but they always fail all over the world, as is happening in Venezuela. The truth is that the poor cannot grow an economy; they don’t have the means. But the middle class are the

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Buhari is a socialist or even a Marxist, who values modest means and a Spartan lifestyle. He sees himself as the hero of the poor, and has built a cult following around... “the socialist politics of envy”

engine of economic growth; they have the discretionary income and provide the stable consumer base that drives productive investment. Which is why any government that truly wants to help the poor must focus on expanding the middle class. But socialist governments and leaders, like Buhari, hate the aspirant middle class, whose desire for living well, they regard as elitist. But, according to Aristotle, politics is primarily concerned with“the actualisation of human flourishing”, and “the pursuit of the higher good of living well”. And, asThomas Jefferson said, “the care of human life and happiness is the only legitimate object good government”. So, any government whose policies are not generating prosperity and improving general welfare so that its citizens can flourish and live well is not a good government. Of course, there is nothing wrong with being ascetic, provided it’s not in opposition to wealth creation. Bill Gates is the world’s second richest man, yet he lives modestly, wearing a $10 watch. The spirit of capitalism, as Max Weber said, requires modesty but also ceaseless capital accumulation. After all, how would society be better off, generating jobs and ensuring good living, if it’s not creating wealth, if it’s not allowing money to manifest its “prolific, generating nature”, as Benjamin Franklin put it? But Buhari’s asceticism rejects the capitalistic ethos, both personally and in terms of policies.Yet, this is dampening business dynamism and damaging investors’ confidence. Even worse, it’s making material poverty acceptable to poor Nigerians, most of who voted massively for his re-election. But no nation can prosper with an anti-wealth worldview. Buhari must show that his ascetism embraces the spirit of capitalism!

Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

The challenge of central bank independence: Boldness required ECONOMIST

NONSO OBIKILI

entral Bank independence is one of those topics that is currently on the front burner. Around the world the number of cases where governments have become publicly at odds with the choices of their central banks have increased significantly, which has a lot to do with the tilt towards more populist politics in many countries. Here in Nigeria we have had, and still have, questions about the independence of our central bank. Before we delve into that it is useful to understand the logic of central bank independence. Central banks are in theory supposed to think about the big picture. Not that they should not care about day-to-day issues, but their broad mandate typically focus on stability, and indirectly, preventing cases of instability. This broad focus however means that in many instances they have to take decisions which in the short term may not look so good. Take for example, decisions to raise interest rates which theoretically help keep future inflation in check but also tend to dampen economic activity. In the short term it

always sounds like a bad decision to dampen economic growth, but the central bank knows that if they don’t act now then the consequences ofhigher inflation down the line would be much worse than whatever short term negative effects you have today. In summary, the central bank is supposed to be the adult in the policy making room. Or as the popular example goes, the person at the party who decides to stop serving alcohol when people are about to get too drunk. As you can imagine, being the adult in the room does not always go down well, especially when the people in the room are indirectly your bosses. Central banks frequently come under pressure from governments to take action that may be in the short term interest to politicians but are detrimental to the economy. The conflict between governments and central banks mean that central banks frequently have to choose between being tough enough to say no to governments, or saying yes and having the economy suffer the consequences. The most popular example of this conflict is the case between former US president Lyndon B. Johnson and his then federal reserve (the US central bank) chairman William McChesney. The Fed wanted to raise rates because they thought the economy was too hot which could lead to a severe recession in the future. President Johnson wanted to not raise rates because he had an election coming in a few months and didn’t want the economy to cool. After a series of discussions, which included a plea by the president to wait until his surgery before

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…the central bank is supposed to be the adult in the policy making room. Or as the popular example goes, the person at the party who decides to stop serving alcohol when people are about to get too drunk

continuing discussions on the matter, the Fed went ahead and raised rates anyway. As the story goes the president summoned the chairman to his office and physically assaulted him. The chairman stuck to his guns and insisted that they had no choice but to act according to their mandate and they had done so. Cases of this conflict between governments and central banks continue until today. Just last year the governor of the Central Bank of India opted to resign instead of ceding to calls to indirectly finance the agenda of the Indian government. Also, President Trump has been at war with his current Fed chairman, Powell, over the decision to raise US interest rates. Of course, central banks don’t always fight for their independence. Sometimes they cave to government demands. If you ever wonder how economic basket cases like Zimbabwe or Venezuela end up with such high inflation and worthless currencies, it typically starts with their governments asking their central banks to finance their deficits and their central banks not being tough enough to say no. When the Zimbabwean government ran into funding problems in the late 90s it simply got the central bank to print money to finance its ever increasing deficits, cue the chaos that followed. The story is the same with Venezuela. And so, we get to Nigeria. Back in the 80s and 90s we had many cases where the relationship between the CBN and the FG was a bit too romantic. We didn’t keep records back then, but we all heard stories of the president ordering the CBN to bring bullion vans filled with cash and

the central bank obliging. Coincidentally the 80s and 90s were the periods with the highest inflation we have ever seen, and not coincidentally very sluggish economic growth. Since the return to democracy in 1999 both parties have however mostly been responsible. We started reporting how much credit the central bank gives to the federal government. We even set legal limits for how much credit the CBN could extend to the FG. The result of responsible behavior is that in real terms credit to the FG has fallen almost consistently up until 2014. Since 2014 though, the reverse has been the case. Between 2014 and September 2019 the credit extended to the FG has risen from N530bn to over N7tn. That is trillion with a T. The relationship between the two is so romantic that in the FG’s Q3 2018 budget implementation report there is N1.6tn deficit that was officially financed by no one even though the money was spent. Essentially, the CBN is not saying no the federal government, a behavior which if not corrected could spell doom for all of us down the line. Of course, it is easy for me to write this from the comfort of my couch. It is definitely a lot more difficult if you have to sit in a room with the president, cabinet, and governors and say “sorry, we can’t do this” to their faces. But the central bank as an institution is going to need to find a way. If they don’t then its only a matter of time before all the emperors find themselves with no clothes. Dr. Nonso Obikili is Chief Economist at Business Day.

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