BusinessDay 25 May 2020

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news you can trust I ** monDAY 25 may 2020 I vol. 19, no 570

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Dangote Cement posts strong performance in Q1 as profit before tax up by 11% SEGUN ADAMS

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LOLADE AKINMURELE

frica’s leading cement manufacturer, Dangote Cement plc, has posted a strong performance in the first quarter ended March 31, 2020, with profit before tax (PBT) up by 11 percent, increasing from N78.96 billion to N88.06 billion.

According to the cement

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oreign exchange rates are galloping again in Nigeria. Dealers are speaking in hushed tone afraid of regulatory sanction. Unmet demands are piling up and manufacturers are raising alarm. Nigeria’s foreign exchange market is virtually frozen. It is a playback to the dark days of 2016 and early 2017 when it is alleged, the market was being rigged.

As was the case then, there’s now anxiety among foreign investors in Nigeria that the country may be creeping back to the days of acute dollar shortages and central bank capital controls that deterred investment and marred the economy.

The fall in oil prices means Continues on page 27

fgn bonds

Treasury bills

Continues on page 27

Inside

What Nigeria’s ‘precision lockdown’ COVID-19 strategy could look like P. 26 President Muhammadu Buhari (4th r) and some government officials perform the two raka’at prayers during Eid al-Fitr celebration at the State House, Abuja. NAN

Apapa traffic to worsen as Lagos closes Marine Beach Bridge for repairs P. 26

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AXA Mansard profit surges 105% to N1.82bn despite coronavirus SEGUN ADAMS

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XA Mansard Insurance plc, a member of the AXA Group, grew profit after tax by a 105% in the first quarter of 2020 where the outbreak of the novel coronavirus disrupted businesses across the country.

The insurer posted a profit after tax of N1.82 billion, up from N0.89 billion in March 2019, thanks to its focus on partnering customers as well as sustained operational efficiencies.

“Despite the challenges arising from the outbreak of COVID 19 towards the end of the quarter, we were able to grow our premium incomes and recorded strong profitability growth,” said Kunle Ahmed, the insurer’s CEO. “We will continue to improve and make available our digital channels during this difficult time and focus on providing bespoke solutions to our customers,” he said.

The profitability recorded during the first quarter cut across P&C, Life and Health portfolios with 21% growth in gross revenues across the board.

While AXA Mansard’s Health business remains the company’s fastest-growing and the commercial lines continue to hold its share of the market, AXA Mansard’s retail business continues to justify the investment in the insurer’s retail structure with 46% growth over the same period last year, Ahmed said.

AXA Mansard Insurance’s gross written premium hits N21.08 billion, 21% more than N17.42 billion in March 2019, while Net Premium Income rose 39% to N8.25 billion, up from N5.95 billion in the previous year.

Investment and Other Income ballooned 79% to N2.36 billion in the quarter and Operating Expenses of N2.09 billion meant a 19% increase from N1.76 billion in March 2019.

AXA Mansard was more operationally efficient as Operating Expense Ratio dropped to 12% in the quarter from 15% in the same period of 2019.

Underwriting Expense Ratio fell to 5% from 8% over the reporting period.

The insurer, however, saw Loss/Claims Ratio hit 50% from

1% in the previous year while re-Insurance Cost Ratio of fell to 28% from 75%.

Profit before Tax surged to N2.01 billion, up 96% from N1.02 billion recorded in March 2019 and Earnings per Share jumped to 13.9k from 8.61k from last year.

AXA Mansard Insurance’s grew its total assets to N104.32 billion, up 13% from N92.28 billion as at December 2019, while Insurance Liabilities were up 40% from N25.16 billion to N35.32 billion.

As a result, Insurance Shareholders’ Funds stood at N24.04 billion, up 4% from N23.09 billion as at December 2019, and Group Shareholders’ Funds rose 6% to N26.85 billion from N25.26 billion.

Returns on Average Equity rose to 8% from 5% in the reporting period and Returns on Average Asset rose to 2% from 1%.

In response to the novel coronavirus outbreak, AXA Mansard launched a telemedicine service to enable its health customers virtually visit the hospital and see a doctor from the comfort of their homes through their phones, laptops or tablets.

Government must expand investment in data for online learning post COVID-19 KELECHI EWUZIE

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frica’s education experts have asked governments across the continent to make investment to expand data reach to their various universities to accommodate the new normal, which is online learning.

They observe that with the cases of coronavirus rising on the African continent and several other countries in lockdown, universities are faced with uncertainty and plenty of open questions.

The challenges faced by universities across the continent occasioned by pandemic have shown that relying on brick and mortar format of learning could constitute a setback to leaning to millions of students.

Mamokgethi Phakeng, vicechancellor, University of Cape Town, South Africa, says governments across Africa need to extend the reach of data coverage so as to ensure all students have

access to online education facility.

Speaking during a virtual panel discussion Tuesday on the challenges faced by tertiary institutions in Africa amid the Covid-19 organised by CNBC Africa, Phakeng says University of Cape Town is focusing on exposing students to international educational experiences through virtual online platforms.

She says on-campus residencies foster educational environments. A report by The Economist indicated that in 2019, 9 percent of young people in sub-Saharan Africa attended tertiary education. This figure is 23 percent less than the global average.

Matthew Opoku Prempeh, education minister of Ghana, says in order to grow the economies of various countries around the world, higher education must be prioritised.

Prempeh says there are programmes the government of Ghana have put in place to ensure

students receive the necessary technological equipment and software, including laptops and internet access, so they may take part in online learning programme.

According to Prempeh, “The government is working with universities to prepare them for the future.” He discusses how Ghana is embracing virtual online lectures to assist students amid the #COVID crisis.

Jon Foster-Pedley, dean, Henley Business School Africa, says virtual education is an effective approach to teaching students as the personal face-to-face approach begins to fade away due to global shutdowns of educational institutions due to the Covid-19.

Foster-Pedley further says virtual online education programmes allow students to interact on a global basis, adding that Covid-19 lockdowns will however not alter the marking system at their institution.

Coalition Against COVID-19 boosts fight against pandemic with free medical equipment to Borno Obinna Emelike

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n addition to its sustained efforts in the fight against the coronavirus pandemic across the country, Private Sector Coalition Against COVID-19 (PSCA) has donated medical equipment worth hundreds of millions of naira to the Borno State.

At the presentation in Maiduguri recently, Hajiya Fatimeh A Jarma, representative of CA COVID-19 in the state, said the coalition was instituted by the Central Bank of Nigeria (CBN) on behalf of the Bankers’ Committee andinpartnershipwiththeprivate sector to raise funds needed to fight the pandemic across the country.

Hajiya Fatimeh, who is the business development manager of First Bank Borno/Yobe states,

saidthecoalitionwasaimedpooling resources together to fight and defeat coronavirus pandemic in Nigeria. “We are here on behalf of Private Sector Coalition Against COVID-19todonatethefollowing medicalequipmenttoBornoState in the fight against the COVID-19,” she said.

She noted that the items included five patients monitor, five infusion pumps, electric suction machine 7A-23D, 5 oxygen concentrator,13,000facemasks,10,000 face shield and 500 Personal Protective Equipment. Hajiya Fatimeh said the impact of COVID-19onsociallivesandbusinessesacrosstheworldistremendous, assheassuredBornogovernment that the private sector would continue the donation towards the course. “The coalition raised funds to procure equipment and materials needed to combat the www.businessday.ng

menace of COVID-19 pandemic in the country. “There will be moredonationsandintervention, we will continue the intervention especially food items aspects of this intervention,” she said.

She disclosed that to ensure the continuity of businesses and economic activities with minimal effect from the pandemic, banks have ensured that everyone visiting any of its branches takes a temperature test, makes use of hand sanitisers and maintains social distance.

Receiving the items, Umaru Kadafur, the governor, thanked the private sector for donating the lifesaving items, adding that the items came at the right time. “We are thankful to the Private Sector Coalition Against COVID-19, we are glad to receive these items. “It is not quantum of the items that matters but the spirit behind it”. https://www.facebook.com/businessdayng

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Buhari’s green shoots of dynamism must have a strategic focus global Perspectives

OLU FASAN

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here have recently been some signs of dynamism in President Muhammadu Buhari’s leadership. Recently, he approved the implementation of the Oronsaye report on rationalisation of government agencies, eight years after its publication. And two weeks ago, he appointed Professor Agboola Gambari, an internationally-renown bureaucrat, as his new chief of staff to replace the late Abba Kyari, who died from COVID-19 on 17 April.

These developments are, of course, inchoate, which is why I call them “green shoots”, and there are no guarantees they would blossom and lead to transformative change. Besides, they are coming very late. Imagine if President Buhari had brought in Professor Gambari at the start of his government to organise his later dysfunctional presidency. Imagine if he had approved the implementation of the Oronsaye report very early in his presidency in 2015.

Well, neither the Oronsaye report nor Gambari’s appointment is my focus here.

Rather, my aim is to argue that President Buhari is running out of time to leave an indelible legacy, and that unless he gives his new-found dynamism a strategic focus his presidency would be a missed opportunity to be transformative. But Buhari is in a race against time!

This week, President Buhari will be five years in power. Specifically, this Friday, 29 May, he will complete the first year of his second term, and thus has three more years in office! But, according to the theory of presidential election cycle, the last year of a presidential term is usually about politicking, not governing, as a president focuses on securing his re-election or on ensuring his party retains power after him. Thus, the Buhari administration will, by 2022, be neck-deep in the politics of the 2023 presidential election. Which means

that President Buhari effectively has only two years to govern, that is, to do anything not driven by populism or short-termism but long-term positive consequences.

So far, his government has lacked such strategic focus. He has done nothing of a legacy type, of a history-making nature.

The Oxford Dictionary defines a historymaker as “a person who influences the course of history or does something spectacular or worthy of remembrance.”

The truth is, by that definition, President Buhari’s five years in power have been absolutely mediocre, utterly lacklustre. It is hard to look at economic governance, political governance and institutional development and say, objectively, that President Buhari has been a transformational leader; that if Buhari left office today, he would leave an indelible legacy.

Of course, Buhari’s staunch supporters will disagree vehemently. The archBuharists, who are behind the “Buhari Legacy Project”, will refer to his “feats” in infrastructure development. They will say “the railways are coming up; roads are coming up”. Indeed, President Buhari is reportedly spending N270 billion on maintenance, repairs and restoration of over 50 bridges across the country; he is also borrowing heavily to invest in the repairs and maintenance of other physical infrastructures, such as rail lines and roads. So, to Buhari’s supporters, his legacy is infrastructure development.

But the truth is, just as previous leaders are hardly remembered today for the infrastructure projects they initiated or completed, Buhari too would not be remembered in, say, 10 or 20 years, as a great leader who repaired roads and restored bridges. The question, then, is: what would he be remembered for?

Well, as I said earlier, he has, so far, done nothing spectacular or gamechanging that is of a legacy type. A true legacy is something that influences the course of a nation’s history, that fundamentally and positively transforms the way it is governed. It’s about structural reforms that bring about transformative change and social progress. As Professors Paul Collier and Tim Besley said in their report on state fragility, “great leaders build institutions.” So, true legacy is about institution-building!

Of course, physical infrastructures are absolutely important and critical to development. But governing is more than simply awarding contracts for

infrastructure projects, paid for with taxpayers’ money or with borrowed money.

Debt-laden infrastructure development is not good government. In any case, the World Bank says that Nigeria would need sustained expenditure of almost $14.2 billion per year over the next decade to address its infrastructural challenges, and that the country currently spends about $5.9 billion.

So, how can President Buhari claim that Chinese-funded infrastructure development, which is nothing near what the country needs to address its infrastructural challenges, is a spectacular achievement? How can making Nigeria a pawn in China’s debt-trap diplomacy be a worthy legacy?

The truth is that no government can fund infrastructure development alone, either with taxpayers’ money or through borrowings. Elsewhere, major infrastructure investment is done by the private sector, while the government creates the right incentives for such investment. So, why has President Buhari not created the right economic environment to incentivise local and international investments in Nigeria’s infrastructure development?

Why, despite persistent calls by the IMF and the World Bank, has his government refused to undertake structural economic reforms to make Nigeria’s economy internationally competitive and attractive to foreign investors through privatisation of state-owned enterprises, including in the oil sector, and liberalisation of the economy?

The Buhari administration’s only strategic attempt at economic reforms was the publication of the Economic Recovery and Growth Plan, ERGP, in 2017. Given Nigeria’s serious economic mess, several local and foreign commentators called for the plan and said that it would “make or break” Nigeria. But since the ERGP was launched amid fanfare in April 2017, it has not made Nigeria but, rather, has left in its broken state. The ERGP set several targets to be met “by 2020”, including growing the economy by 7 percent, creating 15 million jobs and increasing FDI inflow from $3.1 billion to $10 billion. But, to date, none of the targets is remotely near being met, and the document itself is gathering dust in the dustbin of history!

The truth is that President Buhari does not believe in structural reforms. Being self-willed, he trusts his own personality and judgment rather than strong and

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The Buhari administration’s only strategic attempt at economic reforms was the publication of the Economic Recovery and Growth Plan, ERGP, in 2017.

Given Nigeria’s serious economic mess, several local and foreign commentators called for the plan and said that it would “make or break” Nigeria

independent institutions. As a result, he only addresses the symptoms and not the causes of problems. For instance, he fixates on poverty, corruption, insecurity and social tensions but ignores their underlying structural economic, political and institutional causes.

Nothing illustrates this personalityrather-than-institutional-based approach to governance better than an exchange between Vice President Yemi Osinbajo and former Governor Peter Obi during last year’s Vice-Presidential Election Debate. The exchange, in relation to the government’s anti-graft war, went thus: Obi: “You can’t leave your shops and be chasing criminals.”

Osinbajo: “If you allow criminals to steal everything there will be no shop.”

The difference between these two perspectives is instructive. While Osinbajo was personalising the war against corruption, Obi wanted to institutionalise it.

And Obi was right.

The truth is that, using the analogy of shops, major supermarkets put security guards and CCTV cameras in their stores to prevent or catch thieves, while focusing on serving their customers and selling their products in order to make profits. Their managers don’t leave their core operations to chase thieves. Surely, with effective and independent anticorruption and law enforcement agencies, the president doesn’t need to make fighting corruption a personal crusade at the expense of properly running the country. But President Buhari has ignored the much-needed public sector and institutional reforms.

Then, what about political reforms?

Truth is, Nigeria can’t make real progress under its current flawed politico-governance structure; it needs to be restructured.

Yet, five years in power, President Buhari has done absolutely nothing about political restructuring.

All of this is why Buhari’s new-found dynamism is interesting. It needs a strategic focus, and must bring about fundamental economic, political and institutional reforms over the next two years. Otherwise, President Buhari would leave office in 2023 with absolutely no worthy legacy!

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

Supporting the CEO through a crisis

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crisis is a major catastrophic event, or a series of escalating events, that threaten an organisation’s strategic objectives, reputation, or viability. Crises can be classified into two - routine and novel.

Routine events are the known risks for which organisations can plan and develop procedures – including taking out insurance, emplacing robust enterprise risk management frameworks, disaster recovery plans, etc. Novel crises are the risks that exhibit unusual frequency and impact. organisations typically don’t have plans for those events – hence the novelty. They may be a confluence of two or three events that strike at the same time. Or they may simply be too big or unusual to be imagined.

For novel events, there’s no experience to draw from to manage or lead in that type of crisis.

In the absence of predetermined procedures, novel crises—whether they be natural disasters, cyber breaches, or malevolence such as terror attacks—can test the decision-making capacity and strategic-thinking ability of leadership.

COVID-19 is a novel virus and what is called a “black swan event”- unpredictable beyond what is normally expected and has potentially severe consequences.

When dealing with a novel crisis, the CEO has to be mindful of falling into predictable reaction,

including – excessive focus on the incident rather than responding and dealing with anticipated impact; inappropriate scoping of the scale and breath of the crisis and thus inability to fully anticipate and plan for impact; poor decisionmaking owing to inadequate or false information and dealing with an overload of information.

How then can the Board support the CEO through a crisis such as that precipitated by COVID-19?

Leadership that is decisive, yet sensitive and empathic. The CEO will require the wise counsel of Directors given their wealth of experience.

Whilst no one has travelled this path before, Directors can draw on prior experience or even the experience garnered from sitting on other Boards to provide guidance to the CEO. The robustness of the Board’s composition and its diversity come to the fore here.

A heterogenous Board or one that is not sufficiently age diverse will lag behind a roundly diverse board. Agility and speed of decision making is also required at times like this. The bureaucracy of red tapes in seeking approval should be dispensed with. Directors should be available to meet at short notice. Virtual meetings which are easier and faster to set up have become the new normal and all requisite approvals – including amending Articles to give effect to this should www.businessday.ng

be quickly put in place to ensure enforceability of decisions.

Directors can support the CEO by tapping into their networks to pursue high level contacts required for waivers, concessions and access.

Whilst being mindful of their fiduciary responsibilities to the enterprise, Directors should trust the CEO enough to allow him/her to act in what they consider to be in the best interest of the Company. This could entail reviewing the Delegation of Authority matrix to cede more authority to the CEO. This of course presupposes that the Board is satisfied that the incumbent CEO has what is required to lead the organisation through the crisis. Whilst this is no time to replace an underperforming CEO, the Board may need to designate a “Crisis Manager” where the CEO requires support.

As much as possible, the Board should resist the urge to micromanage the CEO. Whilst it may be necessary to have more frequent meetings, the Board should be mindful of delving into purely operational matters.

Clearly, the frequency of Management Reporting will increase to ensure the Board is fully up to date with corporate response to the crisis.

There has to be clarity as to the form, content and frequency of reporting. Similarly, whilst informa-

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Bisi Adeyemi tion is useful - especially relevant and accurate information, Directors should resist the urge to overload the CEO with information. Comparative information though well intentioned, could increase pressure on the CEO and be counterproductive. It is good practice to channel information through the Chairman who will be able to filter and determine which will be useful to the CEO. Note: The rest of this article continues in the online edition of Business Day @https:// businessdayonline.com/ Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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An empty seat for Koleade Adeniji Abayomi, SAN; OON (3)

Bashorun J.K Randle

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NN reported as breaking news the death of Alhaji Abba Kyari, the Chief of Staff to President Muhammadu Buhari GCFR, Commander-In-Chief Armed Forces of Nigeria as follows (quoting the official statement from the Presidency): “Mallam Abba Kyari, who died on 17th April, 2020, at the age of 67 from complications caused by the Coronavirus, was a true Nigerian patriot. My loyal friend and compatriot for the last 42 years - and latterly my Chief-of-Staff - he never wavered in his commitment to the betterment of every one of us. He was only in his twenties when we first met. A diligent student, soon after he was blessed with the opportunity to study abroad - first at Warwick and then law at the University of Cambridge. But there was never any question Abba would bring his first-rate skills and newly acquired world-class knowledge back to Nigeria - which he did - immediately upon graduation.

Whilst possessing the sharpest legal and organisational mind, Abba’s true focus was always the development of infrastructure and the assurance of security for the people of this nation

he served so faithfully. For he knew that without both in tandem there can never be the development of the respectful society and vibrant economy that all Nigerian citizens deserve.

In political life, Abba never sought elective office for himself. Rather, he set himself against the view and conduct of two generations of Nigeria’s political establishment - who saw corruption as an entitlement and its practice a byproduct of possessing political office.

Becoming my Chief of Staff in 2015, he strove quietly and without any interest in publicity or personal gain to implement my agenda.

There are those who said of him that he must be secretive - because he did not have a high public profile.

But Abba was the opposite: he simply had no need, nor did he seek, the cheap gratification of the crowd; for him, there was nothing to be found in popular adulation. He secured instead, satisfaction and his reward solely and only from the improvement of the governance of this great country. Working, without fail, seven days each and every week, he acted forcefully as a crucial gatekeeper to the presidency, ensuring no one - whether minister or governor had access beyond another - and that all those representing and serving our country were treated equally.

He made clear in his person and his practice, always, that every Nigerian – regardless of faith, family, fortune or frailty - was heard and treated respectfully and the same. Mallam Abba Kyari was the very best of us. He was made of the stuff that makes Nigeria great.

Rest in Peace, my dearest friend.” – President Muhammadu Buhari Abba Kyari was a student of Kole Abayomi at the Nigerian Law School

before he joined a leading Law firm - Fani-Kayode, Sowemimo and Co. Sadly, the very powerful seat occupied

by Abba in the inner sanctum of the Presidency is also vacant now.

Verdict on Abba Kyari: “He blew it.

May his soul rest in peace.”

Perhaps we should add as an addendum: “Abba Kyari, the man they loved to hate.” – M.C. Mohammed.

It is now left to his friends and wellwishers to write his elegy/epitaph along with an appropriate edifice to immortalise his name – in education, health, infrastructure or public service.

It appears Ursula von der Leyen, the President of the European Union which recently donated N21 billion to Nigeria as its contribution towards curtailing the Coronavirus has raised the red flag: “How come there’s no single(!!) woman on the shortlist of candidates to replace Mallam Abba Kyari? In this day and age, it shouldn’t matter whether she’s single or married. At the International Monetary Fund (IMF), Christine Lagarde was just been replaced by Kristalina Georgieva as the Chairwoman and Managing Director.

Until recently, Mrs. Theresa May was Prime Minister of Britain. In Germany, Angela Merkel has been ruling the roost for over fourteen years. Here are some other women who are Heads of Government/Prime Ministers – Halimah Yacob, President of Singapore; Jacinda Ardern, Prime Minister of New Zealand; Sheikh Hasina, Prime Minister of Bangladesh; Tsai Ing-wen, President of Taiwan; Sanna Marin (The World’s Youngest PM at

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Abba Kyari was a student of Kole Abayomi at the Nigerian Law School before he joined a leading Law firm - Fani-Kayode, Sowemimo and Co

34 years of age), Prime Minister of Finland among others. As for being Chief of Staff, there are several women who have held (or are holding) that position in both the public sector and private sector.”

In the meantime, social media is awash with speculation that such a powerful position (Chief of Staff ) should be subjected to due process – even to the extent of considering outstanding candidates from wherever.

Rumour has it that both the World Bank and International Monetary Fund are rooting for Ms. Melaine Richards, KPMG’s UK’s most senior female partner and deputy chairman. Her resume is most intimidating. She is not coy about her age – fifty-five years.

According to Bill Michael, Chairman of KPMG UK (on CNN): “Melaine is relentless in her campaigning for equality in the workplace and is an inspirational leader, both within our firm and across UK business as a whole. Wherever she chooses to go next, they will be lucky to have her broad array of skills, experience, energy and counsel – which have been invaluable to me as chairman. She comes highly recommended.”

However, she will not be available until September 2020. The inimitable Richard Quest has been quick to point out that when Britain was searching for a suitable replacement for Mervyn King as the Governor of the Bank of England in 2013, Mark Carney, a Canadian got the job.

J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, J.K. Randle Professional Services.

Email: jkrandleintuk@gmail.com

How African nations can use AI to improve municipal governance

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frica’s old political systems are facing new challenges such as climate change, growing populations, rapid technological change, and more.

Meanwhile, cities, as engines of economic growth, are now tasked with solving these issues.

But as large and intimidating as these challenges may appear, it’s vital that we push our political institutions into the future. New technologies like quantum computing, drones, and AI will allow us to be more efficient, dynamic and prepared to take on the challenges of the 21st century. That’s why I believe that Nigeria can use Artificial Intelligence (AI) to improve municipal governance.

The future is already here It’s clear that AI is coming. AI is already used in autonomous cars and drones. I believe it will join the printing press, the automobile, and the computer in changing the world. Let’s look at a few trends that show why AI is poised to change governance fundamentally.

The rise of the (smart) megacity. Tokyo and New York City were the only megacities, cities with 10 million people, forty years ago. Now, with over 50 percent of the world’s population living in cities, there are over 20 megacities, including Lagos, with approximately 21 million people. The number of megacities, specifically in Africa, is projected to increase. Nairobi, Cape Town, and Lagos are preparing for their future growth by beginning plans to transform into smart cities. There is also an African Smart

City conference.

People are using technologies that enable AI. Big data, machine learning, and cognitive computing have been modernising businesses and governments for years. Cognitive analytics can generate hypotheses by drawing from a variety of potentially relevant information. It can potentially bridge the gap between these technologies and AI. Governments are working on AI research and policy. Governments always need to be ahead of the curve. Countries are forming strategic partnerships with each other, research bodies, and universities to plan for AI’s implications. Tunisia and Kenya are the only African nations so far to start developing an AI strategy.

Nigeria’s AI opportunity Give these trends, Nigeria, Africa’s most populated country, is in a great position to capitalise on the AI boom. Here are five ways AI could improve and modernise governance at the local level, so we can prepare ourselves for the next century.

Virtual assistants: The public sector fields thousands of questions a month from the general public, taking up valuable human resources and more importantly, time.

AI-powered assistants can not only answer questions with higher speed and accuracy, but they can also learn, develop, and get smarter with each question. The US military is using virtual assistants to help prospective recruits.

Think of a bureaucratic Amazon Alexa or www.businessday.ng

Google Home.

Better predictions: AI can use predictive algorithms to protect governments from corruption and financial fraud. Such technologies can also predict the seriousness of wounds and help medics prioritise treatment and evacuation. Predictive AI can even forecast weather more accurately.

Better health care services: With a public health care system in Nigeria, the government could use AI to assist surgeons during necessary procedures. In some cases, AI-powered surgeons have outperformed their human counterparts. African hospitals have already started using AI for analysing genomic data.

Reducing backlogs: When it comes to innovation, the patent office plays an important role. There are thousands of patent applications a year. Any delays to their approval can harm a business’s productivity. A study concluded that just one year of delay in reviewing patent applications that ultimately receive approval reduces a company’s employment and sales growth by 21 and 28 percent, respectively, over five years. Cities can apply the same principle to almost any government document or license entrepreneurs might apply for.

Crime prevention: AI could use facial recognition algorithms to identify criminals better. A study was conducted to conclude just that, and it was successful. Researchers trained their algorithm on 1856 different images of Chinese men, half of whom were known criminals. The algorithm was able to

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Ronald Chagoury

correctly spot the criminal and non-criminal 89.5 percent of the time.

The rise of Artificial Intelligence asks as many questions as it answers. Such a relevant technology is sure to revolutionise the way the world functions. Overall, these five points are just a few of the many reasons Nigeria should be optimistic about the future. AI will not only influence government but business as well.

It is critical that these sectors cooperate. By keeping these points in mind, I’m confident that we Africans can use AI to build smart and efficient cities.

Chagoury is the Vice Chairman of Eko Atlantic City, a new city being built on the coastline of Lagos, adjacent to Victoria Island, and set to become the new financial centre of West Africa. Ronald covers topics relating to the current and future of Africa as he is a big believer in the untapped potential of the continent.

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Monday 25 May 2020

BUSINESS DAY

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Strain of isolation begins to tell amid the deprivations of confinement It is natural for morale to dip when our social ties have been severed

Camilla Cavendish

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fter eight weeks of lockdown, I am beginning to lose my bearings. The anticipation of liberation, as restrictions begin to lift, has strangely made me more grumpy and disoriented. And I am not alone.

Friends report increasing battles with their children and spouses over trivial things, as the initial sense of bonding in a crisis gives way to the dull drumbeat of cramped togetherness, coupled with uncertainty over whether to send children back to school or whether there will be a job to go to. Few people have taken such drastic action as the writer Neil Gaiman, who flew from New Zealand to the Isle of Skye to get away from his wife during lockdown. But for every individual who is revelling in bird song, there are many others suffering acutely from quarantine fatigue.

In the 1980s, behavioural researchers at Nasa studied Antarctic missions and submarine voyages, to understand how human beings might cope with the confinement and isolation of a space station. It was soon clear that breakdowns in social

interaction can disrupt a mission as badly as medical issues.

“Without the ability to physically remove oneself from others”, wrote researcher Marc Levesque of his year at Antarctica’s South Pole Station, “mentally plotting the exact time, place and method of a fellow crew member’s demise became one of the few options available for coping”.

Mr Levesque’s version of lockdown was far more extreme than ours. He had to put up with colleagues who were strangers, three-minute showers, and the grinding sensory deprivation of winter white. My own household argues about who ate the last biscuit, not who took what polar explorers called a “Hollywood shower”: a luxurious four minutes. But it is intriguing that on many missions, dislikes and resentments are heightened in the last phase.

The notion of a “third quarter phenomenon” was coined in 1991, by the researchers Robert Bechtel and Amy Berning. They found that morale seemed to dip, and interpersonal tensions rise, when missions reached the three-quarter mark.

Whether the expedition was due to last a year or six months, there was something psychologically crippling about knowing that the first part of the journey was over, but that a long, tough period still lay ahead.

At least these intrepid voyagers volunteered for their roles and knew the end date. None of us chose Covid-19. We teeter on the verge of entering the next phase, without knowing when or if we will return to our old lives. We may endure a prolonged third quarter, irritated by

the continuing privations and girding ourselves for a next step which never seems to come.

This may help to explain why many of us haven’t mustered the energy to take up oil painting or read Tolstoy.

Whether you are on your own, elbowing a partner for laptop space or trying to work while home-schooling children, you may be running low on resilience. A friend in Massachusetts is churning her own butter because the shops have run out. Far from enjoying this homely pastime, she is infuriated, racing to fit it in between work calls and home schooling. Why do you need butter? I ask. “Because all we eat is toast!” she shouts, furiously. “It’s not that bad,” her husband murmurs in the background.

On polar expeditions, morale was hugely influenced by compassionate leadership. We adults are used to heading our own households, and in some cases our organisations. But we are doing so without the distraction of a commute or the ability to complain to a sympathetic friend out of earshot.

Julia Marcus, professor of population medicine at Harvard Medical School, has compared social isolation to abstinence. Both are unnatural. She has urged public health experts to learn from efforts to stop the spread of HIV in the early 1980s.

Telling all gay men to stop having sex was unhelpful, she says. It was more effective to guide people on how to have safer interactions. She argues for the same approach now.

Yet even as we start to socialise again, we must accept that “normal” is not coming back any time soon.

We are not able to plan for things we usually look forward to, like a summer holiday, or the end of term school events. A-level students leaving school and university students who are about to graduate don’t know if they will ever walk through their institutional gates again.

These deprivations do not rank with illness or death, but they produce a kind of grief for what might have been. For some, they create what the clinical psychologist Dr Hogan Bruen calls a “forced depression” by disrupting plans for the future that usually provide hope. Six in 10 British women are struggling to feel optimistic. For some people, the next phase produces dread. Disabled people and others who rely on carers coming into their homes are especially anxious right now that their helpers may be exposed to infection as restrictions ease.

In a recent poll, 60 per cent of Britons say they feel uncomfortable about going to bars and sporting events or using public transport. Only 49 per cent are happy with the idea of going back to work. #ExtendLockdown has trended on social media, with thousands of people expressing concern about the easing of restrictions, even as others lambast them for being work-shy. We should not underestimate how exhausting this is.

I was prepared for quarantine fatigue. I hadn’t expected to wrestle with the sense that the beginning is over, but that we are nowhere near the end. In this next phase of our pandemic journey, the strains and stresses may take their toughest toll.

‘

We adults are used to heading our own households, and in some cases our organisations.

But we are doing so without the distraction of a commute or the ability to complain to a sympathetic friend out of earshot

FT

Ideas for a new Nigeria: What to do about FOREX

ECONOMIST

(second in a series of five volumes)

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othing quite divides the Nigerian policy space like forex. We know the major vulnerability is the dominance of crude oil in our foreign exchange earnings basket. We also know that any long-term exchange rate “stability” depends on how we diversify that space. What to do in the interim though, is the question?

That question is my focus today.

The dominance of crude oil is however only half the problem. The second half is the bias, specifically in the upper class, for a “strong” exchange rate against the dollar. They measure their standard of living on their capacity to purchase international goods and services.

Contrary to popular opinion, forex utilisation for international travel, foreign education and health is multiples of that for food imports.

In 2018, for example, $9.5 billion was utilised for personal and business travel including for education and health reasons, according to the CBN. The total of all agriculture and manufactured goods imports in the same year was $2.6 billion according to the NBS. Even if you assume that smuggled products were just as large, it still would not come close to the travel expenses. In 2019 the figure for travel was up to $13.5 billion.

This upper class has political power though. They are the ones who write op-eds in newspapers and generate conversations on television once there are forex challenges.

This bias and political power is the underlying cause of the CBNs almost non-stop fascina-

tion with a fixed exchange rate against the US dollar. This fascination comes at a cost.

Unfortunately, in the current policy environment, the cost is not clear, especially who is bearing it. Remember what happened when the fuel subsidy got internalised within the NNPC and no one could actually figure out its true cost? The same has been going on with foreign exchange in the CBN for decades. We only see the consequences when things blow up. So, what is the way forward?

First, we need a new model of transparency in forex transactions with one unified market that allows buyers and sellers to transact and decide the terms of those transactions, including the price. We have properly function asset markets for equities. We have properly functioning asset markets for debt securities.

We even have properly functioning asset markets for Bitcoin. We now need a properly functioning asset market for foreign exchange.

Like every other market you can have rules if you want. For instance, you can require that any transaction above maybe $5000 be done on the market. You can require that, like in other asset markets, dealers cannot pick and choose who to sell to. Or that information such as BVNs or TINs and purpose are attached to every transaction, or even that some items deemed illegal by law are not permissible. The “by law” part is important because we are a democracy after all.

Second, the CBN needs to be stripped of its power to act as Bureau De Change for the www.businessday.ng

government. On this I now subscribe to the late Herny Boyo school of thought. You cannot have a functioning market if you have one monopoly seller who also happens to be a regulator. And the CBNs monopoly status comes from that action of automatically converting the governments foreign exchange tax revenue to Naira at an arbitrary rate. I suggest we let the various governments collect their foreign exchange and sell it on the unified market themselves. At this point I should point out that allowing the governments collect forex taxes to sell on the market does not mean that the government should be allowed to spend forex. They should not. But if Misau LGA gets $1 million FAAC allocation then it should take that $1 million and sell on the single transparent FX market. If Misau decides that it wants to sell it at a 20 percent discount to whoever then so be it. But it cannot force Bida LGA to do the same. Of course, market rules apply and it can’t pick and choose who to sell it to.

One of the travesties of the last five years is that the very same fiscally strapped governments have lost almost 20 percent of their potential revenue to the CBNs FX shenanigans.

The transparent market mentioned above still allows the CBN implement whatever exchange rate policy it wants. If it wants to keep the USD to Naira rate fixed then it can do so, but it will need to buy and sell dollars like everyone else. But what should its actual policy objective be? Whatever it is, the exchange rate policy objective for the CBN needs to be

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NONSO OBIKILI made explicit in the CBN act. The current act specifies price and exchange rate stability as objectives. Price stability is straightforward to interpret but what does exchange rate stability mean? From an optimal macro-policy perspective, the best-case scenario is to always be around the real effective exchange rate. At the very least the avoidance of the worst-case scenario of an over-valued currency based on a publicly reproduceable real effective exchange rate framework should be embedded in the act. The responsibility for implementing that objective should also be moved away from the executive-leaning board, and towards the MPC. This will serve as the legal basis protecting the CBN from the political bias of the upper-class segment and their constant push for “strong” exchange rates.

There are many finer details that cannot fit in a 1000-word column. But if we do these things then we will essentially guarantee that the days of forex scarcity will be gone and the CBN will still have the flexibility to implement exchange rate policy but with some protection from the whims and caprices of the politically connected upper class.

Dr. Obikili is the chief economist at BusinessDay

@Businessdayng

12

BUSINESS DAY

Monday 25 May 2020

EDITORIAL

A crisis not to be wasted

Publisher/Editor-in-chief

Frank Aigbogun editor Patrick Atuanya

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

Spur private investment in physical and social infrastructure

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he confluence of COVID-19 and an oil market collapse means that our oil boom is well and truly over. We have no public sector savings, approximately $85 billion (20 percent of GDP) that we have difficulty servicing, unemployment closer to 40 percent than the official 6 percent when adjusted for COVID-19, under-employment and underreporting. Nigeria is also hobbled by a seemingly endless war in the north-East, climate change and decades of gas flaring devastating the Southeast and Niger Delta, industrial output below 40 percent, daily public electricity averaging less than 5,000 megawatts, augmented by an alternative power market that delivers over 30,000MW at an estimated daily fuel cost of over N1.5 billion.

We are indeed up the proverbial creek without a paddle. And the boat is leaking.

We can no longer await a postCOVID-19 economic recovery.

Nigeria’s leaders must either deliver sterling leadership in a time of crisis or lead us to drown swiftly in the slough of despond. Apprehensive though we are about the coming socio-economic upheaval, BusinessDay believes that this may be the long-awaited tonic that compels a comprehensive change in the political economic management of the country. Absent public sector funding, the private sector becomes the engine of regeneration and subsequent growth, as ought to have been the case for long.

Economic recovery must benefit the middle class and establish a sustainable platform for moving more Nigerians upwards into the middle class. Policy and law in the coming months, therefore, must encourage private sector investment into ICT, infrastructure, agriculture, manufacturing and, COVID-19 permitting, the services sector. The bedrock of all this is urgent investment in physical (roads, land, sea and air transport, energy transmission) and social (healthcare and education) infrastructure.

BusinessDay recognises that Nigeria’s infrastructure growth is challenged by the stifling grip held by the Federal Government over every infrastructure asset or opportunity, and not by access to project finance. Ports, pipelines, railways and electricity transmission lines are owned by and cannot be built or operated without negotiating exemptions from some Federal MDA or the other.

Existing assets, almost all poorly maintained and inadequate, cannot be devolved to the private sector except via a procurement process, run by the ICRC, so tortuous and prolonged that it defeats the purpose of starting the transaction in the first place.

The Federal and State public sectors must come up with a mechanism for developing viable projects around these brownfield infrastructures and finance them with domestic capital. Only then will foreign investment materialise. This is the most effective and fastest route to Nigeria’s economic revival. Fortuitously, the National Economic

Council, comprising State Governors, the Minister of Finance, the Governor of the CBN and chaired

by Vice-President Yemi Osinbajo, has spent the last 6 months working on two major initiatives that could, if properly and firmly implemented, take Nigeria out of the woods and into a new era of sustained socioeconomic development.

Furthermore, the imminent massive cut in the flow of free money from the monthly FAAC ritual in Abuja compels the 36 governments to earn revenues from productive taxable activity, again by the private sector. With very few States having invested consistently in education and healthcare or acted to encourage large scale private sector activity in manufacturing, mining and agriculture – three areas in which all the States can do very well – this will be a difficult journey. At this point, they and the Federal Government must work together to handover assets to capable private sector players as quickly as possible and work to safeguard the investments that will follow.

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

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Monday 25 May 2020

BUSINESS DAY

13

COMPANIES & MARKETS Stocks post biggest gain in two weeks on pace to claw back coronavirus, oil-plunge losses

COMPANY NEWS ANALYSIS INSIGHT

SEGUN ADAMS

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igerian stocks on Friday posted their strongest gain since May 5 on track to recover from the fallout of the novel coronavirus pandemic and record oil plunge that cost investors trillions.

Stocks edged higher by 1.8% to close the week with 5-straight gains.

The market by Friday had risen 22% from its year-low of 20,669.38 index points on April 6, which is also a 22% decline from 26,279.61 index points on March 6, the Friday that the oil market broke over the failure of the OPEC+ to agree on a production cut.

The All Share Index now at 25,204.75 points, its highest level since March 10 is on track to reach its mark on March 6.

Cheap valuations of stocks, low yields on fixed-income assets coupled with excess liquidity in the market and the oil price rebound have played a role in the turnaround in the market, said CSL analyst Gbolahan Ologunro.

“Furthermore some foreign investors that couldn’t repatriate their funds in March following CBN’s reduced intervention in I&E reinvested in the stock market,” he said.

O l o g u n r o, h o w e v e r,

warned against investors becoming overly optimistic as the full impact of the pandemic on different sectors would materialize in the second half of the year.

On Thursday Finance

Minister Zainab Ahmed said Nigeria could contract less one percent or nearly 9% in an optimistic with and a pessimistic one without stimulus case respectively.

Ahmed the National Eco-

nomic Council, that the contraction could reach 4.4% in a best-case scenario, without any fiscal measures.

The IMF had months before forecasted a 3.4% decline for Nigeria this year, while

L- R: The Company Secretary/Legal Adviser, Momas Electricity Meters Manufacturing Company (MEMMCOL), Yahaya Yahaya; Youth Secretary, Orimerunmu Community, Mowe, Ogun State, Alaka Adedayo and Admin Manager Momas Electricity Meters Manufacturing Company (MEMMCOL), Jumoke Aladekomo during the presentation of COVID -19 Palliatives to Orimerunmu Community by the company held on Friday.

policy and stimulus measures have been rolled out by monetary and fiscal authorities to mitigate shocks to the economy from the pandemic and sharp drop in oil revenue.

Also, the country has embarked on a gradual reopening of its economy, announcing a phased easing of the lockdown in Ogun, Lagos and Abuja from May 4.

Economists say as an assessment of the damages and the impact of policy responses will be more accurately measured as businesses reopen.

Nigerian stocks, ahead of African peers, have gained 10.64% in the last month compared to 6.85% for Bloomberg’s tracker for Africa/Middle East.

Still, the biggest test of resilience for Nigerian stock hoping to outperform 2019’s 15% decline lies ahead as national output data for the economy are churned out.

Mobile led the gainers on Friday with 9.97% increase in share price to N213.9. Conoil gained 9.95% to N21, UACN gained 9.87% to N8.35, PZ gained 9.57% to N5.15 and BUA gained 9.55% to N39.

Premium Pension names Babayo new board chairman Infinity Mortgage Bank approves 3.5k dividend at 14th AGM

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he Board of Premium Pension Limited has announced changes in its corporate structure with the appointment of Ibrahim Alhassan Babayo as new Chairman effective April 26, 2020.

This followed the retirement of Yunusa Yakubu, the erstwhile chairman of the board who held the position since 2017.

Other Board changes announced also include the appointment of two Non-Executive Directors, namely - Bitrus Vandos ThemoiKwaji, a retired Major General and Muhammad Musa Makarfi. In his remarks on the new appointment, Umar Sanda Mairami, the chief executive officer of the Company said, “the appointment of Babayo as Chairman is in line with the strategic vision of Premium Pension Limited to become the foremost Pension Fund Administrator (PFA) in the Country. This is even more so when the Company is implementing its 5-year Strategic Business Objective that aims to drive business growth and transformation.” The appointment will also deepen the already sound corporate governance culture of the company.

Babayo, a graduate of Kaduna Polytechnic and Yaba College of Technology in Estate Management and a member of the Nigerian Institute of Survey-

ors and Valuers (NIESV) as well as International Facility Management Association (IFMA), is the founder and Chief Executive Officer of Cosmopolitan Cleaners Limited, an environmental management and sustainability company. He is on the Board of Golden Construction Limited, RDS Insurance Brokers Limited and Nonsuch Health Maintenance Organization, AMML Microfinance Bank, and a Trustee of TAJ Bank Foundation, amongst others. His imprints, which started with a career in banking, traversed many sectors of the Nigerian economy including estate management, road and building construction, banking, environmental, health and facilities management.

Babayo is an alumnus of several World leading institutions, including Harvard Busi-

ness School, Wharton Executive Education, University of Pennsylvania, London Business School, and National University of Singapore. During his previous service on the Board, he had chaired the Board Information Technology Steering Committee, the Committee which laid down the foundation for information technology transformation of the Company.

Until his appointment as Chairman, Board of Directors, he chaired the Board Finance and General Purpose Committee that had oversight over the development of the Company’s Strategic Plan and is responsible for periodic review as well as monitoring the implementation of the Plan. He had also served in many Committees of the Board including Nominations, Audit and erstwhile Establishment Committees.

General Kwaji (Rtd.) an accountant by profession, is an alumnus of Ahmadu Bello University, Zaria and Strayer University Washington DC, USA, among others. Until his retirement from the Nigerian Army in 2014, General Kwaji, was the Group Managing Director, Nigerian Army Welfare Ltd/ Gte, a non-profit organization, registered by the Nigerian Army under the Companies and Allied Matters Act, 1990.

www.businessday.ng

HARRISON EDEH

I

nfinity Trust Mortgage Bank plc has on Thursday held its 14th annual general meeting (AGM), with the approval of 3.5 kobo dividend for shareholders approved at the meeting.

The AGM, which was initially scheduled to hold physically, was disrupted by the Covid-19 pandemic and the associated national response, and was eventually held virtually. The chairman, Adeyinka Bibilari, who acknowledged the presence of representatives from regulatory agencies such as the Securities and Exchange Commission, and CBN, in his statement, noted that the country was indeed going through a trying time due to the Covid-19 pandemic as this had affected so many businesses and rendered some individuals jobless.

He noted that in compliance with the company’s articles of association, that there was enough quorum at the meeting to carry on the business of the day.

The company secretary, Tolulope Osho, read out the ordinary business for the day for deliberations including the approval of the audited

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accounts and reports for the year ended December 2019.

Earlier, the chairman presented the bank’s audited financial statements to the shareholders, after which the Independent Auditors, Messrs Aminu Ibrahim & Co. (Chartered Accountants) read their report on the audit of the bank’s financial statements.

He was quoted in a statement from the bank as saying he was satisfied with the reports noting that they were a true reflection of the performance of the Bank during the 2019 financial year.

“We remain resolute in our commitment to be an industry leader in the Banking sub sector through innovation, focus and excellent service delivery. We shall continuously drive our growth and success story, and improve our efficiency and profitability as we pursue and execute our current and expansionary goals. We are putting in place the right people and technology that will enhance the actualization of our goals.”

One of these resolutions at the AGM was the payment of dividends to shareholders.

The shareholders approved the appropriation of profits proposed by the Board of @Businessdayng

Directors and resolved to distribute a dividend of 3.5 kobo per share. This marks the 14th year that the Bank has maintained profitability and consistently paid dividends to shareholders.

The shareholders applauded the bank for keeping a strong operating performance despite the dwindling economy and keeping to its mandate of increasing investors wealth by not reneging on its dividend commitment despite the raging economic uncertainties presented by the pandemic.

The Bank’s audited figures show a 37.6 per cent rise in gross earnings from N 1.005 billion in 2018 to 1.383 billion in 2019.

The bank also witnessed 40% growth in its loan portfolio from 3.802 billion in 2018 to 5.338 billion in 2019. and showed a 21.2% percent increase in Profit before tax from 366.8 billion in 2018 to 444.4 million in 2019. Total Assets grew by 3% from N 10.351 billion in 2018 to N10.644 billion in 2019.

The shareholders of the Bank approved the Bank’s 2019 annual reports & accounts, during the bank’s first-ever virtual Annual General Meeting (AGM).

14

Monday 25 May 2020

BUSINESS DAY

COMPANIES&MARKETS COMPANY RELEASE

FCMB founder donates relief materials to Ogun community leaders, religious organisations MICHEAL ANI

F

oremost banker and renowned philanthropist, Otunba Subomi Balogun, has again donated relief materials to the people of Ijebu-Ode in Ogun State as part of his palliative measures to cushion the effect of the lockdown occasioned by the spreading COVID-19 disease.

This gesture was among the series of such interventions by the highly revered traditional title holder and the Asiwaju of Ijebu Christians, having earlier donated 750 bags of rice to community leaders in IjebuOde as well as150 bags of rice to residents of Erinlu community in Ijebu Ode and the Anglican Church, Italowajoda also in Ijebu Ode. The latest in the series of the palliatives, which consists 300 bags of rice, were handed over

by Professor Bankole Okuwa, the curator of Otunba Tunwase Museum for onward distribution among respective recipi-

ents in Ijebu Ode. Speaking with some of the beneficiaries, Adebisi Alausa, the Oloritun of Mobegelu in Ijebu-Ode described the donor, Subomi Balogun as a cheerful giver and an extraordinary philanthropist. According to him; “Otunba Subomi Balogun is well known for his humanitarian gestures and unique kindness. I can recollect his support both in kind and cash when I was the Chairman of Ijebu-Ode Club about 30years ago. I find in him, a man who shows love to the people everytime and is always ready to give. We really appreciate his love and concern for the people, especially the less privileged and pray to Almighty God to grant him a long life in sound health”.

Alausa then used the occasion to admonish Nigerians to obey government orders and observe the regulations as handed down by authorities involved in checking the spread of the novel Coronavirus which has defied any meaningful solution since its outbreak.

People, he said, should realise that the virus is highly contagious and can hang and remain active in the air for a long time, hence people should keep the stipulated distance from one another when necessary. “We shouldn’t see the lockdown as a punishment but as part of safety measures to combat the dreaded disease”, he concluded.

In the same vein, the Central Chairman, Ijebu-Ode Christian Association of Nigeria, CAN, Wale Omotayo described Balogun as a philanthropist with a difference.

Omotayo, in his words said; “he is a philanthropist with a difference who will even go out of his way to help the people.

He does his things with fear of God and huge respect for humanity. He is a philanthropist with a difference”.

The CAN Central Chairman then urged Nigerians to abide by the order of the government and keep to them for the safety of each individual and the people of the world at large.

Veritas Kapital Assurance Plc Donates Covid-19 palliatives to Gombe State, Offers discount on motor insurance SEGUN ADAMS

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s the effects of the novel Coronavirus pandemic continues to bite hard on the nation’s economy, especially with its toll on human life, social activities, and businesses, Veritas Kapital Assurance Plc is doing its part to alleviate the impact on the society. The Company recently donated hospital materials to the Gombe State Government Committee on COVID-19.

The donation, comprising a sizable quantity of hospital beddings intended to alleviate discomfort for Covid-19 patients receiving treatment at the State’s isolation centres, were received by Professor Idris Mohammed, Chairman of The Gombe State Covid-19 Committee. Prof Mohammed

thanked Veritas Kapital for supporting the state during these difficult times, and provided assurance that the items will be judiciously used.

In another development, Veritas Kapital Assurance is offering discounts on its comprehensive motor insurance policies through December 31, 2020. According to the company, the offer is to provide relief to customers that are experiencing financial pressure in the current economic environment.

Commenting on the gesture, the company’s Managing Director, Kenneth Egbaran, said that “Covid-19 has had far reaching effects across the country, challenging both businesses and individuals. Our decision to offer the discount is our way of showing empathy with the general public on the

economic strain that they may be experiencing during this challenging period”.

As various sectors of the society work together to slow the spread of COVID-19, Egbaran reiterated that “Veritas Kapital Assurance Plc remains extremely focused on managing the risk customers may encounter through the fastevolving nature of the current uncertain economic environment.

We are confident that we will continue to discharge our obligations effectively at all times. As a responsible corporate citizen, we enjoin all our customers and Nigerians to adhere strictly to the guidelines stipulated by the appropriate government agencies and health authorities managing to curb the spread of this pandemic”.

Takeaways from Unilever Q1 20 performance OLUFIKAYO OWOEYE

A

t the end of its first quarter for the period ended 31 March, consumer goods giant, Unilever printed a 30.7percent year-on-year drop in top line to N13.3bn for Q1 2020 from N19.2bn in Q1 2019.

Though panic buying activities supported Q1 2020 revenue, the company’s performance remained pressured due to intense competition from discount alternatives to its various brands.

Its Food and Home & Personal Care (HPC) businesses declined significantly, down 19.9percent year-on-year and 40.7 percent year-onyear respectively to N7.4bn and N5.9bn in Q1 2020 from N9.3bn and N10.0bn.

Furthermore, the company recorded a steep decline in Net Income, down 26.7 percent year-on-year to N1.1bn in Q1 2020 from N1.5bn in Q1 2019.

Analysts at CSL Stockbrokers predicted a sustained revenue decline in 2020e as www.businessday.ng

the company is yet to present a clear strategy to get back market share lost to competition.

“However, we expect lower material cost to provide significant support for profit lines given Linear Alkyl Benzene (LAB) prices remain weak and risk of further devaluation may not crystalize in 2020.

While we expect the company to return to profitability, we struggle to see it return to its historical performance. We forecast EPS of N0.16/s for FY2020e,” analyst said. https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 May 2020

BUSINESS DAY

23

real sector watch

BUA margins show opportunity in Nigeria’s cement industry ODINAKA ANUDU

B

UA Cement, Nigeria’s second largest cement maker, recorded a 47.5 percent spike in revenue in its just released 2019 full-year financial result.

Revenue rose from N119.01 billion in 2018 to N175.52 billion in 2019, according to the company’s financial statement.

The company’s profits before tax also rose by 69.1 percent, from N39.17 billion in 2018 to N66.24 billion in 2019. However, profit after tax declined by 5.40 percent, from N64.07 billion in 2018 to N60.61 billion in 2019.

BUA Cement plc is a business combination of CCNN Plc (Sokoto Cement) and BUA Cement Manufacturing Company’s Obu Cement Company, which was completed in January 2020 and is currently listed on the Nigerian Stock Exchange (NSE), with a market capitalisation of N1.18 trillion ($3.3 billion), making it the third most capitalised company on the floor of the Exchange.

Speaking on the result, Yusuf Binji, managing director of BUA Cement said, ”Through the adoption of a focused and disciplined ap-

proach, we continue to record strong revenue growth, even as we derive revenue and cost synergies from the merger across: pricing, scale and operational efficiencies; all supported by a sustainable business model and a value-oriented strategy, which have translated to growing market acceptance and is reflective in our margins.”

He explained that despite the complexities and uncertainty of the economy in 2019, the company delivered on important strategic priorities, including the

commissioning of the 3 million metric tons (mtpa) Line-2 at our Obu Plant in March, 2019; the merger completion between CCNN Plc and Obu Cement Company Limited, and its listing process on the floor of the Nigeria Stock Exchange (NSE), with the eventual delisting of CCNN Plc. He disclosed that the company’s focus was to further harness the full benefits of the merger while making further in-roads into ‘new markets’ both locally and outside Nigeria.

“We understand that the

Rom Oil Mills restructures, changes name to Premium Edible Oil Products Odinaka Anudu

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lour Mills of Nigeria Plc (FMN) has changed Rom Oil Mills Limited, its edible oil refinery, to Premium Edible Oil Products Limited (PEOPL) as part of an ongoing process of creating a collective identity across its agro-allied division.

The change of name and brand identity, which took effect from 14th May 2020, was inspired by FMN Group’s new strategy to improve synergy, increase efficiency, and position FMN for greater operational and financial flexibility for continued business growth.

The new brand identity includes a top-to-bottom redesign of the company’s logo, graphics, communications and correspondences.

PEOPL’s new brand assets now include a fresh and

simplified logo that features the new name in light grey and a new three-leaf insignia in green and yellow. The new logo design is part of a new brand identity scheme that has been adopted and incorporated in the logos of all FMN businesses in its agro-allied division.

Other than the change of identity, PEOPL’s existing policies on products, customer relations, quality commitment, management and directions shall remain the same, the consumer goods giant said in a statement.

Customers, consumers and other stakeholders will continue to get the best of services that they have become accustomed to with the former ROM Oil Mills Limited, it added.

Premium Edible Oils Limited (PEOPL) is one of Nigeria’s largest processors and refiners of crude palm oil, palm kernel and www.businessday.ng

local and indeed the global economy would experience more uncertainties, yet we expect continued strong showing across the business, spurred-on by continued recovery across the global economy,” he further said.

However, BUA’s margins show the immense opportunity in Nigeria’s cement industry dominated

by Dangote Cement, BUA and Lafarge Africa.

The opportunity stems from the low level of infrastructure development in Africa’s biggest economy.

There have been conflicting numbers about how much Nigeria needs to fix its infrastructure, but the federal government says the country should spend three to five percent of its GDP on infrastructure annually, which amounts to about $12 billion to $20 billion. Several roads and bridges in the country are in terrible states and require the services of cement makers. Also, cement makers produce concrete used in repairing or building roads and bridges. Some of the roads in Lagos, Ogun and several parts of the country are built or repaired with concrete.

Apart from roads, the countr y is facing acute housing shortage estimated at 17 million to 20 million, according to official data.

The World Bank 2014 data said 50.2 percent of the Nigerian population live in slums and shanties. Some urban dwellers in top-notch cities of Lagos, Abuja and Port Harcourt are homeless.

Some unofficial data say over 100 million Nigerians are homes. A World Bank 2016 report said the country required N60 trillion to fix the housing deficit.

But it is not all gloom as cement makers’ output is required to build houses for

a population growing at 2.6 percent per annum.

Dangote Cement reported N901.213 billion and N891.671 billion in revenue in 2018 and 2019 respectively. Profits before tax in 2018 and 2019 were N300.806 billion and N250.479billion respectively. Though the fundamentals declined in 2019, the size of the revenue shows the enormity of the opportunity in the industry.

It is also an indication of intense competition and poor economy.

But cement makers in Nigeria are making their mark on the African market, with Dangote Cement in many countries across the continent.BUA has also stepped out to Nigeria’s neighbours. A 2019 United Capital report on the Nigerian cement industry said public sector demand remained one of the strongest due to need for capital expenditure, but tapped that dwindling government revenues had been a clog in the wheel.

“Juxtaposing this with the level of infrastructure and housing deficit, especially in terms of demand for roads, real estate and construction activities, the headroom for growth is clearly compelling,” the report further said.

75 firms join LCCI in first virtual induction ceremony Odinaka Anudu soybean extraction facilities. PEOPL is known for producing a range of highquality edible oil consumer products which include, Golden Penny Vegetable & Soya Oil, Spread, Margarine, Soya Bean Meal and other edible oil &industrial fats derivatives for manufacturing purposes.

Incorporated in September 1960 and quoted on the Nigerian Stock Exchange since 1978, Flour Mills of Nigeria (FMN) Plc, owners of the Golden Penny Food brand, is one of Nigeria’s leading food and agro-allied companies. With a broad basket of food products and robust pan-Nigerian production, distribution, and supply chain network, FMN is a fully integrated and diversified food and agroallied group.

FMN’s food brand, Golden Penny, serves millions of Nigerian families.

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total of 75 firms joined the Lagos Chamber of Commerce and Industry (LCCI) last Wednesday in a first virtual induction ceremony.

The event, which lasted for about 30 minutes, had some council members of the LCCI in attendance as well as representatives of the newly inducted companies. It shows that the 132-year-old business organisation is leveraging technology as Covid-19 pandemic continues to change business and life globally.

“As we formally accept your organisation into the Lagos Chamber community today, I wish to underline the commitment of the Lagos Chamber to the cherished tradition of high ethical standards, integrity and good corporate governance in business practice,” Toki Mabogunje, president of the LCCI, said in a presentation.

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She said as businessmen and women, the inductees had obligations which transcended profit making.

She urged them to pay adequate attention to the integrity of their business transactions and practices, stressing the need to be committed to the ideals of high ethical standards and responsible corporate citizenships.

“Indeed, the chamber has a code of business ethics to which all members are to subscribe,” she said.

Mabogunje added that the chamber had come a long way to build its highly reputable profile and credibility through the vision, selfless services and integrity of its illustrious founding fathers and their worthy successors, urging the newly-inducted firms to keep the flag flying.

“It therefore behoves us as inheritors of this goodwill and enduring legacy to keep the flag flying always. I enjoin you to participate actively in the chamber’s activities. This will position your businesses @Businessdayng

to enjoy the tremendous benefits of membership of the chamber.”

Mabogunje said each time the chamber had new members, the voice of the private sector would get louder.

Mojisola Bakare, chairman, membership and welfare committee, said as members of the LCCI, the inductees were ambassadors of the chamber and inheritors of an enduring legacy handed down from generation to generation.

She said it was imperative for them to be guided by the chamber’s governance framework.

“The governance framework ensures that the chamber represents the broad interests of its membership and can be held accountable by members. The chamber adopts the principles of fairness in its governance, selection of its officers and the execution of its programmes and activities.

The leadership selection and decision-making processes are transparent, fair and equitable to all members,” she said.

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Monday 25 May 2020

BUSINESS DAY

In Association With

A new opportunity to tackle climate change

Countries should seize the moment to flatten the climate curve The pandemic shows how hard it will be to decarbonise—and creates an opportunity Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our hub

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OLLOWING THE pandemic is like watching the climate crisis with your finger jammed on the fast-forward button. Neither the virus nor greenhouse gases care much for borders, making both scourges global. Both put the poor and vulnerable at greater risk than wealthy elites and demand government action on a scale hardly ever seen in peacetime.

And with China’s leadership focused only on its own advantage and America’s as scornful of the World Health Organisation as it is of the Paris climate agreement, neither calamity is getting the co-ordinated international response it deserves.

The two crises do not just resemble each other. They interact. Shutting down swathes of the economy has led to huge cuts in greenhouse-gas emissions. In the first week of April, daily emissions worldwide were 17% below what they were last year. The International Energy Agency expects global industrial greenhouse-gas emissions to be about 8% lower in 2020 than they were in 2019, the largest annual drop since the second world war.

That drop reveals a crucial truth about the climate crisis. It is much too large to be solved by the abandonment of planes, trains and automobiles. Even if people endure huge changes in how they lead their lives, this sad experiment has shown, the world would still have more than 90% of the necessary decarbonisation left to do to get on track for the Paris agreement’s most ambitious goal, of a climate only 1.5°C warmer than it was before the Industrial Revolution.

But as we explain this week

(see article) the pandemic both reveals the size of the challenge ahead and also creates a unique chance to enact government policies that steer the economy away from carbon at a lower financial, social and political cost than might otherwise have been the case. Rock-bottom energy prices make it easier to cut subsidies for fossil fuels and to introduce a tax on carbon.

The revenues from that tax over the next decade can help repair battered government finances.

The businesses at the heart of the fossil-fuel economy—oil and gas firms, steel producers, carmakers—are already going through the agony of shrinking their long-term capacity and employment. Getting economies in medically induced comas back on their feet is a circumstance tailor-made for investment in climate-friendly infrastructure that boosts growth and creates new jobs. Low interest rates make the bill smaller than ever.

Take carbon-pricing first.

Long cherished by economists (and The Economist), such schemes use the power of the

market to incentivise consumers and firms to cut their emissions, thus ensuring that the shift from carbon happens in the most efficient way possible. The timing is particularly propitious because such prices have the most immediate effects when they tip the balance between two already available technologies. In the past it was possible to argue that, although prices might entrench an advantage for cleaner gas over dirtier coal, renewable technologies were too immature to benefit. But over the past decade the costs of wind and solar power have tumbled. A relatively small push from a carbon price could give renewables a decisive advantage—one which would become permanent as wider deployment made them cheaper still. There may never have been a time when carbon prices could achieve so much so quickly.

Carbon prices are not as popular with politicians as they are with economists, which is why too few of them exist. But even before covid-19 there were hints their time was coming. Europe is planning an expansion of its

carbon-pricing scheme, the largest in the world; China is instituting a brand new one. Joe Biden, who backed carbon prices when he was vice-president, will do so again in the coming election campaign—and at least some on the right will agree with that.

The proceeds from a carbon tax could raise over 1% of GDP early on and would then taper away over several decades. This money could either be paid as a dividend to the public or, as is more likely now, help lower government debts, which are already forecast to reach an average of 122% of GDP in the rich world this year, and will rise further if green investments are debt-financed.

Carbon pricing is only part of the big-bang response now possible. By itself, it is unlikely to create a network of electricvehicle charging-points, more nuclear power plants to underpin the cheap but intermittent electricity supplied by renewables, programmes to retrofit inefficient buildings and to develop technologies aimed at reducing emissions that cannot simply be electrified away,

such as those from large aircraft and some farms. In these areas subsidies and direct government investment are needed to ensure that tomorrow’s consumers and firms have the technologies which carbon prices will encourage.

Some governments have put their efforts into greening their covid-19 bail-outs. Air France has been told either to scrap domestic routes that compete with high-speed trains, powered by nuclear electricity, or to forfeit taxpayer assistance. But dirigisme disguised as a helping hand could have dangerous consequences: better to focus on insisting that governments must not skew their bail-outs towards fossil fuels. In other countries the risk is of climate-damaging policies. America has been relaxing its environmental rules further during the pandemic. China— whose stimulus for heavy industry sent global emissions soaring after the global financial crisis—continues to build new coal plants (see article).

Carpe covid The covid-19 pause is not inherently climate-friendly. Countries must make it so. Their aim should be to show by 2021, when they gather to take stock of progress made since the Paris agreement and commit themselves to raising their game, that the pandemic has been a catalyst for a breakthrough on the environment.

Covid-19 has demonstrated that the foundations of prosperity are precarious. Disasters long talked about, and long ignored, can come upon you with no warning, turning life inside out and shaking all that seemed stable. The harm from climate change will be slower than the pandemic but more massive and longer-lasting. If there is a moment for leaders to show bravery in heading off that disaster, this is it. They will never have a more attentive audience.

Monday 25 May 2020

BUSINESS DAY

17

In Association With

The next stage of covid-19

Lifting lockdowns: the when, why and how They are blunt instruments that can cause immense harm. Time to be more discriminating Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter.

For more stories and our pandemic tracker, see our hub

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INCE CHINA locked down the city of Wuhan on January 23rd, over a third of the world’s population has at one time or another been shut away at home. It is hard to think of any policy ever having been imposed so widely with such little preparation or debate. But then closing down society was not a thought-out response, so much as a desperate measure for a desperate time. It has slowed the pandemic, but at a terrible price. As they seek to put lockdowns behind them, governments are not thinking hard enough about the costs and benefits of what comes next.

Although social distancing may have to be sustained for months or years, lockdowns can only ever be temporary. That is because it is becoming clear how costly they are, especially in poor countries. Part of the price is economic. Goldman Sachs this week predicted that India’s GDP would fall in the second quarter at an annualised quarterly rate of 45%, and would rebound by 20% in the third quarter if lockdowns were lifted. Absa, a bank, reckons South Africa’s economy could shrink at an annualised rate of 23.5% in

the second quarter.

The poorest are hit very hard, because they have nothing to fall back on. In sub-Saharan Africa an individual in the lowest income quintile has only a 4% chance of receiving social assistance from the government in normal times. The combination of covid-19 and lockdowns could drive up to 420m people into absolute poverty—defined as having to live on less than $1.90 a day. That would increase the total by two-thirds and set back progress against penury by a decade (see article).

The consequences will be farreaching. Hunger permanently stunts children. Lockdowns that block normal services cost lives. The World Health Organisation has warned that covid-19 threatens vaccination pro-

grammes. If they stop in Africa, 140 children could die for each covid death averted. A three-month lockdown, followed by a ten-month interruption of tuberculosis treatment, could cause 1.4m deaths in 2020-25. It is the same for malaria and AIDS. The longer lockdowns continue, the likelier it is that they will cost more lives than they save.

The picture in rich countries is less dramatic, but still worrying. America’s unemployment rate increased from 3.5% in February to 14.7% in April. In Britain a third of new graduates had a job offer withdrawn or delayed. Bond markets in America are signalling a wave of defaults, especially in hospitality, raw materials, carmaking and utilities. The scarring in the labour market could last for years. Rich-world services are vulnerable, too. One study

concluded that delaying cancer consultations in England by six months would offset 40% of the life-years gained from treating an equivalent number of covid-19 patients. Vaccination rates have fallen, risking outbreaks of diseases like measles.

Lifting lockdowns risks a second wave. Iran reopened in April to save the economy, but last week designated the capital, Tehran, and eight provinces as “red zones”, because the virus is spreading there again. Some American states, such as Georgia, that never suppressed the initial outbreak will soon find whether they lifted lockdowns too hastily. Some African countries are going ahead even though their case loads are rising.

To limit the risk requires an epidemiological approach that focuses on the places and people most likely to spread the disease. An example is care homes, which in Canada have seen 80% of all the country’s deaths even though they house only 1% of the population. In Sweden refugees turn out to be high-risk, perhaps because several generations may be packed into a household. So are security guards, who are often elderly and are exposed to many people in their work (see article).

For this approach to succeed at scale, you need data from tests to provide a fine-grained picture of how the disease spreads. Testing let Germany

rapidly spot that it had a problem in its slaughterhouses, where the virus persists longer than expected on cold surfaces. Likewise, South Korea identified a super-spreader in Seoul’s gay bars. Without testing, a country is blind.

Armed with data, governments can continuously refine their policies.

Some are universal. Masks were once thought ineffective, but in fact help stop the spread of the disease. Like handwashing, they are cheap and do not impose hidden costs. However, closing schools harms children and stops parents from working. In contrast with flu, it turns out, the benefits to health are not especially great. Schools should reopen, under conditions that lower the risk to teachers and vulnerable pupils.

As a rule, the balance of costs and benefits favours narrow local policies over blanket national ones. In Britain agency workers carry the virus between care homes: they should work at only one. Gibraltar has a Golden Hour, when open spaces are set aside for the over-70s to exercise while everyone else stays at home. Stockholm is moving vulnerable people into their own flats. Liberty University, run by Jerry Falwell, a supporter of President Donald Trump, was condemned for keeping its campus open. But thanks to social distancing, it has logged no cases of covid-19.

No-frills education

Trust, slavery and the African School of Economics Leonard Wantchekon is trying to build a world-class university in Benin

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S LEONARD WANTCHEKON was having breakfast with his wife, Catherine Kossou, in 2007, she recalled how one friend could not trust anyone. Even as a child her friend would say: “That person is going to sell you,” or “He will make you disappear.”

The words struck a chord with Mr Wantchekon. Now a professor at Princeton University, he was born in Zagnanado in central Benin. Some of the music he listened to in his youth—such as that of Orchestre Poly-Rythmo de Cotonou—had songs that warned against trusting those close to you.

He wondered: “Does this have something to do with slavery?” Benin was a hub of the slave trade. More than 1m people were trafficked from the interior to the port of Ouidah, and then to America, Brazil or the Caribbean. Alongside Nathan Nunn of Harvard University, Mr Wantchekon looked for a relationship between the intensity of the slave trade and low levels of trust (and thus commerce).

He found one. The resulting article is in the top 1% of most-cited economics papers.

The story of the paper has broader relevance, explains Mr Wantchekon (pictured). It was his data-mining skills that helped him find the answer. But it was his Beninese background that raised the question.

Mr Wantchekon is one of just a few African economists at elite Western universities. Most scholarship about Africa is done by academics who are neither African-born nor based in Africa. Influential development journals have few African scholars on their boards. Most major conferences about Africa do not take place there.

The imbalance is partly a result of bias in overseas universities. But it is also because of conditions at African ones. Higher education is not a priority for politicians, who often send their children abroad, or donors, who prefer to fund schools.

The result is underfunded and overcrowded universities that do not equip enough African graduates with www.businessday.ng

the skills required to get into worldclass doctoral programmes.

The consequence is a profound loss, argues Mr Wantchekon. Countless young African intellectuals do not get a fair chance. The world gets a skewed picture of African countries because many of the best researchers come from elsewhere.

That may be changing. In 2014 Mr Wantchekon founded the African School of Economics in AbomeyCalavi, Benin. Its aim is to offer African students the highest standards of mathematics and economics teaching, ensuring they can compete with graduates overseas.

It is refreshingly drab, with no splurging on a flashy campus or needless technology. The 100 or so

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students pay $2,400 per year, about the same as at a public university.

“This is not about doing something grandiose,” says Mr Wantchekon.

It is a model that can be replicated.

Another campus was opened this year in Ivory Coast.

The school draws on several influences. The name nods to the London School of Economics. Princeton is one of more than a dozen “academic partners”. But another institution serves as an inspiration, too.

Mr Wantchekon’s home town had one of the first schools set up by missionaries in Benin. Its presence changed the lives of many young people—and not just pupils. Studies

by Mr Wantchekon and others have shown that the effects of missionary schools were felt broadly. Even children of villagers who did not go to the schools did better in life, a result of higher aspirations and a better-educated social network.

Mr Wantchekon believes that his new school of economics can have widespread knock-on effects as well.

The journey of the son of two illiterate farmers from rural Benin to the Ivy League is remarkable. But so is the detour. After enrolling at university Mr Wantchekon became an activist, campaigning against Mathieu Kérékou, a dictator who ruled for nearly 30 years. He lived on the run for five years before being @Businessdayng

arrested in 1985.

A year and a half later, after charming prison guards and exaggerating his arthritis to get treatment outside the prison, Mr Wantchekon escaped. He crossed the border to Nigeria and, after a brief spell in Ivory Coast, became a refugee in Canada. He returned to his studies, completing a PhD at Northwestern University under the mentorship of Roger Myerson, a Nobel laureate, who describes him as “one of the best students I ever had”.

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Monday 25 May 2020

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

Digital economy: Kogi inaugurates Committee Wednesday James Kwen, Abuja

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he Kogi State Government will on Wednesday inaugurate a committee to develop the roadmap for a revolutionary Kogi State Information and Communication Technology (ICT) and Digital Economy.

According to the Kogi State Commissioner for Information and Communications, Kingsley Fanwo will design the framework for the profitability of the digital economy to the state revenue base.

The Committee is chaired

by Senior Special Assistant to the Governor, Ismaila Umar with the Director of Information Services, Jordan Akpata, Oluwakemi Ayodele, Chairman of Nigeria Computer Society ( Kogi State Chapter) and Sanni Haruna of Radio Kogi as members.

A representative each of the office of the Accountant General and the Ministry of Finance, Budget and Planning are to be members of the Committee while Ebenezer Adurodija, Director of New Media is to serve as Secretary to the Committee.

Fountain splash partners Church to distribute palliatives to over 500 Abuja residents Harrison Edeh, Abuja

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ountain Splash-a non governmental organisation in partnership with Winners of Faith International Church Apo has distributed relief items and palliatives to over 500 Apo residents in the Federal Capital Territory (FCT), Abuja.

Speaking to BusinessDay on the sidelines of the event, Mmemma Eyo,the Executive Director of the Fountain splash NGO said the target of the Organisation is to build self esteem of women and young people to better and grow the society.

She said her outreach for the organisation has seen her visit banks, schools and Abuja Municipal Agencies to help develop capacity of women and youths while ministering

to them with several gift items.

In his earlier remarks, kufre-Abasi Eyo, Pastor of Winners House Of Faith International Church Apo who spearheaded the distribution of the palliatives told BusinessDay that the Church is taking the step as part of the gospel outreach, while fulfilling the demands of the gospel.

According to him, “He who gives to the poor lends to the lend. We also do this outreach to prisoners and those in difficulty as a way of propagating the gospel. As you can see,it is inter denominational. Everyone is welcomed to God’s house.”

On his part ,Abiodun Eshiet, who represented the Abuja Municipal Area Council at the event urged other spirited Nigerians to also lend support to such kind outreach initiatives.

Covid-19: Nisa Hospital Donates two ventilators, PPE To FCTA James Kwen, Abuja

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isa Premier Hospital, Abuja has donated two ventilators and other Personal Protective Equipment (PPE) to boost the Federal Capital Territory Administration (FCTA) efforts to contain the spread of Covid-19 in the nation’s capital.

The Chief Executive Officer of the hospital, Ibrahim Wada while presenting the items, said the donation was in recognition of FCTA’s efforts in the fight against coronavirus. He disclosed that at the beginning of the Covid-19 outbreak in the FCT, Nisa Premier donated PPE to medical workers on frontline.

Wada pledged the commitment of the hospital to provide ambulance support to move symptomatic patients

from one point to the other as part of Nisa Premier Hospital corporate social responsibility throughout the Covid-19 pandemic era.

“First, we want to appreciate the government especially the FCT Administration for the enormous and giant stride being undertaken by alleviating the suffering of the people occasioned by the Covid-19 pandemic.

“We have seen the efforts you have put in place and we pray for strength for you to do more. I am here today with the chairman of Nisa Hospital, Dr. Shamsudeen Usman, former Minister of National Planning and other top management staff of Nisa Premier Hospital to appreciate your team.

“When we entered the pandemic period, Nisa Premier hospital was one of the first hospitals that donated PPE on behalf of the Primary

Healthcare Board to medical personnel on how to stay safe.

Today, we are here for more support for both medical personnel and patients.

“We have brought face masks in cartons, hand sanitizers in cartons, surgical goggles, 50 PPE, hand gloves to protect your medical personnel on frontline and two ventilators. We pledged ambulance support to move people from one place to the other because they are not well positioned within the city. Anytime we are called upon, we shall be there to assist,” he said.

Receiving the items on behalf of the FCT Administration, the Minister of State, Ramatu Aliyu, described the support as unique, adding that the ventilators would be used even after the Covid-19 pandemic.

Aliyu said she was not surprised at the donation made

by the Nisa Premier Hospital as it had in the past put smiles on the faces of many Nigerians and Africans.

“Nisa premier hospital has put smiles and still putting smiles on the faces of many Nigerians and Africans. So, I am not surprised because this is not the first time and he has come again to put smiles on many faces of indigenes and residents of the Federal Capital Territory in this period of Covid-19 pandemic.

“Actually since we have been receiving gifts here, I can proudly say we never received ventilators and other medical items like these. This is unique donation As we all know, ventilator is what every state is seeking for even in advanced climes”, the Minister noted.

Other items donated include face masks, hand gloves, hand sanitizers and protective goggles.

Digital Mobile Software sets to revolutionize advertising in Nigeria - Expert Gift Wada, Abuja

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n expert in Information Technology and software sector have stated that a revolution is set to occur in the Nigeria’s advertising landscape with the planned launch of Admoni Inc, a new digital marketing mobile software to help businesses grow at geometric speed.

Collins Igbadume, an information technology and software expert in a chat with IT Reporters through virtual platform said with the ongoing paradigm shift from TV screen and billboards to smart phone devices, the digital advertising will no doubt be a disrupter in the scheme of things.

He, said: “global estimate has it that the average screen time per person is 195 minutes and higher for young people who make up the majority of our population in Nigeria.

“As eyeballs and the attention of consumers shift from TV screens and billboards to

phones and mobile devices, digital advertising is disrupting advertising as we know it.”

According to the IT expert, digital advertising which relies on desktops and mobile devices looks set to surpass traditional advertising platforms in the country.

While underscoring the importance of Admoni Inc app, he admitted that Nigeria has recorded a rise in the use of smartphones with an increase of over 350% between 2007 and 2016, according statistics from the Nigerian Communication Communications (NCC).

The surge, he added has propelled big and small businesses to reach, connect and engage customers through their mobile devices has been attributed to the increasing affordability of phones and mobile data.

According to him, there are a number of businesses already providing solutions that tap into this new trend by converting mobile phones into mobile billboards. www.businessday.ng

L-R: Kufre-Abasi Eyo, Pastor, Winner House of Faith Church International (WIHOFA), Abiodun Esoet, represeting the Excutive Chairman Abuja Municipal Area Council (AMAC) and Mmema Ogong Eyo, pastor’s Wife during the distribution of palliatives to the vulnerable of Apo Community in collaboration with Fountain Splash Initiative (FSI) and WIHOFA City, Picture by Tunde Adeniyi to ease Covid-19 lockdown in Abuja.

Military kills Boko Haram commanders, 20 terrorists in Northeast Godsgift Onyedinefu, Abuja

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he Nigerian Military has inflicted more casualties on Boko Haram/ISWAP fighters as troops of Operation Lafiya Dole killed atleast 20 terrorists and their senior commanders, while their logistics facilities, gun trucks and other structures were destroyed in the past week.

John Enenche, Coordinator of Defence Media Operations who disclosed this in Abuja explained that the feat occurred in air strikes and other offensive operations executed across the theatre of operation.

“Twenty BHT/ISWAP Terrorists were killed and 6 AK-47 rifles, 520 rounds of 7.62mm special ammunition and five 36 Hand Grenades were recovered,” Enenche said.

He also said the Air Component of Operation Hadarin Daji, the Air Component, neutralized 27 armed bandits and destroyed some of their dwellings along the NahutaDoumborou Corridor on the border between Katsina and Zamfara States in air strikes.

Enenche further disclosed that Operation Whirl Stroke raid on bandits’ hideouts in Benue and Nasarawa States led to the neutralization of 2 bandits of the notorious

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Gana’s gang with others fleeing with various degrees of gunshot wounds including, Gana.

According to the Coordinator, seven members of Bassa militia were arrested in Kpelebewa Village in Nasarawa State and several items were recovered from them.

He also said Operation Delta Safe Area of responsibility, Nigerian Navy Ship DELTA conducted anti-illegal bunkering/Crude Oil Theft (COT) operations around Ugbodede, Uwakeno, Opumami, Banga Communities and around Escravos general area in Warri South LGA of Delta State Enenche explained that @Businessdayng

during the operations, the team located and dismantled illegal refining sites and a wooden boat with 3 coolers, 136 dugout pits, 201 surface metal storage tanks and 174 ovens laden with about 14,434 barrels of suspected stolen crude oil as well as 1,385,000 litres of product suspected to be illegally refined AGO. “The storage facilities were dismantled. No arrest was made as operators of the illegal refining sites fled on sighting the team. Meanwhile, the illegal refining sites have been earmarked for swamp buggy operation,’ he added.

Monday 25 May 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

19

• Utilities • Managing your Tax

How to recharge the revenue stream in your business The Solid Wealth Messenger

Grace Agada

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here is one thing that assures business success to a great degree over the long-term. This one thing is Profitable Business Revenue. The ability of a business to consistently produce profit throughout its lifetime. This ability is present in businesses to different degrees. The degree to which it is present in businesses is revealed during a crisis.

When crises hit a business, it reveals the degree of resilience of its current revenue structure. Thus, economic crises and pandemics are not the reason for revenue challenges. There simply are indicators of gaps in current revenue structures and the reallocators of resources. So, while you lament over the effect of the Pandemic on your business cashflow.

What is more important is for you to listen to the message the pandemic is trying to tell you. A house is never shaken by the storm when it has a solid foundation.

Rather, the storm comes to proves its strength and resilience. Houses that fall under the weight of the storm have a foundation problem and not a storm problem. So, if your business revenue had a nice shave during this lockdown. The problem is not the pandemic.

The problem is your revenue structure. While many businesses have been beaten down during this lockdown. Some are knocking on death’s door and others are limping forward with broken bones. Some other businesses like Facebook, Apple, Amazon, Netflix, Microsoft, and Google are matching forward with profit.

These businesses have proven to be resilient in the midst of the storm. The goal of today’s article is to show you how you can use the strategies employed by these businesses to do a better job next time.

If you are a business owner reading this article chances are high that your business did not make profits during this lockdown. Rather you have been forced to adopt digital technologies. You now know the importance customers place on your business. You have figured out that your legacy assets and wealth are not as indispensable as you thought. And you have suffered fi-

nancial stress. You also have realized that You cannot manipulate your way to consistent revenue.

And that your business can thrive with fewer employees. All these have been revealed to you because of the crises not in the absence of it. Thus, moments of crisis are moments of great opportunities for agile and prepared businesses. It is during the uphill stages of life that opportunities are seized or lost.

Crises come to businesses not to kill it but to validate its core business strategy. To thrive in the 21st Century business leaders must see crises as a gift and the revealer of inherent weaknesses in their business. They must also learn to innovate their way out of crisis and reinvent their business cashflow.

Business cashflow that will thrive must fortify themselves against crisis.

So, what then can business leaders do to Fortify their business Revenue?

To fortify business revenue business leaders must do three things. First, they must identify current revenue fault lines in their business. Second, they must create a revenue ecosystem to recharges their current revenue structure.

Third, they must leverage technology to make each revenue stream profitable and scalable. Let’s look at each of these points in detail.

The first is to identify revenue fault lines. There is a reason why your business was hit during this lockdown. Understanding this reason is the first step to recharging your business revenue. Was your business model dependent on one major source of income? Is your current cashflow reliant on physical interactions? Is the different revenue within your business sus-

ceptible to the same kind of risk? Is your business size preventing you from transforming quickly? Is your business a non-essential item? Is your clientele base homogenous?

Are you far away from the end-user? And so on. Having an accurate understanding of the factors that lead to the impact of a crisis will show you how to innovate your way out of it.

Second is creating a resilient revenue ecosystem. A resilient revenue ecosystem is a revenue system that is resilient against a myriad of crises. To create this kind of system, business leaders must self-disrupt existing business models. And create different channels of independent revenue for their business. No one type of revenue is strong enough to defend a business against crises long term.

It takes a collaboration of different revenue streams to build a resilient revenue structure. The businesses that thrive in the 2ast century must have a strategic mix of revenue streams.

They must have revenue streams that cut across different market segments and are susceptible to different levels of risk. They must also have revenue streams that are independently profitable and collectively enriching such that the collapse of one revenue stream does not kill the business.

For example, Amazon was hit in its Logistics business. But Amazon still declared profit as a business because of its diverse revenue ecosystem. Google and Facebook were also hit in their advertising business. But made giant progress owing to the same reason. These businesses thrived because they have a revenue ecosystem with more than Nine Lives. Businesses

‘

Solving problems with technology means adding value to it.

Adding value to technology requires critical thinking, deep researching, and innovation

that will thrive long-term must create this kind of ecosystem.

Third, is leveraging on technology. Leveraging technology means stepping away from business as usual. It means renovating existing business models and innovating new ways to scale a business with little human interaction.

Technology must be used in ways that make a business profitable. To make technology profitable business leaders must add real value to it. The purpose of a business is to solve problems. So, technology must solve real problems for consumers to be beneficial. Solving problems with technology means adding value to it. Adding value to technology requires critical thinking, deep researching, and innovation.

To succeed with technology business leaders must see technology as a connecting and scaling tool. And not a replacement for human problem-solving wisdom.

When technology is valuable and relevant, consumers will channel their resources into a business.

To build businesses that stand the test of time business leaders must strive to create Ten types of revenue streams with the help of technology. To know what these revenue streams are and how you can create them in your business send an email to info@createsolidwealth.com for a special report.

The goal of every business is to create consistent revenue. Revenue can only be consistent when there are resilient in difficult times.

Making business revenue resilient through crises requires a different way of thinking. It also requires answering certain critical questions.

Questions like What can bring our business revenue down to 50 percent? How can we guard against it?

What do we do when it happens?

Who do we go to for advice? And how do we innovate our way out of it? Without adequate preparation, innovation, and revenue fortification a business will run out of air.

Grace Agada is a Multiple Business Revenue Expert. She helps Brick and Mortar businesses solve limited Revenue Problems. She also helps them transition from industrial age thinking to digital age agility. Grace helps B2C Businesses Create Multiple Channels of Revenue in their business. She makes each channel independently profitable and Scale them using technology.

There are three kinds of value Grace brings to B2C businesses. First, she helps them expand revenue and profit so they can thrive through generations of Crisis. Second, she future proof their businesses by connecting today’s revenue structure to tomorrow’s revenue system. Third, she uses a Collaborative Value innovation Process to help businesses dominate the market and Gain Market Share. If you want to create technology-enabled multiple streams of income in your business, Grace is your most helpful Advisor.

Objectives • Solid Wealth Creation • Solid Wealth Preservation www.businessday.ng

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20

Monday 25 May 2020

BUSINESS DAY

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@Businessdayng

Monday 25 May 2020

BUSINESS DAY

21

BD Money Money Brain with JR

Money is a tool, not a noose already shows us that financial pressure is a poor motivator compared to genuine excitement and curiosity. The sooner you master your personal finances, the sooner you free yourself to discover excitement and curiosity in your career.

Pursuing these opportunities will in fact open more opportunities for you to make money.

There are 4 main parts to personal finance mastery: Track your expenses and a. inflows; b. Put your money to work toward goals that expand your life, influence, and net worth; c. Build a community that motivates you and keeps you focused; Learn how to use and red. pay credit and insurance responsibly to even out your cash flows.

In the coming four weeks, I will be diving into each of these four building blocks. See you then!

JR Kanu

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n anticipation of this week’s article, people who follow @ findreach on social media were asked to select what they most valued when choosing a career. The options were money, personal growth, professional status, and collegial happiness. We asked the same question around this time last year in a similar poll. The answers couldn’t be more different. But then again, the world has since changed dramatically.

Last year, 76% of young Nigerians cited personal growth and development as their main driver when choosing a career. By last week, the figures had shifted dramatically. Money had gone from being a 16% consideration to 43% of respondents saying money was a primary factor in determining their choice in a career.

With most people laid off or their salaries significantly reduced, it is no surprise that money is at the forefront of many minds. But even in a pandemic where cash is king, people still want to elevate themselves.

How then should you balance the concerns you have about making money with your desire to continue your personal growth and development?

Productivity 1. Prioritize Over Title or Status. In the pursuit of money and personal growth and development, odds are, you will be doing this in the context of a business organization. Nothing is more fulfilling than seeing your work come to life. Assuming you have begun practising two of the three

evergreen skills discussed in last week’s column, your next task is to set yourself up for productivity.

Productivity here means you are seeking ways to put out as much work product as you can in the shortest amount of time. For most businesses, this output is measurable.

It might be in how many deals you close, products you release, customers you onboard, you name it.

At every stage of your career and even before you land a job at your dream company, find out what

makes that company succeed and align your productivity and outputs to that metric. Once that happens, you have at least guaranteed yourself relevance. Now that you’re relevant, we move to phase two.

2. Become Indispensable.

Assessing indispensability at an organization can be boiled down to two questions. First, what role do you play? Can you clearly articulate your company’s targets and the role you play in getting there?

Second question, to whom is your

role important?

Is your role important to company leadership, your peers, and subordinates? These are internal stakeholders. Or is the role relevant to regulators, customers, the company’s main source of revenue?

These are external stakeholders. To be indispensable, you must connect your role to at least one external and one internal stakeholder.

3. Master Your Expenses.

Money will always be important to living a good life. But our poll

Every Monday, JR discusses topics focused on career and money management, seeking to highlight the lessons being learned by young professionals navigating similar paths. If you would like to submit a topic or question, please send a DM to my social media handles - jrkanu on Instagram or email stories@ reach.africa.

JR Kanu is the creator of the app, REACH: Expense & Money Manager - www.reach.africa. This app has helped thousands of young people across Africa to better understand and manage their money. He is also the author of the book, Money Brain: Career & Money Management in Your 20s and 30s. He lives in Lagos with his wife and son.

Resilient, evergreen skills in any economy JR Kanu

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he middle of a pandemic is the perfect time to launch a column discussing money and career management in your 20s and 30s. We are all being forced to be thoughtful about the lives we are crafting and how quickly things can take an unexpected turn.

In the case of career management, we want to know which industries and specific roles are most recession-proof. For money management, the question is about how much of a safety net we must build to withstand a major shock to our income streams. There are no easy an-

swers, but today’s young person will have to figure this out with minimal help because most of their parents and mentors have never had to surmount a global pandemic in the midst of an economic recession.

So, how do you start the journey of building a career and money plan that is resilient in the face of cataclysmic change?

I can tell you with full certainty that these skills will always be valued - no matter the time. For today’s discussion, we look at the three skills that are evergreen.

1. Solid communication.

We are a social species. We need to speak, write, or draw to communicate ideas. Hence, your communication skills will serve you well regardless of the field you enter.

Your ability to write clearly, speak www.businessday.ng

clearly, or communicate complex ideas in simple language will always put you head and shoulders above others.

2. Mathematics, Statistics & Analysis. Numbers will never go out of fashion. The more you understand how numbers work, the more secure a position you’ll have in every version of the world and its advancements. As a numbers person, you’ll find that others will often rely on you to make sense of numerical information.

This ability is at the core of all science, technology, engineering and math careers. From writing code to managing a technical product, from balancing accounts to valuing a company’s stock, your understanding of numbers will always be a highlyvalued skill.

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3.

Learning to learn. It’s not just important to express ideas. It’s also important to understand the ideas being created by others. Regardless of the times, you will stay ahead in life if you know how to learn. There are so many resources out there to teach yourself about any topic. You can read articles.

You can read books. You can listen to books on audio. You can watch videos.

Evaluate your skills against these three core skills. If you are not fantastic at one or more of these, you’ve got some work to do.

The beauty of these core skills is that they only improve with practice. In fact, practice and application are surefire ways of ensuring that you’ll actually become an expert. So go ahead, take the first step now and feel free to keep me @Businessdayng

posted on your progress.

In this column every Monday, I will be discussing topics focused on career and money management, seeking to highlight the lessons being learned in the midst of navigating these challenges together. If you would like to submit a topic or question, please send a DM to my social media handles jrkanu on Instagram or email stories@reach.africa JR Kanu is the creator of the app, REACH: Expense & Money Manager - www.reach.africa. This app has helped thousands of young people across Africa to better understand and manage their money. He is also the author of the book, Money Brain: Career & Money Management in Your 20s and 30s. He lives in Lagos with his wife and son.

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Monday 25 May 2020

BUSINESS DAY

cityfile Imo: Man in trouble for faking abduction of wife, children SABINUS ELEMBA, Owerri

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Interstate Passenger: Interstate passengers apprehended by security men at Zuba in Abuja/Niger State boarder, being send back to Kaduna along Abuja/Kaduna expressway.

Pic by Tunde Adeniyi

NDLEA, uncovers destroys hashish oil lab in Lagos JOSHUA BASSEY

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ational Drug Law Enforcement Agency (NDLEA) says it has destroyed a clandestine laboratory for production of Hashish oil and recovered 13 rounds of live ammunition with other drugs and substances in Lagos.

Head of public affairs, NDLEA, Jonah Achema, in a statement at the weekend, said it was the first time the agency would uncover hashish laboratory.

Hashish is a drug made from the resin of the cannabis plant and it is consumed by inhaling from a small piece, typically in a pipe, bong, vaporizer or joint, or via oral ingestion.

Achema said that the laboratory located in an

apartment on No. 7, Imam Augusto Close, Victoria Island, was dismantled by the enforcement team of NDLEA. According to him, the investigation started before the COVID-19 and NDLEA had only uncovered methamphetamine, adding that it is shocking to discover such laboratory in the centre of Lagos.

He noted that the agency arrested one suspect (name withheld) in the course of the operation code-named Hash-Caste.

He said that the suspected owner of the laboratory engaged in indoor growing of cannabis sativa and processing same into hashish oil through extraction.

“The suspect is a graduate of University of Southern Denmark with a degree in Electronic Engineering.

“Aged 42, the suspect

claime d to have b e en pushed into the hydroponic cannabis growing and Hashish oil extraction following the collapse of his Inverter, Metering and Solar Installation Company in 2019.

“He said he noticed that there is so much money to be made in view of the high demand for Hashish oil in the international market as a curative medicine for cancer,” he said.

Achema said that the suspect expansive premise was well fortified with protective dogs and himself well armed, ostensibly to put up resistance from the suspected onslaught of law enforcement agencies.

He added that several drug exhibits were recovered which include 911 grams of cannabis seeds, 21 Kilograms of cannabis infused ethanol, 83 grams of hashish oil 123mg THC-

70 CBD. “1.127 Kilograms of Cannabis Cream, 80 grams of fresh Cannabis plant and 25 grams of dried Cannabis plant were also recovered.

“Other items found in the active laboratory are: 500 grams of Potassium Hydroxide Pellets, Propyl Alcohol.

“500 grams of Sodium Hydroxide Pellets, Distilled water, Water Aspirator Vacuum Pump, Round bottom Flasks, Citric Acid, PH Meter, Retort Stands, Distillation Flasks, Printer, Spectronet wireless wifi, Polyvinyl Chloride (PVC).

“Two vehicles belonging to the suspect were seized as they were suspected to have been acquired from the proceeds of illicit drug trade.

“Also detected are two bank accounts belonging to the suspect and one jointly operated by the suspect and his mother,” he said.

NLC appeals to employers to save jobs amid COVID-19 JOSHUA BASSEY

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he Nigeria Labour Congress (NLC) has again appealed to government at all levels and private employers of labour not arbitrarily send workers into the unemployment market as a result of the ravaging COVID-19 pandemic.

Ayuba Wabba, president of the NLC, in an address to mark the end of the 2020 Ramadan fast at the weekend, begged the employers to shun the temptation of worsening the already difficult experience of Nigerians by sacking

more workers.

According to Wabba, rather, employers should make the COVID-19 burden lighter for millions of families by keeping people at jobs.

“Nigerian workers have demonstrated a strong affinity to the values of Eidel-fitri by soldiering on in self-denial, dedication, and diligence as frontline workers against COVID-19 pandemic.

Government at all levels and employers can make workers’ load lighter by ensuring the security of jobs, income and livelihood. The Ramadan holiday should not be the time www.businessday.ng

to arbitrarily cut down the salaries of workers or deny them their means of livelihood,” Wabba said.

He added that the Eid-elfitr should reinforce the need to love and to share, urging Muslims and non Muslim alike to embrace the spirit of brotherhood.

“There is no better time to share with those who do not have especially the destitute in our midst,” said the labour leader.

He noted that this year’s Eid-el-fitr echoed the message of hope which inspires all of us that though the night of

COVID-19 might be long but the rays of the dawn of God’s benevolent mercies would soon arrive to compensate for all the current troubles, adding “ we can only keep faith alive.”

Wabba, on behalf of the leadership of the NLC, congratulated workers and the Nigerian Muslim community for successfully concluding this year’s Ramadan.

He said though the restrictions and inconveniences imposed by the corona virus made the observation of this year’s Ramadan far more tasking, it was also more spiritually rewarding for all Muslims.

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he police Imo h av e a r re s t e d one Obinna Anusiem from Umuima Atta in Njaba local government area of the state for allegedly faking the kidnap of his wife, Chinyere and their two children.

The 34-year-old was among the 28 suspects arrested by the police in Imo and paraded in Owerri on Friday for various crimes.

The Commissioner of Police (CP) in the state, Isaac Akinmoyede, told journalists that the suspect reported at Njaba Police Station that his wife and two children were kidnapped on April 12 by his cousin, Okechukwu Anusie.

Akinmoyede, however, said that upon “discreet investigation” by the Anti-Kidnapping Unit, it was discovered that the complainant was actually behind the purported abduction.

He said that it was further discovered that the suspect hid his wife and children in his in-law’s house in Okwudor community in the area.

The police chief said:

“He hid them there and maliciously accused Okechukwu of kidnapping them because of land dispute and other family misunderstanding. He has confessed committing the crime. The suspect will soon appear in court.”

The suspect said that he faked the kidnap to punish his cousin who he accused of selling their family land and diverting the proceeds to his personal account without giving him a dime.

“I did not kidnap my wife and children. I only took them to my wife’s place because I want the police to arrest him for selling our land. Please forgive me,” the suspect confessed.

The CP said further he would adopt the community policing strategy in fighting crime in the state.

He said, “Imo is peaceful. I met a peaceful atmosphere when I came but I will not allow any criminal to operate freely in the state.”

He also warned officers and men of the command against human rights abuse and receiving bribe.

According to him, any operative caught involving in sharp practices would face severe sanctions.

COVID-19: NEMA releases 19,713 metric tonnes of grains to Lagos, Kano, Ogun, FCT

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ational Emergency Management Agency ( N E M A ) ha s distributed 19,713 metric tonnes of grains to Lagos, Kano, Ogun and the Federal Capital Territory (FCT), as part of measures to cushion the effect of the pandemic in the states.

Tope Ajayi, assistant chief relief and rehabilitation officer of the NEMA, who disclosed this at the weekend, said that the agency collaborated with the ministry of humanitarian affairs, disaster management and social development to ensure smooth distribution of the palliatives.

The grains, he said, consisted of maize, millet and sorghum.

“At the onset, the directive was for the ministry of humanitarian affairs, @Businessdayng

disaster management and social development to ensure that the grains get to 13 front line states.

“But with the expansion and spread of the pandemic, there was need for us to extend to 24 states. So in the first batch, we delivered to Ogun, Lagos, Kano and the Federal Capital Territory.

“Presently, we are distributing to Zamfara, Borno and Katsina state.

“So out of the 70 metric tonnes of grains which was approved for distribution

by President Muhamadu Buhari, 19,713 metric tonnes went to the first four states earlier mentioned,” he said.

He further explained that the remaining 50,286 metric tonnes would be distributed to the remaining 20 states. NAN

Monday 25 May 2020

Harvard Business Review

BUSINESS DAY

23

MONDAYMORNING

Tidy up your company’s Data Marie Kondo-Style KON LEONG

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rganizing our “stuff” has always been a challenge — which may explain why Marie Kondo has become a household name in the art of cleaning up and organizing one’s personal effects. Businesses face a similar challenge. As data growth continues to accelerate, the regulatory and legal requirements to control this expanding digital mountain keep escalating, causing data cleanup to rise to the top of business priorities. Here’s how we can apply Kondo’s six rules of tidying up to the enterprise: — COMMIT TO TIDYING UP: When it comes to cleaning up, upfront commitment is important. Without it, efforts are likely to founder and peter out. A successful data cleanup initiative requires commitment from top management, including assigning the appropriate resources and budget.

— IMAGINE YOUR (COMPANY’S) IDEAL LIFESTYLE: It’s essential to have a longterm plan for continuity after the initial cleanup process. This often means putting in place automatic policies so that data

is continuously cleaned up as it’s created.

— FINISH DISCARDING FIRST: Gartner research estimates that up to 85% of enterprise data is redundant, outdated and trivial, which can be identified with an initial analysis. However, the enterprise must set and define a policy for data retention and deletion, ensuring that it complies with privacy requirements, regulations and records policies, while also checking to see whether it’s part of ongoing litigation or antici-

patory preservation.

— TIDY BY CATEGORY, NOT

BY LOCATION: If offices worldwide use the same data platform, let’s say for email, then it is better to handle all emails across the globe at once than to tidy up all types of information at once, country by country.

— FOLLOW THE RIGHT ORDER: One should start first with easier data types, such as internal file drives or SharePoint. From there, you can tackle email, instant messaging and social media data, and then

proceed to the more complex environments such as cloud apps, logs, enterprise resource planning data and machine data.

— ASK YOURSELF IF IT SPARKS JOY: One of the most useful types of analytics remains unharnessed: analytics based on textual data created by humans for humans, such as email and file shares. Cleaning and managing this data can drive more effective analytics and offer insight into the human side of the business. For

top management, this certainly could “spark joy.”

The sheer volume of data makes it impossible for humans to individually categorize and apply management to each document. This is where technology steps in with analytics, artificial intelligence and machine learning.

(Kon Leong is co-founder and CEO of ZL Technologies, Inc.)

What good business looks like PAUL POLMAN

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s COVID-19 continues its advance, it is showing that much that we believed was wrong. As conventional wisdoms tumble one by one, the door to bold new thinking has been opened. These are days for challenging dogma — nowhere more so than in how we understand the role of business in our societies.

Fifty years ago Milton Friedman famously wrote that “the social responsibility of business is to increase its profits.” The doctrine of shareholder supremacy was born and, notwithstanding a growing movement toward a more conscious capitalism, continues to reign. Suddenly, even that axiom feels less selfevidently true than did it a few months ago.

This pandemic is turning out to be a grim but vital reminder that we humans are

here on this planet to take care of each other — and business is a way we can do that at scale.

Capitalism, for all its dangers when unfettered, remains the most powerful tool we have www.businessday.ng

ever invented to channel human ingenuity to meet human needs and elevate us to new heights.

We now have a rare chance to hardwire into our psyches

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this more enlightened conception of what good business looks like. The process of expecting more from corporate leaders had already begun, made manifest in the de@Businessdayng

mands of the millennial workforce and the choices of more responsible consumers. It will now accelerate.

How a CEO or company conducted itself in 2020 will be a new and powerful yardstick by which to measure them. Companies that demonstrate a lack of empathy, that don’t stretch themselves to serve others, that remain silent or self-serving, whose leaders refuse to share in the economic pain, risk finding their brands and reputations permanently scarred.

The lesson unfolding before us is that companies need to prepare to meet future crises with sound balance sheets, caring leadership and genuine compassion. Those that do will be celebrated, rewarded and cherished.

(Paul Polman is a co-founder of Imagine and a former CEO of Unilever.)

24

Monday 25 May 2020

BUSINESS DAY

Start-Up Digest

Lockdown weighs on SMEs as margins fall on inter-state restrictions ....75% need funding

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Odinaka Anudu

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easures taken to curb the spread of coronavirus may be timely and inevitable, but they are also hurting small businesses struggling to find their feet in a regressing economy.

The Federal Government had imposed a five-week lockdown in Lagos and Ogun states as well as Abuja to make contact tracing and management of Covid-19 patients easy for health workers. There is still a partial lockdown in some states while Lagos, Ogun and Abuja are yet to fully re-open owing to rising number of cases.

In a survey done by the Enterprise Development Centre of Pan-Atlantic University, Lagos, on the impact of Covid-19 on MSMEs, 93 percent of small businesses reported decline in revenue while 89 percent admitted having issues in their supply chains due to restrictions on inter-state movement.

Forty-nine percent of the respondents said they were facing crippling logistics issues as 88 percent said they would change their business models.

“Most of them reported that they were unable to move their raw materials needed for production or transport their goods due to the restrictions of movement for both human and goods,” EDC said in the report.

Due to the influence of technology during the lockdown, 47 percent would likely consider new businesses due to the harsh realities of Covid-19 pandemic while 25 percent would cut output.

Fifty-seven percent reported that their sales had been affected, just as 52 percent had issues with cash flow, according to the survey.

“The results suggest that many businesses are financial fragile,” EDC said.

“Some MSMEs report that they only have cash to cover for a short period of time,” EDC further said.

More than 55 percent are considering laying off employees, while 44 percent who are reluctant to lay off workers, would consider salary cuts.

MSMEs now see more need to collaboarate and partner with each other as some of them now offer price cuts and promotion, the survey shows.

Most of the respondents (75 percent) would want funding support, while 35 percent required technology support and

access to market. Twenty-nine percent needed mentorship as 22 percent and 17 percent wanted reduced interest rate and tax holiday respectively.

However, the majority of MSMEs (83 percent) believed that their business would survive the pandemic and they would bounce back, the EDC report says.

The EDC said MSMEs required deliberate support services to manage the postCovid-19 period.

The 41.5 million MSMEs in Nigeria are facing challenges caused by preventive measures against the deadly Covid-19, which has killed over 300,000 people globally and more than 200 in Nigeria.

In an interview with StartUp Digest, Olamide AyeniBabajide, chief executive of Pearl Recycling, a Lagos-based company that transforms solid wastes into chairs, said she had orders for the supply 300 chairs across the Nigerian states since the Lagos lockdown but could not supply due to restrictions on inter-state movements.

How entrepreneur emerged as face of Spangler Market Josephine OkojiE

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ollowing a keenly contested competition organised by Spangler Market and Vent Sq, 27 year-old Bernard Iwuoha has emerged as the brand ambassador of the online market place.

Purity Abhulimhen, founder, Spangler Market and Vent, while announcing the winner, described Iwuoha as someone with a calm and respectful personality, saying that the entrepreneur is known for his loyalty which has helped him in winning the social media contest.

According to her, these are some of the qualities that has driven the members of Spangler Market, adding that it is also the thrust of its activities.

“During the campaign period, Iwuoha was able to prove his abilities, not just in popularity, but with the way he carried people along, especially when he introduced his #TAGROID campaign,” said

Building trust and a collaborative culture as employees remain at home during the pandemic

Abhulimhen.

“As an online platform, Spangler Market is devoted to helping people win in their businesses, and Iwuoha has shown over time that he possesses that drives others to achieve their goals,” she said.

Speaking about his victory, an excited Iwuoha said that when he entered for the competition, he was not certain about winning.

“I was initially aiming for second place due to the big names that I kept hearing about,” he said.

“Although, I asked some close friends before registering to solicit their support and they gave their go-ahead before I entered into the competition, but I guess after my showing at the first stage, I was crazy to start having the winning mentality,” he said.

Popularly known as Omekagu on Facebook, the graduate of Biochemistry from the University of Nigeria, Nsukka, further stated that winning the competition has fueled the zeal to succeed more in his endeavours. www.businessday.ng

“I am looking at starting my personal brand and being an ambassador of Spangler Market means I have to represent the brand in a positive manner by encouraging my friends who are business owners to make use of the advantage the market gives to showcase their brands which will surely be beneficial to both the market and the brand owners,” he added.

For winning the competition, Iwuoha goes home with N350,000 cash, a luxury night at a five-star hotel, three months free data subscription, complete company branding including CAC business name registration of his company as well as a Spangler Immunity Card which gives him access to free slots for its online trade fair, 30percent off any products he wants to purchase, free verification and lots more.

One of the most popular online market platforms in Africa, ‘Spangler Market & Vent Sq’ is a social community global market where buying, selling and other forms of businesses take place.

any offices remain closed as cities (and citizens) navigate various levels of lockdown and social distancing across the continent. Businesses for whom working from home is a new practice might be worried about staff productivity outside of the office environment. Apart from infrastructure concerns – power and sufficient data connection – some employers wonder how much work their employees will actually complete. Many establishments are toying with the idea of surveillance software as a result and justifying it with arguments about paid property and time. Companies are fully within their legal rights to do so.

We would like to offer an alternative framework for company and team leaders. While it is true that the laptop might have been paid for by the company and the hours contracted in the form of wages or a salary, it is important not to forget the crucial role that trust and collaboration have to play in supporting company morale—especially at a time like this. Building a safe, open and collaborative culture might be a much better approach than resorting to surveillance as a solution. Managers should be able to engender collaboration and proper communication, hallmarks of strong teams, which will serve organisations well during and after the pandemic.

As an employer, you have a range of surveillance software at your disposal: you can track and log your employee’s mouse movements, keyboard keystrokes, web page visits and even download screenshots of your employees’ computer screens. If you want to, you could install the software that enables the computer webcam to take pictures of the employee on a timed loop whilst tracking their location via a web or mobile app linked to GPS. You could also go lowtech and insist that employees stay on video throughout the workday or simply monitor when an employee is online.

Depending on how much foresight your company lawyers displayed, your hiring contracts might entirely permit the use of such tools with little to no limitations.

Ultimately, the argument for such surveillance is that it helps to improve efficiency and productivity. Surveillance can be an effective motivator and/or deterrent and the HR Daily Advisor website mentions a few conceivable uses including identifying when work needs to be redistributed. In so doing, you might

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minimise waste of company time, highlights bottlenecks as well as increase invoicing and billing accuracy. In fact, there are employee surveillance practices which we routinely accept and even expect. For instance, expect service industry players to record customer service calls to ensure customers are being addressed in a manner aligned with company policy and values. But also, in theory, for training purposes.

However, whichever path you take as a company, it important to implement with longterm team morale and company health in mind.

Building a culture of trust and collaboration is important, especially if you intend for employees to demonstrate reasonable levels of autonomy and responsibility for their work. When surveillance of employees is not thoughtfully implemented and carefully managed, employees inevitably begin to feel resentment.

Surveillance culture within a company can create volatile teams and lead employees to develop entirely transactional relationships with their employers and companies.

At Spurt! we care about organisations’ focus on building trust and collaboration

‘

Managers should be able to engender collaboration and proper communication, hallmarks of strong teams, which will serve organisations well during and after the pandemic alongside better communication because our view of entrepreneurship is for the social good. Entrepreneurs build businesses not just to print money, but to solve real problems. Teams that have low trust, faulty collaboration and wonky communications will not be successful in solving problems. Without trust and collaboration, you cannot leverage your people’s individuated efficiency to create synergies. To build truly impactful organisations that positively affect lives and livelihoods the whole must be a good deal greater than the sum of the parts. Micromanagement and eroded team trust will inevitably undermine company growth as employees struggle to be per@Businessdayng

sonally invested and become increasingly apathetic. More than technical skill or knowledge, psychological pressures disturb team productivity.

Design, recruit and train your team so that your organisation has minimal need for surveillance technology, even at a time like this. Given the issues of employability, we know that this is easier said than done.

However, organisations must hire expecting and planning to upskill their staff whilst tapping into their ingenuity, creativity and grit.

As entrepreneurs and leaders, it is worth developing management styles and company cultures where employees understand the ‘why’ (and ‘what’) of their deliverables and are positioned to thrive.

Within the context of the lockdown, there are a host of technological platforms centred around the promotion of collaboration and communication. Everyone already knows Zoom, and most are familiar with Microsoft SharePoint/ Teams and OneDrive, so there is no need to rehash them here. However, employers might want to look into becoming familiar with software like Slack, Asana and Trello as well as with using the Google G Suite at the enterprise level.

These software packages still track workstream progress, but they do so without the inherent risk of creating problematic power dynamics or suggesting eerie surveillance dystopias. It is clear who is doing what and when, and you can still deploy them in ways that help employees prioritise the right work on schedule and at quality. We think that surveillance and micro-management mostly stifle freedom and creativity and have little positive impact on the long-term growth and sustainability of a business.

Organizational Psychologist and Professor at the Wharton School in the University of Pennsylvania, Adam Grant, tweeted: “Attention micromanagers: if you can’t trust people to work from home, you: a) Probably shouldn’t have hired them in the first place b) Haven’t done a good job motivating them c) Might be projecting your own work habits into them d) All of the above” How are you building a culture of trust, collaboration and open communication in your firm?

Kristin & Oladoyin www.spurt.solutions Reach us at admin@spurt.group if you have any questions or comments.

Monday 25 May 2020

BUSINESS DAY

Start-Up Digest

25

In association with

Ene-Obong: Supporting NCDC to expand Nigeria’s Covid-19 testing capacity ODINAKA ANUDU

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number of entrepreneurs are deploying their resources to support Nigeria’s fight against the novel coronavirus.

One of such entrepreneurs is Abasi Ene-Obong, founder of 54gene, an African genomics research and development company.

In March this year, he launched a $500,000 fund to tackle covid-19 testing challenges faced in Nigeria.

54gene opened the fund by donating $150,000. Within 24 hours of launch, it secured an additional $350,000 from partners, including Union Bank. The money raised was meant to help increase Covid-19 testing capacity in the country by up to 1,000 additional tests a day, said 54gene. It was used to

buy testing instruments and biosafety materials such as biosafety cabinets and personal protective equipment needed to keep frontline healthcare workers safe.

Ene-Obong said in March that his firm was working in collaboration with the Nigeria Centre for Disease Control (NCDC) to make Nigeria’s public health an absolute priority during this global pandemic, which had left thousands dead or fighting for their lives across the world.

“We are extremely ambitious in our mission to expand the testing capacity for Nigeria, and expect to increase the present rate by at least 10X in the coming weeks,” he said.

In April, he launched a mobile laboratory in Ogun State, southwestern Nigeria.

The mobile lab is a 40-foot container structure designed to reduce the logistical chal-

Abasi Ene-Obong

lenges involved in shipping samples to another location for processing.

54Gene partnered First City Monument Bank (FCMB), a financial institution, and Argentil Capital Partners, an energy and infrastructure advisory firm, which was to provide regular electricity to the facility via a

Fintech start-up, Kiakia, launches P2P lending investment mobile app Odinaka Anudu

K

iaKia, one of Nigeria’s leading lending fintech companies, has launched the first lending investment mobile app in the country.

The Android-based mobile app is designed to enable any individual above 18 years of age with legitimate income to invest in the funding of secured personal and business loans originated, underwritten and booked by KiaKia across the country, and earn decent quarterly, bi-annual and yearly interest income.

KiaKia launched and began operations in 2016. Since launching, the company has facilitated, structured, originated and disbursed over N4.5 billion as personal and business loans to individuals and MSMEs across Nigeria. In 2019, it was the recipient of IFINCA award (Inclusive Finance Nigeria Conference and Awards) for the best peer-to-peer lending platform in Nigeria, having successfully facilitated lending and investment of aggregated private capital in billions of naira on behalf of individuals and corporates without recording a single fund loss in four years.

Prior to its P2P app launch, its peer-to-peer lending investment had been privately exclusive to high income individuals in the last three years, Chiemeziem Anyadike, chief operating officer (COO), says.

This has enabled these lend-

ers to earn decent interest income on funds which KiaKia disburses to MSMEs as secured and unsecured loans across multiple sectors. The COO says that the company decided to open up the P2P channel to the public by creating an app that enables any individual with legitimate source of funds/ income to securely lend it out to carefully preselected and preapproved borrowers on the KiaKia platform with clearly indicated and predetermined interest rates. Interest rates range between 10 to 40 percent depending on the package and tenure subscribed to.

The App also offers Halal option. Individuals can earn predetermined profit by funding businesses as a substitute for interest, head of non-interest services, Ismail Abiodun says. He adds that this option was created in response to growing demand from both businesses and funders who have preference for profit sharing rather than interest earnings.

Individuals can lend out a minimum of N50,000 and a maximum of N2.5m for a minimum of 6 months and maximum of 18months as against the previous supposed, financially discriminatory minimum threshold of N1,000,000.

KiaKia does not operate a deposit, payment nor wallet system, the firm says.

Funds go directly to prequalified and pre-approved borrowers on the KiaKia platform. The P2P lending platform www.businessday.ng

has provided access to critically needed working capital to players in Nigeria’s real sector in the face of limited access to credit, a funding gap the Central Bank governor puts at about $158 billion, Anyadike states.

Speaking further, the Cofounder/CEO stated that a peer-to-peer lending and investment platform like KiaKia is optimised to deliver value.

“We offer the opportunity to put your money to work, by efficiently aggregating funds, carefully matching and securely disbursing them to creditworthy borrowers, allowing lenders and funders to directly enjoy interests and profit sharing,” Anyadike further says.

“Traditional financial institutions alone cannot meet the credit needs of economically active individuals and the real sector.”

A recent research carried out by the KPMG on behalf of the Nigeria Industrial Policy and Competitiveness Advisory Council estimated that N770bn would be required annually to fill the financing gap existing in Nigeria’s real sector.

According to Anyadike, it makes no financial sense keeping funds idly in the bank in the face of current economic realities when such could be applied on creating immense value in the economy.

The App is available in the Google Play Store. The company hopes to release the iOS version in the next two weeks.

10kVA solar power solution.

In early May, Africa’s richest man Aliko Dangote engaged him and his team to conduct 400 Covid-19 tests a day in Kano.

According to Ene-Obong, the mobile laboratory in Kano was also fully kitted with critical equipment, including an autoclave, bio-

safety cabinet, centrifuge, heating blocks, vortexes, pipettes, and PCR machines to support COVID-19 testing.

Ene-Obong left his role as a management consultant in the pharmaceutical sector to move back to Nigeria to address the significant gap in the genomics market in Africa.

He founded 54gene in January 2019 to ensure the inclusion of Africans in the precision medicine revolution and improve the understanding of world’s most genetically diverse population.

54gene partners with hospitals and research institutions in African countries and with pharmaceutical and biotechnology companies to address the challenge of limited diverse genomics data, which may hold the key to medical discoveries and new healthcare solutions.

It eyes ending the phenomenon of lack of diversity in

DNA that is used in medicine and pharmaceutical research.

Backed by investors including Y Combinator, Fifty Years Ventures, Better Ventures, and KdT Ventures, 54gene aims to equilibrate healthcare for people of African origin while advancing the quality of medical care worldwide.

The business is looking radically to disrupt the $100billion global pharmaceutical industry. He believes that only two or three percent of all genetic materials used in pharmaceutical research comes from Africans.

His target is to expand the scope to several African countries. He wants more African countries to be included and eyes 200,000 samples by the end of 2020.

He received $4.5 million in funding after launching this platform in July 2019.

Maduka to compete with world’s leading entrepreneurs in Monaco ….at EY World Entrepreneur of the Year award

C

osmas Maduka, founder and president of Coscharis Group of Companies, a leading Nigeria’s indigenous conglomerate, is set to join 60 other top entrepreneurs from 51 countries to compete for the ‘EY World Entrepreneur of the Year’ in Monaco, France.

Maduka and others will also be inducted into the ‘EY World Entrepreneur of the Year’ Hall of Fame.

Due to Covid-19 travel restriction, this year’s winner will be announced virtually on June 04, 2020.

Maduka, winner of 2020 EY Entrepreneur of the Year Award (EOY) in West Africa, will be recognised alongside other 60 country winners for their exceptional entrepreneurial achievements who will vie for the award at the global level.

Speaking on the award, Ashish Bakhshi, EY Entrepreneur Of The Year leader for West Africa, says the award is not only designed to celebrate and honour the contributions and achievements of successful entrepreneurs but also serves to inspire today’s successful entrepreneurs so they could share their incredible entrepreneurial stories.

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Cosmas Maduka

“On behalf of EY Body of Partners and entire staff, I want to wish Maduka very best of luck and hope he brings the coveted award to West Africa. We are proud of his achievements in the business world not only in Nigeria but on the African Continent,” he says.

One of the most interesting and unique features about this year’s edition is that the entire process of the event will be conducted virtually. The overall winner will be chosen by an independent judging panel of distinguished former EY Entrepreneur of the Year winners and other well-known entrepreneurs drawn from the business circle worldwide. The award is given @Businessdayng

on the basis of six criteria: entrepreneurial spirit, financial performance, strategic direction, innovation, global impact and personal integrity/influence), allowing all country winners an equal opportunity to compete.

James Mwangi, CEO and group managing director of Equity Bank, Kenya, was the first and only African to win the prestigious EY World Entrepreneur of the Year award. Other past winners were Hamdi Ulukaya, founder and CEO of Chobani Inc (USA); Olivia Lum, group CEO and president, Hyflux Limited (Singapore); Guy Laliberté, founder and CEO, Cirque du Soleil (Canada); Narayana Murthy, founder and chairman of Infosys Technologies Limited (India), and Cho Tak Wong, chairman, Fuyao Glass Industry Group (China), among others.

EY Entrepreneur of the Year award programme started in 1986 in Milwaukee, Wisconsin, in the US. In 1987, it was held across 11 US cities and in 1993, it started to expand internationally. The programme was introduced in West Africa (Nigeria and Ghana) in 2011.

26

Monday 25 May 2020

BUSINESS DAY

news

What Nigeria’s ‘precision lockdown’ COVID-19 strategy could look like SEGUN ADAMS

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he Presidential Task Force on COVID-19 last week Monday announced a new strategy to impose “precision lockdown” – or precisely targeted lockdown measures – in areas recording high rates of coronavirus infections in the country while the rest of the economy slowly reopens.

Boss Mustapha, head of the task force, said nine undisclosed local government areas have been identified for the new measure which would be complemented with the provision of palliatives.

Nigeria has as at Sunday reported 7,526 confirmed cases of coronavirus, with 2,174 recoveries and 221 deaths.

But what could precision lockdown look like in Nigeria and what is its implication for the country’s COVID-19 fight?

“My understanding is that it would be a data-driven ap-

proach, and likely targeted, rather than merely a small scale. So, that could mean (lockdowns on) a local government or a town – rather than a state,” Ibraheem Abioye, an epidemiologist at Harvard School of Public Health, told BusinessDay. The targeted lockdown will likely be implemented in settings where people necessarily have high contact with each other, and are in close proximity, increasing infection risk. This could be places of work or places of gathering.

“I expect that information from abroad would be considered as well. For instance, Nigeria has not had any outbreak cluster related to a church or mosque, but ample evidence from everywhere else suggests that these could be hotspots,” said Abioye. “Reopening those would be ill-advised.”

The epidemiologist said local information could also be adapted – “For instance, Oyo had an outbreak cluster with

30+ cases in one day from one company. (Nigerian journalist) Fisayo Soyombo suggested that infections could have occurred on the company bus. I don’t know his sources, but that sort of information is critical to guide the response.”

Abioye said the numbers of new cases in a place, as well as the numbers of people identified as persons of interest from contact tracing, could inform a decision to impose a lockdown on that local area or group. He was, however, unsure about the number of new cases that could trigger a precision lockdown.

The measure would require more resources from Nigeria’s frontline defence, NCDC. “Obviously, this is potentially harder to implement.

It would also need robust testing, tracing and isolating – which we are doing better at, but still struggling,” he said.

In India, the government’s containment strategy involves the identification of ‘hotspots’

into red, orange and green zones for implementing perimeter control, quarantine, contact tracing and other measures to stem the spread of the pandemic.

Indiatvnews.com explains that hotspots are further divided into large outbreaks, i.e., more than 15 cases within a geographical area or multiple clusters and clusters, those with less than 15 cases.

Based on the progress of disease and time of last reported case, the hotspots are graded by colour codes.

Red zones are districts/cities reporting a large number of cases/high growth rate.

Inclusion criteria are highest caseload districts contributing to more than 80 percent of cases in India, as a whole or a particular state, and/or districts with doubling rate less than four days (calculated every Monday for the last seven days, to be determined

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EXPLAINER

Why Nigeria’s power sector privatisation is causing uproar STEPHEN ONYEKWELU

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n May 19, Gabriel Suswan, who represents Benue NorthEast in the Nigerian Senate, moved a motion on the floor of upper chamber of the National Assembly calling for the reversal of the power sector privatisation policy.

Senate President Ahmad Lawan considered and approved the motion on the power sector recovery plan and asked the Federal Government to consider a comprehensive review of the power privatisation policy to reverse the current arrangement.

“The privatisation of the power sector has, so far, not been successful. It is not a good commentary that we should continue to give them money. They’re private businesses. We need to review this privatisation,” Lawan said.

The Senate argued that Nigerians would not enjoy stable power supply in the next 10 years if the activities of the electricity distribution companies (DisCos) were not reviewed and restructured.

Is this motion justified?

A little background is needed here to put Nigeria’s power sector privatisation policy into context. The rule of thumb for an industrial nation is about 1 megawatt (MW) for every thousand of population. This puts Nigeria’s energy needs in the 200,000MW range given its population of 200 million

people. The Federal Government had a target of 40,000MW by the year 2020. However, DisCos barely distribute 4,000MW of electricity, that is 10 percent of the projection.

The size of Nigeria’s power challenge led to the government’s release, in August 2010, of the “Roadmap to the Power Sector Reform”, a blueprint to conclude the privatisation of the powersector.Sincethereleaseof the power sector roadmap, the privatisation started gathering steam but current realities show the sector is beginning to lose steam. Tales of near bankruptcy litter the sector.

The performance of Nigeria’s DisCos is getting worse, with negative consequences for the sector and systemic risk to the entire economy.

BusinessDay’s analysis of 2017 financial statements of 10 DisCos shows that the combined accumulated losses or retained earnings hit -N713.63 billion in the period under review, from -N288.85 billion as of December 2016.

Retained earnings are a firm’s total profits over time minus dividends issued to stockholders. A retained earnings deficit, also called an accumulated deficit, happens when cumulative losses are greater than cumulative profits.

The DisCos are in a dire position as surging operating expenses, huge finance costs and absence of new investments to help expand metering and halt electricity theft have shortcircuited profitability.

Equities market: Domestic investors take charge as foreign selloff persists in April OLUFIKAYO OWOEYE

L-R: Haruna Jalo-Waziri, managing director/CEO, Central Securities Clearing System (CSCS) plc; Eric Idiahi, director, CSCS plc; Oscar N. Onyema, chairman, Board of Directors, CSCS plc, and Charles Ojo, company secretary, during the 26th Annual General Meeting of CSCS plc held by proxy in Lagos.

Apapa traffic to worsen as Lagos closes Marine Beach Bridge for repairs Joshua Bassey

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esidents and businesses located within the precincts of Apapa are in for longer travel time as the Lagos State governmentsaysitisclosingtheMarine Beach Bridge for five months for emergency repair works.

The all-important bridge, according to the state government, would be partially closed from Total Gas inwards Apapa from Wednesday, May 27 to Wednesday, October 21, 2020.

Apapa is home to Nigeria’s two busiest ports – Apapa and Tin Can Island – which together account for about 75 percent of the total export and import activities in Nigeria. The

port city also harbours industrial estate and residential area.

But the city has become notorious for traffic jams, with motorists sometimes trapped for five or more hours within the area.

The gridlock and congestion in Apapa have not only made life miserable for residents and business owners in the port city, but are also hurting and squeezing the real sector and the economy as a whole.

Several businesses and residents have had to relocate from the port community in the last 10 years as the traffic situation seems to defy every solution.

But the Lagos State government said on Sunday that the planned repairs were intended www.businessday.ng

as part of the vision to provide a seamless transportation system across the metropolis.

Frederic Oladeinde, Lagos State commissioner for transportation, said in a statement that the repairs to be carried out by the Federal Ministry of Works had been long overdue.

Oladeinde said the repairs were vital for the safety of the people, especially motorists that ply the bridge to access different parts of the state.

He explained, however, that necessary palliative works have been carried out on alternative routes around the construction site, putting them in motorable condition to ease movements during the construction period.

The commissioner also said that the repairs which comprise bearing and expansion joint replacement would be executed in two phases, with each phase focusing on one lane of the bridge at a time.

“The first phase will involve handling the lane inbound Apapa while the second phase will be designated to work on the lane that conveys vehicles outside the axis,” he said.

He further disclosed that adequate arrangement has been put in place to manage the construction period, adding that motorists inwards Wharf Road would be diverted to the other section of the bridge outwards Apapa.

https://www.facebook.com/businessdayng

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esidents and businesses located within the precincts of Apapa are in for longer travel time as the Lagos State government says it is closing the Marine Beach Bridge for five months for emergency repair works.

The all-important bridge, according to the state government, would be partially closed from Total Gas inwards Apapa from Wednesda As global mar-

kets continue to grapple with the impact of COVID-19 spread, the Nigerian equities market last month showed some resilience in the face of severe disruption in economic activities due to the ravaging pandemic, as domestic investors dominated market activities on the back of cheaper valuations, attractive dividend yield and low fixed income yields.

Figures released by the @Businessdayng

Nigerian Stock Exchange in its domestic and foreign portfolio investment report for the month of April show that although total transactions at the nation’s bourse decreased by 47.03 percent from N242.91 billion in March to N128.67 billion in April 2020, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors.

Specifically, domestic investors accounted for 58.67 percent of the total transactions at the nation’s bourse in April compared to 41.33 percent by foreign investors. Largely, foreign investors’ appetite remained weak, owing to increased macroeconomic fragilities concerns on stability of the currency, while the few that participated were forced by the inability to get dollars for repatriation, compelling some to reinvest their funds.

Monday 25 May 2020

BUSINESS DAY

27

news Dangote Cement posts strong performance...

Continued from page 1

company’s unaudited first quarter report, gross

profit rose by 3 percent, from N140.68 billion to N144.86 billion. Group net profit stood at N60.60 billion.

Revenue was equally on the increase, growing from N240.16 billion to N249.18 billion, indicating an increase of 3.8 percent. Dangote Cement sold a total volume of 4.0Mt in Nigeria while pan-African sales accounted for 2.28MT. Michel Puchercos, chief executive officer, Dangote Cement, commended the resiliency of the management and staff of the company in delivering good results despite the lockdown caused by the COVID-19 pandemic.

“From the beginning of the COVID-19 pandemic, we have proactively deployed all recommended measures to protect the health and wellbeing of our employees, customers, suppliers and communities. As such, we have implemented several rigorous protocols in all our operations across the continent,” Puchercos said.

“We are closely monitoring all markets according to the guidance provided by the authorities in each country.

We continue to provide superior services and deliver high quality products to our customers. 2020 started strongly, with growth across the board despite the early effects of the COVID-19 pandemic.

We achieved a record high quarterly EBITDA margin in pan-Africa and a record high quarter in Nigeria, with revenues of N179bn and domestic volumes at 4.0Mt,” he said.

Puchercos said Dangote Cement in April successfully raised N100bn series 1 Bond from the Nigerian Debt Capital Market despite the current challenging environment.

This, he said, illustrates investors’ continuous confidence in Dangote Cement’s strategy.

“This landmark transaction is the largest ever bond issuance by a corporate issuer in Nigeria. It allows us to further broaden our sources of funding by accessing longterm debt at competitive costs from the capital market,” he said.

Dangote Cement recorded volume growth in six of its nine operations. A detailed breakdown of the results indicated that with pan-African

sales volume at 2.28 MT, it contributed 36.2 percent of Group volumes. There was strong volume growth in Ethiopia, Senegal, Cameroon, Ghana, Sierra Leone and Congo. Plans are concluded to further deploy clinker and cement export strategy across West and Central Africa.

Dangote Cement plc is sub-Saharan Africa’s largest cement producer with an installed capacity of 45.6Mta across 10 African countries and operates a fully integrated “quarry-to-customer” business with activities covering manufacturing, sales and distribution of cement.

The Group has a production capacity of 29.3Mta in its home market, Nigeria. It has three cement plants in Nigeria – Obajana plant in Kogi State with 13.3Mta of capacity across four lines; Ibese plant in Ogun State has four cement lines with a combined installed capacity of 12Mta, and Gboko plant in Benue State has 4Mta. Through recent investments, Dangote Cement has eliminated Nigeria’s dependence on imported cement and has transformed the nation into an exporter of cement serving neighbouring countries.

In addition, Dangote Cement has operations in Cameroon (1.5Mta clinker grinding), Congo (1.5Mta), Ghana (1.5Mta import), Ethiopia (2.5Mta), Senegal (1.5Mta), Sierra Leone (0.5Mta import), South Africa (2.8Mta), Tanzania (3.0Mta), and Zambia (1.5Mta).

Dangote Cement has a long-term credit rating of AA+ by GCR and Aa2.ng by Moody’s due to its market leading position, significant operational scale and strong financial profile evidenced by the company’s robust operating and net profit margins relative to regional and global peers, adequate working capital, satisfactory cashflow and low leverage.

Dangote Cement is a subsidiary of Dangote Industries Limited, a diversified and fully integrated conglomerate as well as a leading brand across Africa in businesses such as cement, sugar, salt, pasta, beverages, and real estate, with new multibilliondollar projects underway in the oil and gas, petrochemical, fertiliser and agricultural sectors.

What Nigeria’s ‘precision lockdown’...

Continued from page 1

by the state government), the Indian news outlet said.

If containment measures work and there are no new confirmed cases after 14 days, the hotspot is categorised as orange and then green after another 14 days without new incidence.

For Nigeria, this could be similar and could incentivise groups or LGAs, as the case may be, to ensure the risk of spread within their communities are minimised.

For instance, if employees know their offices could be shut down due to an outbreak, they may be more inclined to prevent such by ensuring www.businessday.ng

L-R: Douye Diri, governor, Bayelsa State; Kosi Owudugu, clerk of the Bayelsa State House of Assembly, and Abraham Ingobere, speaker, during the signing of three bills into law by Governor Diri at Government House, Yenagoa.

Investors fear Nigeria’s FX market going...

Continued from page 1

the central bank of Africa’s

largest oil producer has run low on dollars and is struggling to meet FX demand, forcing it to resort to demand management tactics from 2016 with little success.

Bankers say there is a foreign exchange demand backlog of around $1.5 billion currently. That’s up from the $1 billion estimated a month ago. Sources say regulators are now resorting to pressuring banks on FX quotes to submit in attempts to ration scarce dollars.

“It would appear Nigeria is losing some of the FX market credibility gains since 2017 as there are signs the market is being rigged again,” one investor familiar with the matter said on condition of anonymity.

“How can the futures rate move by near N150, yet the naira spot did not move by a single naira? Meanwhile banks are pressured on what quotes to submit,” the person said.

In 2016, some $7 billion of foreign exchange bids went unmet at the height of a crippling FX crisis that was also triggered by a fall in oil prices and made worse by the CBN’s capital control measures.

The crisis dissipated after the CBN weakened the official rate by 40 percent and created a special marketdriven window for investors and exporters in 2017 which helped to somewhat restore investor confidence in the staff adhere strictly to safety measures.

But the risk is not eliminated and Nigeria is not in a comfortable place yet.

“Personally, I think one of the more important ways to respond is to continue to look at internet access for companies and to expand the ability of companies to work remotely,” said Abioye.

“Let everyone who can work

country’s FX market.

Four years since the crisis of 2016 and Nigeria seems to be drifting towards those dark days yet again.

While there’s an FX demand backlog piling, the naira has crashed to a near three-year low of N460 per dollar at the black market and the forwards market is flashing signs that investors see the naira falling to as low as N510 in a year’s time.

The plunge in the black market rate, in particular, creates all sorts of problems for the central bank in its bid to force a convergence of the country’s multiple exchange rates, as the plunge is an indication the central bank may have to weaken the official rate further after the devaluation in March.

“There is a significant locking up of the dollar-naira market that will last until those holding dollars see a closing of the gap with the perceived true value of the local currency,” said Yann Alix, a partner at Ashurst in London, who sees the need for a fall to at least N400 to N420 to the dollar.

“The rate of 380 does not appear to have made any material impact on the severe liquidity issues faced in Nigeria for entities requiring dollars,” Alix said.

“Nigeria’s measures to date are not going to be sufficient and there is a concern that the government needs to be more responsive to the combined issues of crude-oil price fall and COVID-19,” he

said in an article published

by The Africa Report.

The central bank in March weakened the official rate to N360 per dollar from N306, and the parallel market rate was moved to N380 from N360. It called the move an “adjustment” rather than a devaluation.

“The naira hasn’t found its real exchange rate value” in the COVID-19 world, said Moses Ojo, chief economist at PanAfrican Capital Holdings in Lagos. “There is a scarcity of foreign exchange which is beyond the control of the authorities in the short term.”

The naira devaluation was less than other commodity producers from Russia to Colombia whose currencies, the ruble and peso, are down by 17 percent and 19 percent, respectively, since the beginning of this year. In Nigeria, crude accounts for 90 percent of foreign-exchange earnings and reserves are down 12 percent since January to $33.6 billion.

“If the price of oil is down by more than 50 percent since the beginning of the year, then it makes sense that the naira should typically weaken more than it has now,” said Wale Okunrinboye, head of investment research at Sigma Pensions.

Corporates bid black market rate higher The current backlog in the market has forced some manufacturers and importers to source dollars at the black market, pushing the exchange rate to new highs.

As of May 21, a dollar sold for a record N460 at the black market, according to data from abokifx, a website that tracks daily movements in the unofficial exchange rate. That’s up 28 percent from March.

That means the spread between the unofficial blackmarket rate and the official rate of N360 now sits at N100, while the Investors and Exporters’ window rate at N383 varies from the black-market rate by N77.

Meanwhile, 12-month naira forwards are trading at around N510 per dollar, suggesting investors see the currency falling to around that level in a year.

Godwin Emefiele, the central bank governor, has since called an emergency virtual meeting with corporates asking manufacturers and importers to stop patronising the black market and urged patience while promising the CBN would meet all of their demands in no time. But there’s little confidence in the CBN’s FX firepower at a time when external reserves are dwindling and oil prices have slumped.

Though oil prices have improved in recent days, with Brent crude climbing to a one-month high of $34 per barrel, only Eurobond investors have grown more risk appetite towards Nigeria as they have across other emerging markets.

Yields on Nigeria’s dollar bonds maturing in 2047 fell from an all-time high of 13.2 percent on March 19 to 9.1 percent on Wednesday.

remotely do so. Decongest company buses.”

Abioye believes the recent decisions by the FG could be due to the economic toll of the lockdown, “despite the fact that the universal lockdown was not correctly implemented, and therefore only partly effective”.

One challenge that beset the country and still remains is testing – not capacity this

time but the willingness of the public to get tested.

Abioye said the key issue is that people feel stigmatised by the response to the disease.

Isolating centrally, the white-masked men (in PPE) transporting people, the fact that this is a disease with considerable fatality – all of those are potentially stigmatising and people are refusing to get tested, as a result, he said, asking for

more efforts to be put into reducing related social stigma.

Oluwaseun Ayodeji Osowobi, who recovered from the virus, told Aljazeera in April that she is advocating for the end of (COVID-19) stigmatisation because she “realised there is still a sort of stigma attached to the issue”.

“If we don’t address stigma, our testing capacity will not save us,” said Abioye.

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Nigeria searches for dollars as Covid-19 shatters economy BALA AUGIE

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inancial Times (FT) of London reported recently that Nigeria and two other emerging market countries had been thrown in the cold as they were shut out of the United States’ Federal Reserve and International Monetary Fund (IMF) dollar swap lines despite their currency financing needs.

According to the Centre for Strategic and International studies, the Fed’s dollar swaplines are “designed to improve liquidity conditions in dollar funding markets in the United States and abroad by providing foreign central banks with the capacity to deliver U.S. dollar funding to institutions in their jurisdictions during times of market stress.

Simply put, the Fed’s lend dollars to countries beset by balance of payment deficit, capital outflows, huge debt obligations, dwindling revenue, volatile currencies, liquidity crunch in the banking sector, and soaring unemployment.

Already, some countries are grappling to get the desired dollars needed to galvanize manufacturing and retail activities, while repayment schedules are mounting.

Dollar-denominated sovereign corporate bonds and loan repayment this year alone by indebted nations now stands at $120.60 billion, according to data glimpsed from the FT, and gathered by Institute of International Finance (IFF).

A breakdown of the figure shows Turkey has $22.70 billion of dollar due this year as the country continues to grapple with an unprecedented economic downturn caused by political instability and mismanagement of state resources by public office holders.

Argentina has dollar obligation of $20.80 billion in 2020, but the South American nation has debt of up to $323 billion, much of it had been piling over a decade. The country may default on its obligation to creditors as Covid-19 compounds woes, a reminder of the financial crisis of 2000 that sent stoked currency crisis whereas millions of jobs were lost.

SHORT TAKES N312m After a disappointing 2018, Fidson healthcare seems to have regained its mojo as it records an after-tax profit of N312 million in full-year 2019 for the period ended 31 December. Revenue dipped 13.5 percent to N14.06bn from N16.22bn in the same period in 2018. Efficient cost management saw its cost of sales decline 17.35percent to N8.19bn from N9.91bn

Indonesia has $15.70 billion of dollar outstanding this year, while Nigeria ($8.40 billion) South Africa ($8.30 billion), Egypt ($8.60 billion), Colombia ($6.90 billion), Israel ($9.20 billion), and Chile ($8.0 billion).

Ten Africa countries have $93 billion outstanding dollar Eurobonds, according to data gathered

by Investment house, United Capital Research Limited.

While Nigeria has an outstanding eurobond outstanding of $11.20 billion, analysts are worried that the country lacks a stable and strong revenue stream to service interest on the money borrowed as the coronavirus pandemic has crushed global oil demand and caused commodity prices to fall.

The country spent a total of N1.6 trillion on domestic debt service from January to December, 2019, according to a data from the Debt Management office.

While rich countries have a strong balance sheet or robust external reserve that gives them the leeway to implement stimulus package

necessary to cushion the effect of the epidemic on the economy, Africa countries are grasping for breath as they lack the financial ammunition to salvage their economies from imminent collapse.

According to the International Monetary Fund (IMF), the GDP of the continent’s economic superpowers, Nigeria and South Africa, is expected to shrink by 3.4 and 5.8 percent respectively as a result of the pandemic.

The Minister for Finance, Zainab Ahmed said the economy could shrink as much as 8.9 percent in 2020 in a worst-case scenario without stimulus, as her ministry was forced to slash the budget by 15 percent.

Global ratings agency Flitch said the contraction in exports and remittance inflows means the country’s current account will remain in deficit, despite a sharp drop in imports.

“We project the current account, which had been in surplus for much of the last 20 years, to record a deficit equivalent to 3.8 percent of GDP in 2020 and 2.5% in 2021,” said Fitch.

Why CBN $100m weekly dollar sales is not enough to end dollar scarcity IFEANYI JOHN

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fter CBN announced last April that it was going to resume sales of around $100m to Small and Medium Enterprises(SMEs) as well as parents paying school fees abroad, many thought it may be the beginning of the end of the prolonged dollar scarcity that has sent dollar rate in the FX market to N450/$1 and caused Nigeria’s first technical devaluation since 2016.

Obviously, they all miscalculated as dollar has continue to sustain its N450 exchange rate levels. As at Friday last week, Naira had slipped further as the dollar was trading at N460/$1. The real question is why is the $100m sales not stabilizing Naira in the exchange rate market, we dig into Nigeria’s FX demand figures to explain why.

Last year, Nigeria total effective import demand was about N16.95 trillion ($55.4b) which meant that excluding dollar speculative demand, Nigeria will have a normal weekly FX demand of around $1.065billion just to cover for the weekly national imports of N326.15billion in the country. While this type of lavish spending by Nigerians was affordable last year considering we exported about N19.19 trillion ($62.72b) which comes down to a weekly export earnings of $1.2billion per week, this year export earnings have dwindled significantly while the import demand has failed to collapse at the same magnitude as the decline in import, thereby causing the severe exchange rate pressure Naira is currently suffering.

Despite posting a trade surplus of N2.23 trillion ($7.3 billion), somehow, Nigeria’s foreign external reserves still

P.E

managed to decline by around $4.5 billion in 2019, probably due to large net capital outflows from the country and CBN’s choice to defend the Naira throughout 2019 instead of opting to devalue the already weakened currency.

Today, with export earnings declining rapidly with the collapse of crude oil prices, Nigeria’s monthly export earnings cannot sustain the import demand using just its foreign exchange earnings which may explain why the foreign external reserves dropped quite rapidly in the first quarter of the year. Crude oil which contributed 76 percent of Nigeria’s export earnings in 2019 has seen its market price per barrel fall by around 47 percent year to date. This means that holding all other things constant, Nigeria’s export earnings is expected to have dropped by approximately 36 percent since

5 The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run.

Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month.

Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week.

“Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn

the start of the year. Theoretically, this will cause weekly foreign exchange earnings to drop to barely $0.77b compared to the $1.065b import demand we have in the country, creating an excess weekly dollar demand of around $0.29b that will go unsatisfied every week.

However, our current scenario today is worse, our oil shipments are stuck in the high sea for weeks searching for buyers and reluctant buyers are paying well below market prices to take our oil off our hands which explains the low amount of dollar sales by CBN. If CBN weekly dollar sales is only $100m, then it is only capable of satisfying 10 percent of Nigeria’s import demand, leaving the market to search for the remaining 90 percent in the parallel market thereby causing the severe price dislocation.

Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early.

According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; 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 Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Mystery deaths in Bonny: Preliminary investigation pins cause to resistant variant of malaria, typhoid, others Ignatius Chukwu

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reliminary investigation report is already out in the panic over mystery deaths in Bonny Island of Rivers State, home of Nigeria’s biggest single economic installation, the $12.5 billion Nigeria Liquefied Natural Gas (NLNG), which plans to start off a $10 billion Train 7.

Reports had emerged at the week that important personalities were dropping dead, counting up to 10 in 24 hours, with distress calls going to relations across Nigeria. The Bonny Local Government Authority had flagged off investigations immediately and by Saturday night, preliminary reports came out.

The report issued by secretary of the LGA, Omoni LongJohn, and an elder, Pafuro Tolofari, the supervisor for health, stated: “Following the recent media reports of alleged persons with loss of sense of smell and taste, malaria and typhoid fever, and high level of deaths, the Bonny Local Government quickly swung into action to investigate and ascertain the truth of the whole panic.”

The report said a team headed by the secretary to the LG and the supervisor of health, the Covid-19 Team, and a media team, together with representatives from the Primary Health, went to all the health facilities in the Island both privately owned and government-owned, including major pharmacies and laboratory.

The report added that the head doctors on duty as well as the managers were interviewed and recorded. “The following facts were ascertained. There has been an increase in drugs

resistance malaria in the past two weeks on the Island; there are also increases in the cases of typhoid fever in the said period.

“About 50 percent of the patients also complain of dizziness, bitterness in the mouth, lack of a sense of taste and smell.

There are some few patients with complains of only loss of sense of taste and smell.

“The resistance to normal malaria drugs results in patients returning almost immediately with the same symptoms, resulting in the administration of intravenous injections. This treatment shows 100 per cent improvement in the health of the patients.

“Patients with loss of taste and smell are given allergy drugs, and they report improvement, as majority of them do not show symptoms of cough and catarrh.

“There have been no deaths as a result of these illnesses in any of the hospitals/Clinics on the Island in the past one month.”

The team found that there had been less than six in-patient deaths in all the hospitals/clinics on the Island in the past two weeks, and they all had chronic medical history. “There are about six cases of dead patients brought to the hospital/clinics for confirmation. They also have compromised health situations beforehand, on inquiry to their families by the doctors.

“The rumours of high death rates in Bonny are unfounded, and may not be too far from the fact that the mortuaries are filled as a result of the ban on Public Burial in the state, resulting in bereaved families making calls to all and sundry informing them of the plan to bury their deceased loved ones almost immediately.

Lagos, Rivers account for 40% of internally generated revenues in Nigeria

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agos and Rivers states together account for just above forty per cent of the aggregate internally generated revenues in Nigeria according data from the office of statistics.

The two states recorded a total of N539.13bn of the total of N1.344trn internal revenues generated all the thirty six states and the FCT last year.

The two giants in IGR are joined in the chart for the top five by the FCT, Ogun and Delta and together they account for 56.16% of Nigeria’s total states IGR or N759.294bn which was generated in 2019.

A further analysis shows that the top 12 states (Lagos, Rivers, FCT, Ogun, Delta, Kaduna, Kano, Akwa Ibom, Enugu, Kwara, Ondo and Edo in that order) account for a staggering 73 per cent of the total IGR among Nigeria’s states.

Kaduna powers to 6th, Edo 12th in IGR but Lagos remains clear leader Nigeria’s thirty six states and the federal capital territory recorded a total of one trillion, three hundred and thirty four billion Naira in internally generated revenue in the whole of 2019 according to data by the statistics office.

The amount represents a 21 per cent improvement over the previous year and unsurprising, Lagos state maintains its stranglehold on the top position with near N400bn or a staggering 30

per cent of the total internal revenue generated among the states in 2019.

The highest IGR recorded by the states came in the second quarter of 2019 when the states received a total of N391.316bn in IGR. Performance for the last quarter of 2019 represents a 12% improvement compared with the same period of 2018 and when compared with the third quarter of 2019, the Q1 performance is 18 per cent better.

According to information provided by the statistician general of the federation, Yemi Kale, PAYE provides the highest revenue lever for the states. In 2019 alone, the 36 states and the FCT raked in N809.31bn in personal income taxes remitted by workers in the country.

An analysis of the data paints a not very inspiring picture for the states given that total revenue available to the states and the FCT including FAAC allocations grew marginally by 1.6% in 2019 to N3.744trn.

Kaduna broke into the trail blazers chart by emerging sixth in the IGR table with about N45bn and in doing so it eclipsed its neighbor, Kano state which now ranks 7th on the chart. On the other hand Edo (N30bn) came out well, clinching the 12th position and beating Oyo state to 13th The top five states are Lagos, Rivers N140.3bn; FCT

N74.56bn; Ogun N70.92bn and Delta N64.67bn. Taraba came last with a meagre N6.53bn.

All the states occupying the ten slots at the bottom of the chart are in the north with the exception of Ekiti (N8.54bn 30th position) and Ebonyi (N7.455bn, 34th position).

US oil and gas producers entered 2020 already in trouble - out of favour with investors, they were wilting under heavy debt loads.

The Russian and Saudi oil price war was swiftly followed

by Covid-19 and the subsequent collapse in global crude demand.

Prices plunged, with West Texas Intermediate trading in negative territory for the first time in April. Re-ignited tensions between Washington and Beijing have already halted a nascent price rebound and the US oil benchmark is trading below $32 a barrel — barely half its level in early January and well beneath the break-even price needed by many producers.

For the shale oil companies, which pumped almost 13m barrels a day earlier this year and helped make the US the biggest crude oil producer in the world, the sector is now seizing up. The five charts below highlight a much-changed landscape.

Oil production is falling more steeply than expected, forcing analysts to scale back output projections even before

Umar Usman Kadafur, deputy governor, Borno State, receiving the medical equipment from Fatimeh Jarma, business development manager (Borno), FirstBank on behalf of CACOVID-19 to the Borno State government towards the support to fight against COVID-19 in Maiduguri, Borno State.

CACOVID donates medical equipment to coronavirus-free Kogi

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he private sector-led Coalition Against COVID-19 (CACOVID) at the weekend donated health equipment worth millions of naira to a new isolation centre established in Lokoja by the Kogi State government.

This is despite the fact that the state has not recorded any case of the coronavirus.

The presentation of the equipment by Toyin Idowu, a representative of CACOVID, came alongside the inauguration of the new isolation centre by the state government.

CACOVID with membership across leading private sector operators said the donation of the equipment was a joint initiative between the Central Bank of Nigeria and the leaderships of other private sectors in the country.

Idowu explained that the gesture was aimed at joining hands with the federal and state governments to rid the country of the coronavirus pandemic.

According to Idowu, the fight against the virus cannot be left for government alone to handle because of its peculiar nature.

“Our resolve to wade into the crisis is to avoid untimely deaths of innocent Nigerians as a result of the pandemic,” he said.

He said the measure was also to prepare the state ahead of any eventuality, adding that it would help in tackling the disease.

The CACOVID representative commended the state for holding on to its status as COVID-19-free.

“The equipment we have provided such as analysers, xray machine, oxygen cylinders, beds, mattresses, weight measuring machine among others are world-class equipment that will go a long way in reducing the effects and spread COVID-19 in the country,” he said.

Edward Onoja, the state deputy governor, while commissioning the new isolation centre promised that the government would continue to ensure that the state remains COVID-19-free.

“We will continue to sensitise our people on the need to maintain personal hygiene and adhere to advice given by health experts and the National Centre for Disease Control,” he said. www.businessday.ng

a deep plunge in planned upstream spending further cuts supply later this year.

As operators idle rigs, sack workers and shut in wells, most in the business agree: the US’s worst oil downturn in decades is now under way.

Genscape, a unit of consultancy Wood Mackenzie, said production by May 20 had dropped almost 20 per cent, or 2.3m barrels a day, from a peak of 13.24m in March.

The volume lost already is almost as much as Russia and Saudi Arabia last month pledged to cut in a historic supply deal that begins in June.

It will alarm US politicians, including President Donald Trump, who pressured Opec to shoulder production cuts in a bid to push up oil prices so that American producers could profitably keep pumping oil.

Genscape’s latest numbers, based on satellite monitoring and heat sensors at facilities across the US, suggested the biggest reductions were in Texas’s Permian shale — down 1.15m barrels a day — and North Dakota’s Bakken — 480,000 b/d.

Paul Horsnell, head of commodities research at Standard Chartered, said producers had already cut about 1.5m b/d more than official estimates.

He predicted output could drop below 10m b/d in the coming weeks, down more than 3m b/d since March.

‘COVID-19 should spur professionals to deepen national growth, development contributions’ KELECHI EWUZIE

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ndustry professionals have been advised to use the coronavirus (COVID-19) pandemic as a springboard to deepen their invaluable contributions to national growth and development.

The lack of a cure or vaccine for the COVID-19 pandemic has seen it drastically change the social, political and economic beliefs in Nigeria and indeed the world.

Nnamdi Okwuadigbo, 55th president, Institute of Chartered Accountants of Nigeria (ICAN), observes that the current crisis presents an opportunity for professionals to use their experiences, especially at this time when the world is searching for a solution to the crisis caused by COVID-19.

Okwuadigbo speaking at the

2020 annual awards organised by the ICAN where Ibrahim Magu, acting executive chairman, Economic and Financial Crimes Commission, (EFCC); Kalu. I. Kalu, managing partner, KaluKalu&Co, among others were given merits awards, urged the awardees to double down efforts to ensure that they sustain the enviable attributes that qualified them for the awards.

Okwuadigbo, while justifying the conferment of the Award on Magu, who was presented through electronic video conferencing system, the first of its kind in the history of ICAN, said the EFCC’s chairman was an icon who had been religiously leading the crusade against corruption in Nigeria.

According to Okwuadigbo, “Magu is a worthy ambassador whose award was approved after painstaking scrutiny of his

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contributions to the Accounting profession and the country as a whole”.

Olutola Senbore, the special guest of honour, described the EFCC boss as a steadfast and disciplined head of Nigeria’s foremost anti-corruption agency, adding that Magu deserved the award more than anyone else.

Ibrahim Magu in his acceptance speech expressed delight at his choice for the Award and described it as a personification of ICAN’s support for the anticorruption fight.

The speech read by Dele Oyewale, EFCC spokesman, noted that the award was dedicated to all Accountants in Nigeria, while adding that the coronavirus pandemic had drastically changed the course of the world and accountants had a role to play in the new world order.

Okwuadigbo further said the @Businessdayng

annual awards was an occasion to recognise members, nonmembers and corporate bodies that had demonstrated an unwitting commitment to the ideals and public interest mandate of the accountancy profession.

Highlight of the event was the awards to former ICAN president, C.O.O Oyediran; former ICAN registrar, George Okufi; managing partner, KaluKalu & Co, Kalu. I. Kalu; Taiwo Asaolu, professor of Accounting at the Obafemi Awolowo University.

Others are Uyi Akpata, country senior partner for PricewaterhouseCoopers (PwC), and Harcourt Adukeh, chairman, Megastar Construction Company, Architect.

Two corporate organisations, Nigerian National Petroleum Corporation (NNPC) and the University of Calabar were also honoured with an award each.

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Microsoft Paper outlines steps to drive Nigeria’s digital transformation SEGUN ADAMS

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echnology is changing our lives at spectacular speed.

Advances in medicine, education, communication, and productivity have increased life expectancy around the globe and lifted hundreds of millions of people out of poverty. The ability to connect to people and information instantly is so commonplace that many people take it for granted.

Governments around the world are transforming and adapting to this change. Here at Microsoft we ask, “How can we bring to life the promise of technology to everyone”? Part of the answer is in recognising that empowerment begins with digital inclusion. Just as there is an effective commercial ecosystem that brings the promise of technology to life in the marketplace, there must also be a strong societal ecosystem that democratises the promise of technology.

In a recently published Microsoft position paper, digital transformation is presented as a means for social and economic development in Nigeria, and as an opportunity for every Nigerian citizen and business to achieve more. Commenting on the paper, Nigeria’s Minister of Communications and Digital Economy, Isa Ali Ibrahim (Pantami) said: “In recognising the need to focus on digitalisation of the economy as a way to foster inclusivity, growth and skills development for job creation as well as the significant benefits in enabling government, citizens, and businesses to achieve more, we are working with Microsoft to leverage their technological expertise to enable the transformation that will allow our country to take part in the $11.5 trillion global digital economy.”

Nigeria is not only a key player in West Africa but is also the continent’s largest economy. The country has historically been dependent on its oil resources and the revenue received from it as a means for development and growth, making it highly susceptible to the volatility of oil prices. There is massive potential for growth through the digital economy for Nigeria. The country is on course to developing a robust digital ecosystem as well as infrastructural enhancements in policy and regulatory environments, the education sector and national security.

This paper lays out 20 policy intervention recommendations across four policy areas that will encourage government to fully harness the opportunities presented by the Fourth Industrial Revolution.

“Digital transformation in government can exponentially improve the lives of its citizens, providing more efficient and positive experiences that build trust,” says Microsoft Nigeria country manager, Akin Banuso.

“At Microsoft we are committed to developing solutions that can enable government to capitalise on the opportunities brought about by technology to manage communications, enhance responsiveness, promote well-being and better serve citizens,” Banuso says.

Microsoft has highlighted certain policy gaps that need to be closed to rip the long-term benefits of adopting technologies such as cloud computing and Artificial Intelligence in driving inclusivity in terms of connectivity, skills, and jobs. The paper also lays

out the responsible deployment of these technologies to sustainably fuel the growth of industries and their contribution to the country’s economy.

Rimini Makama, Government Affairs Director for Microsoft Emerging Markets, states, “Technology is at the heart of driving a digital economy which will bring these priorities to fruition. The question for Law makers and policymakers around the world is how to harness the power of the technology to transform people’s lives for the better without unleashing the potential for dislocation and disorder”.

This paper addresses the fundamental questions when making laws about how to strike the right balance between competing interests such as: public safety and the right to privacy; how to recognize national sovereignty without restricting the efficient flow of information across international borders; and how to provide entrepreneurs and innovators with the freedom to create and disrupt while ensuring that the benefits of change are broadly and equitably shared.

There is a need for a new digital mindset and culture, built on development of digital capabilities, reducing costs, removing red tape and other institutional barriers. This allows for easier and more optimal integration of innovative technologies in government that can enable the country to leapfrog into the digital future driving up the number of highly-skilled digital natives, empowering citizens and facilitating positive societal change. Nigeria’s government has placed a great deal of commitment into fashioning such an environment to ensure an inclusive digital future.

“This forward-looking whitepaper from Microsoft aligns with the eight pillars contained in the National Digital Economy Policy and Strategy and the country’s Economic Recovery and Growth Plan and so will support the country in collaborating towards building an inclusive Digital Nigeria,” adds Honourable Minister Ibrahim (Pantami).

Public cloud adoption can provide upfront cost savings on Information Technology expenditure and lead to increased deployment of other technology infrastructure.

To drive cloud adoption in the country which would catalyse the digital transformation of public institutions, Microsoft has laid out recommendations, which include: •To sustain the traction of a cloud-first policy and other digital transformation initiatives, Government efforts to increase digital and cloud capabilities of the public service are important.

The Government should amplify communications of its commitment and support of ICT policies within an enabling environment •Build digital and AI capacity through the creation of AI knowledge centres across the country as well as the enhancement of scientific research on AI adoption •Government must optimise its data ecosystem through the development of multi-domain open data repositories that will enhance citizen interaction and amplify the country’s emergency response infrastructure.

•Government should ensure technology adoption barriers like costs are fair to all socio-economic groups and offer support and provision of digital applications in sectors such as education and healthcare. www.businessday.ng

L-R: Adegboyega Oyetola, governor, Osun State, his wife, Kafayat Oyetola; David Ogunsade, chairman (Cassava), All Farmer’s Association of Nigeria, and Adedayo Adewale, commissioner for agriculture and food security, Osun State, during the flag off of 2020 planting season, at the State Secretariat, Osogbo.

Lagos engages downstream sector stakeholders OLUSOLA BELLO

… seeks solution to incessant tanker accidents

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Odusote said the workshop was put together to address the recurrence of such hazardous incidents, and to seek effective and lasting solutions that align the interests of all stakeholders.

The forum deliberated on the hazardous incidents involving petroleum tankers in the State and explored solutions to the overloading of petroleum tankers, enforcement of the road worthiness of trucks conveying petroleum products and ways to halt the indiscriminate parking of petroleum tankers along roads in the State.

Disclosing that Lagos State has commenced the process of creating fully equipped truck transit parks and terminals to eliminate the indiscriminate parking of trucks in the State, Odusote said that a technology-based Integrated Terminal Management System, where tickets are issued prior to

agos State is set to stop the incessant truck accidents that have taken many lives of innocent citizens.

Governor Babajide SanwoOlu has said “enough is enough,” as the state government convened a stakeholder-engagement with key representatives of the Downstream Energy Sector to deepen safety awareness of operators, given the spate of fire incidents involving petroleum tankers in recent times.

Speaking at a virtual meeting, the commissioner for energy and mineral resources, Olalere Odusote, emphasised that “Mr Governor is keen to see the downstream sector continues to flourish in the State but operators must stay within the framework of safety provided by the regulators and the laws of the state”.

proceeding to the loading bays will be introduced, in addition to the enforcement of the annual certifications for tanker drivers and trucks that ply Lagos roads.

The Commissioner gave assurance that the Ministry of Energy & Mineral Resources will work closely with all stakeholders to implement an optimal framework to curb the menace of tankers, just as it partners the Department of Petroleum Resources (DPR) to monitor loading of petroleum products at the various loading bays in the State.

In his own contribution, the Commissioner for Transportation, Dr. Frederic Oladeinde stated that relevant infrastructure to facilitate vehicletestingwillbemadeavailable atmutuallyagreeddesignatedpoints to support the downstream sector.

He revealed that his Ministry has scheduled visits of all stake-

holders to relevant facilities in the coming weeks to ensure an alignment of requirements that will guarantee prevention of accidents and safety of tankers across all facilities and roads within Lagos.

Also speaking at the meeting, the National Chairman of the Petroleum Tanker Drivers (PTD) Association, Sailimon Oladiti noted that “Lagos State Government is always leading positive change, but to ensure the solutions are sustainable, similar actions must also be taken nationwide”.

Officials of the Lagos State Government who also attended the event are the Commissioner for Special Duties & InterGovernmental Relations, Engr.

Tayo Bamgbose-Martins and the Director-General, Lagos State Emergency Management Agency (LASEMA), Femi Oke-Osanyintolu, among others.

COVID-19: Delta takes steps Insecurity: Troops kill 200 armed bandits in Katsina, Zamfara to re-ignite economy Francis Sadhere, Warri

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elta State government last week said it had taken steps to grow the economy of the state amid the coronavirus (COVID-19) pandemic.

The state commissioner for information, Charles Aniagwu, disclosed this in Asaba, while briefing newsmen on some of the decisions taken by the government to rejig the state’s economy.

He said part of the decision was to ask contractors handling various road projects to return to site and also to ensure that projects do not suffer on account of the COVID-19 pandemic.

The commissioner noted that the state was desirous to open up the economy for growth activities despite fighting the pandemic, which had slowed down the economic activities considerably.

He further said the state had also taken decision to re-open worship centres but advised that appropriate social distancing and respiratory hygiene must be maintained at all times.

“The issues of COVID-19 and the challenges it possess to

our economy and other economies of the world dominated public discussions and to that extent, it has greatly impacted developments particularly on infrastructure and also our social behaviours.

“But as a government in Delta, we have examined the need for us to make progress even as we continue to take steps to fight the pandemic.

“We are very much determined to continue to work with the Presidential Task Force on COVID-19 and sustain our efforts at curbing the spread of the virus in our state,” he said.

He emphasised that the state was determined to ensure that different protocols of regular washing of hands, use of sanitisers, wearing of face masks, maintaining of social distancing and good respiratory hygiene were adhered to by residents of the state.

“As a government we have taken certain decisions with a view to ensuring that our development plans are not jeopardised entirely and to that extent, we have asked that contractors, particularly those involved in road construction should go back for site now that the rains are not disturbing yet.

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Godsgift Onyedinefu, Abuja

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igerian military says its Air Component of Operation Hadarin Daji has killed close to 200 armed bandits in multiple air strikes in Katsina and Zamfara states, a day after it killed 135 bandits.

The air strikes were conducted at Ibrahim Mai’Bai’s Camp in Jibia Local Government Area (LGA) of Katsina State, and Kurmin Kura in Zurmi LGA of Zamfara State on May 22 and 23.

John Enenche, coordinator, Defence Media Operations (DMO), made this known in a statement on Saturday.

The coordinator explained that the air strikes were executed after series of Intelligence, Surveillance and Reconnaissance (ISR) missions led to the confirmation that the 2 locations used as hideouts for some notorious armed bandit leaders whilst also serving as collection points for rustled cattle.

“Accordingly, Air Component, employing Nigerian Air @Businessdayng

Force ground attack aircraft and helicopter gunships, engaged the two locations in multiple passes, destroying the makeshift structures in the camps as well as killing the bandit leaders and their fighters.

“Human Intelligence (HUMINT) sources later confirmed that close to 200 armed bandits were killed in the air strikes at the target locations,” Enenche said.

The Chief of the Air Staff (CAS) commended the Air Component of Operation Hadarin Daji for their professionalism and directed them to remain resolute towards eradicating all armed bandits, thus achieving directives of the Chief of Defence Staff (CDS) of restoring normalcy in the North West and North Central zones of the country.

The CAS has also directed that additional assets be deployed to cover Kaduna, Niger, Nasarawa and Kogi states to frustrate any attempt of the bandits to relocate to adjoining states.

34

Monday 25 May 2020

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Friday 22 May, 2020

Top Gainers/Losers as at Friday 22 May 2020 LOSERS

GAINERS Company

Company

Opening

Closing

Change

N194.5

N213.9

19.4

MTNN

N111

N115

4

CAVERTON

BUACEMENT

N35.6

N39

3.4

GUARANTY

NB

N37.5

N39.5

2

CONOIL

N19.1

N21

1.9

MOBIL

ASI (Points)

Opening

Closing

Change

N32.85

N32.55

-0.3

N2.9

N2.61

-0.29

N24

N23.75

-0.25

VOLUME (Numbers)

N5.35

N5.2

-0.15

VALUE (N billion)

N3.15

N3.06

-0.09

STANBIC

FBNH MAYBAKER

25,204.75

DEALS (Numbers)

5,605.00 259,575,556.00

MARKET CAP (N Trn)

2.881

... non-core revenue grew by 162.5% year-on-year

C

entral Securities Clearing System (CSCS) Plc on Friday May 22 held its 26th Annual General Meeting (AGM), where shareholders approved 86kobo dividend per share payout to shareholders.

The AGM was held by proxy at the Nigerian Stock Exchange Event Centre, Lagos while observing relevant social distancing protocols and hygiene, aimed at curtailing the spread of Covid-19.

Following the approval of shareholders on the 86kobo dividend per share proposed by the Board, CSCS would be paying a total of N4.3billion to its shareholders, some 22.8percent year-on-year growth in return to shareholders, when compared to N3.5 billion dividend (that is 70kobo dividend per share) paid in the previous year.

CSCS has a diversified shareholder base, including the Nigerian Stock Exchange, some of the largest Nigerian banks, private equity firms, other institutional investors and thousands of retail investors.

Speaking on the performance of the company, the Chairman of the Board of Directors, Oscar N. Onyema noted the resilience of CSCS’ performance amidst market volatility and waning transaction volumes in 2019: “This set of results and impressive returns to shareholders are commendable, particularly when put in the perspective of the relatively weak liquidity in the market in 2019. This feat reflects the

tenacity of the management in diversifying the business and commitment to cost efficiency. Whilst transaction fees waned, it is satisfying that CSCS sustained both top and bottom-line growths, with revenue and profit before tax of N9.1billion and N6.3 billion respectively”, the Chairman noted.

Also commenting on the results, the Managing Director/Chief Executive Officer, Haruna Jalo-Waziri said; “my colleagues and I remain committed to our earnings growth and cost efficiency philosophies , as we driven by the ultimate objective of creating superior value for shareholders and enhancing market efficiencies. I am pleased with the 165percent growth in non-core earnings, reflecting our tenacity towards diversifying the business. More importantly, the overall performance reflects the pay-off of our painstaking investment in people and new technologies, as we strengthen our capacity to www.businessday.ng

serve our participants better and meet anticipatory need of the market.”

“Notwithstanding the inflationary environment, we closed 2019 financial year with 31.5percent cost-to-income ratio, demonstrating continuous improvement in cost efficiency. As we deliver on our strategic initiatives aimed at enhancing the post-trade segment of the Nigerian capital market, we are upbeat on the earnings outlook of the Company, with expectations of delivering superior returns to shareholder over the long term”, Jalo-Waziri added.

While speaking beyond the financials, the Chief Executive Officer highlighted that CSCS will continue to strengthen its partnership with all market stakeholders towards deepening the market for mutual growth.

“In 2019, we seamlessly delivered on our core responsibilities of safe depository, clearing and settlement of capital market

transactions, but these do not excite us, as we are not in business for these table stakes, which we consider to be routine. We have greater and audacious ambitions of partnering with our stakeholders in realizing the huge potentials of the Nigerian capital market through innovations. I am pleased that we are laying solid foundations for creating value and impactful innovations for the Nigerian market, even as we reckon the odds”, the CEO noted.

Also speaking on the Coronavirus pandemic, Jalo-Waziri noted that the company activated its Business Continuity Plan requiring staff to work from home well ahead of the Federal Government’s lockdown in Lagos, Ogun and Abuja.

Jalo—Waziri concluded, “I am happy to report that we continue to seamlessly serve the market remotely, extracting the benefits of our proactive investments in new technologies and people.

Whilst operating remotely over the past eight weeks, we continue to record 99.99% uptime across all our channels, with a resounding commitment to efficiently support all primary and secondary market transactions through this challenging time, and always.”

The shares of CSCS are traded over-the-counter through the NASD-OTC, the premier market for trading unquoted securities of public limited companies. As at Friday, 22 May 2020, the bid/ask quote on the shares of CSCS indicate a price of N12.69 per share, having rallied over 70percent in the past two years.

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FTSE 100 Index 5,993.28GBP -21.97-0.37%

Nikkei 225 20,388.16JPY -164.15-0.80%

S&P 500 Index 2,940.35USD -8.16-0.28%

Deutsche Boerse AG German Stock Index DAX 11,073.87EUR +7.94+0.07%

Generic 1st ‘DM’ Future 24,301.00USD -75.00-0.31%

Shanghai Stock Exchange Composite Index 2,813.77CNY -54.16-1.89%

13.135

CSCS shareholders approve N4.3bn dividend Stories by Iheanyi Nwachukwu

Global market indicators

Shareholders laud Sterling Bank’s 2019 financial performance

S

hareholders of Sterling Bank Plc have commended its financial performance and dividend payout for the financial year ended December 31, 2019.

They gave the commendation at the 58th Annual General Meeting (AGM) of the bank held virtually by proxy and streamed live from the MUSON Centre in Lagos.

Speaking at the meeting, Boniface Okezie, President, Progressive Shareholders Association noted that “Our b a n k ’s A n nu a l G e n e ra l Meeting is always a day of celebration; a day to give kudos to the board, management and entire workforce for their hard work.

But we are constrained by COVID-19 and cannot roll out the drums to celebrate the achievement of our bank today. All the same, we thank the board and management for the impressive outing in 2019 and the dividend recommendation.

“Looking at performance highlights, the bank has done a lot to grow our assets to N1.182 trillion. Loans and advances have also grown, operating income has grown, and our deposit base should hit N1 trillion by next year.

We commend the board for retaining earnings, protecting shareholders’ funds, and ensuring there is no insider abuse as it relates to loans. We are happy that our bank is at the forefront of the fight against COVID-19 and keeping the environment clean through its support for LAWMA. Also speaking, Sunny Nwosu, National Coordinator Emeritus of the Independent Shareholders Association of Nigeria (ISAN) appreciated the increase in the bank’s demand deposit which went up by 47 percent and described it as “quite good.”

As a shareholder who is also a customer of the bank, Nwosu was full of appreciation for the way employees of the bank attend to customers and expressed the hope that this excellent service delivery would continue to differentiate Sterling Bank post-Covid-19.

Nonah Awoh, a shareholder, @Businessdayng

commended the bank for its level of financial disclosure.

He said, “I don’t think it is out of place to have payments of external assessors stated. I want other companies to learn from Sterling Bank and do the same.”

Also, Gbenga Idowu, National Coordinator of Shareholders United Front (SUF ), commended the bank’s strategic focus on the HEART sectors, affirming the importance of these critical sectors to national growth and development in the wake of COVID-19 pandemic.

Mr. Idowu urged the bank to remain committed to these critical sectors, most especially agriculture, which he described as the future of the country. The HEART sectors are Health, Education, Agriculture, Renewable Energy and Transportation.

Mathew Akinlade, President, Noble Shareholders Association also commended the bank for bringing down its Non-Performing Loans (NPL) ratio from 8.7 percent in 2018 to 2.2 percent in 2019, a development which he described as below the benchmark of five percent prescribed by the Central Bank of Nigeria. He lauded the bank for compliance which reduced penalties for contraventions in 2019 by 73.3percent compared to 2018.

Addressing the shareholders at the meeting, Chairman of Sterling Bank Plc, Asue Ighodalo said the bank’s shareholders’ fund grew by 22.2 percent to N119.6 billion because of increase in retained earnings despite the challenging operating environment under which it operated during the financial year ended December 31, 2019.

The Chairman said the recorded growth in total equity was attributable to growth in comprehensive income arising from gains recorded from investments in debt securities. He added that the Board of Directors recognised the importance of dividends to its shareholders and constantly sought to balance this with capital requirements to support the bank’s next wave of growth.

Monday 25 May 2020

BUSINESS DAY

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35

36

Monday 25 May 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 23 May 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 238,153.01 6.70 -0.75 256 11,168,058 UNITED BANK FOR AFRICA PLC 232,556.07 6.80 1.49 321 49,170,989 ZENITH BANK PLC 532,170.57 16.95 -0.29 607 44,955,472 1,184 105,294,519 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 186,655.52 5.20 -2.80 407 30,071,663 407 30,071,663 1,591 135,366,182 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,340,769.00 115.00 3.60 145 2,712,984 145 2,712,984 145 2,712,984 BUILDING MATERIALS DANGOTE CEMENT PLC 2,556,076.11 150.00 - 208 1,474,881 LAFARGE AFRICA PLC. 181,212.70 11.25 2.27 240 11,628,901 448 13,103,782 448 13,103,782 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 280,334.99 476.40 - 9 4,767 9 4,767 9 4,767 2,193 151,187,715 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 5 3,165 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 2 66 9,338.94 3.50 - 3 10,425 UPDC REAL ESTATE INVESTMENT TRUST 10 13,656 10 13,656 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 3,312.39 103.20 - 0 0 VALUEALLIANCE VALUE FUND 0 0 0 0 10 13,656 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 2 31,500 OKOMU OIL PALM PLC. 61,431.80 64.40 - 22 36,107 PRESCO PLC 41,500.00 41.50 - 24 139,059 48 206,666 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 2,100.00 0.70 - 4 3,946 4 3,946 52 210,612 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 198.47 0.51 - 1 10,000 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 31,298.95 0.77 -1.30 66 9,194,309 24,058.83 8.35 9.87 155 4,439,565 U A C N PLC. 222 13,643,874 222 13,643,874 BUILDING CONSTRUCTION ARBICO PLC. 310.37 2.09 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 35,772.00 27.10 0.37 84 1,029,781 165.00 6.60 - 0 0 ROADS NIG PLC. 84 1,029,781 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,078.72 0.80 - 6 65,997 6 65,997 90 1,095,778 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 6,498.48 0.83 9.21 17 119,457 829.98 0.81 - 0 0 GOLDEN GUINEA BREW. PLC. GUINNESS NIG PLC 38,879.30 17.75 1.14 332 5,036,806 INTERNATIONAL BREWERIES PLC. 128,937.93 4.80 -1.03 103 2,329,577 NIGERIAN BREW. PLC. 315,877.63 39.50 5.33 75 664,302 527 8,150,142 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 153,600.00 12.80 - 46 216,999 FLOUR MILLS NIG. PLC. 86,107.97 21.00 5.00 38 571,031 HONEYWELL FLOUR MILL PLC 7,930.20 1.00 -1.96 4 220,000 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 29,408.77 11.10 - 30 154,482 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 118 1,162,512 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 14,743.89 7.85 - 98 1,321,188 NESTLE NIGERIA PLC. 788,692.97 995.00 - 32 73,256 130 1,394,444 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 7,505.06 6.00 - 44 621,064 44 621,064 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 20,447.96 5.15 9.57 55 1,009,206 UNILEVER NIGERIA PLC. 97,665.09 17.00 3.34 153 1,604,990 208 2,614,196 1,027 13,942,358 BANKING ECOBANK TRANSNATIONAL INCORPORATED 102,757.49 5.60 8.74 56 834,981 FIDELITY BANK PLC 54,762.37 1.89 1.07 76 7,594,013 GUARANTY TRUST BANK PLC. 698,990.51 23.75 -1.04 377 11,883,970 18,562.48 0.63 8.62 36 3,415,578 JAIZ BANK PLC STERLING BANK PLC. 38,579.16 1.34 -0.74 39 2,897,185 UNION BANK NIG.PLC. 195,109.04 6.70 - 24 546,092 UNITY BANK PLC 6,195.35 0.53 - 9 194,003 WEMA BANK PLC. 22,758.93 0.59 3.51 35 1,287,354 652 28,653,176 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 11,783.41 1.04 2.97 74 5,175,417 AXAMANSARD INSURANCE PLC 17,955.00 1.71 - 9 209,850 CONSOLIDATED HALLMARK INSURANCE PLC 2,926.80 0.36 - 4 124,620 CORNERSTONE INSURANCE PLC 8,101.23 0.55 -1.79 9 563,000 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,830.86 0.25 4.00 17 4,822,404 LAW UNION AND ROCK INS. PLC. 4,296.33 1.00 - 0 0 LINKAGE ASSURANCE PLC 3,280.00 0.41 - 3 301,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 1 3,500 NEM INSURANCE PLC 10,561.01 2.00 - 5 256,800 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 3,229.53 0.60 - 1 1,675 REGENCY ASSURANCE PLC 1,533.81 0.23 9.52 5 1,456,500 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 1 65,000 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 -9.09 12 743,488 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 7,917.25 0.33 -3.03 17 1,220,563 158 14,943,817 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 4,253.15 1.86 -2.11 52 3,135,712 52 3,135,712

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,671.82 1.36 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,500.00 4.25 1.19 64 791,495 34,408.91 5.85 - 6 58,500 CUSTODIAN INVESTMENT PLC DEAP CAPITAL MANAGEMENT & TRUST PLC 495.00 0.33 - 0 0 FCMB GROUP PLC. 35,842.91 1.81 0.56 66 2,473,672 ROYAL EXCHANGE PLC. 1,029.07 0.20 -9.09 3 206,484 STANBIC IBTC HOLDINGS PLC 341,936.69 32.55 -0.91 40 1,089,593 UNITED CAPITAL PLC 15,840.00 2.64 -2.22 146 9,706,719 325 14,326,463 1,187 61,059,168 HEALTHCARE PROVIDERS EKOCORP PLC. 2,991.61 6.00 - 1 500 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1,030.41 0.29 - 2 4,208 3 4,708 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 6,676.35 3.20 -1.87 45 1,712,469 GLAXO SMITHKLINE CONSUMER NIG. PLC. 8,550.52 7.15 -0.69 76 2,229,708 MAY & BAKER NIGERIA PLC. 5,279.22 3.06 -2.86 65 2,046,926 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,633.28 0.86 8.86 18 1,016,892 556.71 3.62 - 0 0 NIGERIA-GERMAN CHEMICALS PLC. PHARMA-DEKO PLC. 325.23 1.50 - 0 0 204 7,005,995 207 7,010,703 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 3 121,190 3 121,190 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 911.95 0.31 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 120 NCR (NIGERIA) PLC. 216.00 2.00 - 12 180 TRIPPLE GEE AND COMPANY PLC. 287.07 0.58 - 0 0 13 300 PROCESSING SYSTEMS CHAMS PLC 1,080.09 0.23 4.55 17 600,315 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 17 600,315 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 3 71 3 71 36 721,876 BUILDING MATERIALS BERGER PAINTS PLC 2,028.76 7.00 - 7 96,067 1,320,709.81 39.00 9.55 95 896,029 BUA CEMENT PLC CAP PLC 14,455.00 20.65 - 21 28,242 MEYER PLC. 265.62 0.50 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 123 1,020,338 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 CUTIX PLC. 2,870.95 1.63 - 19 287,540 19 287,540 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 3 1,255 GREIF NIGERIA PLC 388.02 9.10 - 0 0 3 1,255 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 145 1,309,133 CHEMICALS B.O.C. GASES PLC. 1,664.98 4.00 - 1 545 1 545 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 1 5,000 1 5,000 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 2 5,545 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 1 909 1 909 INTEGRATED OIL AND GAS SERVICES OANDO PLC 33,813.44 2.72 3.82 66 817,533 66 817,533 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 77,131.33 213.90 9.97 27 186,298 ARDOVA PLC 20,839.70 16.00 - 25 157,646 CONOIL PLC 14,572.99 21.00 9.95 43 328,694 ETERNA PLC. 3,482.07 2.67 - 17 178,352 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 20 9,007 TOTAL NIGERIA PLC. 34,902.84 102.80 - 49 95,207 181 955,204 248 1,773,646 ADVERTISING AFROMEDIA PLC 1,242.93 0.28 -9.68 1 100,000 1 100,000 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,520.14 3.80 1.33 44 1,802,958 TRANS-NATIONWIDE EXPRESS PLC. 412.59 0.88 - 0 0 44 1,802,958 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,181.71 2.70 - 0 0 IKEJA HOTEL PLC 2,390.62 1.15 9.52 7 194,088 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,401.62 4.00 - 0 0 7 194,088 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 181.44 0.30 - 0 0 LEARN AFRICA PLC 964.31 1.25 0.81 6 391,764 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 448.67 1.04 - 13 146,505 19 538,269 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 580.20 0.35 - 6 96,289 6 96,289 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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Monday 25 May 2020

FT

BUSINESS DAY

37

FINANCIAL TIMES

World Business Newspaper

Richest nations face $17tn government debt burden from coronavirus Fall in tax revenues set to push average debt-to-GDP ratio to 137%, warns OECD CHRIS GILES AND ROBIN HARDING

R

ich countries are set to take on at least $17tn of extra public debt as they battle the economic consequences of the pandemic, according to the OECD, as sharp drops in tax revenues are expected to dwarf the stimulus measures put in place to battle the disease.

Across the OECD club of rich countries, average government financial liabilities are expected to rise from 109 per cent of gross domestic product to more than 137 per cent this year, leaving many with public debt burdens similar to the current level in Italy.

Additional debt of that scale would amount to a minimum of $13,000 per person across the 1.3bn people that live in OECD member countries. Debt levels could rise even further if the economic recovery from the pandemic is slower than many economists hope.

Randall Kroszner, of the Chicago Booth School of Business and a former Federal Reserve governor, said the situation raised questions about the long-term sustainability of high levels of public and private debt.

“We have to face the hard reality we’re not going to have a V-shaped recovery,” he said.

The OECD said that public debt among its members rose by 28 percentage points of GDP in the financial crisis of 2008-09, totalling $17tn. “For 2020, the economic

A passer-by wearing a face mask walks past shuttered shops in Tokyo, Japan. Now many other countries face a debt dilemma which Japan has confronted for decades © REUTERS

impact of the Covid-19 pandemic is expected to be worse than the great financial crisis,” it said.

Although many governments have introduced additional fiscal measures this year ranging from 1 per cent of GDP in France and Spain to 6 per cent in the US, they are likely to be outpaced by the rise in public debt because tax revenues tend to fall even faster than economic activity in a deep recession, according to the OECD. A decade ago, fashionable economic thinking suggested that beyond 90 per cent of GDP, government debt levels became un-

sustainable. Although most economists do not now believe there is such a clear limit, many still believe that allowing public debt to build up ever higher would threaten to undermine private sector spending, creating a drag on growth.

Rising debt levels will become a problem in future, Angel Gurría, OECD secretary-general, has warned, although he said that countries should not worry about their fiscal positions now in the middle of the crisis.

“We are going to be heavy on the wing because we are trying to fly and we were already carrying a

lot of debt and now we are adding more,” he said.

As a result, many more countries are set to face a similar economic environment to that experienced by Japan since its financial bubble burst in the early 1990s.

Concern about government debt and deficits has been a defining feature of Japan’s political economy ever since, with debt eventually stabilising at about 240 per cent of GDP under current prime minister Shinzo Abe. Many politicians and business leaders are alarmed by the fresh spending packages to tackle the

pandemic in Japan.

“Our economic strategy is using a considerable amount of money, and honestly speaking it’s going to be a big fiscal problem in the future,” said Hiroaki Nakanishi, executive chairman of Hitachi and head of the Keidanren business lobby, in a recent interview with the Financial Times. “I have no good plan. Until the economy is properly back on its feet, I don’t think there is any sensible answer.”

Central banks’ purchases of government debt can help to lighten the load by ensuring the private sector does not have to soak up public assets to finance government budget deficits and helping to keep interest costs low.

Bond yields fall as prices rise.

Advanced economies already benefit from extremely low interest costs on their borrowing as central banks have stepped up programmes to purchase assets in huge quantities in an attempt to keep inflation from falling far below their targets, and bond yields have fallen further in recent weeks.

The UK raised debt at negative yields for the first time this week, joining other countries including Germany and France, whose bond yields are also in negative territory.

But, writing in the FT recently, Willem Buiter, a visiting professor at Columbia University, said there were limits to the deficits governments could run while being financed by central banks without resulting in inflation.

Hong Kong police fire tear gas on protest against security law Demonstrations end months of quiet brought by coronavirus restrictions NICOLLE LIU, JAMIL ANDERLINI AND TOM MITCHELL

L

arge-scale unrest has returned to the streets of Hong Kong for the first time since the spread of coronavirus as China seeks to impose a new national security law on the territory.

Police fired tear gas, deployed armoured vehicles and water cannon in an effort to disperse thousands of demonstrators who had blocked roads in one of the city’s busiest shopping districts.

The police said they had arrested about 120 people.

“I am here because of the national security law,” said one protester, a 40-year-old woman who asked not to be identified.

“Hong Kong will have no more freedoms” she added. “You will be punished for what you say. I fear that Hong Kong will just become another Chinese city.”

Members of Hong Kong’s prodemocracy camp also worry that the new national security law will erode Hong Kong’s prosperity and undermine its status as one of the world’s leading financial centres.

On Thursday China’s legislature, now meeting for its annual session, will pass a resolution authorising its standing committee to draft the legislation for Hong Kong. The law would prohibit treason, secession, sedition, subversion and the theft of state secrets, while also allowing China’s state security services to maintain a formal presence in the territory.

“It is imperative that the Hong Kong national security legal system and enforcement mechanism be established without the slightest delay,” China’s foreign minister, Wang Yi, said at a press briefing in Beijing on Sunday. “ Violent and terrorist activities are continuing to escalate [and] foreign forces have deeply and illegally interfered in Hong Kong affairs.” The move by Beijing has been heavily criticised by officials in Washington, further escalating tensions between the world’s two largest economies that had already been rising as a result of the coronavirus pandemic. In an interview with NBC on Sunday, Robert O’Brien, the White House national security adviser, questioned whether international www.businessday.ng

companies could continue operating in Hong Kong. “I just don’t see how they can stay. One reason that they came to Hong Kong is because there was the rule of law there. There was a free enterprise system. There was a capitalist system. There was democracy and local legislative elections,” Mr O’Brien said. “ I think you’re also going to have a terrible brain drain,” he added.

It sends a very strong signal that Beijing can do anything it wants in Hong Kong Hong Kong-based fund manager Jimmy Lai, publisher of the pro-democracy Apple Daily newspaper, warned that the property market could “collapse” if the new law, which will be drafted by China’s parliament and inserted into Hong Kong’s mini-constitution, scares off investors from mainland China.

“Mainlanders come to Hong Kong to buy real estate for our rule of law, freedom and safety,” Mr Lai, who is awaiting trial for participating in a peaceful but unauthorised protest last year, said on Twitter.

“Now mainlanders fear the na-

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tional security law.”

A local fund manager said that the surprise move by Beijing, announced just hours before the National People’s Congress formally convened on May 22, “will definitely threaten Hong Kong’s status as a financial centre”.

“What’s the difference between Hong Kong and the mainland if this national security law is being imposed directly by Beijing,” said the fund manager, who asked not to be identified. “It sends a very strong signal that Beijing can do anything it wants in Hong Kong.”

Hong Kong’s mini-constitution, or Basic Law, requires the city’s government to draft and pass national security legislation to replace similar laws that lapsed when the former UK colony reverted to Chinese sovereignty in 1997. But it has failed to do so, which Chinese officials say has left them with no choice but to impose them directly, especially after large-scale pro-democracy protests erupted last year.

“Hong Kong will remain a very free society where freedom of expression, protest and press will stay because these are Hong @Businessdayng

Kong’s core values and are protected by the Basic Law,” said Hong Kong’s chief executive, Carrie Lam. Despite such assurances, providers of virtual private network internet services used by people in mainland China to evade the government’s internet censorship regime, or Great Firewall, reported a surge in new purchases by Hong Kong residents.

On Friday, NordVPN said that within 24 hours of the NPC’s decision downloads of its consumer VPNs in Hong Kong were 120 times higher than normal, while interest in its business VPN services tripled. Another VPN provider, Surfshark, said 42,000 Hong Kong residents visited its website over the same timeframe, as it sold a week’s worth of VPN subscriptions in one hour.

“We saw a surge of user growth in Hong Kong directly after the [national security law announcement] was made public,” said Naomi Hodges, a cyber security adviser at Surfshark. “It’s clear that the people in Hong Kong feel their freedom is being directly threatened.”

38

Monday 25 May 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Hedge funds bet against Europe stocks as short selling bans expire Citadel, Millennium and Marshall Wace among firms increasing short positions LAURENCE FLETCHER AND PHILIP STAFFORD

U

S and UK hedge f u n d s hav e u n l e a s h e d a f re s h wave of bets against continental European companies, immediately after bans on short-selling expired in six countries this week.

Citadel, Millennium Management and Marshall Wace were among funds that shorted stocks as soon as France, Italy, Spain, Austria, Greece and Belgium lifted their restrictions just before midnight on Monday.

On Tuesday and Wednesday, the proportion of regulatory disclosures in those six countries that showed an increase in a short position hit 75 per cent, its highest level this year, according to analysis from data group Breakout Point.

“It is almost as if demand that was contained for many weeks got finally unleashed,” said Breakout Point founder Ivan Cosovic.

Among stocks that funds have shorted are Air FranceKLM, against which Sandbar Asset Management and Marshall Wace have raised bets, French cable maker Nexans and Spanish renewable energy firm Ence Energia Y Celulosa. US giant Mil-

Workers wearing PPE at the Air France-KLM baggage desk at Charles de Gaulle airport, Paris. Air France-KLM is among the stocks that have been shorted by hedge funds © Bloomberg

lennium has increased its short position in the latter.

Marshall Wace also increased its bet against Italy’s Banco BPM to 0.83 per cent of the outstanding shares, while Citadel raised its bets against Italian energy services company Saipem and French auto parts firm Valeo on both Tuesday and Wednesday.

Marshall Wace, Millennium and Citadel declined to comment, while Sandbar did not re-

spond to requests for comment.

News of the short positions is likely to reignite debate about whether banning such wagers is effective.

Regulators introduced the curbs in the middle of March as markets convulsed and investors struggled to assess the economic impacts of coronavirus. The onemonth bans were then rolled over in April.

The executive director of

FMA, the Austrian market regulator, said the restrictions had “made an important contribution to absorb the irrational overreactions of the markets”, while French regulator the AMF pointed to the “normalisation” of the implied volatility of the market index.

However, critics of the bans say short selling adds to the liquidity of the market and helps prick bubbles. They also point

out that bets against a stock are often balanced out by “long” positions in another stock, often in the same sector.

UK regulator the FCA said in March that there was “no evidence” that short selling had driven falls in share prices. Jack Inglis, head of global hedge fund industr y body AIMA , said last week that such bans “don’t achieve their intended aims and instead damage the market and disadvantage endinvestors”.

This week’s data from Breakout Point, which includes only positions taken on Tuesday and Wednesday, showed a higher proportion of short positions being increased than the roughly 60 per cent recorded for the week of March 9, when stocks were plunging at the height of fears over the pandemic.

Exchanges saw a sharp pickup in volumes traded this week.

Just over €44.7bn of shares changed hands on Tuesday, the first day after the restrictions expired, according to data from CBOE Europe. That was the highest daily total for May and also higher than the average daily volume of €39.9bn in April. Stock exchanges in Paris, Milan and Madrid, which were subject to the ban, also enjoyed their most active days of the month.

US oil production drop steeper than expected Data suggest largest reductions are in Texas’s Permian shale field and North Dakota’s Bakken as low crude DEREK BROWER

U

S oil production is falling more steeply than expected, forcing analysts to scale back output projections even before a deep plunge in planned upstream spending further cuts supply later this year.

Genscape, a unit of consultancy Wood Mackenzie, said production by May 20 had dropped almost 20 per cent, or 2.3m barrels a day, from a peak of 13.24m in March.

The volume lost already is almost as much as Russia and Saudi Arabia last month pledged to cut in a historic supply deal that begins in June. It will alarm US politicians, including President Donald Trump, who pressured Opec to shoulder production cuts in a bid to push up oil prices so that American producers could profitably keep pumping oil.

Genscape’s latest numbers, based on satellite monitoring and heat sensors at facilities across the US, suggested the big-

Genscape, a unit of consultancy Wood Mackenzie, says production has dropped almost 20% from a peak in March © REUTERS

gest reductions were in Texas’s Permian shale — down 1.15m barrels a day — and North Dakota’s Bakken — 480,000 b/d.

Paul Horsnell, head of commodities research at Standard Chartered, said producers had already cut about 1.5m b/d more than official estimates. He predicted output could drop below 10m b/d in the coming weeks, down more than 3m b/d since March. www.businessday.ng

US shale output responds faster to price changes than other sources of oil, but analysts have disagreed over how much supply it will shed during the worst oil-price crash in decades.

Goldman Sachs had estimated the losses would reach a maximum of 1.3m b/d in the second quarter before “mostly reversing” as the oil market began to recover in the second half of 2020.

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Privately held producers, which account for almost half of US output, are not obliged to disclose production cuts, unlike public companies. This might help explain the divergent numbers, said Randall Collum, managing director at Genscape.

Oil market traders fixate on US supply information, given the huge volumes at stake in the world’s largest oil-producing @Businessdayng

country.

But data often remain obscure or opaque.

“It’s rather like observing a black hole,” said Mr Horsnell of US production estimates. “We’re trying to work out what it is by observing the movements of the things around it.”

Shutting wells in reaction to a sudden market collapse like that of the past two months is a radical step for oil producers, but it is reversible. If prices hold above $30 a barrel, production would spurt higher briefly as operators restore some wells.

The impact of capital spending cuts, though slower to affect supply, will be harder to recover from.

Shale’s defining characteristic is the need for constant spending to keep drilling new wells to replace fast-declining older ones.

In recent weeks, operators have outlined capex cuts totalling 45 per cent of their previously announced plans, which will begin to affect supply in the coming months.

39

Monday 25 May 2020

BUSINESS DAY

FT

ANALYSIS

Australia: has the ‘lucky country’ run out of luck?

The pandemic is set to end the world’s longest run of growth just as Canberra falls out with China, its key trade partner JAMIE SMYTH

I

t is eerily quiet on the viewing platform at Scenic World, one of Australia’s most popular tourist attractions nestled high up in the Blue Mountains. Normally, tourists would be excitedly chatting away in multiple languages as they wait to board cable cars which glide over the Jamison Valley, taking in breathtaking views of sandstone rock formations and temperate rainforest. But since social distancing rules were introduced on March 23 the family business has closed and been forced to furlough 180 employees.

“When we had a global financial crisis in 2008, Sars or the September 11 2001 attacks they took out certain segments of our market but this pandemic has taken out everything,” says David Hammon, a director of Hammons Holdings, which has operated Scenic World in New South Wales for 75 years. “This is one of only a handful of occasions when our family has had to completely close the business.”

Scenic World is one of thousands of tourism businesses that have shut their doors in a sector that contributed A$61bn ($40bn) to the Australian economy last year. A third of people working in accommodation and food services have already lost their jobs due to the government’s policy of putting businesses into “hibernation” following the coronavirus outbreak. And even as Canberra begins to lift elements of its lockdown, following its success in reducing the rate of new infections to just a handful per day, some businesses will struggle to reopen as tourist travel bans threaten to kill demand for months and possibly years to come.

Australia — dubbed the “lucky country” — has produced a record of uninterrupted economic growth that is unprecedented among developed nations. But economists forecast the pandemic will do what no crisis has done in three decades: plunge Australia’s economy into recession.

The added complication for Australia is that the downturn is hitting as relations with China — a key commodity export market over the past decade — are deteriorating, limiting its ability to escape the downturn.

More than 1m people have lost their jobs over the past six weeks and unemployment is expected to double to 10 per cent by the end of June, according to government forecasts. International migration, which includes students and both skilled and temporary workers — a key driver of growth — has ground to a halt and housing investment is forecast to fall 9.6 per cent in 2020. Overall Australia’s A$2tn economy is forecast to shrink by 10 per cent

in the second quarter, ushering in a recession that is expected to be formally declared in economic figures published in September.

Australia entered the crisis in better shape than most developed nations with a net-debt-to-gross domestic product ratio below 20 per cent, which has enabled it to unleash A$200bn in direct financial support for businesses and furloughed workers. But a decade-long house price boom has left many people shackled to costly mortgages. The rate of household debt to income stands at more than 200 per cent, one of the highest levels in the developed world, and is a key vulnerability as the nation faces its worst economic crisis in almost a century.

Diplomatic relations with China, Australia’s largest trade partner with two-way trade worth $235bn in the year to the end of June 2019, have sunk to a modern-era low following Canberra’s call for an independent inquiry into the origins of the coronavirus which was first detected in the Chinese city of Wuhan. Beijing has responded by accusing the Conservative government of teaming up with Washington in “a political campaign against China”.

It has slapped an import ban on beef and applied punitive tariffs on barley.

“Australia is very dependent on China and benefited enormously following the 2008 global financial crisis from Beijing’s stimulus which drove up commodity prices,” says Saul Eslake, an economist and fellow at Tasmania university. “We won’t get that uplift this time and may even suffer an economic backlash.”

Cost of intervention The scale of the challenge facing Australia is immense. When coronavirus began to spread in late January the nation was battling hundreds of bushfires, which killed 34 people, destroyed thousands of homes and cost at least A$5bn. This disaster, which followed a debilitating three-year drought, left deep psychological scars in affected communities. It also undermined public trust in Scott Morrison, Australia’s prime www.businessday.ng

minister, although his handling of the pandemic has helped his approval ratings to recover.

Within weeks of putting out the wildfires, authorities faced a new threat when Covid-19 began spreading rapidly in early March.

Federal and state governments closed borders, shut large swaths of the economy and established efficient testing and tracing systems. The health response has so far proved effective, with just over 100 deaths reported and the total number of cases limited to about 7,000.

But the decisive health intervention has come at a heavy economic cost. A generation of workers with no experience of mass unemployment have either lost their jobs or been furloughed by their employers. Young people have been hit hardest, with almost one in five of those aged under 20 being made redundant. The economic carnage would be worse if it were not for a A$70bn government financed “Jobkeeper scheme”, which is paying the wages of more than 3.5m furloughed workers — a quarter of the country’s workforce — until the end of September.

“The whole experience has been very stressful,” says Racheal Wellman, who lost her café job in Melbourne when social distancing was introduced in March. It took almost three weeks to complete her application for benefits and so far her efforts to secure another job have failed, leaving her in dire financial straits.

“I have been forced to borrow money from my parents and a friend just to get enough money to eat,” says the 23-year-old. “I’ve never felt so much shame in my life.”

Australia’s economy last suffered a recession in 1991. Its resilience since has allowed it to sidestep several global downturns due to high levels of immigration, which adds on average about 1 percentage point to annual growth, sound economic policy and an export boom fuelled by China’s rise as an economic superpower.

Critics warn that the recordbreaking streak has led to a sense of complacency which has left

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Australia vulnerable to this type of external shock. “The more time since the last serious downturn, the less focus there is on what can go wrong,” says Richard Yetsenga, chief economist with ANZ Bank.

“It’s difficult to believe household debt would be 200 per cent of income if the last recession had come more recently. Also this pandemic has dialled up the risk profile of the economy because the most indebted sector — households — no longer have the buffer provided by future interest rate cuts.”

In an attempt to boost weak employment and inflation data, the Reserve Bank of Australia slashed interest rates to a record low of 0.75 per cent in October before the bushfire and coronavirus crises struck. In March the central bank delivered two further rate cuts and began buying government bonds as the pandemic caused financial turmoil and wild swings in the local currency. The RBA intervention has calmed markets but has not resolved the mortgage debt problems facing workers who are losing jobs.

Australian banks have deferred payments on 429,000 mortgages under a scheme that provides people with up to six months’ leeway on home loans. In total, banks have deferred for six months 703,000 home and business loans worth A$200bn due to the pandemic. But they have warned that there is a limit to their generosity and Morgan Stanley has forecast the banking sector’s loan losses could top A$35bn over the next three years.

A ‘bumpy ride’ In the Blue Mountains many businesses were already struggling due to the devastating bushfires which delivered a A$650m hit to the area’s tourism-based economy. The impact of Covid-19 will be much greater and potentially longer lasting making it difficult for some businesses to turn a profit even when they reopen.

About 60 per cent of Scenic World’s 1.1m annual visitors are international tourists and social distancing in its cable cars and railway attractions presents complex challenges for management. @Businessdayng

Mr Hammon says the business will initially depend on the domestic market and possibly New Zealand, which may form a “trans-Tasman travel bubble” with Australia. But he says the government should extend its jobkeeper scheme for companies that depend on international and interstate tourism beyond September.

“This is a balance sheet stress test that everyone is sitting now,” says Mr Hammon, who estimates the business can survive a shutdown for 14 months with the continued support of its banks.

But he says his biggest fear is a second wave of infections as winter begins, which would delay reopening and deal a sickening blow to staff morale.

At the Hydro Majestic, a heritage-listed hotel in the Blue Mountains, work is already starting on a phased reopening with a coffee takeaway service up and running and deep cleaning of the facility beginning. But there are concerns about customer demand and the damaging impact a renewed lockdown would have on the tourism sector.

“What worries us most is the mindset of the public: are they ready to begin travelling again and do they have the economic confidence to spend money,” says Huong Nguyen, a director of the Escarpment Group, which owns several luxury properties in the region.

The government has set an ambitious goal of 850,000 people returning to work by July, when it plans to ease most social distancing restrictions, except international travel and large gatherings of more than 100 people. Although the mining and building sectors have been allowed to continue during the lockdown — providing important tax income — Canberra estimates that weekly economic activity has fallen A$4bn, based on a combination of reduced workforce participation, productivity and consumption, since the restrictions were imposed.

Economists say any return to work and economic recovery are likely to be a “bumpy ride”, which depend on controlling the spread of the virus.

Company IN FOCUS

BUSINESS DAY Monday 25 May 2020 www.businessday.ng

Will unbundling return UACN’s glory days?

OLUFIKAYO OWOEYE

T

he name UAC of Nigeria (UACN) bestrode the market space like a colossus, as the oldest conglomerate in the country, it has its footprints in several business operations spread across Food and Beverage, Real Estate, Animal Feeds, Paints and Logistics sectors of the economy.

Many analysts said the problem with UACN started when it decide to get involved in too many things and could not ensure efficiency across business segments.

No doubt, UACN was once a steel-muscled giant of the Nigerian corporate landscape.

Blessed with the best hands in the country during its early days, such as seasoned administrator, lawyer and business man, Ernest Shonekan, former head, Interim National Government who was earlier sent to further his training in managerial skills at Harvard Business School in the United States of America. Shonekan was later appointed the chairman & Chief Executive Officer of the conglomerate from 1980 to 1993.

Soon after the exit of Shonekan, the fortune of the once shiny conglomerate has continued to deteriorate and has since shrunk to a shadow of its former self.

With a fast-paced consumergoods space, subsequent management have been slow to respond to changing consumer demographic.

The company’s old businesses are no longer as relevant to the new digital age as it was to an analogue world where size alone was good enough to control market power.

Worsened by large debt exposure in both short- and long-term liabilities which have depressed recent earning, also, lower consumer spending has hit the company hard as sales volume tank on the back of double-digit inflation (12.36percent as at April 2020).

How has UACN’s business segments fared The paint business represented

by CAP plc is the value driver and golden boy of the company. It does about N10bn revenues. The profit margin of the business is about 25-30percent. Of the N10bn revenue, 92percent comes from decorative paints, while 8percent is from industrial paint. The industrial paint business segment is what they acquired Portland Paints for in 2013.

They are able to do significantly well in the paints segment because they play in the premium segment.

Hence, there is a room for price increase.

The company’s Quick Service Restaurant that has Mr. Bigg’s is under restructuring and they are currently in partnership with Famous Brands (deemed the best franchise guys in Southern Africa), to develop the QSR segment.

Logistics business used to be a creation of UACN when it was a

trading business in the 70s. Sadly, they have conceded ownership to Imperial, and the argument was that Imperial had the global connections and technical know-how to drive a better value.

For the logistics business, the segments are ‘warehousing (70% of logistics revenue), distribution (7%), haulage (23%) The animal feeds contributes about N40-N46bn to total revenues (about 60%).

The Food segment does about N20-N25bn to total revenue. Of the N25bn, 70percent comes from snacks (gala, funtime coconut chips), 19percent comes from water (Swan water), 11percent comes from diaries ( supreme ice cream).

Worst hit is UAC Property Development Company PLC (UPDC), the first company in the real estate sector to be listed on the NSE. UPDC commenced operations as a department and subsequently a division within UAC. In 1997, UPDC was incorporated as a public limited liability company and certain assets held by UAC were transferred to UPDC through a scheme of arrangement. This culminated in the shares of UPDC listed on the exchange in 1998.

While UPDC engages in a broad range of activities including property development for sale and lease, facilities management, and hospitality for corporations and high net worth individuals, its recent expansion coincided with Nigeria’s economic recession in 2016. The real estate sector was particularly affected with significant declines in asset values and rental rates.

Although Nigeria emerged from recession in the second quarter of 2017, Figure from the National Bureau of Statistics show

that the real estate sector has continued swim in recession posting its fastest growth since 2016 at -2.6percent at the end of the year ended December 2019.

UPDC has continued to record annual losses since 2016, while the company also struggles with high level of debt, combined with plummeting revenues and profitability have resulted in cashflow challenges and inability to pay dividend to shareholders.

In addition to that, UPDC recorded an impairment loss of N8.91 billion, making UACN record a negative EBITDA margin, an assessment of a firm’s operating profitability as a percentage of its total revenue, of 3.9 percent in fullyear 2018 and an after-tax loss of N9.58 billion from a profit of N962 million a year earlier.

With UACN’S loss of N15 billion in 2018, worse than a loss of N2.9 billion recorded in the previous year, it became apparent that the UPDC business segment was no longer profitable for the parent company.

Market watchers have expressed their concerns over the effect of UACN’S conglomerate model and the need to get out of its non-profitable lines.

In March, the company appointed a seasoned professional with 17 years’ experience gained from diverse functional roles, covering finance, strategy, risk management, and corporate finance, Ibikunle Oriola, as its new group finance director, while Folasope Aiyesimoju resumed as managing director/ceo later in the month.

The management has also embarked on aggressive talent hunt in a bid to reposition the company.

Financial result lifted by revenue from Animal feeds

UACN’s 2019 revenue for the period ended 31st December 2019 increased 12.5 percent to N79.2billion from N70.47billion in 2018, cost of sales surged 9.3percent to N62.57billion from N57.23billion leaving gross profit at N16.6billion from N13.24billion in 2018.

Loss for the period stood at N9.25billion from N9.53billion loss recorded in 2018 due to discontinued operations. Selling and distribution expenses increased 39percent to N6.45billion from N4.64billion, administrative expenses increased 25.14percent to N6.57billion from N5.25billion in 2018.

Finance Income increased marginally to N2.78billion from N2.76billion, finance cost jumped to N991.17million from N610.6million in 2018.

Revenue from its reporting segments show that while revenue from its Animal feeds, made up of business units involved in the manufacturing and sale of livestock feeds and edible oil; Paints which comprises of business units involved in the manufacturing and sale of paints products and other decorative; packaged Food & Beverages made up of a business unit involved in the manufacturing and sale of bottled water, snacks and ice-cream, all had an increase in revenue and profit before tax while its Quick Service Restaurant (QSR) made up of a business unit managing Mr. Biggs outlet was again the usual laggards as it recorded a slight drop in profit and a loss for the period.

Revenue from Animal feeds and other edibles increased 16.2percent to N51.8billion from N44.57billion in 2018, paints segments printed 4percent revenue increase of N11.02billion from N10.59billion; revenue from packaged food and beverages stood increased 8.27percent at N17.54billion from N16.20billion; revenue from QSR stood at N1.50billion from N1.27billion it however recorded a loss of N75.20million from N59.23million recorded in 2018.

Further breakdown of expenses shows that marketing, advertising & communication expenses ballooned 28percent to N820.58million from N635.58million in 2018. Management attributed the growth in OPEX to investments made in marketing and distribution in the Animal Feeds, Packaged Food &

Beverages and Paints segments alongside investments made in strengthening management teams across its portfolio companies. Sundry office expenses also skyrocketed 34.78percent from N166.7million in 2018 to N224.69million in 2019. Directors’ emoluments also surged 27percent to N699million from N549.51million.

Announcement of restructuring The announcement of restructuring and recapitalization by the management in September 2019, did not come to many as surprise.

As part of its recapitalization exercise, it recently launched N15.96billion right issue program for its existing shareholders. Proceeds from this rights issue would be used to repay short term debt obligations.

A rights issue is a form of raising capital where cash-strapped companies grant existing shareholders right to buy new shares often at a discount – lower price – to the current market price. The right does not translate to obligation, implying shareholders are not bound to buy the new shares.

According to the management, post rights issue, interest bearing obligations would be its long-term bond with total outstanding balance of N4.3billion.

After the recapitalization of UPDC, the company will also unbundle its majority interest of 61.5 percent in the UPDC Real Estate Investment Trust (UPDC REIT) to UPDC shareholders through the allocation of REIT units directly to UPDC shareholders in proportion to their post rights issue holdings in UPDC. This will be in addition to their shares in UPDC. Unlike UPDC which was enmeshed in losses since 2016, UPDC REIT is profitable and has a track record of consistent dividend payments. Subsequently, UACN will unbundle its 64.16 percent shareholding interest in UPDC on successful capital raise and transfer on a pro-rata basis – a Latin term used for describing allocation based on each person’s share of the whole – to all its shareholders, who will hold such UPDC shares in addition to their existing shares in UACN. Going forward, the management of UACN will now focus more on the rest of the company’s subsidiaries which include UAC Foods Limited, Grand Cereals and Oil Mills, Livestock Feeds Plc, MDS Logistics, Chemical and Allied Products Plc, Portland Paints Plc, amongst others.

According to analysts, short term outlook is still very weak. And the Covid-19 pandemic has further worsened markets. In the mid term, the capacity expansions, particularly in the foods and QSR lines should support earnings. In the long term, it will be about how the firm is able to sweat assets out, and drive operating efficiency.

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Advert Hotline: 08033225506. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Patrick Atuanya. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.