BusinessDay 25 Nov 2019 by BusinessDay

businessday market monitor

NESTLE N1250.00

Foreign Exchange

Biggest Loser

Biggest Gainer 8.70pc

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

NB N50.50

26,991.42

-1.94pc

Foreign Reserve - $39.95bn Cross Rates GBP-$:1.28 YUANY-N 51.43 Commodities Gold Crude Oil Cocoa US$ 2,617.00 $1,470.00 $63.55

news you can trust I * * MONDAY 25 NOVEMBER 2019 I vol. 19, no 442

N300

₦2,853,537.54 -1.42pc

Buy

Sell

$-N 357.00 360.00 £-N 460.00 467.00 €-N 390.00 397.00

www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate Currency Futures

($/N)

fgn bonds

Treasury bills

362.64 306.95

3M 0.35 7.57

NGUS JAN 29 2020 362.99

0.00

10 Y -0.02

30 Y 0.07

12.05

12.72

13.36

5Y 1.34 8.83

NGUS APR 29 2020 363.96

NGUS NOV 25 2020 366.22

ECONOMICS

Nigeria’s Q3 GDP numbers expose growth problem for 2020 LOLADE AKINMURELE

L-R: Lanre Osibona, SSA to the president on ICT; Tijani Babatunde Folayiwo, chairman/CEO, Yinka Folayiwo Group; Niyi Adebayo, minister of industry, trade and investment; Jack Ma, founder/director, Alibaba Group; Vivian Nwakah, CEO/founder, Medsaf; Amal Hassan, founder/CEO, Outsource Global, and Raghav Prasad, division president, sub-Saharan Africa, Mastercard, at the Nigeria Digital Economy Summit in Abuja.

Oil companies now require Buhari’s consent to sack workers See story on P.2

ake out oil from Nigeria’s third quarter (Q3) GDP numbers and the economy is in pretty bad shape and growing at par with the United States economy which grew 2 percent in Q3. How 2 percent growth in the US, which is deemed inappropriate by Wall Street economists, is

Continues on page 54

Inside

Tek Experts secures prime VI office space to take on P. 2 Andela in Africa

to pay $250,000 fine, forfeit licence if rule is violated negates labour laws, lead to more contract staffing - analysts Continues on page 38

Monday 25 November 2019

BUSINESS DAY

news

Oil companies now require Buhari’s consent to sack workers ISAAC ANYAOGU

il and gas companies in Nigeria are now required to obtain the approval of the Minister of Petroleum Resources, through the Department of Petroleum Resources (DPR), before they can remove any staff from their employment. This is according to new guidelines approved by President Muhammadu Buhari, who doubles as Minister of Petroleum Resources. Failure to comply with this directive attracts a penalty of $250,000. In addition, any permit, licence or lease granted to that company may be withdrawn or cancelled by the DPR. In letters issued by the DPR to oil companies in Nigeria, the agency informed them that Regulation 60b of the Petroleum (Drilling and Production) Amendment Regulations 2019 was recently reviewed and signed into law by the president of the Federal Republic of Nigeria. The regulation states that “the holder of an oil mining lease, licence or permit issued under the Petroleum Act 1969 or under regulations made thereunder or any person registered to provide any services in relation thereto, shall not remove any worker from his employment except in accordance with guidelines that may be specified from time to time by the Minister”. Legal analysts who spoke to BusinessDay say the new regulations, while intended to protect Nigerian oil workers from indiscriminate retrenchment by oil companies, may be challenged in court as it impedes contract terms between employer and employee. “Government will argue

FRANK ELEANYA

L-R: James Quincey, chairman/ CEO, The Coca-Cola Company, and Aliko Dangote, president, Dangote Group, at an engagement in Lagos, during Quincey’s tour of Africa.

that the purpose is to enhance local content but Nigeria risks violating terms of multilateral contracts and treaties it signed with other countries,” said Ayodele Oni, an energy lawyer and partner at Lagos-based Bloomfield Law firm. The amendment, which was drafted in October 2019, says any employer in the oil and gas industry who wishes to release a worker “shall apply in writing to the Director for the Minister’s approval stating the manner of staff release, the reasons for the proposed release, the compensation due to the worker, and any proposed replacement for the worker”. The guideline says the application shall contain

a copy of any document relevant to the worker’s employment, including the employer’s conditions of service as defined under the guidelines. Where the employer fails to submit any required information to the DPR, such application for staff release shall not be eligible for the minister’s approval. It further says that an employer shall only be required to notify the minister through the DPR where the worker’s release occurs by way of voluntary retirement, resignation, death and abandonment of duty post. But “where the Worker’s release is by involuntary retirement, dismissal, termination, redundancy or on medical grounds, the DPR

shall conduct an inquiry into the circumstances of the proposed staff release and make a decision on whether to convey the Minister’s approval or otherwise”. “To this extent, the Employer shall not advertise, publish or make a press release in respect of the release of the Worker prior to the DPR’s decision as such an advertisement, publication or press release may prejudice the outcome of the inquiry. The DPR’s decision shall be implemented no later than ten days after it is received by the Employer,” it says. Chuks Nwani, an energy lawyer, said this provision negates labour laws. “You cannot force a willing

Continues on page 54

Five months after, Air Peace records 75% load factor on Dubai route IFEOMA OKEKE

ive months after Nigeria’s largest carrier, Air Peace, commenced operations to Sharjah in the United Arab Emirates, the carrier is seeing about 75 percent load factor on the route and has maintained its threeweekly flights it started with. Since it made its inaugural flight into Sharjar on July 5, 2019, AirPeace has continued to operate three times weekly on the route – Tuesdays, Fridays and Sundays – from only Murtala Muhammed International Airport (MMIA), Lagos. Emirates, on the other hand, operates two daily flights from both MMIA and Nnamdi Azikiwe International Airport, Abuja, amounting to 14 frequencies in a week. Stakeholders in the aviation sector had raised doubts as to whether Air Peace could

Tek Experts secures prime VI office space to take on Andela in Africa

…maintains flight frequency sustain the route and frequency as a result of aero politics on the route, but the airline has assured that it would. The airline has also kept its ticket fares relatively lower than its major competitors in the market. Stanley Olisa, corporate communications executive, Air Peace, told BusinessDay that the carrier is doing well on the Dubai route and would sustain its operations as it is the only Nigerian airline on that route. “This is impressive and we shall keep performing better, with strategic plans for expanding our international routes,” Olisa said. “There have been challenges but we have held our heads high. Nigerians should rest assured that on the Dubai route, we www.businessday.ng

shall continue to give them best-in-class flight experience.” But a top travel agent told BusinessDay that while the airline is doing well on the route with respect to load factor, it has continued to struggle with pricing which seems to be the strong competitive edge it has over other high-end carriers. “I think they are struggling. Emirates has continued to run promos just to see if they can frustrate Air Peace out of the route,” said the travel agent who craved anonymity. “Air Peace is currently cheaper but even if Emirates is more expensive, people often prefer to go for Emirates than Air Peace because they have built that trust over time,” he said.

BusinessDay’s checks show that a return ticket on Lagos-Dubai route using high-end airlines such as Emirates and Qatar Airways costs between N300,000 and N370,000, compared to Air Peace which is offering its passengers between N203,000 and N270,000 for a return ticket on the same route. BusinessDay learnt that when Air Peace commenced operation on the route, it had high patronage because it charged as low as N155,000N175,000 for a return ticket on Sharjah route, but the airline is currently charging over N200,000, making the average passenger book for ticket months ahead using Emirates or other high-end carriers in a bid to get cheaper rates.

•Continues online at www.businessday.ng

https://www.facebook.com/businessdayng

ek Experts, a global provider of business IT support service with operations in seven countries, has secured the Cornerstone Towers, an IFC Excellence in Design for Greater Efficiencies (EDGE)-certified building located at Oniru, Lagos. Cornerstone Towers is the first commercial building to achieve the EDGE certification in Nigeria and this was merited based on the resource-efficient design of the building which will result in reductions in the use of energy (31 percent), water (53 percent) and other materials embodied (23 percent), relative to local benchmarks. Sources close to the matter told BusinessDay that the location will be used by Tek Experts to build and train a team of world-class junior software engineers from across Africa suitable for the global market. It is also a space Africa-focused software developer’s trainer, Andela, is looking to dominate on the continent. Tek Experts was launched in April 2018 with 200 tech-

nical engineers. The firm has since grown its operations to almost 1,000 technical support engineers in Nigeria. Currently, Tek Experts has about 5,000 people worldwide but plans to increase the number to 15,000 people by 2025. Demand for African engineers is rising. This has led to increased investment in the space. Microsoft recently invested $100 million to open its first development centres on the continent and employ 100 full-time African developers. Investors poured almost $400 million into Fintech companies based in Nigeria over the past week, including a $200 million investment by Visa into Interswitch, Opay raising $120 million and Palmpay $40 million. The GitHub’s latest annual State of the Octoverse report showed that software developers from Africa created 40 percent more open source repositories on the software engineering marketplace over the past year – a higher growth percentage than any other continent globally. Ashim Egunjobi, acting

Continues on page 54

How insurers are taking advantage of yield environment to underpin profit BALA AUGIE

nsurance companies are using income from bonds and short-term government securities to underpin profit and compensate for deteriorating underwriting performance. Across the globe, insurance companies, who are very liquid, park their floats in investment securities, and they generate rental income from skyscrapers they own. For the first nine months through September 2019, net income of 15 largest listed insurers that have reported results spiked by 41.06 percent to N24.10 billion from N17.08 billion the previous year. The growth at the bottom line (profit) was largely driven by a combined investment income of N31.15 billion that was up 44.09 percent from the N21.61 billion recorded in 2017. If it were not for the support of investment securities, a lot companies would have recorded a loss or reduction in profitability. “If the growth in investment income is driven by policy holders’ fund, then the insurers are doing well, as they are sweating their asset to generate more in@Businessdayng

MARKETS come,” said Owolabi Salami, executive director, Allianz Nigeria. “However, if the growth is driven by capital, it then means that they are doing nothing. That is, all they are doing is using owners fund and investing it in either fixed income securities or short-term government securities.” Salami, however, said that the fall in treasury bills in recent times has put operators in the industry in dilemma as they do not know where to park their money. Interest rates on Nigerian government short-term debt securities are no longer attractive as myriads of CBN’s directives aimed at cutting the high cost of government borrowing despite weak economic fundamentals have plunged rates on the instruments. For instance, the 364day NTBill cleared at 18.98 percent at a CBN auction conducted in April 2017, the highest in about 17 years, while the stop rate on the bill settled at 10 percent at a November 2019 auction. The equities market has been in a lull since the start of 2018, as investors dumped

Continues on page 54

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

comment

comment is free

Send 800word comments to comment@businessday.ng

Why should we care: The AMCON debt Fifth in the series of address delivered at Dowen College, on 7th October 2019

Bashorun J.K Randle

he list becomes elongated with the addition of Asset Management Corporation of Nigeria (AMCON) which has been engaged in an epic battle – assets estimated at N1 trillion as security for debts estimated at N6 trillion (and still counting)!! O n September 30, 2019, the “Nigerian Tribune” newspaper delivered a pungent front-page editorial with the headline: “the AMCON debts.” “Recently, the federal government inaugurated an inter-agency committee to recover the N5 trillion debts owed the Asset Management Corporation of Nigeria (AMCON). Members of the committee include the heads and representatives of agencies such as AMCON, the Economic and Financial Crimes Commission (EFCC), Nigerian Financial Intelligence Unit (NFIU), Independent Corrupt Practices and other Related Offences Commission (ICPC), Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC) and the Federal Ministry of Justice. While inaugurating the commit-

tee in Abuja, Vice President Yemi Osinbajo said: “One of the terms of reference is for the committee to prepare a report, giving us a sense of what the timelines will be. About 67 percent of the outstanding N5 trillion debt is said to be owed by just 20 individuals/entities.” Earlier, in July this year, the federal government had indicated that it was setting up a task force to recover the outstanding debts. Osinbajo, during a meeting with the board of AMCON and some heads of federal government’s ministries and agencies at the State House in Abuja, indicated that a special task force comprising the heads of AMCON, EFCC, NFIU, ICPC and the Ministry of Justice would be working to develop and implement new strategies that would ensure that the determination of the federal government to recover the debts was speedily achieved. He noted that the new approach to be adopted was part of the federal government’s renewed effort to ensure effective recover y of outstanding debts, adding that all the relevant agencies needed to re-strategise in order to achieve the desired results. On the task of the committee, Osinbajo said: “The key is collaboration. We need a small team comprising these agencies to look at the next steps that we need to take, especially the criminal aspect, forfeiture and all of that.” On his own part, the AMCON’s chairman, Muiz Banire (SAN), reiterated the fact that 67 percent of those owing the N5 trillion were just 20 individuals and entities. He added that AMCON was trying its best to recover the

money through the civil judicial process, but had encountered several challenges. There is indeed no doubt that recovering the AMCON debts is a task that must be done. Ordinarily, the country is not expected to have this kind of problem given the institutional mechanisms put in place for the money deposit banks to recover debts. However, they failed in this responsibility and in order to prevent them from going under, the federal government had to buy over the debts through AMCON. AMCON took over toxic assets through issuance of bonds, while the banks were restrained from granting further credit to potential borrowers with un-serviced facility exceeding a certain amount or any amount of delinquent facility that was taken over by it. As the folding up of the banks would have meant job losses and associated socioeconomic problems, the government indeed did the right thing. However, if the statement by the AMCON chairman is anything to go by, recovering the debts has been a difficult exercise, no doubt because of the spill over effects of the wrong processes through which the loans that eventually went bad were taken in the first place. It is true that the factors that predispose to non-performing loans include lack of credible information on borrowers and trading in the dark. But then there is also the question of fluctuations in the economy, namely short-term inflation and high lending rates, factors which affect the earning power of banks and hence their return on capital. These factors

‘

Ordinarily, the country is not expected to have this kind of problem given the institutional mechanisms put in place for the money deposit banks to recover debts. However, they failed in this responsibility and in order to prevent them from going under, the federal government had to buy over the debts through AMCON

must be addressed decisively. In other words, the AMCON debts are far from a case of the government and the regulatory agencies doing everything right and the defaulters doing everything wrong. In addition, however, we feel that the larger social questions, including the conduct of politically exposed persons, need to be addressed. Truth be told, a number of the affected individuals and entities failed to repay the loans they took not because they did not have the capacity to do so, but because they wanted to exploit the loopholes in the system using their political connections. With honest, conscientious and decent individuals in political office and with very strict regulatory frameworks, the propensity for such dark practices will be greatly reduced. Indeed, since the government began tightening the noose on them as it were, some of the defaulters quickly paid up their outstanding debts. That explains a lot.” For me, what takes the cake is the capitulation of a finance minister (whose self-advertised forte was economic rigour and prudent management). When it came to the crunch – demand for salary/ allowances increase at a time when the treasury was empty, even the putative resistance crumbled under heavy shelling by politicians. Nigeria being a wonderful country where wonderful things happen settled for massive borrowing as a bribe to fend off the threat of civil unrest. Now the chicken has come home to roost. Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Social media regulation and free speech

he Universal Declaration of Human Rights (UDHR) which was proclaimed by the United Nations’ General Assembly in 1948, and adopted as the African Charter on Human and Peoples’ Rights 1981 is a milestone document in the history of human rights. Accordingly, Nigeria as a member nation domesticated it as chapter 4 of the 1999 Constitution, Federal Republic of Nigeria as amended. Amongst them is the right to freedom of expressions and the press enshrined in Section 39 of the Constitution. Section 39(1) provides, “Every person shall be entitled to freedom of expression, including freedom to hold opinions and to receive and impart ideas and information without interference”. Subsection 2 expansively provides, “Without prejudice to the generality of subsection (1) of this section, every person shall be entitled to own, establish and operate any medium for the dissemination of information, ideas and opinions”. On the other hand, the Criminal Code (Laws of the Federation - 1990) criminalized provoking breach of peace by offensive publication in Part 2. Section 88A (1)(b) provides, “Any person who publishes or circulates publications either in the form of newspapers, or leaflets, periodicals, pamphlets or posters, if such publications are likely to provoke or bring into disaffection any section of the country shall be guilty of an offence…” Similarly, in subsection (1)(c). Emphatically, the Criminal Code includes sedition as an offence under the law. Section 51(1) provides, “Any person who – (b) utters

any seditious words; (c) prints, publishes, sells, offers for sale, distribute or reproduce any seditious publication; shall be guilty of an offence …., and any seditious publication shall be forfeited to the State”. By the way, what is sedition? It simply means organized or deliberate incitement of rebellion or civil disorder against authority or the state, usually by speech or writing. In R v Sullivan (1961) US 254, the word “sedition” was described as, “a comprehensive term which embraces all practices, whether by word, deed or writing, which are calculated to disturb the tranquillity of the State”. And in IGP v Anagbogu (1954) 21 NLR 26, it was held that the act of writing an article with a seditious intention is tantamount to the offence of sedition. Now, the crux of the matter is whether the right to freedom of expression and press is an absolute or qualified right? Under permissible circumstances such as is necessarily expedient for public order and security, arguably, freedom of expression and the press cannot be absolute rights instead must be exercised with restraint subject to law. Article 29 (2) of the UDHR 1948 provides, “In the exercise of these rights and freedoms, everyone shall be subject only to such limitations as are determined by law solely for the purpose of securing due recognition and respect for the rights and freedoms of others and of meeting the just requirements of morality, public order and general welfare in a democratic society”. Synchronically, Section 45 (1) of the 1999 CFRN provides, “Nothing in sections 37, 38, 39, 40, and 41 of this Constitution shall invaliwww.businessday.ng

date any law that is reasonably justifiable in a democratic society (a) in the interest of defence, public safety, public order, public morality or public health; or (b) for the purpose of protecting the rights and freedom of other persons”. In the civil jurisprudence, the freedom of expressions and the press, interestingly, are constrained by libel and slander. Logically, freedom of speech is not an unconditional right. The right to life, for example can be encumbered by judicial death sentence; right to free movement can be hindered by lawful arrests and jail terms, and the right to own movable property cannot be exercised by theft or stealing. Ditto on others. In other words, human rights are fundamental but not absolute rights. Suffice to say that putting restraints on social media activities through regulations cannot fairly lead to brouhahas. Events in recent times have shown that such intervention is indispensable, and without regulations, social media will do more harm than good to the society in no distant time. Overtime, sensitive information including falsified national reports and private issues had been disseminated only for people to subsequently discover there were fake news. This is condemnable. If the established media industry; audio, visual and print-media outlets with trained journalists are regulated, why should there be uproars on regulations on social media with unskilled operators? Likewise, sim-cards must be compulsorily registered and intermittently updated to assist in the onerous battle. Any society where people can freely fabri-

https://www.facebook.com/businessdayng

CARL UMEGBORO

cate falsehoods including invasive information and disseminate to the public is in decays, and therefore must not be encouraged to stay. Nonetheless, citizens have unparalleled rights to fairly criticize their leaders and governments on policies at any time. Instructively, the quality of criticisms determines if oppositions are actually in existence. There is a wide difference between criticisms and incitingly feeding the people with falsehoods. No doubt, civilization opened up the world of innovations but mustn’t be subjected to extreme abuse, otherwise, it will tear the nation in pieces. In sum, a situation where disgruntled elements would fabricate fake stories or videos to mislead the public is dangerous. It’s a threat to national security, and sensibly, cannot be permissible under the guise of exercising right to free speech and press. Umegboro is a public affairs analyst and Associate, Chartered Institute of Arbitrators (United Kingdom). 08023184542 – SMS only. https:carlumegboro.com

@Businessdayng

Monday 25 November 2019

comment The muddling hands of the State Patrick Atuanya

his column has consistently argued that the Private Sector and free markets are the best paths to prosperity for millions of Nigerian citizens, whether Rich, Middle Class or Poor. The government at the centre obviously feels otherwise with its attempts to reshape large swathes of the Nigerian economy with what often feels like economic experiments, the implications of which are often barely thought through. Nigerians are naturally the Guinea pigs as these experiments unfold, suffering one hardship or another from border closures that have led to the inflation rate jumping to a 17-month high at 11.6 percent in October, from the 11.24 percent seen in September thanks to rising food prices, to an ever expanding list of banned items being rolled out on an almost daily basis. Amidst all these, there is scant evidence that the statist approach of the Government is yielding any positive results. As a matter of fact the opposite seems to be the case, with economic growth from 2016 stuck at the lowest levels (around 2% per year), since at least 1999. This clearly shows that policy choices do matter, and Nigeria

can if it chooses adopt the right policies to achieve 7 percent plus growth and lift millions out of poverty. It means accepting that abrupt border closures in a global world and in a country with thousands of thriving border communities that have traded for centuries across the artificial lines drawn up by colonialists won’t work. It didn’t work in the past, it won’t work today and clearly will be a losing proposition in the future as Africa becomes more integrated by trade in the future, following the signing of the Africa Continental Free Trade Agreement of AfCFTA. The Government crows that it is trying to protect domestic industry, however it is only shifting the inefficiencies of some domestic producers to consumers in the form of higher costs. It is worrisome that the Nigerian government thinks it can stimulate domestic production through an abrupt border closure, without first tackling issues local manufacturers face such as fostering an easier environment for doing business by providing (or allowing the private sector to provide) infrastructure such as road, rail and power or cutting red tape. The Federal Government can reform the land use act today and get an immediate boost from the transformation that it will give to the Nigerian economy. It can choose to attract private capital into priority infrastructure projects by identifying assets it wants to sell, or partner with the private sector to develop or concession them and removing bureaucracy

that stalls it from happening. Data released by the National Bureau of Statistics on Friday revealed the Nigerian economy expanded by 2.28 percent for the third quarter of 2019. In the first quarter of 2019, the Nigerian economy expanded by 2.01 percent, and in the second quarter it rose 2.1 percent. Effectively after 9 months average growth rate is 2.13 percent for an economy with a lot of slack, which is far from full employment. This is frankly unacceptable and one would have expected the government to change direction, instead it seems to be doubling down on policies that have increased poverty, inflation and unemployment. Today, Nigeria is in essence being shepherded along by the muddling hands of the State and achieving developed economy type growth rates (2% and below), with 3rd world infrastructure and quality of life. It is not a surprise that one of the only bright spot in the GDP report of Friday was the Information and Telecommunications Sector (ICT), which has largely been spared of Governments intervention, despite spirited attempts by the Minister of Communications to set data rates by fiat which is largely outside his purview and above the head of the regulator the NCC. Growth in the ICT sector in the third quarter was up a healthy 9.88 percent, due to expansion in the subscriber base by 9.5 percent to 177 million subscribers. Telecommunications & Information Services under Information and

BUSINESS DAY

comment is free

Send 800word comments to comment@businessday.ng

unnamed countries where they removed the tires and headlights to “reassemble” in Nigeria. Those who could not be bothered just smuggled their cars in through our now infamous land borders. To be fair some businesses set up “assembly” plants, but the costs of the policy were far greater. The transport and logistics sectors, where vehicles are technically a raw material, were all weighed down by the policy. In the end growth in the motor vehicles sector slowed to less than it was before the policy, recession notwithstanding. The hard facts were that the Nigerian economy did not have sufficient demand for new cars and there was no plan for exports. Almost everyone now accepts that the policy was a failure yet as I write this, seven years later, the policy is still there. What about the famous fuel subsidy? Once upon a time some may have argued that it had its uses. Since the fuel subsidy protest fiasco in 2012 most would agree that maintaining a fuel subsidy like we do is bad policy. There are much better ways to target subsidies to the poor and to more productive activities. That is even before we get to the drain on an almost bankrupt government. Yet, despite knowing that fuel www.businessday.ng

‘

Atuanya is the editor of BusinessDay. Email: patrick.atuanya@businessday.ng Twitter: @patrick_atuanya

ECONOMIST

subsidies need to removed and fuel prices need to increase, they haven’t. The talk before elections was that it couldn’t be done before elections. Yet eight months after elections there has been no change. The policy remains. So, why? Why do we see bad policy remain even when there is a consensus that such policies are bad? The short answer is politics. You see, when a government implements policy people back them. Even if the policy is bad, people invest some money and time in supporting the policy. Ban rice to stimulate local rice production? Bad policy but some will still build a rice mill or two. Add a 70 percent tariff on cars? Bad policy but someone will announce an “assembly” plant or two. And typically, the people who invest in trying to take advantage of bad policy are the wealthy and or politically connected. Sometimes they make money too. What happens, when the policy starts to fail and the government wants to backtrack? Well, those who supported the policy see that they stand to lose their investments. That rice mill that cannot compete on price with foreign competitors will probably shut

https://www.facebook.com/businessdayng

Communication grew by 12.16 percent in the third quarter of 2019 from 11.34 percent in the second quarter of 2019. On the other hand the trade sector with full on Government intervention slumped into recession in the third quarter according to the NBS, as the trade sector which comprises of whole and retail trade contracted quarter- on quarter by -1.45 percent, after declining in the second quarter by -0.25 percent. This came as no surprise to most analysts as they had predicted earlier in October 2019 that the sector would be in recession again due to the border closure and poor government policies. Trade contributed 14.69 percent to the Nigerian economy in the third quarter of 2019, compared to 6.73 percent for Telecommunications and Information Services. It would be much better for the Nigerian government to dissipate its energy on thinking about big ideas like working to attract the likes of Intel or Samsung to build the first Semi-Conductor plant making chips in Nigeria, or committing to being the African hub for manufacturing Electric Vehicles and all other renewable energy components such as solar panels, and wind to serve the broader African market. The embarrassing fixation on rice, and closing of orders will be looked upon 20 years from now as a sad chapter in Nigeria’s economic history.

Nigeria is in essence being shepherded along by the muddling hands of the State and achieving developed economy type growth rates (2% and below), with 3rd world infrastructure and quality of life

Why it is difficult to backtrack on bad policy?

olicies can be good or bad, or sometimes somewhere in between but we will focus on the extremes for today. We all love policy that makes a difference and delivers on the impact that we want. We tend not care about good policy as we envision it as mission accomplished. If we wanted to, we could keep the policy going forever or at least as long as we intended it to. But what about bad policy? – Policy that did not meet its objectives and maybe even resulted in some undesirable side-effects. Somehow it always seems like bad policy tends to stick around just as long as good policy. If we know that such a policy is bad then why do policy makers find it difficult to backtrack? Think about the automotive policy we implemented in 2012 for instance. The summary of the policy was to increase tariffs and duties on new vehicles to a combined 70 percent with reduced tariffs on semi and completely knocked down vehicles. The objective was to stimulate local assembly of new vehicles. Of course, as many wrote at the time, the policy was misguided and failed spectacularly. People allegedly routed their new cars to some

NONSO OBIKILI

down if the government backtracks. That assembly plant will probably turn back into a warehouse. Jobs associated with that misadventure will be lost. And if those people have agency and political power then you can see the stumbling block to reversal. This is not a Nigerian thing by the way. Many countries go down bad policy paths and get stuck there, unable to change course because of the costs of reversal. The morale of this story is therefore clear. Think about policy well before you do it. Think about the implications properly. Because once you do it, changing course or backtracking will be difficult. Think before you shoot. Dr. Obikili is chief economist at Business Day

@Businessdayng

BUSINESS DAY

Monday 25 November 2019

EDITORIAL Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITOR John Osadolor, Abuja NEWS EDITOR Chuks Oluigbo 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

Pros and cons of border closure

he closure of the Nigeria-Benin border continues to generate reactions from all. At newspaper stands, filling stations, churches and public places, Nigerians argue for or against the justification behind the closure of the country’s busiest border. Supporters of the closure believe the federal government has taken the right measures to stimulate growth of local manufacturers. There is, however, a consensus that the Nigerian manufacturing sector is grossly challenged. While the manufacturing sector has contributed between 8 to 9 percent to GDP it is still underperforms the doubledigit expectation of the 2014 National Industrial Revolution Plan. Many companies have shut down in the past six years. Protectionists i.e. those for protecting local manufacturers argue that shutting the borders restricts imports and gives local manufacturers the space to scale, sell and make a profit. It reduces the level of

unfair competition they face and increases their competitiveness. Many exemplify this position by citing the cement industry in Nigeria as a success story of protectionism. They argue further that the closure enables firms to achieve economies of scale and protect infant industries, especially in Nigeria, where unverified data show that one out of every three firms dies within three years after set-up. The closure of the border is not entirely a witless exercise. It curbs smuggling, especially of arms and ammunition, at a time when Nigeria is tackling with insecurity, supporters say. Smuggling has been a thorn in the flesh of the Nigerian economy. Several industries have been hurt by this negative practice – in 2015 textiles worth $2.2 billion smuggled from Benin Republic swamped the $40 million produced locally every year, according to the World Bank. Experts argue that no amount of money can revive the textile industry if the borders are open to all kinds of textiles and fabrics. Despite several interventions, including the N100 billion Cotton

Textile and Garment Fund of the central bank, the country cannot boast of any viable full-fledged textile company. These arguments are at cross purposes with the skyrocketing rise in the price of food. Based on the recent inflation data for October, the effects of shutting the border on the price of food is even more apparent. It’s “the worst October since at least 2009” says Nonso Obikili, chief economist of BusinessDay. Food prices in August and September are the worst in 10 years too. While it is tempting to blame it on the rain (the rainy season was late this year) or on monetary policy (it hasn’t changed since January), the only cause of the sharp rise in food prices is the closure of borders. Obikili forecasts that food prices for November and December maybe the worst as well in a while. The price of rice has come down and there are reports of increased production and milling, however pinned on the current harvest season. The sustainability, however, is questionable. Fundamental bottlenecks haven’t been addressed. Despite

various schemes to help rice farmers by the CBN, production cost is still high amid infrastructural deficiencies. Moreover, Nigeria mills 4.7 million metric tonnes of rice, but demand is 7 million, according to the Ministry of Agriculture. Keeping the border closed means about 98 million extremely poor Nigerians will pay higher prices for food. Also, production of farm products, including rice, is inelastic. This means that even if you close borders and increase lending to rice farms by N100 billion, supply won’t increase automatically. The rice must be planted, manured, harvested and milled. This is a process can take five to seven months, according to farmers. Also, border closure impacts trade negatively at a time when the African Continental Free Trade Area (AfCFTA), the agreement to promote trade across the continent, which President Buhari signed few months ago with pomp and ceremony. In all, the negative impacts of border closure outweigh its positives.

HEAD, HUMAN RESOURCES Adeola Obisesan

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

Enquiries NEWS ROOM 08169609331 08116759816 08033160837

} Lagos Abuja

ADVERTISING 01-2799110 08033225506 SUBSCRIPTIONS 01-2799101 07032496069 07054563299 DIGITAL SERVICES 08026011296 www.businessday.ng The Brook, 6 Point Road, GRA, Apapa, Lagos, Nigeria. 01-2799100 Legal Advisers The Law Union

Mission Statement To be a diversified provider of superior business, financial and management intelligence across platforms accessible to our customers anywhere in the world.

OUR Core Values

BusinessDay avidly thrives on the mainstay of our core values of being The Fourth Estate, Credible, Independent, Entrepreneurial and Purpose-Driven. • The Fourth Estate: We take pride in being guarantors of liberal economic thought • Credible: We believe in the principle of being objective, fair and fact-based • Independent: Our quest for liberal economic thought means that we are independent of private and public interests. • Entrepreneurial: We constantly search for new opportunities, maintaining the highest ethical standards in all we do • Purpose-Driven: We are committed to assembling a team of highly talented and motivated people that share our vision, while treating them with respect and fairness. www.businessday.ng

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Monday 25 November 2019

comment

comment is free

Send 800word comments to comment@businessday.ng

The value factor: Why buying ‘naija’ is not just about patriotism global Perspectives

OLU FASAN

igeria’s leaders desperately want Nigerians to buy locally made goods. They want them to boycott foreign products in preference for those made at home. Indeed, the “Buy Naija” sentiment is so strong that the government is forcing Nigerians to turn to local products willy-nilly by banning imports and closing the country’s borders. But the rallying call for the policy is not based on any rational argument, but on a sentimental appeal to patriotism. Nigerians, it is said, must make the patriotic effort to patronise Made-in-Nigeria products. Indeed, President Muhammadu Buhari once described “manufacturers who substitute imported goods with local materials” as “patriotic Nigerians who believe in Nigeria”. The inference is that any manufacturer who uses imported raw materials instead of local ones is not patriotic. It is an extreme form of economic nationalism. But should patriotism be enough to get Nigerians to patronise locally made products? the answer is no! To be sure, throughout history, nations, including today’s developed countries, have pushed a buy-local agenda, through exhortation, persuasion and policy incentives. But as David Clayton and David Higgins wrote in their paper titled “The ineffectiveness of ‘Buy British’ campaigns”, the buy-local initiatives failed in virtually every country that introduced them. Truth is, except in communist countries, where citizens are not allowed to act as rational human beings who seek to maximise their utility, no government can expect the citizens to buy local products simply by invoking the emotive word “patriotism”. In their paper, published

in the London School of Economics’ Business Review, Clayton and Higgins argue that “consumers generally prefer domestic to foreign products”, adding: “But when price, quality and productcountry images are taken into account, the country of origin effect is weakened considerably”. In other words, Nigerians do not have to be compelled to buy local products; they will generally do so voluntarily if their prices and quality are right! But, as we know, buy-local initiatives are designed to support uncompetitive industries, those that can’t compete on price and quality. The trouble, though, is that if people are forced to buy from uncompetitive industries, those industries would have little incentive to improve efficiency. For instance, Nigeria is not an efficient agricultural producer. So, banning food imports to force Nigerians to buy local food products would not increase the efficiency of food production in Nigeria. Of course, the ban may artificially increase production, but it won’t improve productivity, and thus not efficiency and competitiveness. According to a recent report in this newspaper, rice farmers and millers have ramped up production because the import ban and border closure have “compelled Nigerians to shift to local brands”. The report also said that because of the growing demand for local rice, one low-quality brand “with stones mixed with rice grains” is now sold in the market for between N14,000 and N15,000. So, the rice farmers are reaping huge profits but only by fobbing off consumers who are forced to pay high prices for poor qualities local products. But, as Adam Smith said, consumption is the sole purpose of production. Thus, any buy-local policy that protects uncompetitive producers at the expense of consumers is wrong. Which is why industries that care about their competitiveness and about consumer interests should not support protectionist buy-local initiatives. Indeed, that was why the Confederation of British Industries, CBI, Britain’s largest business group, rejected the government’s buylocal initiatives in the 1970s. According to the CBI, “British goods must sell on their merits and their price in relation to those of our competitors, not because they hap-

pen to be British”. Of course, international law, such as the treaty of the World Trade Organisation, also makes unfair competition for domestic industries illegal, which further constrains the ability of most countries to pursue buy-local initiatives. To be clear, I have nothing against buy-local campaigns, provided they are based on persuasion and exhortation, and not on a top-down pressure from government to force citizens to buy local products through crude protectionist measures, such as import bans and border closure, as Nigeria has done. There is nothing wrong with a government seeking to promote the purchase of local manufactures. And, indeed, as Clayton and Higgins said in their paper, evidence shows that “consumers generally prefer domestic to foreign products”. But in a free market economy, rather than a command economy, citizens should be able to exercise their economic freedom and choice, and not coerced into buying local products even when their prices are too high, and their quality is not up to scratch! But here lies the key problem with Nigeria’s buy-local policy: Made-in-Nigeria products are generally of poor quality and expensive. The government itself admitted in the Nigerian Industrial Revolution Plan, NIRP, published a few years ago, that the quality of Nigerian products is generally poor. The NIRP said that “Nigerian firms need to improve products and process in a number of areas”. If Nigerian agricultural products are rejected by the EU on quality grounds, why should the same products be good enough for Nigerians? Why should any government treat its citizens like prisoners who must eat what they are given? A rice farmer was quoted in the BusinessDay report as saying that “the border closure compelled Nigerians who generally have a high preference for foreign varieties, to shift to local brands”. Really? Free trade offers citizens the benefits of quality, value and choice. Only in communist countries, which Nigeria is becoming, would citizens be denied these benefits. Of course, government officials often argue that, apart from spurring local production, the import bans are also designed to conserve foreign reserves. As President Buhari once said, “We wasted our large foreign exchange reserves to

‘

Truth is, except in communist countries, where citizens are not allowed to act as rational human beings who seek to maximise their utility, no government can expect the citizens to buy local products simply by invoking the emotive word patriotism

import nearly everything we consume”. Of course, we know that, compared with other major African countries, Nigeria is not a heavily import-dependent country, and that food items account for less than 10% of its total imports. But even assuming that foreign exchange is an issue, is banning imports and forcing people to buy local goods, instead of foreign ones, the solution? The answer is no! Surely, the market-based solution is to allow the price mechanism to work as it should. In other words, let the exchange rate adjust to reflect underlying economic fundamentals and thus determine what is imported and consumed. A floating exchange rate would ration scarce foreign exchange in a way that determines what people import and in what quantities, and thus what people buy and consume at home. When imported goods are expensive, due to a high exchange rate, only those with the willingness and ability to pay would buy them. This would inevitably reduce imports and could encourage local production of such goods. Indeed, this was the main proposition in David Hume’s price-specie flow mechanism, namely that if a country’s exchange rate is high, i.e. devalued, it would discourage imports and encourage local production. But in a command economy, where the government directs resources to where it wishes, allocation of resources would not be market driven and efficient to encourage productive activities. Yet, only a market economy system that allows that decentralises decisionmaking, through individual freedom and choice, can enhance the competitiveness of Nigerian industries. Forcing Nigerians to buy local products regardless of price, quality and preferences just to protect uncompetitive industries would condemn those industries to perpetual inefficiency. But it would also reduce the general welfare of the people. The “Buy Naija” policy will only be a patriotic call if it is welfare-enhancing and promotes economic efficiency! 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

Moderating the costs of liquidity management in Nigeria

major challenge which financial managers the world over, face is how to maintain sufficient funds to meet their obligations at any point in time. The Central Bank of Nigeria (CBN) in its Monetary Policy Series No. 4 (2011) showed that liquidity is the overall monetary conditions, indicating the extent of mismatch between demand and supply of monetary resources. It also considered liquidity in the context of the financial markets, as the ease of undertaking transactions in financial assets at narrow bid-ask spreads. Thus, we view liquidity as the availability of funds to meet financial commitments or maturing obligations at a reasonable price at all times. It measures the extent to which financial assets can be sold at, or close to, full market value at short notice. From a liquidity management perspective, there are three broad types of liquidity namely: Central bank liquidity which refers to deposits of financial institutions at the central bank, often known as reserves or settlement balances; Market liquidity which relates to the ability to buy and sell assets in reasonably large quantities without significantly affecting the asset price; Funding liquidity which describes the ability of an individual or corporation to raise cash or its equivalent in reasonably large quantities either through asset sales or by borrowing. It is noted that the direct cost of cash management to the financial system rose from N192 billion in 2012 to about N300 billion in 2018 with costs of cash-in-transit, cash processing and vault management accounting for 24 percent, 67 percent and 9 percent of this figure respectively. This expense represents a huge burden

to the financial sector and the larger economy. To put this in perspective, the costs of liquidity management seem to outweigh the combined annual Internally Generated Revenue (IGR) of states in some geo-political regions of the country such as North East, North Central and South East. Added to the above, another instrument that helps the CBN to influence liquidity is the sale and purchase of foreign exchange. Though the main objective of the foreign exchange operations is to ensure stability of the Naira, CBN acts as the net supplier of foreign exchange in the market given that the government surrenders almost all of its foreign exchange earnings from oil sales to it. About $20-30 billion of foreign exchange is currently supplied by CBN on annual basis through its bi-weekly auctions window, to manage liquidity and defend the local currency at the same time. On the fiscal side, the Nigerian government through the debt management office spent approximately N1.5–2.0 trillion on debt services (interest payment alone) on annual basis over the last for years. It is noted that debt service to revenue ratio is currently high at about 40 percent and in the absence of deliberate and well implemented fiscal reforms, this ratio is projected to rise in the coming years. To moderate the downsides of liquidity, we believe that market segmentation in the money market on the basis of perceived credit risk need to be monitored more closely. We noted that as rates for standing facilities increased, banks with excess liquidity appear to prefer deploying their funds to the CBN Standing Deposit Facility www.businessday.ng

(SDF) instead of supplying them into the interbank market. Thus, some banks considered as high credit risk have little or no access to credit from banks with excess liquidity. This created a situation whereby some banks have liquidity shortages while others are awash with excess liquidity. This has compounded the problem of determining the optimal liquidity needs for the system. Another driver of the prevalence of excess liquidity in the financial system is the lodgement of large funds by bankers bidding for foreign exchange during the weekly or daily auctions. Furthermore, admitting AMCON bonds for discount window operations was another factor contributing to excess liquidity (IMF, 2013). Besides, banks are said to be reluctant in giving credit to private sector operators due to their poor credit ratings. Interestingly, recent steps taking by the CBN such as the 65 percent loan to deposit ratio and award of fines to contravening banks seem to be yielding some fresh outcomes. On foreign exchange burden and fiscal sustainability side, we largely align our thoughts with Teriba (2019), in his paper titled, “Unlocking liquidity in Nigeria”. In the article, he evidenced that Nigeria could adopt the following options to raise domestic and external liquidity thresholds: Securitise (not sell) equity holdings in NLNG and other oil and gas joint ventures to give Nigerians at home and in diaspora opportunities to invest in these assets and earn some of the dividends. Privatise to attract brownfield FDI by securitising all wholly owned corporate assets to

https://www.facebook.com/businessdayng

Vincent Nwani joint ventures stakes in which government owns up to 49 percent by privatising (yes, selling) the rest to allow foreign investors own minimum of 51 percent like the NLNG. Liberalise to attract Greenfield FDI by breaking government monopoly in all infrastructure sectors to encourage entry of foreign investors who could operate in parallel to the joint ventures. Commercialise idle or under-utilised government owned lands and built structures by leasing (not selling) them, relocating uneconomic activities from prime locations and repurposing such locations for leasing to open new streams of lease/rental income into government coffers. Doing these will change Nigeria’s economic, fiscal and financial narratives by unlocking vast amounts of liquidity for Nigeria to strengthen the Naira, rejuvenate fiscal, financial and foreign exchange streams, accelerate growth, eradicate poverty and unemployment, rebuild infrastructure, diversify growth, and lay the foundations for shared prosperity. Dr. Nwani is the managing consultant at RTC Advisory Ltd

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

cityfile Activists urge informal workers to strive for better livelihood

H L-R: Odeleye , brigade commander; Musa Etsu-Ndagi, brigadier general; S Abdalla, Club president; Soetan, major; I. Yokohama, and Aremo Ajayi, president of Rotaract Club of Ikeja GRA, Rotary Club of Ikeja GRA donating Drugs to the Medical Centre of 9 Brigade Nigerian Army Ikeja.

Traders count losses as Oyingbo market remains shut JOSHUA BASSEY

i ve days af te r the Lagos State authorities shut Oyingbo Market, in Lagos Mainland, traders at the market have continued to count their losses, saying the “sudden closure without a formal notice” has brought untold hardship on them. The market was shut on Thursday, November 21, by the enforcement unit of the Lagos Waste Management Authority (LAWMA) over indiscriminate refuse disposal and refusal to patronise Private Sector Participation (PSP) operators. Other infractions included roadside trading and poor hygienic practices resulting in environmental nuisance in the area. Most shops in the market remained under lock and key at the weekend while the traders, wearing long faces, milled around.

Women leader of the market, Sikirat Sule, said they have started cleaning up the market to facilitate early reopening by the government. “This is the first time this is happening and we were not warned,” she said, claiming, however, that wastes were not from the market. “Residents living around the market come at night to dump their wastes along the road. We pay N40, 000 every month for waste disposal and we have paid money to cleaners who would clear the place,” she said. She said that the traders would comply with the state’s environmental laws and appealed to the Lagos State government to reopen the market. One of the traders, Yetunde Fatai, said she could not access her stall due to the market closure. “I sell tomatoes and I

am really worried because it is a perishable produce. The shutdown came as a surprise because we were not notified, I don’t know what I am going to do because this is my only source of livelihood ,” she said Another trader, James Ogbonna, a stock fish seller, said that the area was usually littered by commuters. “I never expected this because I pay as much as N500 /N1000 weekly and yet my shop has been closed down. “This is so unfair, we always dispose our wastes properly, most times it is the commuters that litter the area,” Ogbonna said. Blessing Taiwo, a fruits seller, appealed to the state government to reopen the market. “I am appealing to the government to grant us access to our shops because it is from the business we feed and send our

children to school “Since I lost my husband, this is all I do to support my family, I don’t know where else to sell,” she said. A source at the state ministry of the environment and water resources, told BusinessDay at the weekend that the market would remain shut until the traders fully complied with the state’s environmental laws as well as undertake to keep it free of filth. Meanwhile, Tunji Bello, the commissioner for the environment and water resources, has warned that government would no longer condone the excesses of traders who have abandoned the market for the streets. In a statement, Bello said that despite several warnings, the traders have continued to litter the market, the streets and refused to patronise PSP operators.

uman right activists have advised workers in the informal sector to shun bribes from politicians but focus on pursuing their rights to quality life. The activists spoke at a one-day sensitisation workshop organised by the Federation of Informal Workers of Nigeria (FIWON) for its members in Lagos. The theme of the workshop was “social protection as a human rights antidote to poverty proliferation.” Informal workers operate largely in unregulated environment and with low capital. They are major victims of arbitrary tax regime and harassment from law enforcement agencies. Maurice Fangnon, a professor and secretary general, Centre for the Defence of Human Rights and Democracy in Africa (CDHRDA) who addressed the workers, encouraged them to insist on their rights. “Say no to corruption; no to riding the people with poverty; if you elect a political leaders and the person is

not doing well you have the right to say no,” Fangnon said. Chude Achike, a human rights activist also advised the workers to reject money from politicians to vote, rather they should vote for leaders who could make positive change in the economy. Achike said that there was the need to build FIWON to make contributions to national development policies if its members must benefit from democratic dividend. “If you build a strong FIWON it will enable you determine political leaders that will be able to tackle human rights challenges,’’ he said. The general secretary of FIWON, Gbenga Komolafe also said that the workers would be able to get a social protection right if they are united and speak in one voice. Komolafe said that workers in the informal sector was suffering from some anti-government policies in the state and would be able to achieve result in their problem if they unite.

3 family members found dead in Benue

he police in Benue State at the weekend confirmed the discovery of corpses of three family members in their room situated in North-Bank area of Makurdi, the state capital. Catherine Anene, spokesperson of Benue State police command, who confirmed the incident, said investigations were ongoing to unravel the cause of death. Anene also disclosed that a little girl was found in the room where the dead bodies were discovered unhurt but too small to give useful information. She said that the cause of

death was still unknown but that all dead bodies had no physical injuries to warrant an immediate determination of cause of death. She appealed to members of the public with useful information on the strange occurrence to report to the nearest security agencies for necessary action. “The incident was reported on Friday and when our got to the scene, they discovered three dead bodies: a man, his wife and son all dead,” she said. Some of the neighbours described the deceased family members as peaceful and wondered what could have happened.

C’ River clamps down on fake tax agents MIKE ABANG, Calabar

ross River State Internal Revenue Service says it is clamping down on extortionists and increasing number of tax agents and collectors in the state. Ayade Patrick, director of the state internal revenue service planning commission, has encouraged members of the public to resist forceful demand of multiple taxation from people who claim to be

officials of IRS and verify from the commission whether they are authorised or whether the tax is domesticated. Ayade spoke at an event organised by Oxfam Nigeria in collaboration with Kebetkache Women Development and Resource Centre, with the theme “financing for development,” under Oxfam strategic partnership programme and media engagement on participatory budgeting and fair taxation in Cross River State. www.businessday.ng

Patrick encouraged that members of the public to protest unusual or multiple taxation and also demand to know if such were genuine by calling their public service numbers for quick response, saying they now have a task force which has arrested a number of fake tax collectors. Reacting to report of relocation of some firms from Cross River state to neighbouring Akwa Ibom State due to reported multiple taxation; he said such firms would meet the same

tax laws wherever they fled. “Companies fleeing the state do so out of ignorance. Such firms should have bothered to ascertain certain taxes or rates whether they are truly as high or from us. We need people to always communicate with us through any of our public numbers for help and confirmation. We encourage people to resist forceful extortions or demands for taxes. We know the state governor has used his executive power

https://www.facebook.com/businessdayng

to exempt lowly paid or petty traders from paying taxes, which is however, against the tax laws. He said that people could sue the IRS if they were unduly taxed, saying, however, that there are other forms of taxes called levies or assessments, including those from the federal or local government areas. Patrick said as people that have paid taxes, women and community leaders should wake up and impress on government over @Businessdayng

poor public amenities as well as abandonment of projects “You must constantly cry out to your local representatives, law makers in the state House of Assembly even the NDDC. Government may not readily know about poor state of schools, hospitals and other projects, you and others should constantly draw public attention. Without this, desired attention might not be forthcoming”, he said.

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

In Association With

Hong Kong in revolt

A Balkan betrayal Helicopter money

China’s unruly periphery resents the Communist Party’s heavy hand The party cannot win lasting assent to its rule by force alone

FEW DAYS ago hundreds of young people, some teenagers, turned the redbrick campus of the Hong Kong Polytechnic University into a fortress. Clad in black, their faces masked in black too, most of them remained defiant as they came under siege. Police shot rubber bullets and jets of blue-dyed water at them. Defenders crouched over glass bottles, filling them with fuel and stuffing them with fuses to make bombs. Many cheered the news that an arrow shot by one of their archers had hit a policeman in the leg. After more than five months of anti-government unrest in Hong Kong, the stakes are turning deadly. This time, many exhausted protesters surrendered to the police—the youngest of them were given safe passage. Mercifully, massive bloodshed has so far been avoided. But Hong Kong is in peril (see article). As The Economist went to press, some protesters were refusing to leave the campus, and protests continued in other parts of the city. They attract nothing like the numbers who attended rallies at the outset—perhaps 2m on one occasion in June. But they often involve vandalism and Molotov cocktails. Despite the violence, public support for the protesters—even the bomb-throwing radicals—remains strong. Citizens may turn out in force for local elections on November 24th, which have taken on new significance as a test of the popular will and a chance to give pro-establishment candidates a drubbing. The government’s one concession—withdrawing a bill that would have allowed suspects to be sent to mainland China for trial—did little to restore calm. Protesters say they want nothing less than democracy. They cannot pick their chief executive, and elections for Hong Kong’s legislature are wildly tilted. So the protests may continue. The Communist Party in Beijing does not seem eager to get

its troops to crush the unrest. Far from it, insiders say. This is a problem that the party does not want to own; the economic and political costs of mass-firing into crowds in a global financial centre would be huge. But own the problem it does. The heavyhandedness of China’s leader, Xi Jinping, and public resentment of it, is a primary cause of the turmoil. He says he wants a “great rejuvenation” of his country. But his brutal, uncompromising approach to control is feeding anger not just in Hong Kong but all around China’s periphery. When Mao Zedong’s guerrillas seized power in China in 1949, they did not take over a clearly defined country, much less an entirely willing one. Hong Kong was ruled by the British, nearby Macau by the Portuguese. Taiwan was under the control of the Nationalist government Mao had just overthrown. The mountain terrain of Tibet was under a Buddhist theocracy that chafed at control from Beijing. Communist troops had yet to enter another immense region in the far west, Xinjiang, where Muslim ethnic groups did not want to be ruled from afar. Seventy years on, the party’s struggle to establish the China it wants is far from over. Taiwan is still independent in all but name. In January its ruling party, which favours a more formal separation, is expected to do well once again in presidential and parliamentary polls. “Today’s

Hong Kong, tomorrow’s Taiwan” is a popular slogan in Hong Kong that resonates with its intended audience, Taiwanese voters. Since Mr Xi took power in 2012 they have watched him chip away at Hong Kong’s freedoms and send warplanes on intimidating forays around Taiwan. Few of them want their rich, democratic island to be swallowed up by the dictatorship next door, even if many of them have thousands of years of shared culture with mainlanders. Tibet and Xinjiang are quiet, but only because people there have been terrorised into silence. After widespread outbreaks of unrest a decade ago, repression has grown overwhelming. In the past couple of years Xinjiang’s regional government has built a network of prison camps and incarcerated about 1m people, mostly ethnic Uighurs, often simply for being devout Muslims. Official Chinese documents recently leaked to the New York Times have confirmed the horrors unleashed there (see article). Officials say this “vocational training”, as they chillingly describe it, is necessary to eradicate Islamist extremism. In the long run it is more likely to fuel rage that will one day explode. The slogan in Hong Kong has another part: “Today’s Xinjiang, tomorrow’s Hong Kong”. Few expect such a grim outcome for the former British colony. But Hong Kongers are right to view the party with fear. Even if Mr Xi decides not to use troops in Hong

Kong, his view of challenges to the party’s authority is clear. He thinks they should be crushed. This week America’s Congress passed a bill, nearly unanimously, requiring the government to apply sanctions to officials guilty of abusing human rights in Hong Kong. Nonetheless, China is likely to lean harder on Hong Kong’s government, to explore whether it can pass a harsh new anti-sedition law, and to require students to submit to “patriotic education” (ie, party propaganda). The party wants to know the names of those who defy it, the better to make their lives miserable later. Mr Xi says he wants China to achieve its great rejuvenation by 2049, the 100th anniversary of Mao’s victory. By then, he says, the country will be “strong, democratic, culturally advanced, harmonious and beautiful”. More likely, if the party remains in power that long, Mao’s unfinished business will remain a terrible sore. Millions of people living in the outlying regions that Mao claimed for the party will be seething. Not all the Communist elite agree with Mr Xi’s clenched-fist approach, which is presumably why someone leaked the Xinjiang papers. Trouble in the periphery of an empire can swiftly spread to the centre. This is doubly likely when the peripheries are also where the empire rubs up against suspicious neighbours. India is wary of China’s militarisation of Tibet. China’s neighbours anxiously watch the country’s military build-up in the Taiwan Strait. A big fear is that an attack on the island could trigger war between China and America. The party cannot win lasting assent to its rule by force alone. In Hong Kong “one country, two systems” is officially due to expire in 2047. On current form its system is likely to be much like the rest of China’s long before then. That is why Hong Kong’s protesters are so desperate, and why the harmony Mr Xi talks so blithely of creating in China will elude him.

Unconditional handouts benefit recipients—and their neighbours too Every dollar given to a household boosts local GDP by $2.60

CONOMISTS HAVE long argued that people should give each other money rather than gifts, since it is hard to know what others truly want. Though they have failed to ruin Christmas, a study in Kenya shows how they are changing the war on poverty by encouraging cash handouts to the poor. Of 142 countries in a database compiled by the World Bank, 70% now use unconditional cash transfers as part of their welfare programmes. About 40% have conditional payments, in which recipients must fulfil certain obligations, such as getting their children vaccinated or enrolling them in school. Brazil’s Bolsa

Família, launched in 2003, is now the world’s biggest such scheme. It helped slash the country’s extreme-poverty rate from 9.7% to 4.3% in a decade. China’s unconditional cash-transfer programme, dibao, boosts the incomes of 69m people, according to the World Bank, though many poor households miss out because of corruption and red tape. Most research has found that both types of cash transfers reduce poverty, and that conditional ones can boost school attendance and improve public health. Still, some economists worry about unintended con-

Continues on page 23

Monday 25 November 2019

BUSINESS DAY

In Association With

Trouble brewing

Unconditional handouts benefit recipients... Continued from page 22

A row over who owns Kenya’s land is making life hard for foreign firms

Tea estates and big plantations face claims over colonial land-grabs

ANY KENYANS still resent the British colonists who once ruled them, an attitude their schools encourage. The colonists bilked the natives of choice land and ruthlessly suppressed the Mau Mau rebellion, a land-related insurgency waged against them in the 1950s. Land grievances remain a powerful undercurrent in Kenyan politics today. At independence in 1963 the departing British set aside money to buy back land in the “White Highlands”, which had been reserved for settlers, and redistribute it among land-hungry Africans. Though many benefited, much of the land went to those with political connections. The family of Kenya’s first president, Jomo Kenyatta, was among the biggest winners. The politicians, however, were happy to let foreign companies own big tea and coffee plantations, so long as they got seats on the board and a share of the profits. The colonists had turned tea and coffee into mainstays of the economy; it was too risky to hand over all the big estates to cronies. In the past land in Kenya was less explosive an issue than in some other African countries. In Zimbabwe and South Africa white farmers owned a far greater share of the best land, making them a visible sign of racial inequality and historical injustice, as well as an easy target for populist politicians. In Kenya this was not the case. However, thousands of Ke-

nyans have been killed in ethnic clashes linked to land, as tribal groups of smallholders face off against each other, often egged on by politicians. Big commercial farms have largely escaped trouble. But times are changing and multinational firms that own large tracts of land are feeling the heat. In 2010 Kenya adopted a devolved constitution that hands hefty powers to 47 newly created counties. It also created a National Land Commission with a mandate to address “historical land injustices and recommend appropriate redress”. In addition it lopped a nine off the 999-year leases granted to foreign owners of big farms in the former White Highlands. But it failed to specify when the 99 years started, allowing some governors to make the dubious claim that land confiscated by Britain before 1920 is now fair game. Kericho, the capital of Kenya’s tea country, is a verdant spot. Emerald-green estates stretch as far as the eye can see, hugging the western escarpment of the Rift Valley. Set 7,000 feet above sea level, the climate is perfect for growing tea, Kenya’s biggest export, which fetched $1.4bn last year. For Paul Chepkwony, the governor of Kericho County, these plantations are a reminder of the way the British stiffed his Kipsigis tribe of their land. Under British rule the colonists took half the land on which the Kipsigis grazed their cattle, turning it into tea estates. Mr Chepkwony demands that the

British government pay compensation to 115,000 Kipsigis and their descendants, who lost their land. (It will not.) Mr Chepkwony also says that a ruling in February by the new land commission allows him to increase land taxes on tea estates and demand a preposterous $20bn or so in profits that he claims were illegally acquired—equivalent to nearly a quarter of Kenya’s annual GDP. The burden, he feels, should fall primarily on three firms that grow tea on disputed land: Finlays, Unilever and George Williamson. If they cough up, they would be welcome to stay on as tenants of the Kipsigi people, he says. To Mr Chepkwony’s irritation, the multinationals are not playing ball. They have resisted his demands to surrender their title deeds for inspection. They have also challenged the land commission’s ruling. Kimutai Bosek, the governor’s legal adviser, warns that such recalcitrance could prompt frustrated Kipsigis to take the law into their own hands. The tea companies do not take such threats lightly. In June the governor of a neighbouring county led an invasion of an estate, uprooting tea bushes. Historic land disputes are vexing multinationals in other sectors, too. Kakuzi, a big British agricultural firm, and Del Monte Kenya, which grows 13,000 acres of pineapples, have faced demands to surrender large chunks of their plantations. County governors are also using their new powers to make

life difficult off the farm. Tata Chemicals, an Indian soda-ash miner, has been slapped with a $166m land-tax bill it says it cannot pay. Local politicians are also complicating things for Tullow, an Anglo-Irish company trying to extract oil in northern Kenya. All this leaves Uhuru Kenyatta, Kenya’s president and Jomo’s son, in a bind. Aside from fears that those with land grievances could one day turn to his family’s vast holdings, he presents himself as a champion of foreign investors. Yet, preoccupied by a power struggle in his government and wary of alienating voters ahead of an election in 2022, Mr Kenyatta has remained aloof. His silence may damage the economy. Multinationals are not just big taxpayers but also sizeable employers. Del Monte is Kenya’s largest exporter of canned pineapples. Nearly two-thirds of tea processed by big firms comes from smallholders. When landless peasants organised by the ruling party seized big commercial farms in Zimbabwe, the economy collapsed. Some say Kenya’s land commission should look at underutilised farms owned by politicians. Or that Mr Kenyatta could do more good by reducing corruption, boosting urban employment and helping smallholders make their farms more productive. Many Kenyans have legitimate land grievances, but making implausible demands of profitable firms does not seem the best way of addressing them.

sequences. Spending on one thing means not spending on another. Grants targeted at some people might disadvantage their business competitors. And large handouts could cause inflation in isolated areas where markets are thin. A new working paper, however, alleviates many of those concerns—and goes further.* Cash grants, it seems, benefit not just the recipients, but their neighbours, too. Between 2014 and 2017 GiveDirectly, a charity, handed $1,000 to more than 10,000 randomly chosen households in rural Kenya. This amounted to around 75% of a typical local family’s annual expenditure. The authors found that consumption rose by 13% for both the households that received the grants and neighbours who received nothing. Wages for the latter rose substantially, suggesting that grant recipients paid their employees more. Meanwhile local prices rose by less than 1%. The authors estimate that local GDP rose by $2.60 for every dollar granted. The comparable figure in America has been estimated as $1.50-2. The authors did not find a different kind of spillover effect, however: feelings of envy at witnessing the good fortune of others. But an earlier paper found that neighbours of recipients reported significant declines in life satisfaction, though their finances had not changed. General equilibrium effects of cash transfers: experimental evidence from Kenya”, by Dennis Egger, Johannes Haushofer, Edward Miguel, Paul Niehaus and Michael Walker. November 2019.

Monday 24 November 2019

BUSINESS DAY

In Association With

President Trump tries to cut health-care costs

Tackling America’s giant hospital bill Transparency is not enough

HE HEALTH-CARE system in America has long suffered from two grave problems. The first is that not enough people have reasonable access to medical treatment if they fall ill. President Barack Obama tackled this with his landmark reforms in 2010, which succeeded in extending coverage to some 20m Americans who previously lacked insurance. Mr Obama cut a deal with America’s powerful health-care lobbies and built a grand coalition for reform that included hospitals, insurers and Big Pharma. The law was passed after an epic battle in Congress. Unfortunately, since that success the second problem—exorbitant costs—has spiralled even further out of control. Health spending has risen from 17.3% of GDP before Obamacare was passed to 17.9% today. The average figure for rich countries is 9%. Now President Donald Trump is aiming to slay the monster. On November 15th he announced plans to require hospitals and insurance firms to disclose the true prices they charge. More transparency is a vital step in ending the health-care racket. But the plan will not work unless there is also a drive to boost competition in rigged local hospital markets. Mr Trump has correctly identified a big villain behind health-care

cost inflation, and it is not Big Pharma. Hospitals account for over 30% of health-care spending, whereas drugs account for less than 15%. Add in doctors and related professional services, and the share rises to over half. Hospital costs have been climbing by roughly 5% a year of late, compared with 1% for drugs. This reflects pricing strategies that make Mount Rushmore look transparent. Patients and their insurance firms pay for advice and procedures provided by practitioners and hospitals. Exactly how much is a lottery. A mammogram can cost $150 or $550 in Philadelphia, depending on which provider you choose, but your hospital and insurer will not tell

you that price in advance. A scan of your lower back can cost just $150 in Louisiana but more than $7,500 in California. Insurers receive big—but secret—discounts on list prices from hospitals and doctors. Patients who are fed up have little choice. The hospital industry has consolidated in a wave of more than 680 mergers since 2010 (see article). Many cities and regions are dominated by one or two big hospital operators. A recent study found that, by a standard measure, over threequarters of hospital markets rank as “highly concentrated”. Hospital chains have also been acquiring physicians’ practices in order to create large, vertically integrated health-

care outfits that dominate their local market. Privately run hospital firms thrive on opacity and consolidation, which boost earnings. The motives of non-profit hospital organisations that are ostensibly run in the public interest are harder to fathom, but presumably some want to expand their empires and to boost revenues so that they can pay their senior medical staff and managers more. In order to create more transparency, Mr Trump’s new rules mean that hospitals will say what they really charge insurance companies by 2021 and will create a price list for 300 or so common procedures, to allow patients to shop around. Insurance firms will have to make public the actual prices they are charged for services, after they have negotiated discounts. The rule changes do not need approval from Congress, although they will probably be challenged in the courts. It is a good start, but reform needs to go further. Health care is not a normal market. Consumers are often not price-sensitive—you do not haggle during a heart attack. People with decent insurance plans are not directly on the hook for the vast majority of their costs. And the industry’s cosy structure means that transparency could backfire. For example, rather than expensive hospitals cutting prices, cheap ones

in a market without competition might raise theirs instead, once they realise just how much insurers have been willing to pay. Mr Trump should build on an innovative experiment in California that uses reference pricing to encourage patients to choose less expensive providers or insist that hospitals benchmark their prices to those in the most efficient and competitive hospital markets. The government also needs to stiffen the daily penalties for hospitals that fail to comply with the new rules beyond the current, paltry $300 fine. At the same time a big drive is needed to inject more competition into local hospital markets. This means blocking more medical mergers and may ultimately require unwinding deals that have already happened, in order to ensure that patients have a genuine choice. This in turn may demand new laws that reboot America’s rickety antitrust regulators. As in other consolidating industries, from airlines to telecoms, they have let the public down with dire consequences. Mr Trump deserves credit for taking on a demon that none of his predecessors dared to touch. But transparency will not count for much unless it is accompanied by strong and creative efforts to weaken the grip of America’s medical oligopolies.■

Unsettled status

America says Israeli settlements in the West Bank are legal Most of Israel’s other allies disagree

HE ANNOUNCEMENT on November 18th by Mike Pompeo, the American secretary of state, was unscheduled but not unexpected. After a legal review by his department, Mr Pompeo said, Israeli settlements in the West Bank were found to be in line with international law. That declaration was just the latest in a series of gestures by the Trump administration benefiting Israel over the past two years. The move is wholly in tune with Donald Trump’s tendency to disregard diplomatic norms, as he did when he recognised Israel’s sovereignty over the occupied Golan Heights and Jerusalem as Israel’s capital. Despite some dissenting views, the international consensus for decades has been that the settlements Israel has built in the territories it captured in its war with Arab states in 1967 are indeed illegal. They are deemed to contravene the Fourth Geneva Convention, which says “the occupying power shall not deport or transfer parts of its own civilian population into the territory it occupies”. Israel, undeterred, has clung to its own interpretation of international law. Over the past 52 years it has built scores of settlements,

both in East Jerusalem, which it formally annexed in 1967, and in the wider areas of the West Bank (which Israel calls Judea and Samaria). Palestinians, and much of the rest of the world, regard these, as well as the Gaza Strip, as belonging to a future Palestinian state. Settlements have been built and expanded under every Israeli government of the past half-century, whichever party was in power. Labour regarded the occupied territories as bargaining chips in negotiations over a future peace deal with Jordan or the Palestinians. Likud, the party of the present prime minister, Binyamin Netanyahu, sees the West Bank as the ancient

Jewish homeland, never to be relinquished. According to Peace Now, an Israeli advocacy group, 428,000 Israeli settlers live in the West Bank (not including East Jerusalem), alongside 2.6m Palestinians. The timing of the announcement may well have been engineered by pro-settler elements in the Trump administration. Chief among them is David Friedman, Mr Trump’s former bankruptcy lawyer and his current ambassador to Israel, who has been pushing for such a shift. It was partly in response to a ruling on November 12th by the European Court of Justice, reinforcing European Union guidelines that food prod-

ucts exported from the West Bank settlements should not be labelled “Made in Israel”, but specify that they were processed in the occupied territories. Mr Pompeo’s announcement is unlikely to have any immediate impact on the ground. The settlements have been growing at a steady clip anyway; in the three years since Mr Trump took office, 30,000 new settlers have arrived. Although Mr Netanyahu’s government has in this period officially added only one new settlement, settlers have independently opened 26 new “outposts”, with the government usually turning a blind eye. For the Palestinians, whose leaders were swift to condemn the move, it will not change much either. They cut off all talks with the Trump administration two years ago, after it recognised Jerusalem—the putative capital of a future Palestinian state—as Israel’s capital. Mahmoud Abbas, the Palestinian president, had already rejected Mr Trump’s muchvaunted peace plan (the “deal of the century”), though it is unclear whether it will ever actually be presented. The administration has since ordered the closure of the Palestinian mission in Washington and cut nearly all the funding it

provided to the Palestinian Authority, which runs parts of the West Bank but has lost control of the Gaza Strip to its Islamist rival, Hamas. Following the announcement about settlements, the State Department warned Americans of potential unrest in Jerusalem, the West Bank and Gaza. But in the short term it is unlikely to lead to a big surge in violence.

Monday 25 November 2019

BUSINESS DAY

COMPANIES & MARKETS

Company news analysis insight

MARKETS

Stock rout hurts FSDH’s fund profitability DAVID IBIDAPO

m i d t h e c u rrent rout in the Nigeria equities market, Coral growth fund an open-ended fund actively managed by First Securities Discount House (FSDH) Asset Management limited, announced a distribution of the sum of N6.02k to unit holders. At an annual general meeting on Thursday, parties to the trust presented the Fund’s financial position as at the end of December 2018 to unit member present, to mark 10th ordinary general meeting of holders of Coral growth fund. Recall in the pre-election year of 2018, the Nigeria stock exchange market nosedived by some 18 percent in value as investors suffered negative returns in the value of their holdings. Coral growth fund which has about 65 percent its assets in equity securities quoted on the NSE and a minimum of 35 percent

in investment grade fixed income investments also had its hands burnt in the market rout. According to its 2018 annual report, the fund recorded a loss after tax of N41.428 million as against a net income of N646.214 million in the corresponding period. The not too good performance was prompted by a net loss on financial assets measured through profit and loss for the period which stood at - N177,564 million as against a profit of N463.237 million in 2017. This brought about a decline by 95 percent to its earnings before interest and tax which stood at N34.86 million. To put in a better perspective, net trading income on quoted equities during the period plunged by 78 percent to N77.869 million meanwhile trading loss on equity stood at -N246.435 million in 2018. “The Fund has made a loss due to volatilities prevalent in the equities market.

It is envisaged that notable increases will be recorded in all areas of business operations in the years ahead with a view to improving on its performance,” the Fund stated in its report. Although the fund in the year 2018 recorded a negative return of 1.08 percent, it outperformed the NSE All Share Index which was down 17.81 percent during the same period. The stock market experienced a short-lived bullish run in the first quarter of 2018 on the expectation of a bright macro-economic outlook coupled with brilliant corporate announcements. But reverse was the case in the rest of the year’s quarters on the back of political outlook uncertainties and rising global yields which saw foreign investors pullback exposure in the Nigeria equities market. The narrative has changed much so far in the 2019 NSE trend as the market is currently down YTD by -14.81 percent with a lot of stock trading below their

fair values. “In view of our opinion that some of the quoted stocks are trading below their fair value, we will take advantage of purchasing selected stocks with good fundamentals and take profits when prices appreciate,” the fund manager stated in the fund’s report.

“Also, in the fixed income space, we will continue to lock into high yielding securities,” the report added. Analysts have noted outlooks for the Nigeria equity market still bleak as reforms which should boost investor confidence in the economy aren’t yet forth coming. Despite US fed rate cut

which gives room for carry trade and renewed interest in emerging and frontier markets assets by foreign investors, the Nigerian equity market still doesn’t look like a viable destination for these fund inflows despite a lot of value stocks on the exchange waiting to be fairly priced.

L-R: Ikoro Efe, director, Gas, Delta State Ministry of Oil & Gas; Efifia Chu, deputy manager, Seplat Joint Venture, NPDC; and Emmanuel Otokhine, nase manager, Western Assets, Seplat Petroleum Development Company Plc, at the 7th Edition of the SEPLAT Safe Motherhood CSR Programme held in Sapele, Delta State last Weekned.

REAL ESTATE

Afriland looks to low-end market as profit margins contract FRANK ELEANYA

friland Properties said it plans to get its business back on track with investments

in lock-up shops targeted at low-end housing consumers. At a recent Investors’ Call at the headquarters of the NASD OTC Securi-

ties Exchange in Lagos, the company said revenue rose 1 percent in the 2019 financial year, while total assets declined by 2.4 percent as a result of the decline in cash. Uzo Oshogwe, managing director and CEO of Afriland Properties, during the Investors’ Call, said a difficult operating environment was largely responsible for the notso-impressive growth the company recorded. Apart from a marginal rise in ease of doing business Nigeria recorded in 2018, the operating environment had several challenges in 2018 including the high-interest rate on borrowing, deficient infrastructure, energy issues, insecurity in some parts of the country, which impacted negatively on housing demand in the country. Currently, Nigeria has 22 million units of housing deficit. The modern retail office market has an average vacancy rate of 61 percent as of the first half of 2019 compared to 57 percent at the end of 2018.

“We do have a substantial loan liability which we intend to clear up in 2020,” Oshogwe said. The company had lost ground from the Falomo Shopping Mall it signed with the Lagos State government which was later canceled by a new government. Oshogwe said Afriland plans to approach the government again to continue the project. In the

meantime, the company has completed the development and renovation work of the Raymond House building, which commenced in 2016, and now known as Afriland Towers, and will be opening it soon. Nevertheless, rising demand in lock-up shops, Oshogwe says, remains a focus for Afriland which already has a project that is near completion at Egbeda Lagos. As part of efforts to save

money, Oshogwe said, “We kept our staff cost at a minimum. We didn’t do a lot of construction work but we sweated our engineering team. We also did a lot of negotiations.” In 2020, Afriland plans to deepen its engagement with the government and seal joint venture partnerships. Meanwhile, NASD disclosed that it is talking with the Pension Commission of Nigeria to invest money in the alternative market.

L-R: Eddie Efekoha, MD: Obinna Ekezie, chairman, and Rukevwe Falana, company secretary, all of Consolidated Hallmark Insurance plc, at the extra-ordinary general meeting of the company in Lagos, yesterday. Picture by David Apara

Monday 25 November 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

TECHNOLOGY

Global digital transformation presents abounding opportunities for Nigerian businesses …KPMG to hold digital summit to improve customer experiences DAVID IBIDAPO

hile technology disruption is no longer a newsflash and businesses are left with no option than to join the train in delivering value to customers or ceasing to remain a going concern, Nigeria’s ability to position herself in this new wave could unlock economic stimulating investments and viable businesses across all sectors of its economy. While Nigeria continues to grow at a snail-paced rate indicating sluggish business activities in the economy, the survival of firms to a large extent may depend how well they embrace technology and values they create are through digital driven solutions. KPMG, one of the big four professional services firms in

Nigeria, at a press conference announced its upcoming 2019 Digital summit themed “Leveraging insights and experience to scale” which is set to hold Tuesday, 26th November 2019 at Eko Hotel and Suites Convention Centre, VI, Lagos state. According to Boye Ademola, partner and lead, digital transformation of KPMG, this is the third in the series of digital summits held overtime. “It is focused on how businesses and organisations can leverage on the power of technology to create and capture value that is transformational. The summit is said to focuses mainly on customers experience and artificial intelligence (AI). “We are looking to improve customers experience and use artificial intelligence to make better decisions that are timelier and fact based,” Ademola said. In the words of Ngozi Chi-

dozie, partner, strategy and customer experience, KPMG Nigeria, “the summit provides a medium to facilitate the convergence of great minds through an engaging discourse and empowerment.” This she believes will stretch the boundaries of innovation across various demographics in Nigeria. The summit which will bring to table topics around AI and robotics, customer experience transformation and design thinking aimed at improving business competitive advantage is regarded timely amid the transformational wave of technology across the world and increased competition among businesses. “We are going to have international and well renowned technology leaders feature in this event,” Segun Sowande, partner and lead, digital transformation, KPMG Africa stated.

TECHNOLOGY

EFInA to launch Financial Inclusion research report

L-R: Pamela Emodi, manager, education portfolio, MTN Foundation; Temitayo “Tee-Y Mix” Ibitoye, music producer; Banke Ademola, director, Muson School of Music; Tade Adekunle, CEO, Keskese Limited, and Abasi - Ekong Udobang, senior manager, program implementation, MTN Foundation, at the Business of the Arts Workshop 2019 by MTN Foundation, in Lagos

L-R: Abdul Hafeez, chief marketing officer; Akin Alayoku, acting MD; Abhulime Ahigwina, chief finance officer, and Lotanna Anajemba, head brands and communication, all of Smile Nigeria at the launch of “more value and more affordable data plans” campaign by Smile

…prepares for annual Financial Inclusion Conference (FIC) Gbemi Faminu

nhancing Financial Innovation & Access (EFInA) is set for its annual Financial Inclusion Conference holding in Lagos on the 9th of December 2019 at the Eko Hotel and Suites. Speaking on the annual conference, Segun Akerele the company’s board chairman said “the conference seeks to engage stakeholders in the financial sector in identifying opportunities to promote financial inclusion and the sector’s development by creating a platform to identify institutional bottlenecks, proffer solutions, and establish principles required to achieve the national financial inclusion objectives.” The 2019 edition of the annual conference is themed “Unlocking the Potential in Every

Nigerian: The Path to Inclusive Economic Growth”. it plans to examine the transformative power of financial inclusion and it’s potential to accelerate inclusive economic growth through poverty reduction, employment generation, and wealth creation. In partnership with the Central Bank of Nigeria (CBN), EFInA will also, be launching the findings of the recently concluded research on “Assessment of Women’s Financial Inclusion in Nigeria”. This research was funded by the Gates Foundation in order to understand the factors driving the gender gap in accessing financial services in Nigeria and to identify solutions to address the gap. The conference theme will be examined under three main topics which are: “The Role of Financial Inclusion in Achiev-

ing Sustainable Development Goals in Northern Nigeria – A Focus on Agriculture Finance”, “The Promise of Digital Financial Inclusion – Jobs, Jobs, and More Jobs!” and “Bridging the Gender Gap: Empowering Women, Building Economies”. At the FIC, The Fintech Development and Advocacy Initiative (FSI), with the support of EFInA, the Omidyar Network, and Nigeria Inter-Bank Settlement System (NIBBS), will launch the first industry innovation sandbox in Nigeria. FSI has been conceived to stimulate industry collaboration, drive financial innovation and accelerate Fintech development towards widespread availability and uptake of financial services for a vibrant and inclusive financial ecosystem. The goal is making Nigeria a global leader in financial services innovation for emerging markets by 2050.

L-R: Olalekan Yinusa, commissioner for economic planning and budget, Osun State; Bola Oyebamiji, his finance counterpart, and Charles Akinola, chief of staff to the governor, Osun State, at the Osun State Economic and Investment Summit in Osogbo.

AVIATION

Experts urge outsourcing firms to focus on aviation, education sectors to scale Josephine Okojie

xperts have urged outsourcing firms operating in the country to focus on the aviation, education, and telecommunication sectors to grow and scale their businesses in 2020. The experts who spoke at the Association of Outsourcing Professionals of Nigeria (AOPN) interface event held in Lagos recently say that operators of outsourcing firms need to pay more attention to sectors that records growth irrespective of the performance of the Nigerian economy. “Sectors such as aviation transportation, education telecommunication will continue to grow no matter the performance of the general economy,” said John Chukwu, chief ex-

ecutive officer, Cowry Asset Management Limited during a presentation on the economic outlook for 2020. “The service sector is the largest in the Nigerian economy and it accounts for more than 58percent of the GDP,” Chukwu said. He stated that the Nigerian economy is largely diversified, adding that the missing link is Nigeria’s inability to earn foreign exchange through the service sector. He added that if the country is able to advance its service sector to compete in a level that can be matched anywhere in the world, then Nigeria will be able to create new jobs. Speaking also during the AOPN event, Taiwo Ajibola, managing director, MDS Logistics called on outsourcing firms to seek collaborative planning

and shared value in delivering services, noting that relationships are always a win-win situation. Ajibola also urged them to look at the upper production chain and understand where the value is and how to harness it. He stated that the government has started well by setting up policies but that such policies need to be followed with actions and enforcement of standards as well as regulations. “By the time the government does this; they create a level playing field for foreign companies to see that Nigeria is a place where they can outsource their processes too,” Ajibola said. “The government also needs to provide the right environment for outsourcing businesses to thrive,” he added.

www.businessday.ng

L-R: Collins Balogun, managing partner, Colton Group; Dele Onabokun, former commissioner for housing, Lagos State; Anthony Ajulo, managing partner, Colton Group, and Galkwad Shivkumar, West and Central Africa, sales manager, Costar Building Product System, at the launching of Next Generation Solutions for Today’s construction in Lagos.

L-R: Sylvester Okoruwa, secretary, Photojournalist Association of Nigeria (PJAN) Lagos Chapter; Abiodun Ajala, chairman, PJAN 1st National Conference planning Committee; Ibijoke Sanwo - Olu, first lady of Lagos State; Ademola Akinlabi, chairman, PJAN, Lagos Chapter, and Tayo Odusanya, member of the planning committee, during the Association’s courtesy visit to the first lady’s office in Lagos

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BUSINESS DAY

Monday 25 November 2019

BUSINESS DAY

BusinessDay States Competitiveness and Good Governance Awards 2019 in Abuja

L-R: Yakubu Gowon, former Head of State; Femi Adesina, SA media to the President, and Frank Aigbogun, CEO/publisher, BusinessDAY Media Limited,

L-R: Yakubu Gowon, former Head of State; Kalechi Igwe, deputy governor, Ebonyi State, and Frank Aigbogun, CEO/publisher, BusinessDAY Media Limited

L-R: Femi Adesina, SA media to the President, with Frank Aigbogun, CEO/publisher, BusinessDAY Media Limited

L-R: Idris Garba Jahun, speaker Jigawa State House of Assembly, with Frank Aigbogun, CEO/publisher BusinessDAY Media Limited

L-R: Bisi Fayemi, wife of Ekiti State governor; Frank Aigbogun, CEO/publisher, BusinessDAY Media Limited, and Yakubu Gowon, former Head of State

L-R: Yahaya Abubakar, Estu Nupe/royal father of the day with Frank Aigbogun, CEO/publisher BusinessDAY Media Limited

L-R: Yahaya Abubakar, Estu Nupe/royal father of the day, with Kalechi Igwe, deputy governor, Ebonyi State

Frank Aigbogun, CEO/publisher, BusinessDAY Media Limited

Yakubu Gowon, former Head of State

L-R: Frank Aigbogun, CEO/publisher, BusinessDAY Media Limited, with Cecilia Ezeilo, deputy governor, Enugu State.

L-R: Haruna Manu, deputy governor, Taraba State; Bisi Fayemi, wife of Ekiti State governor; Muhammadu Ibn Abali Muhammad, emir of Fika/chairman, council of chiefs Yobe State, and Yahaya Abubakar, Estu Nupe/royal father of the day.

L-R: Cecilia Ezeilo, deputy governor Enugu State, receiving an award from Femi Adesina, SA media to the President.

Femi Adesina (r), SA media to the President, presenting an award to a recipient

L-R: Yakubu Garba, representing Nasarawa State governor, receiving an award from Frank Aigbogun, CEO/publisher, BusinessDAY Media Limited

L-R: Idris Garba Jahun, speaker Jigawa State House of Assembly, receiving an award from Frank Aigbogun, CEO/publisher BusinessDAY Media Limited

L-R: Yakubu Garba, representing Nasarawa State governor, receiving an award from Muhammadu Ibn Abali Muhammad, emir of Fika/chairman, council of chiefs, Yobe State

???????????ww

L-R: Haruna Manu, deputy governor, Taraba State, receiving an award from Yahaya Abubakar, Estu Nupe/royal father of the day.

L-R: Bisi Fayemi, wife of Ekiti State governor, receiving an award from Yahaya Abubakar, Estu Nupe/royal father of the day.

L-R: Uche Uwaleke, commissioner for finance, Imo State, representing the governor, receiving an award from Muhammadu Ibn Abali Muhammad, emir of Fika/chairman, council of chiefs, Yobe State.

L-R: Sam Egwu, chairman, senate committee on housing, with Yakubu Gowon, former head of state. Pictures by Tunde Adeniyi

Monday 25 November 2019

BUSINESS DAY

real sector watch AfCFTA, opportunity to develop value chains and produce quality goods — UNIDO ODINAKA ANUDU

he United Nations Industrial Development Organisation (UNIDO) says the African Continental Free Trade Area (AfCFTA) offers Nigeria and the rest of Africa a golden opportunity to make optimal use of the regional market, develop local and regional value chains to produce products that meet international standards. Speaking at the 2019 Africa Industrialisation Day on November 21, LI Yong, director general, UNIDO, said the AfCFTA provides a platform and a new impetus to continent’s industrialisation agenda through increased intra-African trade. UNIDO DG’s speech was read by Jean Bakole, UNIDO representative to ECOWAS and regional director, Nigeria Regional Office Hub. The 2019 Africa Industrialization Day (AID) was organised in Calabar by UNIDO, in partnership with the Federal Ministry of Industry and Investment, and supported by the Cross Rivers

L-R: Jean Bakole, UNIDO representative to ECOWAS and regional director, Nigeria Regional Office Hub; Ben Ayade, Cross River State governor, and Richard Adeniyi Adebayo, minister of Industry, Trade and Investment, during the 2019 Africa Industrialization Day commemoration in Calabar, last Thursday.

State Government, and the Embassy of the People’s Republic of China in Nigeria. The event reaffirms UNIDO’s support towards Nigeria industrialisation drive. Yong said by strengthening country-specific and regional comparative advantages in terms of resources,

information, knowledge, skills and institutions, Africa can emerge as a strong industrial power in the near future. “Regional cooperation within the framework of AfCFTA can exploit the huge reservoir of potential resources to create sustainable

dvanced Concre te Te ch n o l o gies (ACT), a premium construction chemicals manufacturer, has launched first and 4th generation crystalline waterproofing admixtures in Nigeria. The company said these products were targeted at reducing the incidence of building collapse across the country. The solutions were the Aquafin Betocrete Plus, a 4th Generation crystalline ad-

mixtures by the Schomburg Group, Germany, and a new range of products by Costar Building Product System, USA. There were unveiled at a ceremony in Lagos last Thursday. Speaking at the unveiling of the products, Anthony Ajulo, managing partner of the firm, said the concrete admixtures were targeted at eradicating the menace of weak buildings. “Unveiling the next generation construction solutions is informed by the need to drive quality construction in

L-R: Collins Balogun, managing partner, Colton Group; Dele Onabokun, former commissioner for housing, Lagos State; Anthony Ajulo, managing partner, Colton Group, and Galkwad Shivkumar, sales manager, West and Central Africa, Costar Building Product System, during the unveiling of next-generation construction solutions in Lagos last Thursday. www.businessday.ng

through the AfCFTA, African countries must begin the work of implementing strategies for exports, diversification, industrialisation, and value chain development,” he said. “The road ahead to realising these opportunities are tough and challenging but we have no choice but to tackle them head on. On our part, the Nigerian Government is committed to resolving the constraints which remain in our business environment,” Adebayo stated. Ben Ayade, Cross River State governor, said: “On behalf of the good people of Cross River State, said: “I want to thank the minister of Industry and Industry, Trade and Investment , and UNIDO for hosting the 2019 Africa Industrialisation Day in Cross River State, in recognition of our ongoing efforts towards industrialising our state. Also, I want to commend UNIDO for being a reliable partner in supporting Nigeria and also Cross River State towards achieving Inclusive and Sustainable Industrial Development.”

MAN enters closer partnership with Chinese investors

Our quality products are targeted at reducing building collapse — ACT Gbemi Faminu

industrial development as an effective means of fostering transformative change towards greater manufacturing value added and regional integration,” he said. He further said that continuous improvement of products and production systems, maintenance of

price competitiveness, identification of niche products, exploitation of comparative advantages and turning them into competitive advantage, as well as re-training of workers while applying ICT and digital technologies are possible policy options open for Nigeria and the rest of Africa. He said the Fourth Industrial Revolution would play a major role as digitisation offers opportunities to African countries in terms of facilitation of trade and private sector investment to foster growth and create jobs. The AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent. Otunba Niyi Adebayo, minister, Industry, Trade and Investments, called for increased intra-African trade to reduce the continent’s vulnerability to external macroeconomic shocks and protectionist trade policies. “If Africa is to fulfil its potential of diversifying and transforming its economies

Gbemi Faminu Nigeria’s building constructional scheme, ameliorating increasing cases of building collapse and providing industry operators with quality water proofing solutions,” he said. “These set of solutions unveiled consolidate our leverage on our innovation systems. This means that now, we are better equipped to serve our consumers with complete solutions from basement to roof for waterproofing, flooring and general construction chemical solutions,” Ajulo said. He said ACT Limited has been able to operate as a franchise brand of well-known players in the concrete industry, including Schomburg Chemical Group Germany, Aquafin Inc USA, and Costar Building Products, among other companies. Collins Balogun, another managing partner, Colton Group, said in growing the awareness for better buildings, the firm has engaged in various activities which include sensitisation programmes, from one company to another, enlightening them on the importance of admixtures and products that will enhance buildings durability.

he Manufacturers Association of Nigeria has entered into a much closer partnership with Chinese companies in order to create value for them and foster relationship between Nigeria and China. Through the partnership, a Nigeria-China information centre could be established to provide accurate and valid information for all parties. Speaking at the maiden edition of the MAN-Chinese Investors Forum on doing business in Nigeria, Segun Ajayi Kadiri, director general of MAN, said at the Africa Industrialisation Day held recently, MAN was selected to lead the formation of PanAfrican manufacturing and was mandated to establish a platform that would help manufacturers in all 55 African countries on the continent to engage with international companies. He said the forum created with Chinese firms was an avenue to create conducive environment that promotes mutual benefit for both countries as well as understanding the need to provide essential goods and services. He further said the country must improve technology, raw

https://www.facebook.com/businessdayng

materials and machinery in order to facilitate industrialisation and the economy. Welcoming the partnership with China, he said, “We have tailored our organisation to suit partnership. We have 2500 members operating in 10 sectors.” He said the partnership would enlarge investor margins and build business relationships between Nigeria and China. Chang’an Ronnie Liu, chairman, Chinese Investors Association, said Africa, especially Nigeria, is an interesting place to establish businesses but it requires relationship with other countries in order to grow investor relationship. The maiden edition of the forum was themed ‘NigeriaChina Business Relationship: The Role of MAN, Chinese investors, Regulatory Agencies and the Institute of NigeriaChina Development Studies, University of Lagos’. Liu said the relationship between China and Nigeria is fruitful, especially in business terms, but regrets a mismatch between what the country requires in the business environment and what investors are aware of about the country’s business environment. “We are here to do business, but we do not know what Nigeria wants us to do. This is @Businessdayng

why this association is established to guide Chinese investors. We want more investors to come here and establish more businesses,” he said. “There should be a partnership that will aim to move the Nigerian business environment forward and proffer policies that will be beneficial for business relations between the two countries,” he further said. He said it is necessary to think far and ahead in order to make plans that would make Nigeria’s business environment attractive and conducive for prospective business partners in the future. Femi Saibu, director of Institute of Nigeria-China Development Studies, said the partnership would boost business relationship between the two countries by bridging communication gaps. He said inclusion of the Nigeria-China development department will change the narrative by incorporating empirical analysis which will inform decisions. He added that a NigeriaChina information centre will be established in order to provide accurate and valid information, and also organise necessary programmes and conferences to grow the partnership.

Monday 25 November 2019

BUSINESS DAY

real sector watch Nanono’s statement on food production conflicts with facts ODINAKA ANUDU

he Nigerian government closed its border with Benin Republic on August 20, 2019, in order to curb rice and petrol smuggling. It was then a temporary measure codenamed ‘Ex-Swift Response’. But on October 14, the government extended this exercise to January 31, 2020. The following day, Sabo Nanono, the newly appointed Minister of Agriculture in Nigeria, when reminded by journalists that the exercise could worsen hunger and create food scarcity in the country, responded that Nigeria was producing enough food to feed itself and send to neighbouring countries. He also said there was no hunger in the country. “We are producing enough to feed ourselves. I think there is no hunger in Nigeria; there could be inconveniences. When people talk about hunger in this government, I just laugh,” Nanono said. Facts vs joke The Ministry of Agriculture, under Nanono’s predecessor Audu Ogbeh, released Nigeria’s food production capacity to BusinessDay in 2017 and 2018. T h e m i n i s t r y ’s d a t a showed that Nigeria was the largest producer of yam, with an output of 40 million metric tons per annum (MTPA). However, yam demand in the country was 60 million (MTPA), leaving a gap of 20 million MTPA. The country, according to the data, produced 42 million MTPA of cassava, but domestic demand for the crop was 53.8 million MTPA, leaving a gap of 11.8 million MTPA. Similarly, the data said national supply for Irish potato was 900,000 MTPA, but market demand in Nigeria was 8 million MTPA—opening a gap of 7.1 million MTPA. Also, local production of sweet potato was 1.2 million MTPA, while demand was 6 million MTPA, leaving a gap of 4.8 million MTPA. The ministry’s data said Nigeria produced 400,000 MTPA of wheat annually while demand was 4 million MTPA, opening a gap of 3.6million MTPA. According to the data, Nigeria’s ginger production as of 2018 was 310,000 MTPA, but demand was 650,000 MTPA,

A woman buying ‘egusi’ from a local food vendor at Makoko

leaving a gap of 340,000 MTPA. Maize production in the country was put at 10.5 million MTPA by the ministry while local demand was 15 million MTPA, leaving a gap of 4.5 million MTPA. Again, local soybean production was 750,000 MTPA, but domestic demand was 2 million MTPA, meaning there was a supply gap of 1.250 million MTPA. For Acha, local production was 78,000 MTPA while demand was 187,000 MTPA. This left the country with a gap of 109,000 MTPA. The data further showed that sesame production was 200,000 MTPA while local demand was 600,000 MTPA, leaving a gap of 400,000 MTPA. Local shea nut production was 200,000 MTPA, but Nigerians demanded 1.4 million MTPA. This left a gap of 1.2 million MTPA. According to the government ministry, castor production was 14,000 MTPA while demand was 510,000 MTPA, leaving a gap of 496,000 MTPA. The data further said that Nigeria produced 2.5 million MTPA of tomato whereas the country needed 6 million MTPA of it to survive. This means there was a gap of 3.5 million MTPA. Sorghum production in the country as of 2018 was 11 million MTPA while demand was 12.5 million MTPA, indicating a gap of 1.5 million MTPA. According to farmers, all the gaps are filled with imports. “We import food from West African neighbours, but we also export some despite not being sufficient in any crop,” Ifeanyi Okeleke, chief executive of Kenfrancis Farms, who plays in the poulwww.businessday.ng

try and cassava industries, said. The noise about rice Muhammadu Buhari, Nigeria’s president, said on January 11 this year that his government’s ‘rice revolution’ has made Nigeria attain food sufficiency, especially in rice. Nanono, too, did not dispute his boss’ assertion. But facts contradict this position. In 2018, the Ministry of Agriculture claimed that Nigeria’s rice production had risen to 5.3 million, MTPA from less than 4 million MTPA before 2015. It admitted that local demand for rice was 7.2 million MTPA, with a supply gap of 1.9 million MTPA. The Rice Processors Association of Nigeria (RIPAN) confirmed to BusinessDay on November 20, 2019, that rice production as of that day was 5.1 million MTPA, leaving a supply gap of 2.1 million MTPA. Earlier this year, the United States Department of Agriculture, in its report, put Nigeria’s milled rice capacity in 2018/2019 at 4.78 million MTPA, as against 4.66 million MTPA in 2017/2018. Have things changed in 2019? Key players in the agriculture value chain said Nigeria is yet to attain sufficiency on any crop this year. “Agriculture is not child’s play. You have to plant, manure, harvest and process. These take time. We are not sufficient in any crop yet,” Okeleke, earlier quoted, said. Aminu Goronyo, national president, Rice Farmers Association of Nigeria, said farmers have been ramping up rice production. But he was quick to admit that supply for rice in the country is

Photo by Olawale Amoo

less than the demand. Spotting low food production After the closure of the Nigeria-Benin Republic Border in August, the price of rice rose dramatically. I visited Daleko Market, the biggest rice market in Lagos, on Friday, September 27, 2019. I found that the price of rice had risen dramatically. “The price of a 50kg bag of local rice is N24,000 now,” Okedula told me. “The price was around N15, 000 to N17,000 in July, but it has risen astronomically since the closure of Nigeria-Benin Republic border,” she said. Bismarck Rewane, economist and chief executive of Lagos-based Financial Derivatives Company Limited, said high prices of food in Nigeria is an indication that the country is not producing enough food for a population growing at 2.6 percent every year. “What informs rising food prices in Nigeria?” he asked, rhetorically, while explaining Nigeria’s inflation rate in 2017. “It is either there is high demand for foods or that we are not producing enough. But the answer is that we are not producing enough,” Rewane said on Channels TV. Data released by the National Bureau of Statistics (NBS) on October 19, 2019, showed that Nigeria’s inflation in October rose from 11.24 percent in September to 11.61 percent in October, 2019. Food inflation rose to 14.09 percent in October, compared with 13.51 percent in September. Inflation is a measure of price increases in an economy over a period, economists say. The NBS

https://www.facebook.com/businessdayng

admitted that increases in prices of meat, fish, vegetables, bread and cereals, potatoes, yam and other tubers within the month drove up the food inflation rate. There was silence on the impact of an increase in rice price on food inflation. “Nigeria imports virtually every food item from crayfish to cereals through the Nigeria-Benin border, and given that they are not produced in sufficient quantity in the country now, any attempt to close the border will drive up the prices,” Ike Ibeabuchi, a manufacturer and chief executive of MD Services Limited, said. Poverty capital with no hungry mouths? I visited Makoko, a slum in Lagos, where make-shift houses are built on still water. People hop into canoes to criss-cross this community. On top of water, a woman, burdened by five children, beckoned on an egusi seller— to the excitement of one of her children. “Children here go to bed without food,” Fashina Daramola, who lives there, told me. “They are often excited whenever they see food,” Daramila said. “We are poor and hungry in this community—most times without food, electricity and without the good things in life,” he further said. The everyday experiences of Nigerians in Makoko and many communities contradict Nanono’s view that there is no hunger in the country, particularly in the administration in which he serves. In June 2018, independent institutions World Poverty Clock and Brookings Institute said that Nigeria had replaced India as world poverty capital. Eighty-seven million people in the country, out of 200 million, now live on less than the extreme poverty benchmark of $1.90, their report said. In July 2019, the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative released the Global Multidimensional Poverty Index (MPI). The report showed that 98 million Nigerians are in multidimensional poverty, which means they cannot afford good education, healthcare, cannot eat well and are exposed to the threat of violence and live in areas that are environmentally harm@Businessdayng

ful, an expert definition says. “Poor people are hungry and do not often have three meals in a day,” said Onyeka Ugbana, an economist. A joint United Nations (UN) and European Union (EU) report published on April 2, 2019, put Nigeria among the hungriest countries in the world, which also included Yemen, Ethiopia, Democratic Republic of Congo, Sudan and Syria. The report said 5.3 Nigerians faced food crisis or hunger in 2018. “At the peak of the lean season, three million were acutely food insecure in the three north-eastern states affected by the Boko Haram insurgency where protracted conflict and mass displacement disrupted agriculture, trade, markets and livelihoods, and pushed up food prices,” the report said. Other data that show hunger increasing Unemployment figure released by the nation’s statistics agency NBS showed 18.8 percent of the Nigerian population were jobless as of the third quarter of 2017. The number rose to 23.1 percent in the third quarter of 2018, according to the NBS. As of the first quarter of 2015, before Buhari emerged as president, unemployment rate stood at 7.5 percent, according to the country’s statistics agency. “A lot of people are becoming increasingly jobless. A jobless man has no food or any good thing in life. So, he is hungry,” said Ike Ibeabuchi, who was earlier quoted. Steve Hanke, a professor of Applied Economics at Johns Hopkins University in the United States, released his Misery Index in 2018. He used critical indices such as unemployment, inflation and bank lending rates, in ranking countries in his index. He ranked Nigeria as the 6th most miserable nation in the world with a Misery Index score of 43.0. Conclusion Minister Nano’s assertion on Nigeria’s food sufficiency is not supported by any fact. All data contradict his position. Also, his assumption that there is no hunger in Nigeria is wide of the mark, as all indices point to increase in unemployment and poverty in Nigeria, especially since the administration in which he serves came to power in 2015.

Monday 25 November 2019

BUSINESS DAY

BusinessDay CEO Breakfast Roundtable, themed â&#x20AC;&#x2DC;CEO

Paul Gbededo, MD/CEO, Flour Mills of Nigeria PLC making a remark at the event.

Rachael Maiye, country business leader, Autonomous Cloud.

L-R : Tina Nwachie, FSI territory manager, Oracle , and Tomiwa Idowu, country manager, Gilead .

L-R: Ken Dibor, sales director, West Africa, Oracle; Dare Oguulade , director, Oracle , and Olufemi Oyenuga, chief customer enterprise architect, Oracle ECEMEA.

Oghenevwoke Ighure , (2nd left) ED, strategy, innovation and partnerships, Businessday; Nicole Umoren ( 5th right), manager , business development BusinessDay and other members BusinessDay staff. L-R: Effiong Okon, ED, operations, Seplat and Yemi Odusanya, acting MD, Keystone Bank

L-R : Bipul Deka, of Access Bank and Ayo Stuffman of VAS 2Nets Technology.

L-R Andrew Sordam, vice president, Emea, Oracle, and Olu Adeosun.

Monday 25 November 2019

BUSINESS DAY

Suite: Digital Leadership Starts Hereâ&#x20AC;&#x2122;, in Lagos

Mauricio Alarcon, MD CEO, Nestle Nigeria, (2nd right) ,and other CEOâ&#x20AC;&#x2122;s at the event.

L-R : Yinka Sanni, chief executive, Stanbic IBTC Holding and Tony Attah, managing director, NLNG.

L-R : Nath Ude, executive director, Union Bank, and Ude Enebeli of MTN Nigeria

L-R: Bismarck Rewane, MD/CEO, Financial Derivatives Limited; Abayomi Awobokun, MD/CEO, Enyo Retail Supply Limited and Adebayo Sanni, country managing director, Oracle Nigeria.

R-L: Onyinye Ikenna-Emeka, GM, enterprise marketing, MTN, Dare Ogunlade, director, Oracle ,and Ude Enebeli of MTN Nigeria.

L-R : Nath Ude, executive director, Union Bank, and Ude Enebeli of MTN Nigeria Pic by Pius Okeosisi

Monday 25 November 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

NAICOM wants insurance brokers increase presence at the grass root for better penetration Modestus Anaesoronye

he National Insurance Commission has urged Insurance Brokers to establish their presence in all the nooks and crannies of the country to accelerate insurance penetration and financial inclusion Sunday Thomas, acting commissioner for Insurance gave the counsel when the delegation of the Nigerian Council of Registered Insurance Brokers, led by Bola Onigbogi paid a visit on the commission in Abuja. Thomas said the vision to have the nation’s critical pop-

ulation accept and patronize insurance services would only be achieved if Brokers who are professional intermediaries extend more of their operations to remote areas of the country, rather than urban areas. While promising the support of NAICOM in accelerating insurance growth by collaborating with all insurance stakeholders, the Commissioner advised operators, particularly Insurance Brokers to be more creative in their product development initiatives so as to make insurance first line of consideration by Nigerians, irrespective of their location and financial status. Thomas lamented the

Sunday Thomas, acting commissioner for Insurance

over concentration of insurance companies and brokerage firms in major cities and their reliance on government accounts stressing that there would not be effective enforcement of compulsory Insurances in the hinterland with poor presence of underwriting and brokerage firms there. Responding to Onigbogi’s appeal on Insurance penetration, which is the cardinal focus of her thrust of office as the president and chairman Governing Board of NCRIB, Thomas noted that the issue of enforcement of insurance in Nigeria has always been on demand and supply side. In the same vein, the Commissioner assumed

that NAICOM would use its Zonal Offices to sensitise the public about the importance of insurance and however urged that all hands should be on deck to ensure that the supply side through operators are always available when the market is opened. In deepening insurance penetration, the acting Commissioner alluded to the fact that irrespective of operators’ poor presence at some states and local government areas, issues of building collapse, fire incidences in offices and market places, motor accidents, flood and other insurable disasters go on unabatedly.

Niger Insurance gets shareholders approval on recapitalisation plans Modestus Anaesoronye

oard of Directors of Niger Insurance Plc has secured the nod of its shareholders to continue with her recapitalization plans already approved by the National Insurance Commission (NAICOM) to enable it comply with the new minimum capital requirement set for insurance and reinsurance companies in the country. The approval secured during the Company’s 49th Annual General Meeting held in Lagos empowered the directors to take all steps necessary to effect agreed resolutions to recapitalize the company and make it competitive in the nation’s insurance industry. “That, subject to obtaining the of relevant regulatory authorities, the directors be and are hereby authorised

to take all necessary steps to raise additional capital of up to N15 billion only, whether by way of rights issue, private placement; or to negotiate a merger and/ or acquisition or any other form of business combination or other arrangement or a combination of methods

with an insurance company; and that the right issue be executed at such price, time and on such other terms and conditions as the directors may deem fit”. Another major resolution at the meeting was share capital reconstruction, which according to

chairman of the company; Stephen Dike will create the headroom for the recapitalisation. He said: “The essence of the share capital reconstruction is to enable the company pursue its recapitalisation objective and comply with the new minimum

Board of Directors, Niger Insurance Plc at the Company’s 49th Annual General Meeting held in Lagos

www.businessday.ng

https://www.facebook.com/businessdayng

regulatory requirement at a fractional cost, thereby optimizing use of the Company’s limited financial resources.” Dike said Niger Insurance has engaged Chapel Hill Denham and Mainstream Bank Capital Limited as financial advisers, to assist in developing a viable strategic blue print for the successful recapitalisation of the company. He said that Nigeria was exploring an optimal mix of funding options including rights, private placement, merger and /or acquisition, stating that it was already discussing with potential investors who will not only being in capital but also technical expertise. Dike also noted that the ongoing transformation drive and activities will put the company back on the track of sustainable growth and profitability. Edwin Igbiti, managing director/CEO of the Com-

@Businessdayng

pany said the first order of business on resumption at the company was for the executive management to develop a winning strategy that will deliver the company’s top goals and priorities. Igbiti said that management has designed a fiveyear strategy (2020-2024) transformation plan with three main priorities which includes strengthen its balance sheet, straighten its people and strengthen its business model. He stated that the company was restructuring its balance sheet by converting some of the fixed assets positions to liquid assets in fixed income securities in favour of safe and guaranteed returns. Igbiti assured its customers that all their claims would be met, while all matured investment will be paid as customer’s remains biggest priority of Niger Insurance.

Monday 25 November 2019

BUSINESS DAY

insurance today

In association with

E-mail: insurancetoday@businessdayonline.com

Africa Re lays foundation of new head office in Abuja Modestus Anaesoronye

Dignitaries at the Africa Re foundation laying ceremony of its new corporate head office in Abuja

Declining premium remains major concern for offshore energy underwriters Modestus Anaesoronye

ames McDonald, chair of the Offshore Energy Committee of the International Union of Marine Insurance (IUMI) has reported a further reduction in global offshore energy premiums, raising concern for underwriters. McDonald who made the remark at IUMI conference in Toronto, Canada said global premiums in that sector were reported to be $ 3.4 billion which represented a 3 percent reduction from 2017, reflecting the same situation in 2017 which was a down 5 percent on the previous year and premiums in 2016 were down 21 percent on 2015.

James McDonald explains: “the drop in premium income has largely followed the oil price which has dipped by around 20 percent over the past year. Oil demand is being affected by trade tensions, which is impacting economies across the world. Conversely, geopolitical considerations in Venezuela, Iran, Libya and Syria in tandem with OPEC and Russia’s agreement to cut production is squeezing supply.” “Whilst premiums have again fallen, 2018 is only the second year in a decade that they have stayed ahead of claims. 2018 has seen a historically low number of large losses to date but there are several potential large losses in the pipeline, including possible LOPI (loss of production income) losses on two FPSOs

and a significant blowout in Indonesia. 2018 is still an immature year and given the increased activity in the oil and gas sector, it is likely to have a longer tail than the years immediately preceding it”. Sentiment appears to be driving the current market and there are modest indications that a return to profitability is imminent. However, several challenges remain for underwriters including: Aging infrastructure and the operation of platforms well beyond their design life; increasing cyber threat; climate change leading to more frequent and severe windstorms and floods; and the spectre of climate change litigation; rising and unsustainable acquisition costs.

Consolidated Hallmark advances recapitalisation plan, gets shareholders approval to raise fresh funds Modestus Anaesoronye

he Board of Directors of Consolidated Hallmark Insurance Plc has advanced its recapitalization plans, with approval of its shareholders to increase her authorized share capital from N7.5 billion to N10 billion. This is to enable it comply with the minimum paid up share capital requirement set for insurance companies in the country. At the Company’s Extra Ordinary General Meeting held in Lagos, the Directors also got the approval of the shareholders to raise additional capital of up to N1.057 billion through a Right Issue of 2,032,500,000 units to the ratio of 1:4 at N0.52 per share. Also there was a resolution empowering the Directors to raise whether by way of private/public, special offering, right issue or a combination or any other method(s) they deem fit, additional capital of up to N4.5 billion or its equivalent whether locally or internationally. Obinna Ekezie, chairman, Board of Directors in his address at the meeting said to enable the Company comply with the recapitalisation, it will be embarking on capital raise through a series of measures including but not limited to Private Placement, Rights Issue, Mergers & Acquisition/ Business Combination etc, to which it has received approval of NAICOM.

He said that its earlier capital raise in 2017/2018 financial year has started impacting positively on its operations. “I am glad to inform you that the operations of your company have since been enhanced with the earlier capital raise in 2017/2018 as can be seen in the nine months ended 30th September 2019 perormance. “Although the anticipated business climate is yet to be attained, additional resources deployed in operations have led to the latest results”. Ekezie disclosed that profit after tax (PAT) of N519.6 million was recorded during the third quarter of 2019 as against the N355.9

Eddie Efekoha, managing director/CEO, Consolidated Hallmark Insurance www.businessday.ng

million recorded in the corresponding period of 2018, representing a 46 percent rise. The result also revealed significant improvements in other indices, as gross premium written for the period grew by 23.7 percent to N6.687 billion from N5.404 billion reported in September 2018. Also, total assets of the Group rose to N11.159 billion from N10.821 billion during the corresponding period. Ekezie also noted that there are strong indications that this trend would not only be sustained, but possibly surpassed as the financial year draws to a close. He also informed shareholders that Consolidated Hallmark was in the verge of being granted an operational license by NAICOM to operate a Micro-Life Insurance subsidiary. “Statutory deposit and license application fee have been paid to the Central Bank of Nigeria and NAICOM respectively. The anticipated commencement date of full operations by this subsidiary is early in the new year.” “We believe firmly that with your approval and continued support, your company will emerge a stronger and more formidable player in the sector, adequately equipped to meet the growing needs of our rapidly expanding clientele and with the ability to retain a higher proportion of risks hitherto ceded, he said.

https://www.facebook.com/businessdayng

he African Reinsurance Corporation (Africa Re) has laid the foundation of its new head office in Abuja, at a recent ceremony attended by Muhammad Musa Bello, honourable Minister of the Federal Capital Territory, Nigerian Government Officials, members of diplomatic corps, insurance industry captains, representatives of international institutions and dignitaries from various sectors. The laying of the foundation of the new head office in Abuja signals the imminent relocation of the headquarters of Africa Re from Lagos to Abuja. This relocation is in line with the practice which requires that diplomatic missions and international institutions should be located in the capital city of the host country. Africa Re’s move to Abuja was delayed until now due to business considerations. The building, whose foundation was laid yesterday, Monday 18 November, is futuristic, with a unique and modern design. It comprises 7 main floors, designed to comply with international standards and uses strategies aimed at energy saving and water efficiency. Accordingly, its energy management system includes solar panels, which will make use of the Abuja sunlight as an alternative source of energy, thereby contributing to the reduction of the burden on the national grid. The design also provides for a reduction in carbon dioxide emissions and improved indoor environmental quality. Addressing the audience during the ceremony, the Chairman of Africa Re, Hassan Boubrik, stated:“Relocating to the seat of government is like a child moving closer to the parents to enjoy more attention, as the Federal Republic of Nigeria is one of the founding fathers of Africa Re. In Abuja, Africa Re will certainly enjoy increased government attention in terms of immunities and privileges accorded by the Agreement establishing Africa Re and the Headquarters Agreement with the Federal Republic of Nigeria”. Established in 1976 by 36 member States of the African Union and the African Development Bank Group (AfDB), Africa Re, is the leading reinsurance company in Africa and the Middle East. The corporation is a panAfrican financial institution whose shareholding is split between African shareholders (75 percent) and non-African investors (25 percent). African shareholding currently comprises 41 African states, the AfDB and 114 African insurance and reinsurance companies from the 41 member countries. Headquartered in Lagos (Nigeria), Africa Re has a continental network of regional and local offices in Lagos (Nigeria), Casablanca (Morocco), Nairobi (Kenya), Abidjan (Côte d’Ivoire), Ebene (Mauritius), Cairo (Egypt) and Addis Ababa (Ethiopia).as the corporation also has two subsidiaries namely: Africa Re (South Africa) Ltd in Johannesburg and Africa Retakaful Ltd in Cairo (Egypt).

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Start-Up Digest

In association with

Adedoyin: Redefining integrated marketing communications business ODINAKA ANUDU

emola Adedoyin is the chief executive officer of Integrated Troops, a diamond structured agency with a handon expertise on deploying integrated marketing communications approach to brand activations. Adedoyin started his career in marketing communications firms such as Saatchi & Saatchi, Leo Burnett local affiliates and Unilever, before venturing into the consulting business. He was on the board of the Advertisers Association of Nigeria (ADVAN) for three terms of office, handling publicity and treasury at different times. After years of practice in Lagos, he left the commercial nerve centre for Nigeria’s capital, Abuja. He is now reactivating the Lagos office—this time with an eye on a better mix of digital and terrestrial integration in the business of brand activation. “You can drive Nigeria from Lagos, but it’s difficult to drive Lagos from elsewhere,” he says. The entrepreneur understands his industry as a lion knows its prey. He is returning to make a difference and break with the past. “We operate in the market that faces challenges,” he says. “One of the challenges we have in our own sub-sector has been transparency / accountability in the field. We are going to be reinforcing the pursuit of that aspect of our unfinished business, which is more attention to details

as well as transparency and accountability in the field,” he explains. He says that evolution will continue to take place in the integrated marketing communications industry. Speaking about some past evolutions within the sector, he recalls the emergence of the business centres. “When business centres came, it was a big thing because shortened the timeline for reporting back from the field in hard-to-reach territories,” he says. It was easier to visit a centre and send in a report. Then with digital cameras, photographs also became easily accessible from the field. And then laptops for the field workers and so on. For him, the next level for the industry now is to optimise alignment with digital revolution. “Now, we talk about Internet of Things (IoT), cloud, AI, blockchain and all others. How do we leverage these to bring more transparency and accountability in the industry? For me, I think that should not be the next level in 2020,” he further says. He recalls a time when media compliance was a very big issue in the industry, but the industry sat down and did something about it. At the moment, he says, the industry must align its operations with digital compliance. “For the industry, there has to be a good blend of both digital and terrestrial for maximum coverage and reach to deliver quality interaction and engagement for businesses,” he advises. He believes that this is the best time for him to re-launch despite Nigeria’s current eco-

Demola Adedoyin

nomic quagmire. “This is the best time to relaunch because marketing is also about the survival of the fittest,” he says. “This is the best time anybody who needs to survive has to survive by strengthening the battle front. If one realises that there are critical things that will help in achieving a certain business objective, it is a good time for those who possess such essential skills to register their presence. We want to give our partnering clients that edge across their business objectives,” he further says. Adedoyin says the business has embraced a ‘diamond’ structure that positions leadership across all facets of the process. The model is hands-on, he adds. “We must also optimise digital amplifications for terrestrial operations in line with the shift in the habits and attitudes of the consumers,” he says.

Explaining the global nature of brands custodianship, he says that some of them do not need to keep big agency teams across all markets. Troops has been around and has significantly made impact on brand assignments. “When we launched a soap variant for a client with the mobile bathroom, the objective was to get people to use the brand on a day-to-day basis as against the previous perception of the brand as a one-use curative soap. The campaign executed changed the perception and also heralded the taste for cool bath in the category. We also worked with Total. We worked on the lubricants with ‘Chop better oil’ idea amongst targeted ‘okada’ and ‘keke’ riders. We were involved in introducing SABMiller’s Malt offering in line the brand’s market entry plan. We had the ‘Omo Wonder Show’ among others

for Unilever. We also worked with Dangote, Cadbury and West African Tobacco and others,” he enumerates. The African Continental Free Trade Area (AfCFTA), which is targeted at removing barriers to trade across the continent, is knocking on the doors. Adedoyin does not see this as a threat, rather as an enormous opportunity for his industry. “It is an opportunity for us in marketing communications. For Nigeria, we already have a lot of agencies running regional operations. I think that will strengthen that. I do not always believe in protectionism for professionals. Competition is good,” he says. However, he also foresees challenges if the country does not put its house in order. “At the moment, the complaint is that goods are coming in through our borders but are not being manufactured by our neighbours. If we do not sit up with our infrastructure and production capability, we may suffer some setbacks in the long run,” he warns. He leverages partnerships and believes that this is the only way the industry can do big things. “In our industry, there is a rising realisation that coming together to do things is better than everybody operating in silos,” he notes. “What we need to do better is institutionalising that practice—being able to have things on paper and getting it to work. What we should be looking at is coming together to do big things—not coming together merely to survive. We need to do it within the framework of what will make us compete globally,” he admonishes.

He is also a protagonist of mergers in the industry. He tells Start-Up Digest that companies will have to merge because skills requirements are not determined by what anyone has in their basket but what the market is asking for. “You can’t keep building up staff numbers and incurring huge overheads because of one-off requests. A way out is for you to align structures with clear understanding that promotes competitive growth,” he stresses. There are complaints by a number of marketing communications firms that advert budgets are the biggest victim any time firms begin to see lower margins. He says this should not be a problem. “The industry should not exist because of a budget size. The industry should exist because there is a need for the solutions it proffers. What we need is the best-fit solutions to available budget to tackle business or market challenge. The budget may constrain in a way, when you have a fixed mind, but if you open the window of the consumer world and you have a dynamic partner on the other side, the budget constraint can be relieved viz-a-viz the business objectives,” he further explains. “Also, the age-old saying that 50 percent of ad spend is a waste should not arise anymore. This is in view of the fact that we have since experienced the break-up of the traditional agency compound offerings with a drive towards continuous investment efficiency. What is now at play is the drive towards effectiveness and innovation to deliver optimal return on investment.”

“The economy is not very friendly for businesses, so for us, it is a give-back mechanism to encourage these young women that have been selected from over 500 applicants,” she said. “To use Access Bank training facilities for free is a rare opportunity,” she noted. In a panel session, experts advised SMEs to embrace personal development to remain relevant in the 21st-century. They reiterated that profit comes only when entrepreneurs give value to customers,urging business owners to leverage technology and identify the gaps that can create opportunities. On his part, Sola Adeyiga,

CEO, CreditPRO, a business support service provider, said many businesses do not last more than five years in the country owing to inadequate start-up capital to scale the business. “We want to bridge the gap between the current state of most startups and where they need to be, by not just giving the funding but also training and mentoring them,” Adeyiga said. “For example, if you need a loan for investment, you do not take a loan for working capital. The banks do not ask these questions. You need a loan they give you, so when it is time for repayment the funds are not available,” he said.

30 Winners emerge at MetroWoman Accelerator Programme Josephine Okojie

s part of efforts to develop and support young female entrepreneurs operating across various sectors in the country, MetroWoman Accelerator has selected 30 winners for its 2019 accelerator competition programme. According to the MetroWoman, the winners will have access to mentoring opportunities, working loan capital of about N2million and hand-holding by successful entrepreneurs in the twelve months of the programme. Speaking at the maiden edition of the accelerator

competition,Chinenye Nnoli, convener and founder, MetroWoman Empowerment Foundation, said, Nigerian women, possess the potential to grow the economy if properly guided. She said each of the winners will be exposed to a different aspect of business ranging from strategy and human relations to accounting and investors to leverage other platforms like the Access Bank Hub and CreditPRO advisory services company. “We are just trying to support young businesses because we were at this stage before and needed this support to upscale and people gave it to us,” Nnoli said. www.businessday.ng

Chinenye Nnoli https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Start-Up Digest Our goal is to make 1m farmers richer by 2025 — Masha Lola Masha is the executive director for corporate services at Babban Gona Farmer Services. She holds Bachelor of Science degree in Engineering from University of Virginia and doctorate degree in the same discipline from University of California, Berkeley. Babban Gona in Hausa language means ‘Great Farm’. It is a high impact, financially sustainable and highly scalable social enterprise, which franchises thousands of mini farmer cooperatives across Northern Nigeria. It trains these farmers, provides them with credit and inputs, including market access. In this interview, Masha tells ODINAKA ANUDU, Start-Up Digest editor, that her firm plans to make 1 million farmers richer by 2025. Tell us in detail why you set up Babban Gona. he vision that is Babban Gona today began in 2012 as an agricultural, socially responsible enterprise. Our mission was to end insecurity and to solve the rapidly rising youth unemployment indices within the country. A major contributing factor towards our company’s inception in 2012 was the urgent need to solve the oversaturation in the Nigerian workforce— an occurrence that still threatens to double over the next two decades. Statistics show that in the last 20 years, 20 million young people have entered the workforce, and Nigerian youth unemployment is at 60 percent. If an approximate 20 million job seekers triggered the Niger-Delta militancy, the Fulani herdsmen crisis and Boko Haram, the mere thought of what will happen when over 80 million youths enter the labour market in 20 years’ time indeed caused us to ask questions around what we could do to create an economic buffer to halt the spread of insecurity by unlocking the power of agriculture as a job creation engine. We succeeded in discovering a way of putting an end to the vicious circle where vulnerable unemployed youths are recruited into insurgent groups and here we are today, still committed to the vision of job creation, empowerment, growth and expanded incomes for farmers.

You started in 2012. Seven years down the line, what can you say is the biggest achievement of Babban Gona? From inception, our mission was to break the average farmer out of the vicious cycle of poverty, driven by poor agricultural practices and leading to low yields year after year. We have succeeded

through our model to significantly increase the profitability of smallholder farmers 2.5-3 times more than the recorded average farmers produce in Nigeria. Even in the face of the challenging terrain of Nigerian agriculture with climate change, pest infestation and an uncertain political climate, we are consistently increasing the earnings of our members relative to the national average. Since we began, we have disbursed up to 140,000 individual loans to our member farmers while maintaining a repayment rate of over 99% percent. We have also expanded our core credit programme to create varied income generating streams for our farmers, one of which is our Women Economic Development Initiative which is spread across multiple locations. We grew to become the single largest maize producing entity in Nigeria in 2015, and in 2017, we were the first for-profit social enterprise in history to win the prestigious Skoll Award. We have been listed by the London Stock Exchange among the 2019 ‘Companies to Inspire Africa’ and have been featured in Forbes Magazine as one of ‘2019’s Top 5 Most Innovative and Impactful Social Enterprises’. You have spoken a lot about creating jobs through Babban Gona. Who exactly are your target: Job seekers or passionate farmers? Our target is both: job seekers and passionate farmers. As I already mentioned, we have a personal mandate to reduce the rate of unemployment in the country and our vision is to recreate the narrative around agriculture and make it an attractive sector to the average unemployed youths. Our offer to them is the opportunity to be gainfully employed, making profit and creating more agri-entrepreneurs through their own

have you faced in the last seven years? I believe every experience, whether it comes in the form of a challenge or a success, is an opportunity to learn and become better. In working to solve the challenges smallholders face, not forgetting that there will be some over which we have no control such as climate change, we proactively manage and maintain the efficiency within our systems—changing and adapting where we need to and constantly being innovative in our bid to achieve excellence.

Lola Masha

businesses. The farmers, on the other hand, are already in the business and know what it entails. How much have you raised from external sources since you started, and what’s your total investment in Babban Gona? We have been lucky to have both private sector and public sector investors that have consistently supported us along the way. Unfortunately, we cannot disclose specific figures, but we focus on building a financially sustainable business model to support and grow our small-holder farmer members. Your profile says that the farmers you serve are partowners of the outfit. Can you clarify this assertion? Indeed they are part-owners of the outfit. This is because in creating our model, we put the needs of our farmers at the forefront. It is for this reason that we have a representation of our member farmers on our board. This ‘member first’ consciousness is one of our core values and it drives the innovative products we deliver to our members that dramatically

increase their net incomes by directly impacting all the key indices of their productivity such as their yield, input costs and commodity prices after harvest. This increase in net income has enabled members to make significant investments in improving their children’s education, health/nutrition, and invest in additional farm land and livelihood enhancing assets such as home improvements, maize grinding machines, cars, trucks etc. As such, their successes are our successes. Why did you choose to do this in agriculture, rather than, say, real estate? We believe that agriculture is Africa’s job creation engine and that Nigeria’s agricultural landscape is still largely untapped, even though it is bursting with possibilities. We saw a chance to create a model that plays a critical role in transforming agriculture in Nigeria. Through this model, we offer a suite of services to smallholder farmers that help them to overcome the challenges of fragmentation and low economies of scale. Tell me, what challenges

Do you need more investors in Babban Gona? How much do you think you need to double your impact? Yes, we do. Having more investors will go a long way in helping us achieve our target to offer innovative products to our members that will dramatically increase their net incomes and directly impact all the key indices of their productivity such as their yield, input costs and commodity prices after harvest. Looking at how far we have come through our service offerings, we welcome more investors and strategic partners to join us in our mission to make more money for more farmers. What is your target in the next 10 years? Our goal is to make 1 million farmers richer by 2025. So, in 10 years, we believe that number will have increased exponentially. We hope to see millions of young, agri-entrepreneurs owning their ‘mini Babban Gona’ franchises and creating a positive netneffect on the Nigerian economy.

marketing and unstable prices which impact the welfare of the farmers. It is known that the majority of Nigerian agricultural production is performed by smallholder farmers. Yet, despite being the backbone of the agricultural sector, the majority them remain impoverished, earning less than $2/day. In particular, in northern Nigeria, where the Babban Gona Agricultural Franchise is focused, farmers face extreme poverty. I believe a focus on increased investment in the agricultural sector is key. Also key is the need to understand and move with the trends, especially with technology in ensuring that the sector becomes better. I believe that by taking the right steps in the right direction, the latent potential, especially in agriculture in Nigeria. will be achieved. You are yet to reach the entire northern Nigeria. When will you reach all other states that you are yet to cover? It is a process that we are willing to work our way through. We are scaling rapidly. Sustainable change is a process, and our vision is unrelenting. Through our strategic partnerships, we will be equipped to meet the needs of the entire region and even beyond.

Are you satisfied with the current state of the agriculture sector? There is a lot of potential that is still left untapped in the agriculture sector, especially with respect to technology,

Tell me, how much have you given to smallholder farmers so far? What do you do to ensure the money you give out is returned? We ensure that our farmers pay back the loans by putting in place strong risk mitigation systems, which has allowed us to maintain repayment rates of up to 99 percent. This is also the reason why we can price our credit to our members at a significantly discounted interest rate compared to traditional microfinance that have historically delivered credit at 30 percent to 60 percent APR.

at that time to take off. The programme not only helped the business plan, it put us through on how to evaluate customer acquisitions, and the business canvass helps you to break down where you are going to get your resources.” Eze now has plans to start his own training programme. There are many others in a position to give back to their communities after going

through Elumelu’s foundation. CNN met Oduwa Agboneni, who grew her mechanic business, thanks to the entrepreneurship programme. She detailed how she employed local people for her growing business. “We have about 20 people working with us— five of them are interns because we also encourage interns from the university,” Agboneni said.

Entrepreneurs share success stories from Tony Elumelu Foundation Ifeoma Okeke

ntrepreneurs across Nigeria have continued to share their success stories after passing through the Tony Elumelu Foundation Entrepreneurship Programme. Tony Elumelu Foundation Entrepreneurship Programme, which launched in 2015, includes a 12-week

training, mentoring, and $5000 of seed funding. To date, more than 7,000 thousand aspiring entrepreneurs have gone through the programme. In an interview with CNN’s African Voices Changemakers, Elumelu said that he wants to encourage young African entrepreneurs to succeed and surpass what his peers have done as African business leaders. www.businessday.ng

CNN travelled with Elumelu to meet some of the entrepreneurs who have become successful after completing the foundation’s programme. One of the businessmen is Ndubuisi Eze, who explained his initial business pitch. “I applied with just an idea of using drones to support crop dusting and also gather data on farms and that’s where the magic really started,” Eze said.

After gaining access to the intra-African trade fair through the Elumelu Foundation, Eze was spotted by a Singaporean minister and today his drone company is up and running in Singapore. Eze said his success would not have been possible without the Elumelu Foundation. “Without the Elumelu Foundation Programme, there was no way, not a chance for this idea that I had

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

How to enlarge wealth in a family for many generations The Solid Wealth Messenger

Grace Agada

here are two ways to enlarge wealth in a family. The First is for members of a family to develop certain abilities to grow wealth on a consistent basis. The Second is for a family to manage the load of dependent family members. The more human load is piled on wealth. The faster wealth will die. When wealth dies the children in a family will suffer. Their dreams and aspirations will stall and they will struggle to create wealth on their own. If they succeed, wealth will return otherwise they will languish in poverty. To prevent this from happening to a family, a family leader must device means to keep and grow wealth in a family for many generations. To grow wealth, members of a family must develop certain abilities. These abilities are usually acquired when a person goes through the process of creating wealth from scratch. Since subsequent generations will not have this privilege, family leaders must help them develop these abilities if wealth is to be preserved. It is the failure of family leaders to equip the next generation with these abilities that ultimately lead to the death of wealth. To succeed at preserving wealth, family leaders must help the next generation develop these abilities. They must also define what wealth means to them. The simple way we define wealth is this. Wealth is any asset human or financial that can produce more income for a family. That is future income not current income. The current income in a family is not true wealth. True wealth is not measured by things that can be stolen, lost or destroyed. True wealth is measured in things that can stand the test of time. Any amount of current income can be lost. True wealth is the ability of a family to produce income on an ongoing basis. It is this ability that keep wealth in a family for many generations. For a family to develop these abilities and produce continuous income, it must leverage its two key assets. The first asset is the Human asset and the second asset is the existing financial asset. The human assets are the

human beings in a family that are responsible for preserving wealth. This includes the wealth creators and their successors. Both have certain responsibilities they must fulfill. The wealth creator has two responsibilities to fulfill. The first is to prepare for succession. Succession is the preparation, optimization and transfer of a business asset to a ready and equipped successor. To successfully handover business wealth, wealth creators must standardize their own wealth creation process. That is they must document in easily digestible form how they have grown wealth over the years. Standardizing their wealth creation process this way makes it easy for them to transfer valuable lessons to the next generation. It also gives the next generation a template to work with. Standardizing the wealth creation process also means that valuable wisdom is preserved and mistakes are not repeated in a family across many generations. The second responsibility the wealth creator has is to hand over to the successor at the right time. The right time is as soon as the successor is ready to take over. Without a ready successor, succession cannot take place. Getting successors ready require that wealth creators with the help of their advisors create the Designated Successor profile. This profile shows a detailed description of the best person to lead the family business. Wealth creators and their advisors must approach this task like creating a profile for an important job role. Each potential successor must then be anonymously accessed to see how far or close they are to the designated successor profile. A detailed report of recommendation with action steps of what to do to bridge any gaps then need to be compiled. These are the two responsibilities the wealth creator must fulfill. The successor also has two responsibilities to fulfill. First he must acquire and master the skills and abilities to expand wealth. Second he must receive the baton of leadership and lead the family business to greater heights. Mastering the ability to enlarge wealth requires that he develop three skills. The first skill is critical thinking skills. That is he must have the ability to create profitable ideas from an intelligent collection of thoughts. The second skill is creative skills. That is he must have the ability to create valuable products and services from his ideas. The Third is the marketing skills. That is he must have the ability to exchange his products and services for cash. His ability to master these three skills is what will enlarge the wealth of the family. The second

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

responsibility successors have is to accept the baton of leadership. This means that successors must agree to lead the family business and wealth. They must truly be interested in taking over from the wealth creator. When leadership is forced, it is rarely successful. Only Successors who desire to lead will increase the family’s wealth. These are the two responsibilities os a successor. The other type of asset a family needs to grow wealth is the existing financial asset. Financial assets are divided in to two types. The first is the Investment Asset and the second is the business asset. To grow investment asset a family must have an investment strategy. That is an agreed-to investing plan that explains the reason why an investment is necessary or why it should be purchased. Investing for any other reason aside reasons that grow family’s wealth is a way to erode wealth forever. Without a philosophy that guides how money is invested, where it is invested, how assets are optimized, protected and preserved. Investment decision becomes emotional and ego based. For wealth creators and successors to preserve wealth, they must hold every investment accountable for their contribution to wealth. If wealth creators display a random style of investing, successors will follow their footsteps. Without an Investment strategy it is very easy to lose family money especially when the wealth creator is no longer alive. To grow a Business asset, a family must have a business diversification strategy. A business diversification strategy is a list of principles that guides the expansion, acquisition and diversification of a business. Uncontrolled Diversification can lead to the loss of wealth. When money is taken out of existing business to invest in other businesses without the necessary assessment for profit, wealth is diluted. The key questions for wealth creators and their successors to an-

https://www.facebook.com/businessdayng

‘

If wealth creators display a random style of investing, successors will follow their footsteps. Without an Investment strategy it is very easy to lose family money especially when the wealth creator is no longer alive

swer is this? What kind of businesses should we diversify into? How do we define a Profitable Business? Where do we find them? What do we do to increase their value when we find them? What kind of businesses should we never diversity into? And so on. Every business investment must be held accountable for its contribution to family wealth. Growing wealth in a family across many generations is an intentional process. It requires certain preparation and the development of certain skills. Without these important steps, wealth is destined to die. If you are a wealth creator and need help making your wealth last for many generations, we can help you. We will make it certain for your wealth to last, help you develop sound investment and business diversification strategies that will be effective long after you are gone. To see how you can work with us send an email to info@createsolidwealth.com.Whether your family stays rich or poor depends on what you choose to do now. There is no way wealth will last if you keep doing what you are doing. Every new goal requires a change. You must be willing to do the things you absolutely do not want to do.

Grace Agada is a Generational Wealth Advisor, Legacy Expert and Author of the popular Solid Wealth Book. She is a Consultant and Coach to an exclusive list of top executives and entrepreneurial clients running Businesses from $1-million to $1 billion in size. She help Affluent clients prepare and execute a Ten Generation Wealth Legacy, Diagnostic Family meetings, Family Business Succession, Family Bank Systems, 90 days Sudden death contingency plan, Next generation grooming, and second opinion review of existing Trust and Estate Plans to support generational wealth goals @Businessdayng

Monday 25 November 2019

BUSINESS DAY

DeloitteNigeria

Deloitte-Nigeria

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Special Report

FT INVESTING IN NIGERIA World Business Newspaper Neil Munshi

n August, President Muhammadu Buhari tightened Nigeria’s notoriously porous land borders to goods. It was a neat distillation of Mr Buhari’s approach to running Africa’s largest economy: radically interventionist, infuriating to the free-market-minded Lagos business elite and thrilling to his most ardent supporters. Like many of his policies since he was first elected president in 2015, it produced mixed results and unintended consequences. The blockade echoes one that Mr Buhari instituted as military dictator in the 1980s, and is aimed at cutting smuggling of both cheap foreign goods into the country and cheap subsidised petroleum out of Nigeria. It is also intended to bolster local production in an economy desperately in need of diversification. It is unclear when the ban will end, but it is already bearing fruit: customs revenues at Nigeria’s congested ports have risen and smuggling is reportedly down in both directions. Inevitably there are downsides too. Traders report a spike in prices for staples such as rice, legitimate businesses log losses, and mountains of tomatoes rot in the sun on the Benin side of the border. Following a resounding electoral victory in February, Mr Buhari begins his second term with a mandate and an eye on his legacy. Observers expect a new cabinet full of loyalists and allies to lead both chambers of the National Assembly to help him push through his agenda, and at a faster pace than his first term which many saw as a lackadaisical. Mr Buhari’s appointment of a new economic council featuring some of the country’s top economists — and frequent critics of some of his more statist impulses — has been seen as a sign that an insular administration may now be more willing to listen to outsiders. “My point of view is that the president has accepted that we need a mixed economic model,” said Bismarck Rewane, chief executive of Lagos consultancy Financial Derivatives, and a member of the new council. That, he says, means markets and “people-orientated policies [and] a welfare state scenario where investors are equally rewarded for

What’s in store for Nigeria as Buhari launches interventionist second term? Radical policies infuriate Lagos business elite yet thrill leader’s ardent fans

their investment and their risk and workers earn a decent wage and the unemployed and underprivileged are protected by the safety net.” Despite criticism from business circles, the administration has notched economic victories — including instituting reforms that have seen Nigeria jump 39 spots since 2016 on the World Bank’s annual ease of doing business report, to 131 out of 190 countries, including 15 spots over the past year. There are other bright spots — a recently announced increase in VAT from 5 per cent to 7.5 per cent is seen as a measure, albeit small, of the administration’s efforts to boost much-needed tax revenues; Lagos’s vibrant start-up scene is a leading light on the continent; and Nigeria finally signed up for an Africa-wide free trade deal in which its participation as Africa’s largest economy is essential. And yet the economy remains stagnant. Twenty years after democracy returned to Nigeria, the challenges

it faces are immense — and, to Mr Buhari’s critics, in many ways worse than when he took office in 2015. Security crises rage in nearly every corner of the country, the government has cracked down on dissent and jailed journalists, corruption remains endemic, foreign direct investment has slumped, unemployment has soared, and economic growth remains sluggish three years out from a recession brought on by the oil price crash. The administration has signalled a continuation of its broad statedriven policy direction. It has focused on diversifying the economy away from its oil industry — which still provides 90 per cent of its foreign exchange but little in the way of productive growth. It has sought to stamp out corruption, alleviate poverty and bolster national security. His record on all four fronts is thus far mixed, and there are calls for more radical reforms, particularly cutting the fuel subsidy that largely benefits the better-off and costs the

country billions each year. Last month, the administration released a typically over-optimistic 2020 budget, with higher revenues and lower deficits than most economists believe possible. Many of the country’s leading analysts, businesspeople and international institutions are calling for urgent action to address what some view as a potential economic crisis that is feeding the country’s insecurity. As the IMF put it after an October staff visit: “Action on a coherent and co-ordinated set of policies is urgently needed to reduce vulnerabilities and increase growth over the medium term.” The data paint a grim picture. Nigeria is home to more people in extreme poverty according to the UN definition (living on less than $1.90 per day) than anywhere else in the world — surpassing even India, a country with nearly seven times the population. Some 43 per cent of Nigerians are unemployed or underemployed. For the country’s massive youth population, the figures are even worse. Foreign reserves are falling, and the current account swung into deficit in the first half of 2019 after three years of surplus. Nigeria now attracts less foreign investment than Ghana, a country with about an eighth of the population. Many states cannot pay their employees even as Abuja has raised the national minimum wage. Federal government interest payments consume more than half of revenues. The benchmark stock index is among the worst-performing in the world. As one frustrated Lagos-based executive, echoing the sentiment of many of his peers, says: “There’s a sense that there’s too much policy instability for direct investors and there are questions about how friendly the environment is for investment and for business.” “I think the government says a lot of the right things but doesn’t necessarily back those up with action,” he adds.

The IMF said “depressed private consumption and investors’ wait-and-see attitude” amid policy uncertainty had kept growth at 2 per cent in the first half of this year, “a rate significantly below population growth”. In response, Mr Buhari argued that the IMF’s data were wrong. As Lagos-based consultancy SBM Intelligence pointed out, as a candidate in the run-up to the 2015 election, Mr Buhari “often quoted these same statistics as evidence that the previous government was a failure”. The data, in any case, came from domestic sources such as the well-respected Nigerian Bureau of Statistics. “Now that he has served a term in office they cannot be trusted,” SBM continued. “We urge the government to . . . tackle the uncomfortable issues the data raises rather than attack the credibility of institutions.” But the next year will probably be a crucial one, and could be the Buhari administration’s last real chance to achieve its policy goals. Though Mr Buhari was overwhelmingly re-elected, the chattering classes began speculating about who might succeed him the day after the vote, and jockeying for 2023 seems already to have begun. There are fears that policymaking could be sidelined even further as members of the administration and Mr Buhari’s party seek to secure their political futures — or, according to cynics, their retirement accounts — and potential candidates look to establish themselves. “Traditionally, in Nigeria, very little is achieved in a government’s second term — politicking is the dominant activity,” says Richard Ali, a Nigerian political analyst. “Policymaking, which has seemed knee-jerk and which has not benefited from the best advice possible over the past four years, will probably maintain a middling to tumultuous course in the run-up to the elections.”

Wildcat Nigerian gold miners look to regulation in a post-oil future Reserves as yet unquantified in sector where Chinese buyers face ‘little scrutiny’ Andres Schipani and Harry Dempsey

ausa music pounds out of loudspeakers in between cocoa and banana trees, announcing the presence of an alluvial mining site — and miners from northern Nigeria — in south-west Nigeria’s Osun state, close to one of the spiritual centres of Yoruba-land. Here, 27-year-old Mohammed Salisu, who has been a wildcat miner for the past decade, is panning his way through what he feels will be Nigeria’s future — gold. “One day, Nigeria will turn to gold mining and leave behind oil,” he says, his bare feet ankle-deep in the mud. He is one of almost 70 workers on this site, the likes of which are slowly being formalised across 11 gold-producing Nigerian states as west Africa’s powerhouse hopes to develop its mining riches to the point where the sector can contribute 3

per cent towards the country’s gross domestic product by 2025. Gold mining in Nigeria is mainly informal. The International Institute for Sustainable Development, a think-tank in Ottawa, estimates Nigeria is home to about 500,000 artisanal gold miners. “Formalisation is a good thing for business, it will make it grow,” says Abdullahi Shal’anu, the site supervisor. One digital platform has already registered hundreds of informal miners. The drive to regulate the gold business in Nigeria — where Chinese buyers operate with little scrutiny, critics say — is spearheaded by Nere Teriba, the 37-year-old vice-chairman of Lagos-based Kian Smith Trade & Co, which is soon to open Nigeria’s first gold refinery. “Other countries around us in the region are known for gold, but not Nigeria. One of the reasons is that so far we haven’t quantified our gold reserves. We focus on oil so much, but everything else not so much,” she says.

Ms Teriba, a US-educated computer engineer, estimates that artisanal miners in Nigeria produce two tonnes a month and another two tonnes are smuggled in from neighbouring countries. Map of Nigeria with oil region and states with security risks highlighted After negotiating the government’s red tape and political pressure, Kian Smith recently received its licence to operate. It is building a 900 sq m smelting and refining facility with a four-metre deep vault and its own power plant in Mowe, Ogun State. It is due to start processing three tonnes of gold a month from next June, and this is expected to rise to 10 tonnes a month in five years. While Nigeria has other resources including zinc, coal and iron ore, gold is the easiest to exploit since it requires less infrastructure. The refinery plans to transport gold to Lagos using security vans: “The government is considering this a

national security asset, much like it does with pipelines”, says Ms Teriba. The idea is to source raw material for the refinery from miners such as Mr Salisu, who belong to registered Nigerian businesses that are “tax compliant, produce gold responsibly and sell a significant volume of chemical-free gold”. In a country where mining data are almost non-existent, Ms Teriba says that, through a digital platform called Zokia, her company has registered more than 400 informal miners and 200 small extraction businesses. “We already have a thriving underground gold community, let’s bring it above ground,” she says. “We’re not just trying to be a refinery.” Graphic showing that Africa is the largest and fastest growing gold producing region Not too far from Mr Shal’anu’s site, Canada’s Thor Explorations is developing Segilola, an open-pit gold mine in Osun State, which is planning to produce 100,000 troy

ounces — over three tonnes — a year by the end of 2020. It is poised to be Nigeria’s first large-scale gold mine, after receiving $78m in funding from the African Finance Corporation, a Lagos-based development institution. “It’s still difficult to get financing because of the record of the country. Surrounding countries have the advantage based on [their] record but that can quickly change,” Segun Lawson, chief executive of Thor, explains. Despite the government gaining valuable experience through Thor which could help other prospectors achieve speedier approval to exploit Nigeria’s mineral resources, further support is needed to advance their project and the sector, Mr Lawson added. “The mining ministry has to almost be joined at the hip with the mining companies seeking fiscal exemptions to ensure they get [implemented] by the ministry of finance,” he says.

BUSINESS DAY

Monday 25 November 2019

Special Report

FT INVESTING IN NIGERIA State promises hike in oil take will benefit all Nigerians President says country has been short-changed over share of deepwater output Neil Munshi

n November 4, President Muhammadu Buhari signed a major oil reform into law — the first in years affecting the country’s most important industry — that will increase the percentage Nigeria earns from each barrel of oil on nearly half of its crude production, bringing in an estimated $1bn a year. It was a sign that the Buhari administration is taking seriously Nigeria’s desperate need to raise revenue, and seen in many quarters as an inevitable rebalancing: Africa’s biggest oil producer has, as Mr Buhari argues, long been short-changed

the royalty, Nigerian oil projects, already high-risk, become even less economical. “Although in the short term, the change will deliver the intended increase in revenues for Nigeria, in the long-term it won’t if investors allocate capital to better projects elsewhere,” she adds. Map of Nigeria with oil region and states with security risks highlighted At the same time, Nigerian legislators are promising the passage of long-awaited reforms to overhaul the entire sector. The Petroleum Industries Bill has been floating around Abuja for the best part of two decades, holding back investment into an industry vital to Nigeria’s success.

Allleged kidnappers paraded by police in northern Nigeria © AFP via Getty Images

Threat of abduction makes Nigeria a high-risk business Kidnap for ransom has devastating effect on commerce and daily life Neil Munshi

Royalty rise: measure underlines Nigeria’s desperate need to increase revenue

over its share of deepwater production contracts with oil majors. “A combination of complicity by Nigerian politicians and feet-dragging by oil companies has, for more than a quarter-century, conspired to keep oil taxes to the barest minimum,” Mr Buhari said in a statement. “Today this changes. For the first time under our amended law, 200m Nigerians will start to receive a fair return on the surfeit of resources of our lands.” Mr Buhari said the reform marked a “new and beneficial relationship with our oil company partners”. But it comes amid challenging times for the Nigerian oil and gas industry, which provides roughly 90 per cent of the country’s foreign exchange — and analysts warn it could drive investment elsewhere. Resetting the fraught relationship between the state and western oil companies, as well as the country’s reputation for corruption surrounding the poor distribution of hydrocarbon revenues, could prove difficult to achieve. The royalty rise in part addresses a regulation that allows the government to renegotiate revenue-sharing contracts once oil prices rise above $20 per barrel. Last month, the attorney-general said Nigeria was seeking $62bn in arrears from the oil majors under the criterion, which was met in the 2000s, but neither the government nor the oil companies triggered the renegotiation. The government has maintained — and some oil executives concede — that contracts struck decades ago are unfair and have called for improved terms. Gail Anderson, research director at energy consultancy WoodMackenzie, says in a note that the average royalty hike for the government of about 5 per cent was “not as bad as investors feared”. But by increasing

The bill is meant to make the opaque national oil company Nigerian National Petroleum Corporation (NNPC), an epicentre of corruption, more transparent by breaking it up, establishing an independent regulator and stripping the oil minister of the ability to award, renew or revoke licences. Nigeria’s relationship with the international oil companies has been strained for more than half a century. The government has struggled to pay for its share of oil production costs while pumping barrels has caused environmental devastation in the Niger Delta. Amaka Anku, Africa head of the political risk consultancy Eurasia Group, thinks the bill could pass in the next two years because “the incentives have never been more aligned”. Oil majors have generally opposed previous bills in part because “the fiscal reforms would reduce their revenue share”, she says. But with those production sharing contracts now expiring starting 2023, even the international oil companies are incentivised to get a new fiscal framework in place for the sake of long-term certainty, Ms Anka explains. “Otherwise they will have to negotiate each expiring contract piecemeal and without an overarching legal backing, which obviously makes them vulnerable to the political process if the [All Progressives Congress] loses power in the 2023 election.” The most recent attempt to pass the reform bill involved breaking it into four parts. The first section, on governance, finally passed the legislature last year. But Mr Buhari refused to sign it, objecting in part because the bill would constrain the power of the president — who has also named himself oil minister — to oversee oil licences and contracts. www.businessday.ng

arlier this year, an employee of a large company in Nigeria was abducted by armed gunmen while travelling along the Abuja-Kaduna highway. The company’s security team handled the negotiations through intermediaries, as it often does when employees are kidnapped on what has quickly become the most notorious stretch of highway in Africa’s most populous country. It was a delicate process. The team had to decide whether to involve the police, knowing that officers are sometimes in cahoots with bandits. It had to know when to give into the abductors’ demands and when to let them sweat — for instance, it gave them phone credit, as bandits often demand, but in charge card form, so it can be traced, rather than via bank transfer (some also reportedly demand payment in bitcoin). It had to bring the ransom demand down from nearly $30,000 to the roughly $500 that was ultimately paid. “It’s the biggest security risk that faces any person or company or family presently operating or moving around Nigeria,” says a senior executive at another company, who did not wish to be named for fear that it could drive up ransoms for its employees. “Today really anyone or everyone is at risk of being kidnapped — whether you’re a big oga [boss] or a small boy.” Nigeria has the highest rate of kidnaps for ransom of both locals and foreigners in all of Africa, according to the global risk consultancy Control Risks, with kidnappers operating in each of its 36 states. It is usually in the top 10 countries in the world for kidnapped foreign nationals in the bimonthly Kidnap and Ransom insight report from Constellis, the US-based security consultancy. The oil-rich Niger Delta has long been a hotbed of kidnapping, with militants using it to extort both the government and international oil companies. But in recent years, the tactic has increasingly been used by criminals in the Fulani nomadic

https://www.facebook.com/businessdayng

communities of the country’s north. The governors of two northwestern states at the heart of the banditry crisis have gone so far as to negotiate with leaders of the armed groups, who live in the thick forest and say they have been neglected by the state. Map of Nigeria with oil region and states with security risks highlighted The impact of armed banditry on both commerce and daily life has been devastating with thousands killed and tens of thousands displaced in the north-west, according to the UN. The Abuja-Kaduna highway — one of the country’s most important commercial thoroughfares, leading from the capital to the vast northern market — has become Ground Zero

‘

Anyone or everyone is at risk of being kidnapped — whether you’re a big boss or a small boy for the scourge of kidnapping. The spread of kidnapping has thrown up an additional security challenge for businesses in a country with no shortage of them, as they seek to move goods from the ports and commercial centre of Lagos to the north. “Some of my clients are in the logistics space and part of what they do is move goods to different states — most of them have had to re-strategise and completely avoid those hotspot routes that [bandits] ply,” says Tanwa Ashiru, founder of Lagos-based risk consultancy Bulwark Intelligence. “It is a problem and it is obviously affecting the ease of goods moving across Nigeria.” While foreign workers are seized for their perceived high value — and the ability of their employers to pay — bandits indiscriminately target everyone from the poor up to politically connected wealthy Nigerians, and locals are by far the most affected. @Businessdayng

Still, there have been a number of high-profile kidnappings of foreign workers in recent years. In July, four Turkish construction workers were abducted from a bar in Kwara state, a few months after two senior Shell workers were taken in the Niger Delta. As in many such cases, the armed police that accompanied the Shell employees, as they do with many expatriate staff in Nigeria, were killed. Bandits use fake checkpoints and roadblocks on the country’s shoddy road network, by which the vast majority of goods are transported. The administration of President Buhari has prioritised upgrading the country’s road infrastructure, but the task is immense, and bandits are aided by the potholes that plague nearly every Nigerian road. “For most businesses, the greatest risk to their employees is while they are travelling,” says Tom Griffin, senior partner for Africa and the Middle East at Control Risks. “Almost half of all kidnaps in Nigeria recorded by Control Risks occur during road travel, with kidnappers often selecting targets based on perceived wealth during roadside ambushes, roadblocks or attacks in traffic congestion.” Beyond kidnapping, commercial truckers are subject to regular shakedowns in every corner of the country by bandits who know that long-haul drivers carry cash advances for provisions along the way. Kobo360, a logistics start-up that announced earlier this year that it had raised $30m in debt and equity in a funding round led by Goldman Sachs, exists in part to solve that problem. It is using an “Uber for logistics” model to connect drivers and fleets to companies — crucially, in a cashless, mobile money-enabled way that allows drivers to move about without too much loose cash. This is one of many ways businesses are being forced to innovate in the absence of any action by the government. “The government has to sit down and figure out how to effectively police the highways,” says Ms Ashiru. “The private sector on the other hand understands what needs to be done.”

BUSINESS DAY

Monday 25 November 2019

Special Report

FT INVESTING IN NIGERIA Afrobeats stars back uduX, Nigeria’s answer to Spotify Promising Lagos start-up profits from music as ‘a way of life’ Andres Schipani

frobeats star Tiwa Savage has a message for her fans: “My new single, called 49-99, is out now. Make sure you get it on uduX.” The Nigerian pop sensation — dubbed “The Beyoncé of Africa” — was promoting a new Lagos-based subscription streaming service, a local version of Spotify, which aims to encourage Nigerian music at home and also push it into the global mainstream. On the single’s launch day, uduX gained 1,000 new subscribers. “Some of these artists have a huge following, and in Nigeria that’s cash. Let’s get the African artists to take this as their product, their own, and make them be the one selling it to subscribers,” says Chidi Okeke, uduX’s creator, adding that the whole idea is “to bring value to the music ecosystem in Nigeria”. For N500 ($1.3) a month, uduX’s tens of thousands of clients can access millions of songs from Nigerian artists, including stars like Wizkid. “In Nigeria, you don’t have a place you go to and you see all the music you want to listen to. That’s what we want to do, and to use technology to generate revenues for artists,” Mr Okeke explains. The service was launched in April in Nigeria and is looking to

expand into Ghana. Africa was once ravaged by music piracy but smartphones mean it can now get round this problem by streaming. Lagos has become the industry’s most valuable startup ecosystem. The up-tempo, dance-till-dawn music that is a soundtrack for tens of millions of Nigerians is making Africa’s most populous nation a major centre for the musicstreaming business. Nigerian singer Bisola Aiyeola believes that new streaming services will provide a wider fan base, wider reach and more money for artists. “We are still catching on, tons and tons of people are just getting to join,” she says. The country ‘s smartphone users are expected to go up from 53m to 144m by 2025, according to GSMA, the mobile phone industry trade body. One of the pioneers of music-

‘

African music is everything for the African. We use music for death, we use music for life. It is a way of life and life is musical streaming in Nigeria is Boomplay, a Chinese-backed service which claims to have “the largest online African music catalogue in the world”, with 5m tracks. It launched in Nigeria four years ago and also has a strong presence in Kenya and Tanzania. Earlier this year, it secured $20m in investments from Maison Capital and Seas Capital, both based in China, to expand its customer base of more than 46m subscribers. Telcos also want a piece of the musical action. After snapping up

music-streaming business Simfy Africa last year, MTN, Nigeria’s largest telecoms operator and a subsidiary of the South African group, launched its own, called MusicTime. According to the company, it is a time-based music streaming service, which allows customers to purchase music time using airtime — 120 minutes of music a week for N45 (12 cents) or 300 minutes for N100 (27 cents) — at the press of a button. “There will always be the raw material here, the music that is ingrained in our culture, and people are willing to buy music if you make it easy,” says Iredumare Opeyemi, head of legal and music service partnerships at MTN group in Nigeria. Some of these streaming services have already agreed licensing deals with major global music companies, such as Universal Music Group, that want to move into digital streaming in Africa.

African music became internationally popular in the 1970s when Nigeria’s Fela Kuti created Afrobeat — a jazzy, funky mix of Nigerian and American musical traditions which was deeply political and took aim at repressive governments. In contrast, today’s Afrobeats — a fusion genre from Nigeria and Britain with a Caribbean twist — focus on romance and living the good life. Both, however, have space on Nigerian streaming platforms. “When you have a population of 200m people, where everybody likes music, it automatically translates into a very high demand,” explains Idris Olorunnimbe, founder of The Temple, a music talent management company in Lagos. One of his staff, David Nice, is about to release his first Afrobeats single. The 19-year-old wants his music on the streaming platforms “to help me get where I want to get”. Femi Kuti, Fela’s musician son, has some words of advice for him. With these new apps music may “go far, everywhere” but music is “not about fame and fortune”, he explains, before a performance at the family’s nightclub and concert hall, “The New Afrika Shrine”. “African music is everything for the African — we use music for death, we use music for life, we use music for farming. It is a way of life — and life is musical,” Mr Kuti says.

Lagos life overwhelmed by Nigeria infrastructure crisis Flooding and constant influx of people add to commercial capital’s headaches David Pilling

n October, with great fanfare and almost zero impact, Uber launched a boat-taxi service with the stated intention of helping commuters beat the notorious Lagos traffic. The two-week pilot, running just four trips a day with 35 people on each boat, was launched in a city of 21m inhabitants where it can easily take three hours to make the 12-mile road trip from the Victoria Island business district to Murtala Muhammed International airport. Babajide Sanwo-Olu, governor of Lagos state since May, said he hoped to encourage the use of waterways in a city built on a lagoon. Yet the initiative has so far proved more of a publicity stunt than a serious attempt to solve Lagos’ myriad infrastructural problems, which have been exacerbated by exponential population growth, terrible flooding and political wrangling. “The Lagos State government is overwhelmed and daunted by the infrastructure crisis,” says Olu Fasan, visiting fellow at the London School of Economics. “It seems the situation, the gridlock, is getting worse.”

Mr Fasan argues that, to make a real improvement, Lagos should keep more of its relatively healthy tax base. “Like oil-producing states, Lagos needs a bigger slice of the federal budget. It is clear the problems can’t be tackled without significant federal government and private-sector interventions.” Oladeinde Olawoyin, a local journalist, goes further. “All the structures of modern society are broken,” he says, adding that moving around the city is an act of “self-torture”. Lagos, the federal capital until government functions shifted to Abuja in 1991, is arguably Africa’s most vibrant, creative and dynamic city. It is a centre not only of commerce and the country’s burgeoning high-tech industry but also of its creative industries, including music, fashion and the Nollywood film industry. Like India’s Mumbai, that makes it a city of dreams. Each day, thousands of people arrive from poorer parts of the country attracted by an economy bigger than that of Ethiopia, a country of 110m people. The city’s expansion has been almost entirely unplanned. In 1960, at Nigeria’s independence, Lagos had just www.businessday.ng

200,000 people. More than half a century later it has grown 100-fold to around 20m making it one of the top ten most populous cities in the world. By 2040, that could hit 30m. Not long ago, it had a northsouth axis but Lagos has bulged from east to west. In the southeast, the upscale and relatively well-organised new development of Lekki is under seemingly permanent construction. Lekki and other middle-class parts of the city such as Ikoyi and the artificial Banana Island — with their gated communities, private generators, private security and maintained roads — are enclaves of relative efficiency. Lagos has a nominal average income per capita of more than $5,000, double the Nigerian average, but that disguises a huge gulf between a relatively thin middle class and the bulk of the city’s inhabitants. Millions of less well-off Lagosians, particularly those on the mainland, live in a city at permanent breaking point. There, public transport, electricity, and rubbish collection are severely strained. Many live in informal settlements or outright slums where piped water or proper sanitation is rare. The failing road infrastructure,

https://www.facebook.com/businessdayng

which affects rich and poor alike, has gained most attention. Heavy rains routinely occur outside the normal rainy period, a phenomenon blamed by many on climate change. Flooding has turned potholed roads to mud and added to the traffic chaos. Things have become so bad that in October, Mr Sanwo-Olu declared a state of emergency, announcing extra funds to repair crumbling thoroughfares. “The infrastructure is more dilapidated now than before and that is putting more of a strain on life and work,” says Olayinka David-West, a senior fellow at Lagos Business School, who gives the city’s performance a score of three out of ten. “Rains have been extensive and when it is flooded, that puts further constraints on the road network,” she says, recounting a recent five-and-a-half-hour journey to work. “You cannot imagine the frustration.” Fixing Lagos’ problems can be as much a political as a logistical battle. The previous governor, Akinwumi Ambode, fell foul of his political masters and failed to win his party’s nomination for a second four-year term. He is currently facing a state assembly investiga@Businessdayng

tion over a tender to purchase 820 city buses brought to replace the worn-out fleet of yellow minibuses known as danfo. It may have been his attempt to solve the city’s garbage problem, however, that proved his ultimate undoing. In 2017, the state ended overnight its longstanding rubbish-collection arrangements with state-run Lagos Waste Management Authority. Instead, it signed a 10-year contract with Visionscape, a Dubai-based company that promised to collect and recycle residential garbage in what it called an example of a waste-reducing “circular economy”. Within months, garbage began to pile up all over the city after a dispute between Visionscape and local organizations that had implemented the previous contracts. John Irvine, Visionscape’s chief executive, said the terms of its agreement had changed, with his company now being asked to clean up not only residential rubbish, but also that from markets, schools and public buildings. By the time the new state governor assumed office this May, all trace of Visionscape’s rubbish-collecting operations had vanished.

Monday 25 November 2019

BUSINESS DAY

Special Report

FT INVESTING IN NIGERIA Nigerian central bank chief Emefiele defends unorthodox policies Critics say monetary and exchange rate policy exacerbated post-oil price crash recession Neil Munshi

he Central Bank of Nigeria has been busy under Godwin Emefiele. Last month, the bank levied $1.3bn in penalties on a dozen banks, including Citigroup, Zenith Bank and Guaranty Trust, for failing to meet a threshold aimed at getting Nigerian banks to do something few actually do: lend to Nigerian companies and consumers. Two weeks later it refunded those banks that had boosted lending. In September, within the span of about a week, the reserve bank announced a host of initiatives. These included a 3 per cent processing fee for bank withdrawals of more than N500,000 ($1,380) in cash, as part of the bank’s efforts to take Nigeria cashless. An agriculture programme, meanwhile, aimed to boost the livestock production of nomadic herdsmen, spent N30bn to bolster oil-palm production, N146bn to support nearly 1m rice farmers, and hybrid cotton seeds were given to 200,000 farmers. The bank has also unveiled an initiative to increase lending for Nollywood, the Nigerian film industry, along with a host of efforts to increase mortgage and retail lending. These are all part of a complicated set of policies that has also seen the bank set multiple exchange rates and focus on keeping the naira stable against the dollar. In addition, with a view to increasing local production and slashing imports, the bank has withheld

foreign exchange through official channels on dozens of imported items from rice and chicken to cement and wheelbarrows. Mr Emefiele also supports President Muhammadu Buhari’s controversial decision to close the country’s land borders to goods in order to stop smuggling, arguing it will quell insecurity by creating agricultural job opportunities for young people, according to local media. Naira stability is expected to continue to be the main policy aim of Mr Emefiele’s second five-year term, which began in June, even as he pursues expanded financial inclusion, increased access to credit for small businesses and consumers, and the diversification of Nigeria’s oil-dependent economy. “They’ve chosen an unorthodox, more interventionist model and more developmental role as a central bank instead of just ensuring price stability,” says Yvonne Mhango, sub-Saharan Africa economist for Renaissance Capital. “But the main objective is naira stability and I think that helps you understand all the other policies they consider.” Mr Emefiele has been praised for overseeing a fall in inflation over his tenure and the near doubling of Nigeria’s foreign reserves amid a drop in the price of oil, which accounts for nearly 90 per cent of foreign exchange earnings and 60 per cent of government spending — but recently inflation has crept back up and reserves have fallen significantly. The central banker has also come under fire from some quarters.

Emefiele: second five-year term began in June © Bloomberg

Many economists have argued that the bank’s strong naira policy and multiple exchange rates exacerbated the recession that followed the oil price crash. His controversial decision last year to fine MTN, the country’s largest telecoms operator, over $8.1bn it said had been illegally repatriated to South Africa, was sharply criticised by the Lagos business community as being overzealous, based on a technicality and likely to defer foreign investment. The fine was later settled for $53m. Yet it is clear Mr Emefiele has gained the confidence of President Buhari, who appointed him to a second term earlier this year, a first for a central bank governor. Mr Emefiele has acted in virtual lockstep with

the Buhari administration, using the bank’s tools to enhance government policy. It has been particularly active in agriculture, one of Mr Buhari’s highest priorities, and dedicated to diversifying the overall economy away from oil. “The fact that he was reappointed suggests President Buhari was happy with his conduct in the first term,” says Ms Mhango. “It implies that the central bank will continue its unorthodox methods.” Yet it is a strategy that could cause problems for the wider economy further down the line, warns Cobus de Hart, chief economist for north and west African countries at NKC African Economics. “Exchange rate stability also clearly remains

one of the key policy objectives, and intensifying pressure on reserves thus raises the risk of additional capital controls being pursued,” he says. “This could serve to weigh further on the still-fragile economy.” After a visit last month, the IMF warned of the “government’s overreliance on expensive borrowing for the central bank to finance the fiscal deficit . . . [which] reinforces the needs for an ambitious revenue-based fiscal consolidation”. In summary, the IMF described the outlook under current policies as challenging. Mr Emefiele however, was unrepentant in a recent speech: “Critics of our policy say it’s unconventional. Yes, unconventional [but] it has delivered results.”

Nigeria stands to gain from better trade links with rest of Africa

For such a large economy, business with continental neighbours remains remarkably small Andres Schipani

orge Bom Jesus, the prime minister of São Tomé and Príncipe, apologises for the lack of air conditioning, which follows a string of power cuts. Angola, which supplies the fuel the west African republic uses to produce electricity, has been sending less oil lately because its production is down and it is owed money by the tiny island nation. “Angola has been having difficulty in delivering oil to us,” Mr Bom Jesus laments. “We have to find other strategies to get fuel.” One option is Nigeria, Africa’s largest economy and its biggest crude producer, just 300 miles away across the Gulf of Guinea. “While things worked, we never thought about it. Now we have to put all the options on the table,” says Mr Bom Jesus. São Tomé and Príncipe’s needs are an example of trade opportunities that Nigeria may be able to explore, especially since both countries recently signed the Africa Continental Free Trade Agreement. The practical benefits of the agreement remain to be seen, especially as smaller neighbours often feel intimidated by Nigeria. Only a few months after signing the free trade agreement, Nigeria partially

Buhari meets Putin: But smaller guys nearer home would welcome more contact © Reuters

closed its border with Benin. It has now closed its land borders to all movements of goods, ostensibly to combat smuggling. For an economy with a gross domestic product of nearly $400bn, Nigeria’s trade with the rest of Africa remains small. It accounted for only $7bn in 2017, says Afreximbank, the pan-African trade finance institution. Nigeria’s top export destinations are India and the US and the leading sources of its imports are China and Belgium, according to the Atlas of Economic Complexity at Harvard University. Nigeria’s future trade, argues www.businessday.ng

Efem Ubi, who heads the division of international economic relations at the Nigerian Institute of International Affairs in Lagos, may lie in deepening relations with African neighbours and other emerging markets. “We’ll be good at south-south trade because it is easier for those partners to understand us,” he says. China, at least, has benefited from understanding Nigeria. Over the past decade, Chinese state banks and contractors have helped build a 186km rail line between the cities of Abuja and Kaduna, with another line between Lagos and the northern city of Kano under construction.

https://www.facebook.com/businessdayng

While Chinese imports from Nigeria grew almost tenfold in two decades — from $182.5m in 1999 to $1.86bn last year — Chinese exports to Nigeria rocketed from $396.4m to $13.4bn, according to the China Africa Research Initiative at Johns Hopkins School of Advanced International Studies in Washington. This has turned Nigeria into a “perennial importer of Chinese goods”, says Mr Ubi. For its part, the Nigerian government rejects criticisms that it has become dependent on China. Others, meanwhile, are trying to follow China’s example. Brazil, for instance, sees opportunities in Nigeria. “The potential for trade and investment relations between Brazil and Nigeria is untapped,” says Marcos Troyjo, Brazil’s deputy economy minister for foreign trade. Brazil has been considering importing gas from Nigeria to reduce its dependence on gas purchases from Bolivia. Russia is another country looking to increase its Nigerian trade links. Last month’s first RussiaAfrica summit, staged in Sochi, saw Russian oil company Lukoil sign a memorandum on drilling and refining rights in Nigeria. Russia also offered to build a railway from Lagos to Calabar. “We can do @Businessdayng

a lot together,” Russian president Vladimir Putin reportedly told his Nigerian counterpart, President Muhammadu Buhari, who promptly agreed to put NigeriaRussia relations on “a fast track”. Closer to home, however, the case of Morocco, which in recent years has made considerable subSaharan investments, could prove an example to build on. It has agreed, for instance, a deal for the construction of a 5,660km pipeline bringing Nigerian natural gas to Morocco. Meanwhile, OCP, Morocco’s state-controlled phosphates giant, is keen to build a $1.5bn ammonia plant in Nigeria for use in fertiliser production. Such African arrangements are the sort of links that Nigeria needs more of, argues Karim El Aynaoui of the Policy Center for the New South think-tank in the Moroccan capital, Rabat. “Nigeria is big and when you are big, others are scared of you,” Mr El Aynaoui says, adding that Nigeria’s African neighbours would welcome more evidence of it wanting to do business with them rather than China, Brazil or Russia. Given its recent troubles securing its fuel supplies — and with oil-rich Nigeria a reasonably close neighbour — this is possibly a sentiment with which tiny São Tomé and Príncipe would agree.

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

CEOINterview Interview with Private Sector Leaders

‘The longer you are in a space and delivering value, IBUKUN AWOSIKA is chairman, First Bank of Nigeria Limited and founder/CEO, The Chair Centre Group, including The Chair Centre Limited, Sokoa Chair Centre Limited, Furniture Manufacturers Mart, TCC Security Systems and Cubes & Boxes Limited. It has been 30 years of running a successful business in Nigeria and she speaks with KEMI AJUMOBI on the challenges and triumphs of her business, how businesses can grow, government’s intervention and encouraging optimism in the Nigerian system. Excerpts: 30 years of doing business in Nigeria hen I look at the last 30 years of the Chair Centre Group, I think about my workers, and the people who had made it possible to build out on the dream of a young woman of 25 going on 26, to build for the long term of 30 years and build to this point, and so when things are hard, you think about those who have built together with you and you are not quick to give up because they are part of your story. There are multiple factors that affect a manufacturing business as opposed to a services business. I can understand some of the issues because I have been on both sides. We stated out in 1989 January essentially as a local manufacturing company producing furniture. And along the path, based on certain limitations as opposed to where I wanted to go in terms of the vision of the company, I started exploring ways for us to be able to produce in a sustainable manner, the same quality in large volume over time. You can have the best imagination about designing, but your ability to execute it would depend on what you have to play with in terms of machinery and resources. So we invested in that, and then used the factory to produce for our own retail customers through our retail business which is the Chair Centre, and then process for other factories.

Importance of delegation of duties and leaving a legacy My people are fully empowered and I delegate responsibilities without any issues. I mean, think about it, if that was not the case, when the corporate world became intense, it would have been difficult, it would have had great impact on the business because one of the things that has always troubled me about Nigeria is that there are many great Nigerian businesses that had been built over time, but a lot of those business had died as the owner died. As a young woman, as I grew my business, I kept asking myself, ‘if my business dies when I die, I’ve wasted my life, because if I spent all of my youth building, and then it goes down just because my time is up, then I’ve left no legacy. Then I set a target for myself that by the time I’m 50, I’d like not to be at the centre of driving my business every day, so when I became 48, we engaged a firm to consolidate all our companies into the group, and we tried to identify the talents within the company that were able to take the positions that were open and where we needed people from outside to do that so that I could pull back from being at the centre of the business. So essentially, my work is strategy and new businesses, but the everyday running of the business is not mine, I don’t like operations even as a person. I probably did it in building the

business because I had no choice. I can think of the idea, I love the ideation and the execution of the idea but once it becomes a process, I’m bored and on to something else which is probably why I ended up with multiple businesses. So the people who really make the business go on are my team because they are the ones who drive it every day and my only gift to them is to fully empower them to be able to do what they need to do in order for us to continue. Pains of an ethical business woman in 30 years of doing business in Nigeria It is your responsibility to set your own agenda; it’s your responsibility to fight to maintain what you believe and what you consider to be right or wrong. What you will also find is that, people are looking for value in many ways, and over time, what you need to do is to show them the value that you bring to the table at every opportunity. Now, will you have every opportunity? No. But you see, the opportunities you lose on account of your value system, that’s your opportunity cost for what you believe and it’s a price you must be willing to pay. Now, www.businessday.ng

one thing I can say categorically is that there are enough decent Nigerian institutions that also want to do things right, otherwise, we will not have survived. That’s really what that points to because the only reason we’ve survived for 30 years and still in business, is because we found like minds along the path as we sought to deliver value. Now, one of the things we did to make up for the things we would not do, is to make sure that we were indispensable to our customers. I had a saying in the early days that all our customers had to do was encounter us the first time. With our dedication to our business, in terms of the quality of product that we sought to deliver to you, and with sincerity in terms of the service that we sought to give, and with our diligence in servicing you over time, we always sought partnerships with customers rather than a sale because a sale is a one-off, one-time thing. Partnership is a relationship, and when you seek to build a relationship, you’d find that partnership is a weapon for many of those things. When people get to know you and get to know the value you bring to the table for them in terms of products and service, and personal interactions, you

https://www.facebook.com/businessdayng

would find that, yes, there are people that would still make a choice against you for those things, but there are many decent people who will not. All in all, you know the more you stick to something, the more confident you become at it, and the longer you’re in a space and delivering value, the longer you cannot be ignored. There are many days you want to cry because you know of a transaction you’re better at, you can better deliver but, it isn’t given to you because of what you stand for. Nevertheless, we’ve learnt patience of waiting for our time within the context of our business, and we have consistently sought to fight for our opportunities with everything that we have. So, it’s in building for the long term, it’s in delivering quality to the customer, it’s in consistency of your values, it’s in becoming indispensable to your customers in many ways. In what way is your sector evolving? If we talk about furniture, I think sadly, we watch a lot of companies come and go because they haven’t been able to survive. But also, we’ve watched a number of incursions into the sector, especially Chinese companies who are coming into the markets. There is also quite a massive smuggling sector, because technically, by the law till today, complete furniture importation

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Ibukun Awosika, Chairman, First Bank Of Nigeria Ltd Founder/CEO The Chair Centre Group

the longer you cannot be ignored’ to Nigeria is actually banned, but I guess what you have to do is drive around, either the high street of Awolowo Road, V.I, or go to markets like Alaba and all of that, and there is furniture everywhere. So, we’ve had to learn to compete with both legal competition and illegal competition, and what we’ve always sought to do is to find how to have advantages over those competitions despite their tasking proposition because if you are paying duties on everything as you should, and you have a lot of taxation left, right and centre and you’re still dealing with diesel to produce and all sort of power issues, and somebody else is bringing stuff through other means without the cost outlay that you have, they will create a tough competitive environment for you. They do not create the jobs that you create because I could import billions of Naira furniture and run my business with five to ten people. However, there is no way I can produce that without running a factory of hundreds of people. Also, a lot of capital investment is involved which includes machinery and operational cost. So, it’s a commitment to our country as a firm believer in the fact that, there is no way we’re going to survive without some level of manufacturing activities in our country. There is no way we can create jobs enough if all segments are just reliant on importation because with that, you’re creating the jobs in the manufacturing country. Your people are only involved in sales and installation. You know there are many days you have to convince yourself it’s not just about you because there are also days where I think to myself, if I sold all the asset of this company today, and I put my money in the bank and get interest on it, I’ll be wealthier than I am leaving the business operating because you have all the money in cash. I’d have no liabilities to carry, no electricity to look for, all of the factors you have to build with. You pay your taxes but you will also be earning decent interest on your capital that you put in the bank. But when you think about the hundreds of families whose life is dependent on your continuous existence in business, and with pride you can look at the projects you execute, and the value you’re creating for your country, albeit through sweat and blood, you’d hope that policy decisions would encourage you more and support your ability to deliver that value in an easier form.

reached the point of frustration, but no bank was going to give our business at that age, we were four years old then, I was a young lady doing manufacturing, who was going to give me a major loan for that? It was really a customer of mine who had taken interest in me because he knew that I was diligent and dedicated to my business. I was doing some work for their company and saw that I was sad on that day, (I was pregnant at that point) and just thought ‘what’s wrong with you? you’re not your normal self, follow me to my office.’ And I sat in front of this gentle man, and I told him what was going on. The man said, ‘you know what, I could give you a one-million naira loan’ (this was 1993), ‘but you need to find a finance house that would broker between us. I would give them the money, and they would issue it to you and they would be responsible for collecting the money and the interest but they will be responsible for paying me my money’. Luckily for me, the only way I had survived in the short term was always to go to a particular finance house to get short term money –30 days, 60 days or 90 days, to execute project, to buy a machine I desperately needed, and work over that period just to pay back, but I always paid back. So I had a good track record with them and when this opportunity came, I went to them and said ‘look, I had this opportunity will you do it?’ they said ‘we’ll do it because we know you’ll pay’. So they got the N1m, gave me the N1m, I worked like a jackal for the next fifteen months, every 90 days I had to roll over, paid part of the principal,

pay interest, roll over and went on. But because of the machines I could buy with the money, I was able to take a major job at that point, that by the time I finished the job and they paid us, I could go to the finance house to ask them ‘what is final pay off?’ it was a season when interest rate was as high as between 40 to 72 percent. It was that period in Nigeria when finance house rates were crazy. I saw it as a short term high cost for my long term vision, and so I took the money, with diligence and dedication, worked the money, and the materials and the machines I bought with it to create the value to pay off, and once I paid them off, I owned the machines. So I could then use the machines to generate value and that was how I survived. So in a time and a season where you now have microfinance, albeit more expensive, but the money is available. What that teaches you is, if you take it, you must be disciplined, do what you need to do quickly, return it, but also, that the profit from your own business must not be consumed, because you retain your business without wasting in lifestyle. So, that discipline helped me to build internal capital very quickly because I retained most of our earnings within the business investing in machines, in building capital for the business and in keeping us light in terms of debt. It’s a good time for small businesses as compared to when I started. So if you just make sure you keep proper records, you’re disciplined with your resources, you don’t consume all the money, delay gratification, your business will go a long way. I don’t think I bought my first car for years until after I started my business. By the time I bought my first car, which was not a brand new car, I was already doing 150 million in turn over. You need to focus on the goal, and give the business what it needs in order to go on. Is it true that the cost of credit is falling? What advice do you have for the government, CBN and banks in general? I think what people also forget is that Banks sell what they get. A bank’s product is money and it trades on money. So, if you take your money to the bank and you are asking for interest payment on your deposit of a certain level, the bank can never give that money out as a loan to another customer at a level lower than that. It would still have to add on its cost. Banks have branches, they run on generators, they need to provide security, borehole needs to be provided and so on. So you have all of those other factors that add to the cost, the cost of doing business adds to the cost of financing because, you know, I sit on both sides now so I can see it better. You can easily say ‘oh the banks are making it difficult and all of that’ but in reality, they are running a very expensive shop in terms of all the things that you need to deal with and by the time you do all that, you’re in business to make money, you’re not in business to make a loss. So you have to be profitable and that accounts for some of the high cost of funding, but as all the other factors in the economy and infrastructure

Access to capital for small businesses I think small business owners are actually in a much better time than when I started in so many ways. When I started, the banks wouldn’t even talk. I remember there was a bank that would not even allow me to open an account with them because we were too small as far as they were concerned. Also, most of the banks existed to service big companies and businesses. But in this time and in this season, you have quite a number of options. You have microfinance banks, you have all sort of intervention funds and grants available for businesses, you have a lot of FinTech options for short term money albeit more expensive. But you know sometimes, people talk about ‘but it’s so expensive’ forgetting it’s the opportunity cost of having access to that money. I remember, I think it was ’93 or ’94, a very frustrating moment for me in my business. I really needed money to buy some machinery and stuff to move us forward because we had www.businessday.ng

https://www.facebook.com/businessdayng

and all of that are getting better, and many other things are at play; then the environment can only get better. It’s obviously a deliberate policy of the central bank to make sure that the cost of funds is much lower in the market and throwing out a lot of policies to achieve that, and we’re a regulated industry; so the banks definitely don’t have a choice but to respond the best way that is possible to regulatory directions from the central banks. Importance of gender equality on boards and in businesses There is a lot going on in terms of getting women on to boards either by deliberate policy decisions or choices made by the institutions themselves. We also have positive actions by organisations like WIMBIZ, who are deliberately ensuring that women are equipped and prepared so that they are available because, part of the issue is that some companies say ‘we can’t find them’. Good news is that, now, it is a little hard to say that because there are more than enough qualified women that are available however, note that you might be technically competent but you may not be skilled to do other things required. That is why other programs that WIMBIZ for instance is running, is to fill the gaps so that you will not have that excuse. The women are having what you need and I think we are making process. Though it needs to be faster nevertheless, progress is being made. It is important to have diversity on boards because any smart company knows that diversity only adds value to you. You can’t be looking at issues form a 180 degrees view, you need a 360 degree view to look at matters and except you have men and women together at the table, you can never have a 360 degree view on anything because we look at things differently. So, it is in the interest of institutions to have that diversity on the board to the best that they can. In addition, more women are now building successful businesses so they have control of who gets on their board and as such can influence it in many other ways. I am positive that we will get there.

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Access Bank Rateswatch Market Analysis and Outlook: November 22– November 29, 2019

KEY MACROECONOMIC INDICATORS GDP Growth (%)

2.28

Q3 2019 — higher by 0.17% compared to 2.12% in Q2 2019

Broad Money Supply (N’ trillion)

35.03

Decreased by 0.53% in Sep’ 2019 from N35.22 trillion in Aug’ 2019

Credit to Private Sector (N’ trillion) Currency in Circulation (N’ trillion)

25.47 2.01

Increased by 2.61% in Sep’ 2019 from N24.82 trillion in Aug’ 2019 Decreased by 0.66% in Sep’ 2019 from N2.02 trillion in Aug’ 2019

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

11.61

Increased to 11.61% in October 2019 from 11.24% in September 2019

Monetary Policy Rate (%) Interest Rate (Asymmetrical Corridor)

13.5 Adjusted to 13.5% in March 2019 from 14% 13.5 (+2/-5) Lending rate changed to 15.5% & Deposit rate 8.5%

External Reserves (US$ million) Oil Price (US$/Barrel) Oil Production mbpd (OPEC)

39.97 63.90 1.81

November 20, 2019 figure — a decrease of 1.15% from November start November 21, 2019 figure— an increase of 1.67% from the previous wk October 2019 figure — a decrease of 2% from September 2019 figure

COMMODITIES MARKET

STOCK MARKET Indicators

NSE ASI Market Cap(N’tr)

Friday

22/11/19

15/11/19

26,991.42 13.10

26,851.68 13.07

Volume (bn)

0.21

0.47

Value (N’bn)

2.84

5.59

MONEY MARKET NIBOR Tenor

Friday Rate

(%)

22/11/19

Change(%)

Indicators

22/11/19

Energy Crude Oil $/bbl) Natural Gas ($/MMBtu) (55.87) Agriculture Cocoa ($/MT) (49.26) Coffee ($/lb.) Cotton ($/lb.) Sugar ($/lb.) Wheat ($/bu.) Metals Change Gold ($/t oz.) Silver ($/t oz.) (Basis Point) Copper ($/lb.) 0.52 0.24

1-week Change

YTD Change

(%)

63.90 2.61

1.67 0.00

(0.87) (14.59)

2615.00 115.60 64.38 12.74 513.75

(1.80) 4.47 (2.69) (0.16) 0.83

35.07 (11.21) (16.93) (16.89) 18.51

1470.34 17.17 264.95

0.34 1.72 0.42

11.60 (0.12) (19.17)

15/11/19

3.71

14.07

(1036.0)

NIGERIAN INTERBANK TREASURY BILLS TRUE YIELDS

O/N CALL 30 Days

4.43 4.45 13.50

13.07 13.55 12.76

(864) (910.0) 74

Tenor

22/11/19

15/11/19

90 Days

12.59

11.78

80.7

1 Mnth 3 Mnths

9.78 10.11

9.80 9.45

6 Mnths 9 Mnths 12 Mnths

11.66 13.75 13.49

9.92 10.19 12.84

OBB

FOREIGN EXCHANGE MARKET Market

Friday

1 Month

(N/$)

Rate (N/$)

22/11/19

15/11/19

22/10/19

Official (N) Inter-Bank (N)

306.95 362.34

306.90 362.58

306.95 362.11

BDC (N) Parallel (N)

0.00 360.00

Indicators

AVERAGE YIELDS Friday

Friday

Change

(%)

(Basis Point)

22/11/19 3-Year 5-Year 7-Year 10-Year 20-Year 30-Year

0.00 11.79 12.05 12.31 12.74 13.36

15/11/19 0.00 11.60 12.28 12.25 12.85 13.19

0.0 18.8 (22.8) 5.9 (10.7) 17

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

Friday

Change

(%)

(Basis Point) (2) 66 174 356 65

ACCESS BANK NIGERIAN GOV’T BOND INDEX

BOND MARKET Tenor

Global Economy In the Eurozone, the quarterly economic growth remained soft in the third quarter of the year weighed on by a weak manufacturing sector and uncertainty surrounding global trade. According to Eurostat, the figure stood at 0.2% in Q3 2019, the same as the previous period. The economies of Germany and Italy expanded a meagre 0.1% quarter-on-quarter and Germany thus narrowly dodged a technical recession. However, France and Spain kept up the pace during the quarter, growing by 0.3% and 0.4% respectively. Elsewhere in East Asia, Japan recorded its first trade surplus in 4 months in October 2019. This is an improvement over the deficit $1.13 billion (JPY 123 billion) recorded in the preceding month. The Ministry of Finance revealed that the nation posted a surplus of $160 million (JPY 17.3 billion) in the reference month – October 2018: $4.19 billion (JPY 456 billion deficit). Exports and imports both slumped by 9.2% and 14.8% year-on-year during the month. Exports came in at $60.6 billion (JPY 6.58 trillion) and imports came in at $60.4 billion (JPY 6.56 trillion).

Friday

Change

(%)

(Basis Point)

22/11/19

15/11/19

Index Mkt Cap Gross (N'tr)

3166.01 9.89

3159.92 9.87

0.19 0.18

Mkt Cap Net (N'tr) YTD return (%)

6.46 28.89

6.46 28.64

0.08 0.25

YTD return (%)(US $)

-26.93

-27.15

0.22

TREASURY BILLS (MATURITIES) Tenor

Amount (N' million)

Rate(%)

Date

91 Day

4,384.18

7.7998

13-Nov-2019

182 Day

12,920.90

13-Nov-2019

364 Day

107,938.48

12.94

13-Nov-2019

Domestic Economy The nation's economy advanced at a faster pace in Q3 2019, making it the second highest quarterly rate recorded since 2016. The economy grew by 2.28% year-on-year in real terms, higher than the growth of 2.12% (revised) in the previous quarter. This represents a 0.17% increase in the growth rate over the preceding quarter. In the reference quarter, aggregate GDP stood at N37.81 trillion in nominal terms. This performance is higher than N33.37 trillion recorded in Q3 2018, representing a 13.30% growth. The Nigerian economy is broadly classified into the oil and non-oil sector. In the oil sector, average daily oil production came in at 2.04 million barrels per day (mbpd), its highest in more than three years. This output was 0.02mbpd higher than the revised oil production in Q2 2019 (2.02mbpd). Real growth of the oil sector was 6.49% year-on-year during the quarter and its contribution to GDP was 9.77%. the non-oil sector climbed higher by 1.85% in real terms, lower by 0.20% when compared to Q2 2019. The sector was majorly driven by the information & communication sector, agriculture, mining & quarrying, transportation & storage and manufacturing. The non-oil sector contribution to GDP came in at 90.23% (Q2 2019:91.02%). In other news, The National Bureau of Statistics revealed that inflation rate for October 2019 printed at 11.61% year-onyear from 11.24% in September 2019. Prices rose mainly for food, due to the ongoing closure of the country's land borders and the impact of unusual heavy rainfall on harvest. This represents a 0.37% rise in the rate compared to the prior month and majorly due to increases in the price of food. Core inflation eased slightly to 8.88% from 8.94% in the previous month and food inflation jumped to 14.09% from 13.51% in September 2019. Food inflation on a year-on-year basis was highest in Kebbi state (17.53%) and lowest in Bayelsa state (9.95%). Stock Market The bulls-maintained dominance in the local bourse last week with the All Share Index (ASI) gaining momentum. The upward move was mainly impacted by gains recorded in medium and large capitalised stocks in the Fast-Moving Consumer Goods (FMCG) and industrial goods sectors. Consequently, the All Share Index (ASI) rose by 0.52% to 26,991.42 points from 26,851.68 points the preceding week. Similarly, market capitalization rose 0.24% to N13.10 trillion from N13.07 trillion the prior week. In

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

the near term, the equities market would likely sustain gains of the previous weeks, as investors continue to position in value and dividend paying stocks with expectations of making solid gains. Money Market Average rates plummeted in the week ended November 22, 2019 as the market received Open Market Operation (OMO) maturity of about N390billion and retail refund of about N250billion. Short-dated placements such as Open Buy Back (OBB) and Over Night (O/N) rates declined to 3.71% and 4.43% from 14.07% and 13.07% respectively the previous week. However, the 30-day and 90day Nigeria Interbank (NIBOR) rate jumped to 13.50% and 12.59% from 12.76% and 11.78% the prior week. This week, rates may go northwards due to anticipated OMO auction, despite the expected OMO maturity. Foreign Exchange Market At the CBN official window, the Naira traded flat against the Dollar to close at $/N306.95, same as the prior week, while the NAFEX rate appreciated by 24kobo to close at $/N362.34 from $/N362.58 the week before. The local currency remained unchanged at the parallel market segment, trading at $/N360. The appreciation witnessed in the NAFEX segment as supply of funds outweighed demand in the market. This week, rates are expected to remain around current levels with the apex bank's continuous interventions. Bond Market Movement in average bond yields were mixed even as activities at the Bond market were subdued during the week relative to the previous week despite liquidity in the system. Nonetheless, mild buying interest on the longer end of the curve was observed owing to unmet demand at the bond auction during the week. Yields on the five-, seven-, ten- twenty-year, and thirty-year debt papers closed at 11.79%, 12.05%, 12.31%, 12.74% and 13.36% from 11.60%, 12.28%, 12.25%, 12.85% and 13.19% respectively the previous week. The Access Bank Bond index rose marginally by 6 points to settle at 3,166.01 points from 3,159.92 points the prior week. Market is expected to trade bullish in the near term owing to the expected OMO maturity. Commodities Oil prices held near two-month highs last week boosted by expectations of an extension to OPEC+ production cuts although doubts over U.S. and China trade talks capped gains. Bonny light, Nigeria's benchmark crude gained 1.67% or $1.05 to close the week at $63.9 per barrel. Precious metal prices were on track for a second straight weekly gain last week, as uncertainties about the fate of a “phase one” trade deal between the United States and China lingered. Gold inched up 0.34% to $1,470.34 per ounce and silver rose by 1.72% to $17.17 per ounce. This week, we see oil prices hovering around current levels as uncertainties around the trade deal continues to prevent prices from majorly moving higher. Precious metals prices may remain bullish given the ongoing uncertainty regarding trade talks.

MONTHLY MACRO ECONOMIC FORECASTS Variables

Nov’19

Dec’19

363

362

363

Inflation Rate (%)

11.70

11.81

12.1

Crude Oil Price (US$/Barrel)

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

www.businessday.ng

https://www.facebook.com/businessdayng

Jan’20

Exchange Rate (NAFEX) (N/$)

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

MARKETS INTELLIGENCE

Supported by Asset Management Corporation of Nigeria (AMCON)

Stocks

Currencies

Commodities

Rates + Bonds

Economics

Funds

Week Ahead

Watchlist

Cadbury, Nestle, Flour Mills record largest profit growth among peers BALA AUGIE

ome consumer goods firms have stayed afloat even as their peers grappled with deteriorating margins brought on by a myriad of challenges. Of the 10 companies under our coverage, Only Cadbury Nigeria Plc, Nestle, and Flour Mills recorded profit expansion, thanks to sales growth, cost cuts, and a reduction in finance charges. The three winners are able to turn each Naira invested in sales into higher profit, but their stocks, just like their rivals, have remained beaten down. Cadbury’s third quarter net income surged by 246.15 percent, Nestle (+11.24 percent), and Flour Mills (+16.45 percent), according to data gathered by BusinessDay. On the other hand, Nigerian Breweries recorded a 17 percent reduction in profit; International Breweries, (-130); Honeywell Nigeria, (-14.80 percent); Pz Cussons, (-12.10); Dangote Sugar (-435.15 percent), and (-54.25 percent). International Breweries, and Guinness, fell off the cliff as they recorded losses of N16.45 billion, and N370.10 million respectively. Dangote Flour Mills- a firm

that has been incurring recurring loss- had been sold by its Billionaire owner Aliko Dangote before it was delisted from the bourse.

Olam International had paid N120 billion as purchase consideration for the miller. Consumer goods firms are

feeling the pang of an economic downturn than any other sector in Africa’s largest economy as consumers have refused to open their purse strings. The cumulative net profit of the 10 largest consumer goods firms that have released third quarter results showed net income fell by 28.92 percent to N54.96 billion, from N77.33 billion as at September 2018, according to data gathered by BusinessDay. That compares with a 20.17 percent drop in 2018/17 financial year, but the bottom line reached an all-time high of +189.12 percent in 2017/2016, when a price hike across product brand help compensate for rising cost of production. Combined sales followed the same downward trajectory as it increased by 1.0 percent to N1.10 trillion as at September 2019, this compares to 7.51 percent drop in 2018/17, but it increased by 30.71 percent in 2017/2016 financial year. The latest GDP figures show the sector is a laggard, and the outlook continues to be bleak. According to the National Bureau of Statistics (NBS), real GDP expanded by 2.28 percent in the third quarter, faster than the revised figures of 2.10 percent for the second quarter (Q2) of 2019. However, the trade sector, which contributes. 15.2 percent to the overall GDP recorded its second consecutive contraction, down by 1.5 percent in the third quarter (Q3) of 2019. The outlook for consumer goods industry is bleak as a hike in Value added Tax (VAT) to 7.50 from 5 percent by the Federal Government will squeeze consumer wallets. Experts have warned that an increase in excise duties on carbonated drinks will hurt companies’ margins as they will find it difficult to pass on the cost to a beleaguered consumer. The decision by Federal Government to close the borders (which is responsible for spiralling inflation) has hindered many companies from shipping their products in and out of the country. Data from the National Bureau of Statistics (NBS) revealed that Nigeria’s consumer inflation rose by 36bps to 11.61 percent in October, representing a 17-month high. Unemployment rate is at an alltime high of 23 percent.

P.E

SHORT TAKES 7.04% The stock market Thursday gained the most since late May as big domestic investors who are facing limited investment options returned, pushing the banking index to highest daily gain since January 2016. The banking index rose 7.04 percent, while the main equity gauge advanced 1.91 percent as attractively priced banking stocks returned much-needed liquidity to one of the worst performing stock markets globally. The market-frenzy follows a move by the CBN to limit participation in high-yielding OMO market which sent real returns on T-bills below zero, forcing big domestic investors back to equities. The move to restrict the OMO market to banks and foreign investors have left big domestic investors, mostly pension funds and insurance companies, with idle funds and caused heavy demand at a primary market NTBills auction on Wednesday. However banking stock fell 1.68 percent Friday.

$1bn Last week, US-based global retail electronic network, Visa, announced a strategic partnership with Interswitch to acquire a significant minority equity stake in the Nigerian-based paymentsprocessing company, valuing Interswitch at $1 billion. Visa agreed to pay $20 million for a 20 percent stake in Interswitch, said to be planning a London Stock Exchange (LSE) debut next year. The investment makes Interswitch Nigeria’s first home-grown unicorn (a startup valued at $1bn or more) and one of few in Africa

N3bn C&I Leasing Plc last week notified its shareholders, stakeholders, the Nigerian Stock Exchange (NSE) and the general public, that the Company has obtained an approval from the Securities Exchange Commission (SEC) to conduct the signing ceremony with regards to the proposed Rights Issue of 539,003,333 ordinary shares of 50kobo each at N6 per share.

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

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team patrick.atuanya@businessdayonline.com www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

MARKETS INTELLIGENCE

Stocks close flat despite GDP growth report for Q3 ... Analysts predict the economic performance could spur a santa rally IFEANYI JOHN

y 9am last Friday, economists in the country were in joyous mood as the Nigerian Bureau of Statistics reported that the economy had grown by its second highest quarterly rate since 2016. While this is a positive news for the government after fears that a border closure and a pick up in inflationary trends in the country may hurt economic growth performance in the third quarter of 2019 proved to be wrong, the 2.28 percent growth in the economy was greeted with zero excitement at the stock market. A l t h o u g h t h e s t o ck market closed positive on Friday (for the fourth consecutive trading day), the All Share Index rose by only 0.44 percent as news on the economic growth failed

to significantly spur demand pressure in the local bourse. A closer look at the stock market performance

in the days leading up to the economic announcement showed that investors may have been anticipating

a good economic performance as the stock market rose for three consecutive days leading up to the an-

nouncements. How e ve r, n o t e ve r y economist is of the opinion that the stock prices are fully reflecting changes in economic fundamentals. “A lot has changed in the economy in the last 2 weeks and we are not seeing it fully reflected in the stock market just yet,” said Obinna Uzoma, chief economist at EUA Intelligence. “In my opinion, the stock market still has a lot of room to climb higher. The low economic growth rate masks a lot of fantastic and surprising things going on in the economy right now. For example, the oil sector is growing twice as fast as the overall economy this year which is better than expected but the oil and gas index has declined -21.9% year to date,” Uzoma said to BusinessDay The oil sector average growth rate this year moved to 4.07 percent,

higher than the 2.17 percent average growth achieved by the overall economy so far this year. After suffering a sector decline in Q1, recording a negative growth of -1.46 percent, the oil sector bounced back recording 7.17 percent in Q2 and 6.49 percent in Q3. However, oil stocks have declined steadily during the year. “I think we may see better performance in the market next week, we have already seen that the last 2 weeks have been better than the past few months in the stock market. As more and more positive stories enter into the market, it very likely that the stock market will continue to rise till late December. This could really be the start of a santa rally, we just have to be patient with the market,” said Tochukwu Okafor, a Lecturer in Finance at Covenant University.

Small cap stocks lead the charge as bulls push NSE Index higher …Neimeth, Cornerstone and Chams end week as best performing stocks

nvestors are gradually becoming more confident to invest in the stock market after another week of gains at the Nigerian Stock Exchange. The stock market closed the week trading at 26,991 points, up by about 0.5 percent during the past week. Last week, as much as 40 stocks appreciated in price, higher than 39 stocks which posted a positive performance in the previous week. The top performers were largely small cap stocks where investors seeking bargain prices have caused significant stock price jumps in the market. Neimeth was the top performer during the week with a stock price jump of around 40 percent as the stock rose from 40 kobo to 56 kobo during the past week. Behind Neimeth were Cornerstone (35.48%), Chams (33.33%), Ikeja Hotel (31.58%) and Conoil (20.13%). Other top performers dur-

ing the week were Learn Africa (18.87%), Forte Oil (13.84%), Ekocorp (10%), Flour Mills (9.85%) and McNichols (9.52%). “Investors took particular interest in smaller companies during the week in search for big gains in the market. 6 out of the top 10 performers were trading below N1 during the week, only 3 stocks among the top 10 performers had their stock prices above N10, show-

ing the over concentration of small cap stocks during the past week,” said Obinna Uzoma, chief economist at EUA Intelligence. Amidst decent returns from small cap stocks during the week, it was not a fantastic week for all investors as some large cap stocks took a beating in the market during the past week. In total, as much as 23 stocks declined in value during the past week, higher than the 11 recorded

in the preceding week while 102 stocks saw their prices relatively unchanged, lower than the 116 recorded in the previous week. The biggest laggards in the stock market during the past week were: Lasaco (-20.69%), Jaiz (-11.27%), Associated Bus Company (-8.89%), Sterling (-8.52%) and Aiico (-6.58%). Other market decliners in the past week were Wema (-6.58%), Transcorp

‘

The top performers were largely small cap stocks where investors seeking bargain prices have caused significant stock price jumps in the market

‘

IFEANYI JOHN

(-6.42%), Ecobank (-6%), Nascon (5.72%) and Unilever (5.68%). Noticeably, none of the banks made up the top 10 performers in the market during the past week but three slipped into the worst performers list as investors worry that lower treasury yields will impact the revenue and performance of banks www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

during the final quarter of the year. Investors are also wary of the impact of the billions in potential sterilised funds the banks will be forced to park at the CBN after the apex bank withheld almost N500 billion in additional cash reserve ratio from 12 banks who failed to meet up the 60 percent loan to deposit ratio requirement at the end of September this year. Investors are also waiting to see how many of the banks will meet up the new CBN requirement of 65 percent loan to deposit ratio at the end of the year. “While it is very clear that investors are still very cautious, it is very likely that they won’t soon throw caution to the wind as the hunt for yield begins. I think the stock market should brace up for billions that will flow into it till year end so long as treasury yields remain so low in the market. I just hope that the strange yield curve doesn’t lead to a financial crisis in the country or trigger a stock market bubble,” Uzoma concluded.

Monday 25 November 2019

BUSINESS DAY

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

Top Gainers/Losers as at Friday 22 November 2019 LOSERS

GAINERS Company NESTLE OKOMUOIL FO CCNN IKEJAHOTEL

Opening

Closing

Change

N1150

N1250

100

Company

Opening

Closing

Change

N51.5

N50.5

-1

N50

N55

N144.9

N144.4

-0.5

N16.6

N18.1

1.5

DANGCEM DANGSUGAR

N13.1

N12.75

-0.35

N18

N19

GUARANTY

N29.5

N29.4

-0.1

N1.14

N1.25

0.11

UBA

N7.6

N7.5

-0.1

ASI (Points) DEALS (Numbers) VOLUME (Numbers) VALUE (N billion) MARKET CAP (N Trn)

26,991.42 3,630.00 207,401,139.00 2.836

Iheanyi Nwachukwu

L-R: Kasumu Garba Kurfi, honourable member, Investments and Securities Tribunal (IST); Edward O. Ajayi, honourable member, IST; Kolade T. Olawuni, Babalakin & Co; Tinuade Awe, executive director, Regulation, The Nigerian Stock Exchange (NSE); Jude I. Udunni Esq. acting chairman, IST; Oghenekevwe Okpobia, head, Litigation/ADR NSE; Albert L. Otesile, honourable member, IST; Mamman Bukar Zargana honourable member, IST; Olumide K. Famuyiwa, Partner, Babalakin & Co; Abubakar A. Ahnad Esq. honourable member, IST during Investments and Securities Tribunal Closing Gong Ceremony at the Exchange today.

stocks, in expectation of making solid gains”, said United Capital Research analysts in their November 21 note. NSE Banking Index (-0.86percent), NSE Consumer Goods Index (+6.02percent), NSE Industrial Goods Index (-2.25percent), NSE Insurance Index (+0.46percent), and NSE Oil and Gas Index (+2.16percent). Though the banking sector lost in the review trading week, market watchers are still of the opinion that there will be renewed interest in banking stocks as domestic investors search for bargains in the market. Investors exchanged

1.416 billion shares worth N17.249 billion in 20,303 deals as against 2.084 billion shares valued at N33.867 billion that exchanged hands the preceding week in 21,849 deals. The Financial Services industry (measured by volume) led the activity chart with 880.236 million shares valued at N8.089 billion traded in 12,488 deals; thus contributing 62.15percent and 46.90percent to the total equity turnover volume and value respectively. The Conglomerate industry followed with 283.854 million shares worth N1.587 billion in 841 deals; and the Consumer Goods industry with a turno-

FTSE 100 Index 7,325.78GBP +87.23+1.21%

Nikkei 225 23,112.88JPY +74.30+0.32%

S&P 500 Index 3,104.80USD +1.26+0.04%

Deutsche Boerse AG German Stock Index DAX 13,163.88EUR +26.18+0.20%

Generic 1st ‘DM’ Future 27,791.00USD +43.00+0.16%

Shanghai Stock Exchange Composite Index 2,885.29CNY -18.35-0.63%

13.102

NSE ASI rises by 0.52% in one week n the trading week ended November 22, the benchmark performance indicator of Nigeria’s stock market increased by 0.52percent. The Nigerian Stock Exchange (NSE) All Share Index (ASI) closed the week at 26,991.42 points from week-open level of 26,851.68 points. The market closed positive for four consecutive days on the back of improved sentiments towards the equities market. Forty equities appreciated in price during the review week, higher than 39 equities in the preceding week. Twenty-three equities depreciated in price, higher than 11 equities in the preceding week, while 102 equities remained unchanged, lower than 116 equities recorded in the preceding week. The stock market’s negative return year-to-date (ytd) moderated to -14.12percent. The NSE 30 Index, which tracks the top 30 companies in terms of market capitalisation and liquidity increased by 1.71percent. The value of listed equities on the Nigerian Bourse decreased by 0.34percent, from N13.071trillion recorded in the preceding week to N13.027trillion. “Looking ahead, we still expect investors to position in value and dividend paying

Global market indicators

ver of 80.804 million shares worth N2.349 billion in 2,871 deals. Trading in the top three equities –UACN Plc, FBN Holdings Plc and Access Bank Plc (measured by volume) accounted for 554.855 million shares worth N4.310 billion in 4,113 deals, contributing 39.18percent and 24.98percent to the total equity turnover volume and value respectively. Also, 42,085 units of Federal Government Bonds valued at N47.490 million were traded in 30 deals, compared with a total of 31,474 units valued at N33.486 million traded in the preceding week in 12 deals.

Uduk named fellow as 15 professors, 215 others become stockbrokers

he Chartered Institute of Stockbrokers (CIS) at the weekend, named the acting Director General, Securities and Exchange Commission (SEC) Mary Uduk and CIS’ Registrar and Chief Executive Adedeji Ajayi, Fellows while 230 newly qualified stockbrokers, the single largest in the Institute’s history were inducted as Associate Members. Besides, the Managing Director, Central Securities Clearing System Plc, Jalo Waziri; General Manager, the Nigerian Stock Exchange, Bola Adeeko, 15 university Professors, other lecturers and some top civil servants made the list of latest Securities Dealers in Nigeria at the colourful investiture and induction ceremony which marked the end of the Institute’s 23rd Annual Conference in Lagos. Addressing the newly qualified stockbrokers at the Investiture and Induction ceremony which marked the end of the Institute’s 23rd Annual Conference at the weekend in Lagos, the President, Dapo Adekoje who congratulated both new the Fellows and Associates urged them to uphold the tenets of integrity and professionalism in order to be good ambassadors of the Institute. Adekoje explained that membership of some university dons would upscale the Institute’s research base as many of them had done several researches on the capital market. According to him, the development would enhance

teaching of Capital Market Studies in the tertiary institution as envisioned by the Institute’s Governing Council. “For our friends joining us for the first time, the Chartered Institute of Stockbrokers was established by law, specifically Act 105 of 1992 (Laws of the Federal Republic of Nigeria) and given clear mandates to determine the standard of knowledge required to practice as a core professional in the Securities and Investment industry in Nigeria, provide the required training, and duly certify those candidates that are deemed qualified to practice. In effect, no person can carry out core professional functions in the industry without obtaining appropriate certification from CIS. “In recent years, and in recognition of the changing dynamics of the financial industry worldwide, the institute has made the qualification process much easier, even though every single one of our examinations remain very high and world class in standard. Unlike in the past when we had one omnibus Professional Examination programme to cover every aspect of the securities profession, the institute now has several differentiated professional areas available for candidates who choose to specialize in any. “So, our young entrants today can choose to focus on Fixed Income Dealing, Commodity Trading, Custodianship, Equity Dealing, or Financial Advisory Services.

the Company expects to grow its current gross premium position for both the general and Life businesses. The Group recorded a commendable growth in premiums at 42percent year-onyear to close at N13.89billion in 2018. Underwriting profit grew to N2.15billion in 2018, a 40percent annual growth from the prior period driven largely by the growth in premiums and better claims expense management. The strategic drive for im-

proved top line performance and better market positioning was a key contributor to the 11percent growth in operating expense recorded. Asset portfolio rebalancing for strategic growth was a major driver of the 65percent increase in cash and cash equivalent from the December 2017 position. Increase in reinsurance recoverable across key product classes largely impacted the growth in reinsurance assets for the review period.

Wapic Insurance N5.9bn Rights Issue opens Iheanyi Nwachukwu

he acceptance list for Wapic Insurance Plc Rights Issue opened on Wednesday November 20. The company is offering existing shareholders 15,613,194,623 ordinary shares of 50 kobo each at 38kobo per share. The Rights Issue is on the basis of 7 new ordinary shares for every 6 ordinary shares held as at the close of busi-

ness on 19 September 2019. The Acceptance list closes on Tuesday December 31, 2019. Chapel Hill Denham Advisory Limited is the Lead Issuing House on this transaction. The Rights are tradable on the Nigerian Stock Exchange between November 20, 2019 and December 31, 2019. Wapic Insurance Plc is raising the N5.93billion to enable the company invest in Wapic Life Assurance Limited to meet regulatory capital requirements and invest www.businessday.ng

in Wapic Insurance (Ghana) Limited. Over the last half century, Wapic has developed strong expertise in risk management and underwriting, assisting corporate entities and individuals with various classes of cover across a wide segment of the Nigerian demographics. The company operates two wholly owned business lines –Wapic Life Assurance Limited, which operates in Nigeria and, a regional foot-

print in Ghana, Wapic Insurance (Ghana) Limited, as its subsidiaries. The company’s business lines are split into large corporates, financial institutions, public sector, high net worth individuals (HNIs) and retail sales/distribution for underwriting, investment and claims management. Wapic has a new five-year strategy plan for 2019 to 2023 to guide its aspirations to be a top 3 Nigeria Insurance Company by 2023. To achieve this,

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

GDP Report Nigeria’s trade sector slumps into recession in Q3 amid border closure OLUWASEGUN OLAKOYENIKAN, BUNMI BAILEY & IFEANYI JOHN

ears of possible recession in the Nigerian economy next year may have been expelled from the minds of investors and analysts after the National Bureau of Statistics (NBS) reported that the economic growth in the country in the third quarter this year was the second highest since the recession in 2016. However, not all parts of the economy remain strong as the trade sector slumped into recession in the third quarter for the fourth consecutive year, a BusinessDay analysis shows. The trade sector shrank by 1.45 percent on a yearon-year basis in the third quarter of 2019 from a decline of 0.25 percent in the preceding quarter, the latest

NBS data show on Friday. This is no surprise to analysts as they had predicted earlier in October 2019 that the sector would be in recession again due to border closure, poor government policies and weaker consumer spending continue to subdue growth. Analysts at Lagos-based

Telecommunication grows 12.16% in Q3 as ICT contributes 11.34% to GDP OLUFIKAYO OWOEYE

he information communication sector grew 9.88percent in Q3 2019 from 9.01percent in Q2 2019 and 12.09percent in Q3 2018. Telecommunications & Information Services under the Information and Communication sector grew by 12.16percent in Q3 2019 from 11.34percent in Q2 2019 and 14.97percent in Q3 2018. The sector which comprises four activities includes telecommunication and information services; publishing motion picture; sound recording and Music Production; and Broadcasting. As a share of real GDP, the sector contributed 11.34percent in Q3 2019, higher than in the same quarter of the previous year in which it accounted for 10.55percent of real GDP, but lower than the preceding quarter, in which it accounted for 14.55per-

cent In nominal terms, the third quarter of 2019 saw the sector grow by 11.19percent (year-onyear), a –2.21percent points decrease from the rate of 13.40percent recorded in the same quarter of 2018, and 29.35percent points lower than the rate recorded in the preceding quarter. The Quarter on quarter growth rate recorded in the Q3 was –33.30%. The sector contributed 8.54percent to nominal GDP in Q3 2019, lower than the 8.70percent recorded in the same quarter of 2018 and the 13.83percent it contributed in the preceding quarter. The sector recorded a growth rate of 9.88percent in real terms, year on year. This indicates a decrease of 2.21percent points from the rate recorded in the corresponding period of 2018. Quarter on quarter, the sector exhibited a growth rate of 14.89percent in real terms.

investment house United Capital in a note to clients attributed the contraction to a combination of factors including “a sustained difficult operating environment, constrained consumer wallets, partial closure of border and lack of economic stimulus.” The Federal Government of Nigeria partially

closed its land borders with neighbouring countries against imported goods on August 20, and followed it up with a complete closure against the movement of all goods in October to stem the tide of smuggling activities in a country which relies on importation to meet its rising demand.

“The impact of the exchange rate revision for duties payment should continue to bite hard while the closure of the border in August would obviously impact negatively as all exports and imports must now be done via the ports increasing congestion of activities within the ports,” said Ayorinde Akinloye, a consumer goods analyst at Lagos-based CSL Stockbrokers. The trade sector is the second-largest contributor to the Nigerian economy after Agriculture. The sector’s contribution fell to 15.23 percent between July and September 2019 compared with 15.80 percent input in the corresponding period a year earlier, no thanks to the downturn in the sector. Meanwhile, the analysts expect the trade sector to continue shrink as the complete closure of land borders impacts trading activities

negatively and weak consumer wallet constrain potential upsides from festivity. “We expect trade to record another negative because of the border closure. The bulk of our trade sector is usually through the seaport, land is maybe 5 percent, but the fact is that things like food is imported though the land border might have an impact. And with the weak economy and income, people spend more on food. Also, the border closure has impacted on food prices” said Eronmosele Aziba, a consumer analyst, Tellimer Group. While the border closure has translated to security and economic benefits for the country, the federal government extended the border closure to January 31, 2020 to enable it achieve strategic objectives, according to a statement issued by the Nigeria Customs Service.

Nigeria’s manufacturing sector records fastest growth in Q3 2019 on improved CAPEX disbursement DAVID IBIDAPO

he Nigerian manufacturing sector in the third quarter of the year 2019, recorded its fastest growth so far in the year after it expanded 1.10 per cent against a negative growth of 0.13 per cent in the previous quarter. This is evident in the recent National Bureau of Statistic (NBS) GDP numbers for Q3 2019 which recorded real GDP growth of 2.28 per cent, fastest in the year. An overview of the manufacturing sector revealed that GDP growth in the cement subsector quarter on quarter, grew 11 per cent at a constant price of GDP during the period. Also, its year on year growth stood at 6.87 per cent, outperforming the industry average of 0.42 per cent. This suggests an increase in construction activities on the back of capital expenditure disbursement in Q3 2019. According to a report by United Capital, “notably, growth in the manufacturing, and construction sector, that largely depends on government spending should receive a further boost in Q4 2019 amid the recent disbursement by the minister of finance for CAPEX.” However, some analysts believe that the recent policy

of the CBN to increase loan to deposit ratio to 65 per cent in other to boost lending and spur growth in the real sector has rubbed off on the performance of the manufacturing sector of the economy. “In our opinion, the recent policy by the Central Bank to improve lending and support growth in the real sector appears to be kicking in. The implementation of the loan-to-deposit ratio (LDR) guideline early enough in the quarter, compelled banks to lend to the real sectors and had a multiplier effect on output from both the real sectors and the financial & insurance sector and by extension aggregate

economic output,” a report by CSL stockbrokers explained. The sector which accounts for 9 per cent of the GDP as at Q3 2019 in real terms and 12 per cent in nominal terms is still threatened by the operating challenges in the Nigerian economy has businesses are largely affected by deficiencies in the infrastructural position of the country. While we might be quick to celebrate the improvements recorded in the manufacturing sector after a decline that was recorded in the previous quarter, for a sector that has the potential to grow at 3.39 per cent in Q1 2018, an average growth of 0.59 per cent so far in 2019 shows the

pitiable state of the Nigerian economy. The manufacturing PMI in the month of October stood at 58.2 index points, indicating expansion in the manufacturing sector for the thirty-first consecutive month after a marginal decline in September 2019. Hence, the outlook for sustained growth in the sector is positive. “In all, we believe the continued operating challenges in the economy and absence of the implementation of major policy reforms thus far during the quarter, would keep growth at sub-optimal levels (below population growth rate),” report from United capital stated.

Monday 25 November 2019

BUSINESS DAY

GDP Report

Nigeria’s Agric sector grows 2.28% in Q3, fastest since Q1 2019 MICHAEL ANI

igeria’s agricultural sector grew 2.28 per cent in the third quarter of the year; the latest data released by the National Bureau of Statistics (NBS)

have shown. This is the fastest growth reported in the sector since the first quarter of 2019 when the sector grew by 3.17 per cent on an annual basis. Growth in the second quarter stood at 1.79 per cent, while in Q3 2018, the sector grew by 1.91 per cent. In real term, the sector recorded a value of N5.4 trillion from the N3.86 trillion and N5.288 trillion recorded in Q2 2019 and Q3 2018, respectively. Analysts say the growth was due mainly to the bountiful harvest season during the quarter as farmer’s ramp up harvest to meet the increasing demand of food products that come with the period. “In Q3, you have more of output compared to the second quarter where farmers are still cultivating,” said Ayodeji Balogun, country manager, AFEX Commodities Exchange. The agricultural sector comprises four different subsectors including crop production, livestock, forestry and fishing. Forestry reported the biggest real growth in the sector, growing by 3.78 per cent year on year. Crop production, fishing and livestock followed, grew 2.41, 1.68 and 0.02 per cent within the period. In real value term, that’s N44 billion, N4.99 trillion, N78 billion and N291 billion, based on the growth order.

Nigeria’s agricultural sector is largely made up of smallholder farmers engaged in crop production, livestock, forestry and fishing. To boost growth in the sector, Nigeria embarked on several policies aimed at curbing the country’s huge import bills while boosting domestic production. Part of such policies was a directive by President Muhammadu Buhari to the Central

Bank (CBN), to stop the provision of dollars to importers of agricultural produce into the country. With the policy, alongside the Anchor Borrowers—an intervention program aimed at providing credit facilities to smallholder farmers—would assist the country in attaining food sufficiency. As at September end, a total of N205.8 billion has been disbursed to over 1.2 mil-

lion smallholder farmers across seventeen commodities under the anchor borrower’s scheme, according to latest data released by the Central Bank. However, despite the huge investment into the sector, growth has been tepid at a little over 2.4 per cent, as farmers complain post-harvest loses arising from the dilapidated road infrastructure and poor storage facilities.

Oil GDP grew 6.49% in Q3 2019, here is why DIPO OLADEHINDE

igeria’s oil sector is gradually gaining momentum after recording a growth rate of 6.49 per cent caused by market conditions, a development which led to an increase in crude oil production. Despite lower global prices, the oil sector has made modest progress this year. Production is up thanks to the Egina oilfield coming online and fewer acts of sabotage by militants in the Niger Delta. Nigeria recorded the highest quarterly growth in September since the last quarter of 2018 as the oil sector rose by 6.49percent while the non-oil sector rose by 1.85percent during the period. Growth rates in Nigeria have been bouncing back this year, though from a low base, after the oil sector, which accounts for around two-thirds of government revenue and 90percent of foreign exchange shrugged off its negative performance in the first quarter. “Oil sector growth saw its strongest momentum for some time in 2019, accelerating to more than 5 per cent year on year,” Razia Khan, chief Africa economist, Standard Chartered bank said. According to data from National Bureau of Statistics (NBS), the real growth of the oil sector was 6.49percent (year-on-year) in Q3 indicating an increase of 9.40percent points relative to rate recorded in the cor-

responding quarter of 2018. The rate was lower by –0.68percent points when compared to Q2 2019 which was 7.17percent. Quarter-on-Quarter, the oil sector recorded a growth rate of 18.88percent in Q3 2019. The sector contributed 9.77percent to total real GDP in Q3 2019, up from figures recorded in the corresponding period of 2018 as well as the preceding quarter, when it accounted for 9.38percent and 8.98percent respectively. Charles Akinbobola, a research analyst at Sofidam capitals said the growth recorded in Q3 2019 was driven more by environmental stability, relative peace in Niger delta and an increase in oil production. “No major export pipeline was shut

down due to leakages or maintenances which also aided production during the period,” Ologunro told BusinessDay. Crude production in the third quarter stood at 2.04 million barrels per day, its highest since the first quarter of 2016, the statistics office said. This output was 0.1mbpd higher than the daily average production of 1.94mbpd recorded in the same quarter of 2018 and 0.02mbpd higher than the revised oil production levels in Q2 2019 of 2.02mbpd. Nigeria’s oil and gas industry remains it’s most lucrative and viable investment opportunities as stakeholders believe that the oil and gas sector offers consistent opportunities in solving Nigeria’s dwindling

revenue. The economy, Africa’s largest, expanded by 0.17percent in the previous quarter and 0.47percent in the same period a year earlier. The country has struggled to shake off the effects of a 2016 recession that ended the following year. Experts in the oil and gas sector ranked reforming fiscal and regulatory terms by passing into law a competitive petroleum industry bill as the most urgent task needed to make an oil sector record a two digits growth rate. Next is domesticating the value chain and also ensuring the oil and gas sector provides linkages across the economy. Today, Nigeria is only capable of pumping some 2.5 million barrels of crude oil per day despite sitting on more than 40 billion barrels of proven reserves with its midstream and downstream infrastructure are arguably in worse shape than upstream production. Boosting other industries to reduce the Nigerian economy’s dependence on oil has been the aim of successive governments. With crude oil prices fluctuating recently, President Muhammadu Buhari’s administration has repeatedly promised to diversify the economy by developing its non-oil sectors. Friday’s data release comes ahead of the Central Bank’s announcement of its main interest rate on Tuesday and days after the statistics office said annual inflation was at a 17-month high in October.

Monday 25 November 2019

BUSINESS DAY

news Tek Experts secures prime VI office space... Continued from page 2

country manager for Tek Experts, told BusinessDay in an interview in September that Nigeria is one of the “biggest sites” for training engineering talents. The BusinessDay source also confirmed that as a result of the quality of engineers from Tek Experts, some investors have already paid in advance to the company. “We have an in-house talent acquisition team both represented at the global level and in sites locally as well,” Egunjobi said. “DNA is something that is extremely important for us at Tek Experts, so across the globe we foster a certain kind of culture that we strongly believe is one of our unique selling points to the customers. We require a kind of certain performance from people but what we value even more is the right culture, mindset, discipline, hardworking spirit, honesty, integrity, and punctuality.” Andela, one of the biggest firms training software engineers, let go of over 250 of its contracted junior developers in Lagos and Uganda as part

of a major shift in its model to focus only on senior developers. In an interview with BusinessDay, Andela said demand for junior software engineers was shrinking hence the decision. Meanwhile, Tek Experts is said to be planning on filling the gap in the supply of junior software engineers which it sees around the globe and on the continent. “The most important aspect here is with regard to skills development, so we recognise that the clouded option generally in Africa is in its baby steps so it is just growing,” Egunjobi said. “As a company serving a global customer, we are servicing customers who have adopted the cloud fully, who have been running on cloud for some years, who use a variety of different software or products and are on the cloud, which means that our engineers are able to interact with a very much matured customer than what you may be able to interact within the local market, and so skills development is a huge one,” he said.

How insurers are taking advantage of yield... Continued from page 2

shares over economic uncertainties and lack of transformation policy on the part of the present administration. The Nigerian Stock Exchange (NSE) All Share Index (ASI) has returned -14.13 year to date. AIICO Insurance, the largest quoted insurance company by asset, recorded an underwriting loss of N3.21 billion as at September 2019, but its net income surged by 157.51 percent in the period under review, thanks to investment income of N7.22 billion. Cornerstone Insurance saw underwriting profit dip by 12.26 percent to N1.46 billion in the period under review, but net income surged by 327.81 percent to N2.81 billion in the period under review, thanks to 219.88 percent surge in investment in fixed income securities. While AXA Mansard’s underwriting profit was down

3.15 percent to N4.29 billion in the period under review, a 29.08 percent increase in investment income to N8 billion helped the largest insurer by market capitalisation post a profit of N2.11 billion. However, analysts are of the view that Nigerian insurers should be cautious on how they invest their coffers to generate investment return since the environment is fraught with interest, inflation, and currency risk. They argued that companies should be able to meet obligation to policy holders in form of claims payment as and when due. “There is a guideline on how you invest the money in Treasury bills, bonds and real estate,” said Moronfola Monsuru, actuarial analyst at Wapic Insurance. “It deals with a lot of risk and firms are usually cautious because the money belongs to policy holders and it will be used to settle claims.”

Oil companies now require Buhari’s consent ... Continued from page 2

employee on an unwilling employer. Besides, only statutory employment has this kind of protection,” he said. Nwani argued that the cyclical nature of the oil and gas sector allowing for boom and bust makes the guideline unrealistic. “When oil prices fell to less than $30 in 2016, workers had to be removed so the companies can remain in operation. Forcing companies to keep workers they no longer

need will ultimately be injurious to their business and even to the government as it will affect tax remittances,” he said. Analysts expect oil companies to challenge the rule and where they are not successful, foresee a situation where oil companies will prefer contract staff rather than offering full employment to Nigerians. These guidelines may have been created to deal with incessant sacks of oil workers in Nigeria leading to strike actions by labour unions. www.businessday.ng

fast becoming the norm in Nigeria since its exit from recession is worrying. It is worrying because it is an anomaly for a developing economy to be expanding at a similar rate with the world’s most developed economy. The reason is that a developed economy has firstgrade infrastructure which means it is operating at full capacity in terms of economic output and has limited scope for growth. For a developing economy, with a gaping infrastructure deficit that holds back economic activity, there is usually ample room for growth in the range of 6 to 10 percent. Nigeria, being a developing economy and needing some $100 billion in annual infrastructure investment for the next 30 years to measure up with the type of first-grade infrastructure the US boasts, should therefore be growing at above 6 percent. The third quarter GDP numbers expose how far away Nigeria is from the growth required to lift millions of its people from poverty. Two things stand out from the third quarter report that drain any optimism for future growth of the economy and improved welfare of its citizens. First is that the economy is still leaning on the oil sector to grow. That’s after the sector grew 6.49 percent in the third quarter compared to last year on the back of increased production volumes. Oil production averaged 2.04 million barrels per day (mbpd), 5.0 percent higher than the revised production of 2.02 mbpd in the second quarter. Sadly, that growth is largely one-off and asks valid questions over what the driver of growth will be in 2020. The production recovery is supported by the gradual ramp-up in Egina oil field which means the waning base effect is likely to cap scope for significantly greater growth acceleration from current levels. Also, with the Organisation of Petroleum Exporting Countries (OPEC) mulling production caps for Nigeria and Iraq by 2020, it becomes a tougher task for the oil sector to drive even the tepid growth we have seen in the last few quarters. “If Nigeria, an OPEC member, was pressured to comply with the cartel’s production quotas, the consequent decline in output could wipe one percentage point off GDP growth, almost halving it,” says John Ashbourne, senior emerging markets economist at

L-R: Babajide Sanwo-Olu, Lagos State governor, exchanging gift with Quyang Weimin, president of China Development Bank, at the bank’s headquarters in Beijing.

Nigeria’s Q3 GDP numbers expose growth... Continued from page 1

See GDP Report P. 52

Capital Economics. If the oil sector is not able to drive growth, attention rightly shifts to the non-oil sector and expectations for growth. This leads to the second low point that implies growth in the range of 6 percent is wishful thinking at best. The non-oil sector managed growth of 1.85 percent in the third quarter, thanks to the agriculture, telecommunication and manufacturing sectors. Telecommunication was the best performer of the lot at 12.16 percent while agriculture grew 2.28 percent and manufacturing managed 1.1 percent. Growth in all three sectors doesn’t sufficiently prove it can be sustained. Not when consumer purchasing power will come under increasing pressure from the hike in Value Added Tax (VAT) to rising inflation on the back of the country’s land border closure. That, coupled with a potential increase in electricity tariffs and petrol prices next year, would not only lead to reduced consumer demand but would also push the cost of operation for businesses higher. When economic activity is low, manufacturing takes a hit, which is why the sector has contracted for the better part of 2016 till date. Telecommunications also suffers as weaker consumer purchasing power leads to lower voice and data revenues. For agriculture, if the N200 billion of credit disbursed under the Anchor Borrowers’ Scheme has yielded below 3 percent growth in the sector, then the sector has more challenges than the government

will readily admit. Two questions come to mind here. Where will growth come from next year? And if it will be incredibly difficult to get 3 percent growth at the current pace, what would it take to get 6 percent? To grow at 6 percent, economists polled by BusinessDay said Nigeria will need to open up various sectors to increased private sector participation. “Take the transportation sector, it can contribute much more to economic growth if, say, only the airports are concessioned to the private sector,” said Wale Okunronboye, head of investment research at pension fund manager, Sigma Pensions. Pension funds like Okunrinboye’s are actively seeking investment opportunities in the economy after they were restricted by the CBN from purchasing high-yielding OMO bills. “The current Q3 numbers don’t show where growth will come from next year and that’s why the government must start thinking ahead of how to attract sufficient investment,” Okunrinboye said. For strong growth, the other analysts polled said more investment was needed. However, with a surge in oil revenue-driven investment unlikely, other investments, besides short-term portfolio flows, continue to be hampered by the difficult operating environment and uncertainties in the foreign exchange market. To break out of this trap, Nigeria will need to show it is a serious investment

https://www.facebook.com/businessdayng

@Businessdayng

destination by, for example, enacting legislative-driven reforms to attract capital to infrastructure. “In the short term, the government needs to abandon its protectionist trade policies and tightly managed currency regime,” Ashbourne said. This would encourage investment and allow for more competition, according to Ashbourne. “In the longer term, the government needs to diversify its revenue sources, formalise the non-oil economy and break up large uncompetitive companies that have near-monopolistic powers,” Asbourne said. Asbourne also thinks the government should stop subsidising petrol, which is an expensive policy with few benefits. The urgency with which the government tackles these issues will mean much for Nigerians who have been growing poorer since 2016, with economic growth failing to match population growth rate of 3 percent. Amaka Anku, Africa head for the Eurasia Group consultancy, said the reason Nigerians have been getting poorer for some time now is largely because “we have had an uncompetitive and largely unproductive economy [with] poor infrastructure, poor human capital and education and poor welfare”. “It would be great to see longstanding [infrastructure] projects completed, such as the [Lagos-Kano] railway that has been in the works since the early 2000s,” Anku was quoted as saying in a Financial Times special report.

Monday 25 November 2019

BUSINESS DAY

Reps summon perm sec, director, Julius Berger over Abuja-Kaduna- Zaria-Kano road project ...want completed sections of road opened to motorists The chairman in a stateJames Kwen, Abuja ment he signed and made available to newsmen in ouse of Represen- Abuja obser ved that the tatives Committee quality of life of people makon Works has sum- ing those commutes had moned the permanent sec- started to decline, as a jourretary, director (Highways) ney that would normally Planning and Development, take four hours now takes and director (Highways) nine hours to complete. Construction and RehabiliHe called on the contation, Federal Ministry of struction company workWorks and Housing as well ing on the road to expedite as Julius Berger to brief it on work on the project so as to the ongoing Abuja-Kaduna- complete it in time and to Zaria-Kano road project. immediately open up closed Abubakar Kabir-Abuba- sections of the road that they kar, chairman, House Com- had completed to motormittee on Works, who issued ists, so as to reduce the long the summon on Sunday, hours spent travelling on said the Committee was the road. being inundated with com“We are also calling on plaints by well-meaning the relevant authorities such Nigerians travelling on the as the Federal Road Safety corridor. Commission and the NiAbubakar noted that the gerian Police Force to proongoing rehabilitation and vide adequate security and dualisation of the Abuja-Ka- ensure that motorists drive duna-Zaria-Kano highway within the maximum speed was causing untold hardship limit of 50Km per hour as to motorists and other road prescribed by the National users plying the road. Road Traffic Regulation, He stressed that the par- 2012, as the maximum speed tial closure of some sec- allowed at construction tions of the road had caused zones. They are to ensure enormous financial and la- that motorists observe lane bour time losses due to road discipline and avoid driving traffic congestion and long against traffic,” Abubakar hours spent on the road. said.

Lagos-Ibadan $2bn rail project will be ready April 2020 - FG MIKE OCHONMA & STELLA ENENCH, Abuja

igeria’s minister of transportation, Rotimi Amaechi, says the Lagos-Ibadan ongoing standard gauge rail project valued at $2 billion would be completed and ready for use from April 2020. The minister, who said this during the monthly inspection of the Lagos-Ibadan project at the weekend, explained, “The initial contract was from Ebute Metta, but because the Federal Government wanted it to end at the seaports, so it had to be extended to facilitate the movement of goods and services out of the seaport and to decongest trailer and container gridlock.” He said the focus would no longer be on the track but on the completion of the stations and communication and signal. According to him, “We will be out of the Lagos-Ibadan corridor tlatest by April 2020. We are no longer giving ourselves the time, the contractors are the ones giving us the time.” The contractors can get to Ebute Meta soon, but getting there without getting to Apapa will not achieve much because the gridlock need to be cleared and the easiest way to do it is

to get the track to the seaport, he said. That way, cargoes will be loaded to wagons and taken to Ibadan, and thank God we have got contract for IbadanKano, as soon as we get the money, we will start work and the gridlock will be cleared, he said. The CCECC contractors are willing to complete the stations but the equipment has not arrived from China, and the advice is that they should get some things from Nigeria, he said. ‘’Before they wanted to import glasses and doors as if we don’t have in here, the pressure we are putting is now making them buy the glasses and doors in Nigeria and they are installing them which will quicken the process. They are still expecting pipes and other things and they requested that we give them one or two months to complete the stations. “We don’t have enough coaches and locomotives but we will start with as many as we can take pending when the 20 locomotives that we imported arrive. They will arrive end of December or latest second week in January, 2020,” he said.

news

Millennial economy: Banker calls for innovation in workplace BUNMI BAILEY

ith the recent reports that in the next five years, three out of five employees in the workplace will be Millennial, professionals converged in Lagos recently to brainstorm on the challenges faced by organisations whose workforce now increasingly constitute the Millennial demographic. The event titled ‘Who Really Cares about Workplace Motivation’ was convened by Nduneche Ezurike, a marketing communication specialist and head brand and marketing communication in one of Nigeria’s commercial banks. The event, which drew a large section of professionals from across the country, explored recent developments in managing Millennials in the formal sector. While the event attracted varied perspectives, it also agreed on the need for inter-generational harmony between the Millennials and the Generation X, the latter who still constitute the largest number of employees within the organisation. Earlier in his presentation, Ezurike highlighted critical challenges being faced by organisations in their response to the challenges of the fourth indus-

trial revolution. He noted that the leadership model, which has formed the crux of most corporate strategies over the years, may not be able to achieve the expectations of an innovative enterprise in the business environment of the future. “While prevailing leadership models are largely focused on how to create, manage and measure financial capital, the millennial economy requires leaders to upskill themselves to ensure they are digitally smart as well as developing emotional intelligence skills as: cultural competence, empathy, adaptability and intellectual curiosity,” Ezurike said. “Rather than describe and treat the millennial employees as the statistical manpower and workforce, the Millennials will want to be recognized as talents who have come into the workplace with a value proposition and will be expecting their employer to provide them with opportunities to accelerate their talent, in exchange for their contribution to enterprise productivity and innovation. The Millennial employee expects the organisation to have an employee value proposition which clearly defines shared benefits for both employee and enterprise,” he said.

Unity Bank, NYSC SAED partnership to promote youth enterprise SEGUN ADAMS

25-year-old graduate of Medicine and Surgery at the Iyana Ipaja National Youth Service Corps (NYSC) orientation camp in Lagos was among half-a-dozen corps members in the state and Abuja that received a grant for successfully pitching their business idea in Unity B a n k ’s C o r p re n e u r s h i p Challenge, weekend. Adebayo Abigail, a medi ca l d o c t o r f ro m O s u n based private higher institution, Bowen University, won N500,000 for pitching an online clothing store for women’s wear, while the second and third place winners in the 19C stream one batch in Lagos received N300,000 and N200,000, respectively. The pilot stage of the partnership between the mid-tier lender and the Skills Acquisition Entrepreneurship Development (SAED) programme of NYSC aims at promoting the entrepreneurial spirit of the Nigerian youth was held across camps in Lagos, Abuja, Edo and Ogun State, although the business pitch took place in only two states. “I am currently a medical do cto r bu t th e e c o nomic situation of Nigeria is not so good and I cannot rely on salary, which is why I decided to go into the clothing business,” Abigail said, who explained she started the young business

with N9,300 and made a profit of N50,000 in the first month of operation. “I heard about this opportunity to expand my business and grabbed it,” she said. Coined from the words “Corper” and “Entrepreneurship,” the Corpreneurship Challenge is a novel Entrepreneurship Development Initiative aimed at promoting the entrepreneurial capabilities of Youth Corp members during their one-year compulsory service to the nation. The idea is to aid skill acquisition that will enable Corp Members embrace entrepreneurship through cultivating a spirit of selfsustenance, innovation, creativity, business acumen and relevance, Unity Bank said. Youth unemployment in Nigeria reached an alltime high of 38 percent in the second quarter of 2018 and dropped slightly to 36.5 percent in the third quarter of 2018, where Nigeria’s unemployment rate hit record-high, latest data from the Nigerian Bureau of Statistics show. “Unemployment is not a spiritual problem or a natural disaster but a manmade problem that can be solved by addressing the root cause. One way is to encourage entrepreneurship early and catch people young,” said Abiodun Folawiyo, CEO of Shoespeed Interglobal Services Limi t e d a n d a ju dg e at t h e business pitch. www.businessday.ng

L-R: Olufemi Fadairo, head, identity and fraud management, Nigeria Interbank Settlement System (NIBSS); Ifeanyi Emefiele, head, Anti-Fraud, Access Bank plc; Ademola Adeleke, assistant director, oversight and compliance division, payments system management department, Central Bank of Nigeria (CBN); Herbert Wigwe, group managing director, Access Bank plc, and Tope Aladenusi, Cyber Security leader, Deloitte West Africa, at the Access Bank’s Anti-fraud Forum in Lagos.

2020 budget: Nigeria set for a ‘January-December’ budget cycle - Akabueze SEYI JOHN SALAU

i re c t o r- g e n e ra l , Budget Office of the Federation, Ben Akabueze, has disclosed the possibility of a likely passage of the 2020 budget by the National Assembly latest second week in December, stating that the early budget submission was geared towards ensuring early approval and restoration of January-December budget cycle. According to Akabueze, the early approval of the 2020 budget will also enable a return of a 12-month capital

budget implementation. Akabueze stated this at the 2019 annual public lecture of the Chartered Institute of Personnel Management of Nigeria (CIPM) with the theme, ‘Effective Budget Execution and Management – Recipe for National Development.’ “The budget is designed to sustain growth, create jobs and advance the delivery of Economic Recovery and Growth Plan (ERGP) 20172020 goals. More importantly, it will aid private sector planning and more effective engagement; the proposals

https://www.facebook.com/businessdayng

reflect key reforms and initiatives in the ERGP,” Akabueze said, who was represented by Olumide Ayodele, the senior technical adviser in the budget office. According to Akabueze, human resource is critical in delivering the 2020 budget revenue and expenditure plan of government, which aims to achieve macroeconomic goals and promote socio-economic development. The public sector is central to the performance of any economy, as the budget is key in reviewing government’s economic performance and development outcomes, he @Businessdayng

said. He said government was also keen in incentivising private sector investment to complement the FGN’s development plans, policies and programmes, as, “Overall, government aims at creating the conducive business environment for the private sector to thrive, create jobs and contribute towards lifting people out of poverty.” Wale Adediran, president/chairman of governing council, CIPM, said budget implementation, monitoring and evaluation had a direct link with human capital and resource management.

Monday 25 November 2019

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

FCTA laments indiscriminate dumping of construction waste in city centre James Kwen, Abuja

Sharon Ikeazon minister of state Ministry of Environment amidst School Children during the 2019 World Toilet Day, theme “Toilet for All: Leaving No One Behind” in Abuja. picture by TUNDE ADENIYI.

FG holds capacity building workshop for FCT women Stella Enenche, Abuja

s part of its drive towards job creation, the Ministry of Women Affairs, has held a capacity building workshop for women cooperative groups across the six Area Councils of the Federal Capital Territory, FCT to empower women entrepreneurs to grow their small-scale businesses. In a keynote address, the Minister of Women Affairs, Pauline Tallen, said the event came at a time when Nigeria was trying to reposition her economy from the oil enclave to agriculture and entrepreneurship development. The Minister, who was represented by the Director Economic Services, Idris

Mohammed, lauded the entrepreneurial spirit of Nigerian women, even as she noted that the Economic Recovery and growth Plan (ERGP) policy of the Federal government. focused on sustainable economic development. “Globally, entrepreneurship in Small, Medium and Large scale have been accepted as The engine of economic growth and promoting equitable development .The major advantage of the sector’ is its employment potentials at low capital. It constitutes over 90% of total economic activities in most economies and credited with generating the highest rate of employment for industrial production and promoting. “In recent years, entre-

preneurship has consistently registered a higher growth rate compared To other‘ sectors . with its agility and dynamism, the sector’ has shown encouraging innovation and helped The country to survive The past economic recession”, Tallen said. According to her: “Prior to this time, particularly, the past national development plans, emphasis had been on government-led industrialization initiative that hinged on import substitution. Consequently, government is poised to playing down on its role as The major driving force of the economy through commercialization and privatization. “Therefore, the organized private sector’ is seen as The major focus To _ spearhead economic ac-

tivities and programs. This sector’ is given various incentives to encourage increased participation in entrepreneurship activity which is perceived as capable of alleviating the problems encountered by industrialist in the country, thereby giving them greater’ opportunity to contribute to national economy. “It is worthy to the that, women in Nigeria have a natural appetite for’ entrepreneurship and as such venture into different businesses to either support their families or to keep themselves busy in different profitable ventures. Today, most women who started petty trading have grown into bigger enterprises that employ large labour force and generate financial support to the economy.

African Reinsurance Corporation invests NEXIM Bank proposes $90m to boost insurance firms in Nigeria N217.76bn budget for 2020 Cynthia Egboboh, Abuja

frican Reinsurance Corporation (AFRICA Re) has announced its investment of $90 million to boost the activities of insurance firms in Nigerian. Hassan Boubrik, Chairman, Africa Re, speaking at the groundbreaking event for the construction of the corporation’s headquarters in Abuja said that Africa Re was established with the aim of curbing the loses recorded in the African continent due to poor capacity of insurance firms. Boubrik stated that within the last 43 years, the corporation has retained cumulatively over $5bn which has been invested in Africa thereby contributing to the economic development of the continent. . “The Corporation has been consistently profitable since

inception, accumulating a total profit of $971.62 million and would continue to provide the needed support to the development of the insurance industry”. He said over the years, the Corporation had assisted Nigerian insurers in mitigating foreign exchange risk by accepting payment of premiums in Nigerian bank accounts and in the national currency, adding that Nigeria remains a strategic partner in the operations of the corporation. “In Nigeria, where the Corporation employs 30 per cent of its total staff strength, Africa Re provides continuous support to the development of the insurance industry. Unlike foreign re-insurers, Africa Re assists Nigerian insurers in mitigating forex risk by accepting payment of premiums in Nigerian bank accounts and in the national currency (naira). www.businessday.ng

James Kwen, Abuja

he Nigerian E xport-Import (NEXIM) Bank has proposed 217.76bn budget which represents a growth of 91.01% for the 2020 financial year. Presenting highlights of the budget before the House of Representatives Committee on Banking and Currency at the National Assembly Complex Abuja, Abba Bello, NEXIM Managing Director said, projected gross income stands at 14.48bn which represents a growth of 46.44%. According to him, other highlights of the budget include, “total operating expenses of N8.98bn,

projected loans and advance of N138.94bn which represents an increase of 88.03bn 0r 172.92%, the total year end profit is projected to be 2.94bn and increase of N1.21bn or 69.51%”. NEXIM was established by Act 38 of 1991 as an Export Credit Agency (ECA), with the mandate to provide Finance, Risk Bearing and Advisory Services to duly registered companies in Nigeria towards the Expansion, Diversification and Development of the Non-Oil Export Sector. With an authorized and called up share capital of N50,000,000 (50bn) held equally by the Federal Ministry of Finance incorporated (MOFI) and the Central Bank of Nigeria.

https://www.facebook.com/businessdayng

he Federal Capital Territory Administration (FCTA), o n Thu r s d ay i n Abuja lamented the indiscriminate dumping of construction wastes within the Capital City Centre Olawale Labiyi, Dir e c t o r, D e p a r t m e n t o f Monitoring and Inspection of FCTA who made this known during a news conference in Abuja said construction companies often dumped wastes in the wrong places within the City Centre. Labiyi said the Department has identified problems and nuisance in public Educational and Health Institutions, Market and Housing Estates and reported to the relevant agencies in the FCTA for appropriate actions. “Among the issues monitored in the city were the evacuation of domestic waste, vegetation and construction wastes, general cleanliness of the environment, social nuisance and areas prone to security risks and informal sector”,

he said. Labiyi called on the Department of Development Control and the Abuja Environmental Protection Board to be proactive in ensuring that construction companies did not dump waste indiscriminately. He also expressed concern over poor sanitation and increasing rate of open defecation, bad road and blocked drainages in Bwari Area Council and urged the Chairman of the council to put measures in place to address the challenges. The Director, however, said with the concerted efforts of the department, the level of cleanliness in the city had improved, adding that education and health institutions have also witnessed an improved state of environmental condition. “The sanitation state o f ma rke t s n e i g hb o u rhood shopping centres and housing estates within the city has improved. Also there is a slight improvement in the sanitation condition in the major settlement at the area councils,” he said.

CSOs want FG to sanction MDAs failing to publish procurement data Godsgift Onyedinefu, Abuja

he Public and Private Development Centre (PPDC) and Media Rights Agenda (MRA) has called on the Federal Government to sanction Ministries, Departments and Agencies (MDAs) not complying with the directive to publish procurements data in line with the Open Contracting data Standards. Gift Maxwell, PPDC’s Programme Manager, speaking at a workshop noted that the Bureau of Public Procurement (BPP) developed and deployed Nigeria’s Open Contracting Portal (NOCOPO) which is expected to feed procurement data from the pilot MDAs showing records of contracts from planning to implementation stages. She added that the Secretary to the Government of the Federation (SGF) had in July 2018 through a circular mandated all public institutions to use the NOCOCPO and upload their procurement information and records on the platform. The Programme Manager however regretted that many public institutions still fail to upload their procurement data on the platform, thereby @Businessdayng

blatantly disobeying with impunity the directive and urged the Federal to ensure full implementation of open contracting in Nigeria. Maxwell said despite Nigeria joining the Open Government Partnership (OGP) as the 70th member in 2016 and had the full implementation of open contracting as one of its commitments in its first National Action Plan (NAP), which lapsed in June this year, accessing basic contract information and records remained a challenge for members of the public, including civil society representatives and media practitioners. MRA’s FOI Programme Manager, Ridwan Sulaimon called on the Federal Government to as a matter of urgency ensure that the institutions proactively publish their procurement and contracting data on the platform to ensure that it justifies its essence. “This is a wake-up call on the Federal Government to ensure that public institutions feed their information proactively and timely into the platform. Circulars should be followed with appropriate sanctions to give it the deserved effect whenever disobeyed,” he said.

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

news

Knight Frank names Okosun new CEO in Nigeria KELECHI EWUZIE

night Frank, an independent residential and commercial property consultancy firm, has announced the investiture of Frank Okosun as a new senior partner/CEO for Knight Frank Nigeria. The company in a statement made available to BusinessDay says Okosun replaces Albert Orizu, who is retiring after 36 years of service. According to the statement, the investiture ceremony of Okosun as the new CEO scheduled for November 28, at Eko Hotel & Suites, Lagos, will have corporate enterprise leaders, industry magnates, institutional stakeholders and other global real estate market personalities in attendance. Okosun until this announcement served as a partner in the firm for about 15 years and takes over the estate firm at a significant epoch in the history of both the firm and the profession in Nigeria, because he embodies the core values of the Knight Frank brand. Okosun is a Fellow of the Nigerian Institution of Estate Surveyors and Valuers; Fellow of the Royal Institution of Chartered Surveyors; Member of the International Real Estate Federation; Member of the International Facility Management Association; Member of the Estate Surveyors and Valuers Registration Board of Nigeria. He is also an accredited member of the Royal Institution of Chartered Surveyors ACRETM Civil and Commercial Mediator. He holds an MBA and has attended several programme and courses at Harvard Business School relating to Real Estate Management Finance, Design & Leadership. He enjoys a stellar reputation for prompt and personal response to client demands, Connecting people and property, perfectly. Knight Frank Nigeria is part of Knight Frank LLP - the world’s largest independent residential and commercial property consultancy. Established in 1965, Knight Frank can best be described as the founding fathers of transformational and integritybased real estate practice in Nigeria.

Okosun

AFC continues expansion into Asia with $140m Kimchi Term Loan Facility

frica Finance Corporation (AFC), investment-grade infrastructure solutions provider, has announced the closing of its inaugural $140 million Kimchi Term Loan Facility (Facility). This Facility is AFC’s first Korean-focused instrument. It follows the Corporation’s $233 million and JPY1 billion dual currency Samurai Term Loan Facility, closed in September 2019, and a $300 million Loan Facility, through the ExportImport Bank of China. This is in addition to Asian investors’ purchase of 28 percent and 16 percent of AFC’s $500 million

www.businessday.ng

and $650 million Eurobond issuances, respectively, this year. Cumulatively, recent Asian investments (from China, Hong Kong SAR, Singapore, Malaysia, and Taiwan) into AFC have reached approximately $1.2 billion equivalent. The closing of the Kimchi Loan Facility, and all other Asian investments in AFC, exemplifies the Corporation’s success in global investor engagements and is an important step as it builds a broad coalition of investors to diversify its funding sources while also allowing institutions from around the globe to participate in Africa’s development. Proceeds from the

Kimchi Term Loan Facility will be used for general corporate purposes in accordance with AFC’s Establishment Agreement and the Charter. Samaila Zubairu, president/CEO of AFC, commented: “We are very pleased to have achieved this historic milestone with the South Korean debt markets, which we know to have highly selective investment criteria, as was evidenced through this Kimchi Loan Facility. The success, close on the heels of the Samurai Loan Facility in Japan, signifies the East’s growing appetite for African investments, which are particularly attractive con-

https://www.facebook.com/businessdayng

sidering today’s negative-yield environment. “We look forward to continued engagement with South Korea as well as the other Asian markets that understand the opportunity that is available through Africa’s unprecedented development.” Banji Fehintola, senior director/treasurer of AFC, added: “At AFC, we have always taken a diverse and forward-looking approach to funding. Asia is a very important region for us and the participation of Asian investors in our bond issuances has been growing significantly over time. The Kimchi and Samurai Loan Fa-

@Businessdayng

cilities that we closed this year further exemplify AFC’s wide market access and innovation in mobilising global capital to execute projects and transform the lives of people in Africa. We are very proud of our successes in Asia and we look forward to deepening our partnerships in the region.” Shinhan Bank London branch and South Africa’s Nedbank Limited, London branch acted as Bookrunner and Mandated Lead Arrangers, KEB Hana Bank acted as Mandated Lead Arranger, NongHyup Bank was Lead Arranger, and First Abu Dhabi Bank PJSC was the Agent.

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

news

El-Rufai’s committee must restore investor confidence Nokia treats customers to double delight in festive special offers MD Global, the home keeps getting better with Nokia fering, customers get the chance as liquidity concerns threaten power sector - experts of Nokia phones, has phones and the festive Special to choose from the range of exHARRISON EDEH, Abuja

xpertsinthepowersector have called on the Nasir el-Rufai led committee mandated to review the ownership of power Distribution Companies (DisCos) to ensure the process does not dampen investor confidence in the sector.

Recall Governor Nasir elRufaihasjustbeenappointedas theheadofanad-hoccommittee thatwillreviewtheownership of the electricity distribution companies. Already,BusinessDayhad reported that the biggest equityinvestorinAbujaDistributionCompanyiscontemplating pullingouttheirinvestmenton concernsofliquidityproblems confrontingthesectorinadditiontoconstantsquabblesover stakeholders’ debt. Inaddition,therehasbeen lingeringissueswiththeNigerian ElectricityRegulatoryCommission(NERC)onreviewofmarket remittance obligation. Onthebackofthisdevelopment,industryanalystssaythe committeemustre-evaluatethe performanceoftheDiscoswith aviewtofindinglastingsolutions tolingeringissuesinthesector, whilestatingthatlicencesofthe Discosmustnotberevokedin ordernottodampeninvestors’ confidence.

… as government clarifies controversy “While I must commend thesettingupofthecommittee, Iwishtosaythatthetermsand conditionsforthecommittee arenotproperlydefined,”Chuks Nwani,powersectoranalystand energylawyer,toldBusinessDay. Accordingtotheenergylawyer,“Thekeyperformanceindicators(KPI)arealreadydefined inthePerformanceAgreement andhadacoupleofsetbacks.Ido notexpecttheCommitteetostart fromthescratch,butshouldconsultBPEwhoisthecounterparty inthePerformanceAgreement, the Discos and NERC.” He stated, “The data are already out there and parties shouldhaveanopenmindto discusstheissues.Ialsowishto requestthecommitteetoopenly tellthebusinesscommunitythat thepurposeoftheCommittee isnottorevoketheownership structure of the Discos but to evaluatetheirperformancewith aviewoffundinglastingsolutions for the sector.” EmekaOkpukpara,leadpartner,NEXIERPowerAdvisory,told BusinessDaythatthecommitteemustre-lookintoseamless collaborationofvariouspower stakeholdersinordertoensure thattherewasproperrealignmentthatdeliveredthequality thatledtothegrowthofthesector.

www.businessday.ng

“Wehavehadvariousgrid collapseinthecountryovertime anditdoesn’tspeakwellofthe kindofcollaborationthesector needs to have. It shows weak linksincommunicationandpoor collaborationinthesector.The committeeshouldalsolookinto these areas,” he said. Recall,thedecisiontoconstituteGovernorElRufai’scommitteewasreachedonThursday atthemeetingofthenational economic council (NEC). The committee will be reviewingthegovernment’s40 percent stake in the DisCos. EmekaIhedioha,governorof ImoState,announcedthecommittee’sdecisionafterthemeeting,sayingtheNationalCouncil onPrivatisationandBureauof PublicProcurementwouldserve on the committee. Governorsrepresentingthe sixgeo-politicalzonesonthe BoardoftheNigerDeltaPower HoldingCompanywillserveon the review committee. Recallthepowersectorwas privatisedin2013,resultingin sixgenerationcompaniesand11 distribution companies. TheFederalGovernment hadalsosaiditwouldconduct a final review of the five-year performanceagreementwiththe DisCosbyDecember31,2019.

announced its festive special offerings aimed at delivering more value on select Nokia phones, which would be bundled with gifts in the Nigerian market, as part of its drive to deliver shopping delight to customers. The festive special offerings will start with the Black Friday offer and will run till November, 29, 2019, while the Christmas Special offer starts on the 1st of December 2019 till the end of the year. Joseph Umunakwe, general manager, West, East and Central Africa, HMD Global, says: “It

offerings are just some other ways of delivering value to our esteemed customers, and taking the Nokia phone experience closer to them this special season.” Umunakwe states further that with the amazing giveaways and gifts to be won this season, customers get double value on purchase as well as an unbeatable experience of the sheer power of a Nokia phone, saying there is more coming from the brand in 2020 and customers can expect Nokia to beat their imagination with innovation in the new year. For the Christmas special of-

citing and tantalising hampers available at partner stores each time a purchase of any of the 2.2, 3.2 and 4.2 series is made. The promotions, in partnership with select stores, offer customers flash sales on Fridays plus a chance to win shopping vouchers and fantastic gifts upon a purchase of any of Nokia 2.1 and Nokia 2.2. The offer is available to customers only when purchase is made at both online and offline partner stores, which include Jumia, Konga, Finet, SLOT, as well as 3CHub.

Union Bank deepens simpler, smarter for Lekki customers

etermined to provide morecustomerswithsimpler and smarter banking services, Union Bank has launched a flagship branch along Admiralty Way in Lekki, Lagos. The modern solar-powered branch structure equipped with an innovative drive-through ATM facility portrays Union Bank’s innovative outlook to banking. Speakingatthelaunch,Emeka Emuwa, chief executive of Union Bank, said the new establishment would give more of the bank’s customers increased access to the reliable and efficient banking experience. According to Emuwa, “We are proud to unveil our flagship

https://www.facebook.com/businessdayng

branch right here in the heart of Lekki; one that speaks to our rich heritage while staying true to our simpler, smarter proposition. “At Union Bank, we believe banking should be simple, smart and tailored to the needs of the customer. It is this customercentricoutlookthatunderpinsour goaltocontinuouslyinnovateand improve on our products and services across all our touch points.” The branch was formally declared open by Hakeem Fahm, commissionerforscienceandtechnologyinLagosState,inthepresence of Union Bank customers, guests, seniormanagementandstaff. While declaring the branch open, Fahm lauded the bank’s fo-

@Businessdayng

cus on ensuring excellent service delivery, saying, “I congratulate Union Bank on the establishment of this new branch and applaud the management and staff for leveraging such innovative technologies in a bid to satisfy their customers.” The new branch is equipped to cater to the banking needs of all categories of customers including individuals, small businesses and larger organisations. Some major features of the branch include a fully equipped and accessible ATM gallery, the drive-through ATM facility and an Elite Lounge where customers can carry out their transactions in a premium environment.

Monday 25 November 2019

BUSINESS DAY

Lagos-Ibadan $2bn rail project will be ready April 2020 - FG MIKE OCHONMA & STELLA ENENCH, Abuja

news

Millennial economy: Banker calls for innovation in workplace BUNMI BAILEY

Unity Bank, NYSC SAED partnership to promote youth enterprise SEGUN ADAMS

2020 budget: Nigeria set for a ‘January-December’ budget cycle - Akabueze SEYI JOHN SALAU

https://www.facebook.com/businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

news

SEC removes deadline for multiple accounts regularisation

Sanwo-Olu urges China Development Bank to increase investment in Nigeria to $1bn

... says 2.82m investors enrolled in e-Dividend Mandate Management System

JOSHUA BASSEY

Iheanyi Nwachukwu

ecurities and Exchange Commission (SEC) has suspended the regularisation deadline put in place for shareholders that opened accounts for the purchase of shares with different names. This was part of the outcome of the third Capital Market Committee (CMC) meeting held in Lagos, weekend. Acting director-general of SEC, Mary Uduk, said this would enable other shareholders having challenges with their details to come up and regularise their holdings, noting that, the commission had discovered that some shareholders were avoiding it due to the fear of prosecution. According to Uduk, “the Multiple Subscription Committee presented the status of its ongoing engagement with the Central Bank of Nigeria (CBN) and Committee of Heads of Banking Operation to display multiple accounts regularisation banners in the banking

halls all over the country. The Committee also reported that CMOs have commenced the filing of report on regularised accounts with the Commission, on a quarterly basis. Given the relevance of this exercise and the need to create more awareness, the Committee requested for an extension of the deadline of multiple accounts regularisation. “We are keeping it open for now with no deadline. We are also encouraging investors to take advantage of this to regularise their accounts and claim their dividends.” Uduk explained that other resolutions that were reached at the meeting included, “Registrars are to discontinue the practice of requesting for confirmation of bank signature during the E-DMMS process. CMOs are to display awareness campaign banners of e-DMMS at their offices and Venue of Annual General Meetings (AGM). Capital market operators should also work with the Commission to share aware-

ness information on their social media platforms.” She said the commission also reviewed the request from the Association of Stockbroking Houses of Nigeria (ASHON) for extension of time for compliance on the transfer of complete investor data among operators such as Brokers, Registrars and CSCS. Adding that upon completion, the position of the Commission will be communicated to the relevant parties. Determined to deepen liquidity in the nation’s bourse, the SEC said it is engaging the National Pension Commission (PENCOM) and the Asset Management Corporation of Nigeria (AMCON) on securities lending. She said the commission was engaging PENCOM on modalities that would permit Pension Fund Administrators (PFAs) to participate in Securities Lending. Securities lending is the act of loaning a stock, derivative or other security to an investor or firm.

‘Development of non-oil sectors panacea to Nigeria’s economic downturn’ JOSHUA BASSEY

… rewards distributors, regional sales team

overnments at federal and state levels must shift their focus to the development of the non-oil sectors if the Nigerian economy is to leap over its present downturn. This was the submission of Babajide Sanwo-Olu, governor of Lagos State, at the 2019 Africa Industrialisation Day and trade exhibitions, which opened at Alausa, Ikeja, Wednesday last week. According to Sanwo-Olu, the development of the non-oil sectors remains the panacea to getting the economy out of the woods and repositioning it for tangible growth and job creation. Sanwo-Olu, represented at the event by Folashade Jaji, the secretary to the state government, also harped on the need to encourage the development of small and medium enterprises as engine of economic growth and stability, the reason he said,

his administration was poised to implement policies and programmes to support businesses operating in the state. “The present situation in Nigeria and indeed Africa, calls for each state of the federation to look inward and initiate policies that would engender the development of the non-oil sectors. “Lagos as a state has always been in the vanguard for enhancement of fiscal, financial and banking policies, as it serves as the centre of the most industrial, financial and management institutions in the country. But in spite of this, we are not relenting to initiate friendly policies that would promote and provide the needed environment for industrial growth,” the governor said. Restating his administration’s commitment to the T.H.E.M.E.S agenda towards fast-tracking development and making Lagos the preferred

agos State governor, Babajide Sanwo-Olu, has urged China Development Bank to increase its investment in Nigeria to $1 billion. The governor made this request at a meeting with the bank’s president, Quyang Weimin on Lagos State’s infrastructural needs and areas of collaboration with the bank in Beijing, weekend. The governor, who is on investment drive to China, was received by the entire management team of the bank at its headquarters “because of the importance of Lagos State and the value placed on Nigeria-China relationship,” Weimin said. In his interaction with the bank’s management, SanwoOlu said, “There are huge developmental projects in Lagos the bank could support the state in developing. “We are determined to build a 21st Century economy, and infrastructural development is one of the key deliverables for a modern economic system and society to run efficiently and effectively. With functional infrastructure, businesses will thrive and the city will be more habitable. So, as a

government, we are talking to you now about our needs and the areas of intervention where we require your support. “Even though I know that you have to consider a lot of factors as a Bank, I can assure you that you cannot get it wrong with Lagos and Nigeria as a whole. Lagos is Africa’s 7th largest economy and the most populous on the continent. The State has enjoyed political stability for 20 years and has consistently grown across key economic indices. “If you consider these facts, you agree with me that your risk analysis will favour Investing in our State. As a development bank committed to supporting developing nations, I am certain that your involvement in our 4th mainland bridge construction, railway projects, road construction around our free trade zone and our water projects will fittingly support the attainment of your organisational goal.” An impressed Quyang Weimin responded, “I have always had confidence in Lagos State and Nigeria, but your presentation today has increased my level of confidence in Lagos State and Nigeria,” adding that “I am particularly happy that Lagos State has a vibrant and

destination for investors, Sanwo-Olu commended existing businesses and industries for keeping faith despite the economic challenges. “Considering the erratic and turbulent macro-economic environment under which our industrialists operate, kudos should be given to stakeholders that have continued to remain in operation and contributing to the socioeconomic development of the state,” he said. The state commissioner for commerce, industry and cooperatives, Lola Akande, whose ministry organised the event, with the theme “positioning Africa industry to supply the Africa Continental Free Trade Area (AFCTA),” said the government was aware of the challenges of industrialisation, which explains why it is keying into programmes that boost the potential of the private sector to create jobs.

LAPO MFB appoints Ikponmwosa as new CEO as Ehigiamusoe retires HOPE MOSES-ASHIKE

APO Microfinance Bank Limited, weekend, announced the appointment of Cynthia Ikponmwosa as the new managing director designate of the bank. She succeeds Godwin Ehigiamusoe, founder/CEO, Lift Above Poverty Organisation and LAPO MFB, who has just retired. Ede Osayande, chairman, describes Ikponmwosa as a foundation member of the LAPO story in its commit-

ment to social and economic empowerment of members of low-income household. Osayande noted that the board has absolute confidence in Ikponmwosa’s capacity to build on the accomplishment of the bank, saying Ikponmwosa, in the new position will be offered all the necessary support needed to deliver value to all stakeholders. Ikponmwosa joined LAPO NGO, the precursor of LAPO MFB in 2001 as a senior programme officer and has played several key www.businessday.ng

roles within the Group. She provided leadership for the transformation of LAPO into a regulated microfinance bank between 2008 and 2010. She led the corporate secretariat and recently as executive director, corporate services. She holds a Master of Arts degree in Corporate Governance, University of Hertfordshire, England. Ikponmwosa has attended several senior management development programmes. The appointment is subject to the approval of the CBN. https://www.facebook.com/businessdayng

@Businessdayng

visionary leader like you who is ready to take the State forward. “I have deep interest in what you are saying and your ideas. And we look forward to supporting you. We are different from commercial banks because we are focused on development and greater good of humanity. We give loans at the lowest cost and very long loan maturity period,” Weimin said. “Nigerians are our brothers. Our relationship with Lagos will be as reliable as the cooperation between Nigeria and China. Lagos is politically and economically stable, so the risk of investing in the State may not be high. We are therefore enthused to put our weight as the world’s largest development bank by asset, standing at $2 trillion, loan balance of $150 billion, over 100, 000 employees with a loan balance of $200 per staff behind your greater Lagos goal”. In the past one week, Governor Sanwo-Olu has been knocking on Chinese investors for Lagos State. His engagements with the Chinese investment community seems to be guided by the government’s T.H.E.M.E.S agenda given that his interactions have been the focused areas of the programme deliverables.

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

BD Money

Monday 25 November 2019

BUSINESS DAY

Investing

COVER

INVESTING

Take these 6 steps to get your unclaimed dividend

Thinking investment in 2020: Key things to watch

Lessons from Warren Buffetâ&#x20AC;&#x2122;s Berkshire investment strategy

Nigeria has an avalanche of unclaimed dividend, larger than the countryâ&#x20AC;&#x2122;s combined capital expenditure to health and education sectors in its 2020 budget. The value may keep growing and serve little or no economic gain as some stock investors in the Nigerian capital market continue to leave their dividends untouched.

Heading into 2020, key macroeconomic indicators an open letter to Berkshire Hathaway such as inflation, global/domestic growth, interest shareholders, an American multinational rate, foreign exchange/ external reserves are top of conglomerate which he chairs every year. mind for investors in their investment decision.

American investor Warren Buffett writes

www.businessday.ng

Page 73

Page 72

Page 71 https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Tender

Market Wrap-up

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

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Investing

Take these 6 steps to get your unclaimed dividend OLUWASEGUN OLAKOYENIKAN

igeria has an avalanche of unclaimed dividend, larger than the country’s combined capital expenditure to health and education sectors in its 2020 budget. The value may keep growing and serve little or no economic gain as some stock investors in the Nigerian capital market continue to leave their dividends untouched. But what does a dividend really mean? A dividend is a reward a shareholder of a company gets from a portion of the company’s net profit. This reward can be issued in the form of cash payments for every unit of the company’s stock owned, bonus shares or any other form. Basically, companies use part or a whole of their retained earnings to reward their shareholders as dividends. However, companies are not obliged to pay dividends, particularly when there is a shortage of cash or a need to carry out some investing activities to expand the business. It is noteworthy that only shareholders who bought shares of a particular company on or before the closure of the company’s register for a period are entitled to the company’s dividend. In Nigeria, the total value of unclaimed dividend stood at N103 billion as of December 2017, according to the Securities and Exchange Commission (SEC). This means a total of N103 billion worth of investors’ dividends owned as a result of investing in the shares of some companies is lying fallow waiting to be reclaimed. While stockholders have several reasons for not claiming their dividends including lack of information, perceived hassle that comes with the processing of the funds, negligence, forgotten investments, death or some other reasons, it is important to note that a dividend left unclaimed gradually loses its value as investors do not earn interest on the unclaimed dividend. For instance, if First Bank of Nigeria Holdings Plc paid you a total dividend of N200,000 in January 2010 without claiming your funds, it probably has lost about 66 percent of its purchasing power to inflation within the period since the money did not grow. If the dividend was paid in October 2019, the real value would have reduced to N68,000 even though you hold

a nominal value of N200,000. How would you invest and watch the value of your dividend erode for every day

“

The first thing you need to do is to check if you or your relatives have an unclaimed dividend. This can be done through your stockbroker or on SEC database for nonmandated accounts at (www.sec.gov.ng/nonmandated)

www.businessday.ng

you delay to claim your reward? “The best time to plant a tree was 20 years ago. The second-best time is now,” according to the Chinese proverb. It, therefore, means that you can take a step and halt the losses. You can claim your entitlement now using these six steps as a guide provided it was declared within the last 12 years. Check if you have an unclaimed dividend The first thing you need to do is to check if you or your relatives have an unclaimed dividend. This can be done through your stockbroker or on SEC database for nonmandated accounts at (www.sec.gov.ng/ non-mandated). The online portal can help investors to check if they have unclaimed dividends by simply inputting their names in a search box and see the list of companies they have an unclaimed dividend in. So, the website will produce a list of Know your registrar(s) The registrars are mandated to manage all issues relating to the shareholders on behalf of companies. These issues include dividends, public offers, and share certificates. Obviously, for your dividend to be paid, you need to know your registrar(s). The Securities and Exchange Commis-

https://www.facebook.com/businessdayng

sion (SEC) has about 18 registrars managing all the listed companies on the Nigerian Stock Exchange (NSE), implying with more than 160 firms on the Nigerian Stock Exchange, a registrar could have more than one company it manages. Also, you could have your data with more than a registrar depending on the companies you invested in. Sign a share transfer form Now that you know your registrar, you can proceed to obtain a share transfer form from your stockbroker. The form mandates the stockbroker to process your unpaid dividends with a fee which could be a certain percentage of the value of your dividend. But if you are concerned about the fee, you can contact your registrar to process your dividends. This approach, though saves some money, might take a longer time to process your dividends. Process your e-dividend registration It is also important to process your edividend registration and get it sorted out once and for all. Yes! It is a one-off process; it was introduced to as a solution to the incidences of unpaid dividends. This means you would not have to go through the stress again once a dividend is paid. Whenever a dividend is paid by any company you have holdings, the dividend will be automatically credited into your bank account by your registrar(s). Once you identify your registrar(s), go to their websites on SEC website to download their e-dividend mandate forms and complete with the right information. You will need to provide vital information such as name, Bank Verification Number, account number, email among others. Visit your bank Now, you will take a completed and signed copy of the e-dividend mandate form to your bank - it is advisable to use a bank rather than multiple banks to monitor dividend payments - for signing. Return signed e-dividend mandate form to your stockbroker You can now return the e-dividend mandate form which has been duly signed to your broker or registrar in order to complete the process on your behalf. While this ensures your subsequent dividends are paid directly into your bank account, you can make enquiries on the status of your unpaid dividend haven done the needful and how to get them back.

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Monday 25 November 2019

BUSINESS DAY

Cover Story

Investing

Lessons from Warren Buffet’s Berkshire investment strategy OLUFIKAYO OWOEYE

Thinking investment in 2020: Key things to watch HOPE MOSES-ASHIKE

eading into 2020, key macroeconomic indicators such as inflation, global/domestic growth, interest rate, foreign exchange/ external reserves are top of mind for investors in their investment decision. Specifically, inflation will be a key variable to watch in 2020 given recent fiscal pronouncements and relationship with interest rates according to a report by Rand Merchant Bank Nigeria (RMBN). Nigeria’s inflation accelerated by 11.61 percent in October compared with 11.24 percent recorded in September, according to the latest data from the National Bureau of Statistics (NBS). This is the highest figure since May 2018. Overall, inflation in October was triggered by an increase in food prices. An Increase of 58 basis points was recorded for food inflation which stood at 14.1 percent in October while the nonfood inflation rate declined marginally

to 8.88 percent from 8.94 percent in September. According to the NBS, food inflation was caused by increases in prices of “Bread and cereals, Oils and fats, Meat, Potatoes, yam and other tubers, Fish and Vegetables”. Although inflation moderated from January to August 2019, inflationary pressures kicked in from September, largely as a result of the closure of land borders. “The outlook for inflation remains bleak, given the continued land border closure, approaching the festive season and proposed tax increase in addition to new taxes/charges,” analysts at FSDH Merchant Bank said. To shore up government revenue, the government has proposed several taxes and charges for 2020, which could result in higher prices. Some of these taxes include VAT, Communication Tax, Online Tax, Toll Charge, Taxes on Carbonated soft drinks, among others. The analysts said Challenges of poor power supply, bad roads, and poor road networks persist and they are traditional sources of inflation in Nigeria. Continued closure of land borders will result in higher prices of affected commodities such as rice, and poultry products. www.businessday.ng

In August, President Muhammadu Buhari ordered the partial closure of Nigeria’s border with the Benin Republic to curb smuggling of rice and other commodities, and also directed the Central Bank of Nigeria (CBN) to stop providing dollars to import food items in a bid to ramp up local farm production and attain full food security. With a proposed 2020 budget of N10.3 trillion, government spending poses a risk to inflation. An increase in the minimum wage to N30,000, if implemented across states, is also expected to result in higher prices, FSDH analysts said. Inflation rate has trended upward for two consecutive months to reach 11.6 percent in October. When compared with the MPR, an upward movement in the Inflation rate narrowed the real interest rate margin to +1.9 percentage points (pp) in October from +2.5 in August. FSDH inflation report revealed that for the 364-day Treasury bill, real interest rate margin which was +3.4 percentage points in January 2019 fell to +0.9 in October, owing to falling interest rates and rising inflation. The recent increase in inflation rate coupled with inflationary pressures are huge concerns for monetary authorities. “This rules out the likelihood of a reduction

https://www.facebook.com/businessdayng

@Businessdayng

in Monetary Policy Rate (MPR) at the November MPC meeting, especially given the improved 2.3 percent GDP growth figure in 2019 Q3,” the analysts said. Global economic recovery is on the horizon, but there are some risks. Risks to global growth forecasts according to Gbenga Sholotan, head, RMBN stockbrokers research include: weaker-than-expected commodity prices, global policy uncertainty; Trade wars, geopolitical tensions, while Risks to Nigeria’s growth forecasts include: fiscal tightening, monetary and fiscal regulatory uncertainty, and broader security challenges. Sholotan said interest rates are likely to go up as CBN attempts to attract Foreign Portfolio Investment (FPI) flows to keep a stable Naira and deliver real return to investors as inflation trend upwards. On foreign exchange sustained intervention of US$210.0 million weekly by the CBN has kept rates stable said Ike Chioke, group managing director, Afrinvest West Africa. External reserves declined to $39,95 billion as at November 21, 2019, support about 11 months of import cover (goods) – Weakest in 3 years.

merican investor Warren Buffett writes an open letter to Berkshire Hathaway shareholders, an American multinational conglomerate which he chairs every year. The company owns nearly 10percent stakes in fortune companies such as soft drink giant, Coca-Cola, and Wells Fargo, an American multinational financial services company, just to mention a few. As at September, Berkshire Hathaway Inc.’s operating profit jumped 14percent to a record as Warren Buffett’s conglomerate saw gains from its railroad and got some long-awaited earnings from Kraft Heinz Co The company ended September with a record $128.2 billion of cash, despite repurchasing $700 million of stock in the quarter, and its stock price has lagged the broader market by the most since 2009. Operating earnings surged to $7.86 billion in the third quarter, thanks in part to a rise in investment income and Berkshire’s reinsurance group posting its first underwriting profit of the year despite losses from a Japanese typhoon. Revenue climbed 2.4percent on increases from the company’s insurers and manufacturing businesses. Buy stocks in businesses that you would like to own yourself Warren advises investors to buy stocks as the owner and not as a speculator. According to Warren, when many investors buy stock, they become price-conscious, constantly checking the ticker to see if the prices are up or down From Buffett’s perspective, buying a stock should follow the same kind of rigorous analysis as buying a business. “If you are not willing to own a stock for ten years, do not even think about owning it for ten minutes,” he wrote in his 1996 letter. Rather than getting too caught up in the web of price movement, Buffett says investors should think of buying into a company that makes a great product,

with a strong competitive advantage, and can provide investors with consistent returns over the long-term. “Whenever Charlie and I buy common stocks for Berkshire’s insurance companies… we approach the transaction as if we were buying into private business,” he wrote in his 1987 letter, “We look at the economic prospects of the business, the people in charge of running it, and the price we must pay. We do not have in mind any time or price for sale.” Ignore short-term movements in stock prices For many stock investors, price is everything and the maxim is buy low, sell high Buffett disagrees completely with this approach. And with Berkshire’s portfolio, he is adamant that the price of a stock is one of the least important factors to consider when deciding whether to buy or sell shares in a particular company. The company’s operations and under-

www.businessday.ng

lying value are the only things that matter, to Buffett. That’s because the price of a stock, on any given day, is mostly dictated by the forces of demand and supply. For Buffett, investors succeed when they can ignore these forces and his upand-down emotional states. Instead, they look at whether the companies that they are invested in are profitable, returning dividends to investors, maintaining high product quality, and so on. Eventually, Buffett says, the market will catch up and reward those companies. Be fearful when others are greedy, and greedy when others are fearful During a market downturn, Buffett believes that savvy investors should continue looking at the fundamental value of companies, seeking companies that can sustain their competitive advantage for a long time, and investing with an owner’s mentality. If investors can do that, they will natu-

https://www.facebook.com/businessdayng

rally tend to go in the opposite direction of the crowd to “be fearful when others are greedy and greedy only when others are fearful,” as he wrote in 2004. His reasoning is simple when others are fearful, prices go down, but prices are only likely to remain low in the short term. In the long term, Buffett is bullish on any business that creates great products, has great management, and offers great competitive advantages. For example, piling cash into distressed American companies like General Electric, Goldman Sachs, and Bank of America during 2008 financial crisis, Buffett reportedly made $10bn by 2013. Don’t invest in businesses that are too complex to fully understand Relying on his “circle of competence” belief, Buffett advice that investors “never invest in a business you cannot understand.” In other words, don’t choose businesses requiring knowledge outside your circle of competence, at least not until you have acquired sufficient knowledge to do so. Buffett lumps factors affecting a business into categories: the knowable, the unknowable, the important and the unimportant. If you don’t have sufficient knowledge about a company, it becomes harder to hold long-term investments and predict what the company (and its industry) will look like a few years down the line. Stock option as executive compensation Buffett has several issues with the practice of CEOs granting themselves stock options as compensation. There’s the problem of dilution as this increases the number of shares of a company, diluting the existing pool of shareholders and reducing the value of shareholders’ current holdings, Buffett’s beliefs that managers should work to increase the value of his share of the company. Then there’s the corporate malfeasance possible when executives with a better understanding of their company’s value (or lack thereof ) can leverage their options into undeserved wealth.

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Equities

How far away is a reality check for stocks LOLADE AKINMURELE

igeria’s equity market has gained 2.4 percent since the Central Bank of Nigeria restricted non-banks from purchasing Open Market Operations (OMO) bills. The directive has forced non-banks from pension funds to money managers to pile into equities. Investors also fleeing from negative real return in Treasury bills are also rotating to the equities market. The new found attraction to equities is aided by Tier-one banks from Zenith to United Bank for Africa which already have dividend yields higher than the one-year treasury bills. Analysts are however torn between what will happen to stocks in the near term. While some see negative real returns on Nigerian debt forcing investors to take position in equities thereby driving the market higher others beg to differ, saying the underlying weak economic fundamentals may soften appetite for stocks. “Equity investors have been disappointed by low growth and had hoped to see a convergence of exchange rates, rapid reform of the electricity sector and greater efforts to attract foreign direct investment,” said Charles Robertson, the chief economist at Renaissance Capital. Robertson implied that economic reforms addressing these challenges will be required to sustain any stock rally. Despite the recent rally, stocks are down 14 percent year to date and are some of the worst performers globally. In the same vein, an economist, John Ashbourne, who attributed the poor stock market performance to low confidence, “expects the market will continue to struggle in 2020.” “It is difficult to see, in the short term, what could change to boost investors’ confidence in policymaking and growth,” Asbourne said. The National Bureau of Statistics on Friday said economic growth expanded 2.28 percent in the third quarter, as economic growth continues to under perform population growth of 2.6 percent. The performance of the NSE is a consequence of pessimism about the economy and the ability of listed firms to deliver profits, and fear of a future foreign

exchange crisis. These factors have left many funds only willing to invest in short-term securities which limit their exposure to future currency problems. Those two drivers of the sluggish NSE performance are set to remain at least for the next year unless there is a change in policy direction, according to Nonso Obikili, chief economist at BusinessDay. The lack of growth and absence of short-term catalysts has made consumer companies on the NSE unattractive for investors. The story may have changed recently, but the common thread in the views shared by analysts is that the economy will need some tough reforms if the stock market rally is to be sustained. A total turnover of 1.416 billion shares worth N17.249 billion in 20,303 deals were traded last week by investors on the floor of the Exchange in contrast to a total of

www.businessday.ng

“

It is difficult to see, in the short term, what could change to boost investors’ confidence in policymaking and growth

https://www.facebook.com/businessdayng

2.084 billion shares valued at N33.867 billion that exchanged hands the prior week in 21,849 deals. The Financial Services industry (measured by volume) led the activity chart with 880.236 million shares valued at N8.089 billion traded in 12,488 deals; thus contributing 62.15% and 46.90% to the total equity turnover volume and value respectively. The Conglomerate industry followed with 283.854 million shares worth N1.587 billion in 841 deals. The third place was Consumer Goods industry with a turnover of 80.804 million shares worth N2.349 billion in 2,871 deals. Trading in the Top Three Equities namely, UACN Plc, FBN Holdings Plc and Access Bank Plc (measured by volume) accounted for 554.855 million shares worth N4.310 billion in 4,113 deals, contributing 39.18% and 24.98% to the total equity turnover volume and value respectively.

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Data

Federal government Eurobond Yields on Eurobonds rose 0.18 point week on week from an average of 6.32 percent last week to 6.50 percent this Friday following slight sell-off in Nigeriaâ&#x20AC;&#x2122;s Sovereign Eurobonds.

Corporate Eurobond Yields on corporate Eurobonds reduced 0.035 percent points across all tickers from 5.29 last week to 5.26 percent. www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

Banking Finance and Insurance Sector grows at 3.72% in Q3 HOPE MOSES-ASHIKE

inance and Insurance Sector grew at 3.72 percent in nominal terms (year on year), in the third quarter (Q3) 2019, with the growth rate of Financial Institutions at 3.25 percent while Insurance was 6.69 percent, according to the National Bureau of Statistics (NBS). The overall rate was higher than that in Q3 2018 by 5.89 percent points, and 2.74 percent points higher than the preceding quarter. Quarter on quarter growth rate was –14.16 percent. The NBS report released on Friday showed that the sector’s contribution to the overall nominal GDP was 2.40 percent in Q3 2019, lower than the 2.63 percent it contributed the previous year, and 3.03 percent recorded in the preceding quarter. The Finance and Insurance Sector consists of the two subsectors, Financial Institutions and Insurance, which account for 85.90 percent and 14.10 percent of the sector respectively in real terms in Q3 2019.

In real terms, growth in this sector stood at 1.07 percent, higher by 5.87 percent points from the rate recorded in Q3 2018, and 3.30 percent points higher than the rate recorded in the preceding quarter. Quarter on quarter, growth in real terms stood at –14.17 percet. The contribution of Finance and Insurance to real GDP amounted to 2.49 percent, lower than the contribution of 2.52 percent recorded in the third quarter of 2018 by –0.03 percent points, and the 3.17 percent recorded in Q2 2019 by –0.68 percent points. Members of the Monetary Policy Committee (MPC), during the last meeting held in September, noted the improvements in the financial soundness indicators banks and urged the management of the Central Bank of Nigeria (CBN) to sustain its regulatory surveillance to ensure continued financial system stability. “It is gratifying to note the sustained improvement in the various measures of banking sector resilience. The industry capital adequacy and liquidity ratios remained above the minimum

threshold, just as the non-performing loans ratio fell to 9.4 per cent in August 2019, from 11.0 per cent in May 2019, though it remained above the regulatory minimum,” Folashodun Shonubi, deputy governor, operations, CBN, said. The banking sector total assets is expected to hit N44.2 trillion by the end of 2019, which is 7.8 per-

Week Ahead Ahead (Monday, November 25 – November 29, 2019) Week

cent compared with N41.0 trillion in 2018. At the end of the first half of 2019, the sector recorded N43.7 trillion in total asset, according the banking sector report by Afrinvest West Africa. The industry’s total deposits is expected to reach N29.1 trillion by the end of 2019, growing at 25.4 percent as against N23.2 tril-

lion in 2018. Total deposits stood at N25.6 trillion in the first half of 2019. Growth in credit by the banking sector seems to have found a new impetus, probably in response to recent measures by the CBN. Sustained moderation in financial soundness indicators highlights the resiliency of the banking sector.

Chart of the week

Commodity Week Ahead (Monday, 8th April – Friday, 12th April, 2019)

Oil: Crude oil prices dropped on Friday reversing from its two-month highs as concern over U.S-China trade talks overshadowed expectations of an extension to OPEC+ production cuts. Equity The Nigerian Stock Exchange sustained its bullish trend last week to book its third straight week of positive performance as investors looked to invest excess funds in stocks with strong fundamentals and trading at attractive yield levels. The equities market gained 0.52 percent on a week-on-week basis to close at 26,991.42 points following the gains recorded on four out of the five trading days of the week, moderating its year-to-date return to -14.12 percent. Global Spectrum Energy Services Plc will hold its Annual General Meeting today at Lagos Chamber of Commerce and Industry, Alausa, Ikeja, Lagos. Multiverse Mining and Exploration Plc wuill hold its Annual General Meeting on Thursday, November 28 at Ace Olivia Hall, 2nd Floor City Mall, Onikan, Lagos. Currency The exchange rate was relatively stable across all market segments. It traded flat at N360/$ at the parallel market. At the interbank market, the currency hovered around N306 to a dollar, and closed at N362.64 per dollar on the Investor and Exporter window. Going forward, the naira is expected maintain stability across all windows given CBN’s continuous intervention in the currency market. Economy The Central Bank of Nigeria will kick off its 2-day monetary policy meeting today. Fixed Income The Federal Government of Nigeria (FGN), through the Debt Management Office (DMO) conducted a primary bond auction on November 20, 2019. While the 5-year bond was undersubscribed, the 7-year and 10-year bonds witnessed strong investor demand. www.businessday.ng

The Nigerian economy recorded its second-fastest growth since 2016 supported by an appreciable growth in its non-oil sector. The Gross Domestic Product, which measures the aggregate value of production in an economy, rose by 2.28 percent on a year-on-year basis in the third quarter of 2019 from 1.94 percent yoy in the second quarter of 2019. The non-oil sector expanded by 1.85 percent, while growth in the oil sector slowed by 6.49 percent from 7.17 percent in the second quarter of 2019.

https://www.facebook.com/businessdayng

@Businessdayng

Monday 25 November 2019

BUSINESS DAY

www.businessday.ng

https://www.facebook.com/businessdayng

@Businessdayng

Monday 18 November 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 22 November 2019 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. 357,229.52 10.05 -0.99 276 27,304,368 UNITED BANK FOR AFRICA PLC 256,495.66 7.50 -1.32 150 5,878,135 ZENITH BANK PLC 585,544.61 18.65 0.27 425 26,118,819 851 59,301,322 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 269,214.70 7.50 1.33 263 12,405,769 263 12,405,769 1,114 71,707,091 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,442,541.57 120.00 - 83 3,420,328 83 3,420,328 83 3,420,328 BUILDING MATERIALS DANGOTE CEMENT PLC 2,460,649.27 144.40 -0.35 65 437,140 LAFARGE AFRICA PLC. 230,341.48 14.30 -0.69 106 1,883,127 171 2,320,267 171 2,320,267 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 323,467.98 549.70 - 21 48,145 21 48,145 21 48,145 1,389 77,495,831 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 11,873.80 4.45 - 5 30,585 5 30,585 5 30,585 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 5 30,585 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 52,465.05 55.00 10.00 20 179,605 OKOMU OIL PALM PLC. PRESCO PLC 34,600.00 34.60 - 14 23,334 34 202,939 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,590.00 0.53 - 7 191,500 7 191,500 41 394,439 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 3 2,298 JOHN HOLT PLC. 217.92 0.56 - 1 10 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 TRANSNATIONAL CORPORATION OF NIGERIA PLC 41,460.95 1.02 -0.97 64 4,553,328 U A C N PLC. 20,601.27 7.15 - 62 795,611 130 5,351,247 130 5,351,247 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 25,080.00 19.00 - 18 17,786 ROADS NIG PLC. 165.00 6.60 - 0 0 18 17,786 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,598.40 1.00 - 4 17,299 4 17,299 22 35,085 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 7,986.09 1.02 - 13 149,152 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 67,901.87 31.00 - 47 138,149 INTERNATIONAL BREWERIES PLC. 80,801.10 9.40 - 14 93,052 NIGERIAN BREW. PLC. 403,843.55 50.50 -1.94 76 6,297,082 150 6,677,435 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 153,000.00 12.75 -2.67 97 1,410,607 FLOUR MILLS NIG. PLC. 73,191.78 17.85 - 63 366,441 HONEYWELL FLOUR MILL PLC 8,088.80 1.02 -0.98 30 2,575,826 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 3 18,296 NASCON ALLIED INDUSTRIES PLC 37,092.14 14.00 - 8 56,313 UNION DICON SALT PLC. 3,321.07 12.15 - 0 0 201 4,427,483 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 16,903.82 9.00 - 34 187,477 NESTLE NIGERIA PLC. 990,820.32 1,250.00 8.70 60 264,062 94 451,539 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,803.24 3.84 - 13 298,467 13 298,467 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 20,845.00 5.25 - 51 770,928 UNILEVER NIGERIA PLC. 100,250.34 17.45 - 55 342,983 106 1,113,911 564 12,968,835 BANKING ECOBANK TRANSNATIONAL INCORPORATED 129,364.34 7.05 0.71 122 4,703,480 FIDELITY BANK PLC 57,949.59 2.00 -4.31 149 15,640,628 GUARANTY TRUST BANK PLC. 865,276.67 29.40 -0.34 127 15,597,536 JAIZ BANK PLC 18,562.48 0.63 -8.70 76 6,752,012 STERLING BANK PLC. 58,732.45 2.04 -1.92 44 1,437,438 UNION BANK NIG.PLC. 206,757.34 7.10 - 25 295,121 UNITY BANK PLC 7,948.75 0.68 -2.86 12 522,350 WEMA BANK PLC. 27,387.87 0.71 -5.33 38 2,537,391 593 47,485,956 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,920.45 0.71 5.63 53 12,658,324 AXAMANSARD INSURANCE PLC 17,745.00 1.69 2.42 8 248,266 CONSOLIDATED HALLMARK INSURANCE PLC 3,252.00 0.40 8.11 5 679,716 CONTINENTAL REINSURANCE PLC 23,442.40 2.26 - 1 10,000 CORNERSTONE INSURANCE PLC 12,372.79 0.84 9.09 15 250,146 909.99 0.20 - 0 0 GOLDLINK INSURANCE PLC GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 101 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,684.39 0.23 -8.00 34 7,069,000 LAW UNION AND ROCK INS. PLC. 2,577.80 0.60 1.67 6 1,112,446 4,080.00 0.51 - 3 50,500 LINKAGE ASSURANCE PLC MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 1 1,790,000 NEM INSURANCE PLC 11,089.06 2.10 - 18 336,500 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,745.10 0.51 - 0 0 1,333.75 0.20 - 1 50,000 REGENCY ASSURANCE PLC SOVEREIGN TRUST INSURANCE PLC 1,668.16 0.20 - 1 501 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 - 1 501 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 1 101 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,550.13 0.34 5.88 26 1,474,943 175 25,731,045 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,743.97 1.20 - 0 0 0 0

www.businessday.ng

MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 4,200.00 1.00 - 1 850 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 1 850 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 8,520.00 4.26 - 26 160,200 CUSTODIAN INVESTMENT PLC 35,291.19 6.00 - 6 751,860 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 41,387.67 2.09 -4.13 82 3,733,233 1,029.07 0.20 - 5 1,001,101 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 418,938.08 40.00 - 28 117,001 UNITED CAPITAL PLC 13,260.00 2.21 -1.78 88 10,486,087 235 16,249,482 1,004 89,467,333 HEALTHCARE PROVIDERS EKOCORP PLC. 2,029.31 4.07 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 0 0 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 494.58 0.50 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 7,302.26 3.50 - 5 52,991 7,534.02 6.30 - 27 525,946 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 3,381.46 1.96 - 7 145,220 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,063.53 0.56 9.80 26 1,022,693 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 65 1,746,850 65 1,746,850 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 -8.00 8 1,385,222 8 1,385,222 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 486.00 4.50 - 1 70 TRIPPLE GEE AND COMPANY PLC. 316.77 0.64 - 1 1,000 2 1,070 PROCESSING SYSTEMS CHAMS PLC 1,690.58 0.36 9.09 6 1,941,733 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 1 2,000 7 1,943,733 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,122,935.67 298.80 - 14 49,086 14 49,086 31 3,379,111 BUILDING MATERIALS BERGER PAINTS PLC 2,173.68 7.50 - 6 62,383 CAP PLC 17,010.00 24.30 - 7 7,282 CEMENT CO. OF NORTH.NIG. PLC 249,726.52 19.00 5.56 26 334,419 MEYER PLC. 313.43 0.59 - 1 100 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 40 404,184 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 CUTIX PLC. 2,589.14 1.47 - 18 635,149 18 635,149 PACKAGING/CONTAINERS BETA GLASS PLC. 26,898.49 53.80 - 2 1,450 GREIF NIGERIA PLC 388.02 9.10 - 0 0 2 1,450 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 60 1,040,783 CHEMICALS B.O.C. GASES PLC. 2,547.42 6.12 - 1 300 1 300 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 83.60 0.38 - 0 0 0 0 1 300 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 32 2,858,924 32 2,858,924 INTEGRATED OIL AND GAS SERVICES OANDO PLC 48,358.19 3.89 0.26 71 2,281,035 71 2,281,035 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 53,332.04 147.90 - 20 11,828 CONOIL PLC 12,838.11 18.50 - 24 56,018 ETERNA PLC. 3,651.61 2.80 - 10 73,900 FORTE OIL PLC. 23,574.91 18.10 9.04 43 2,264,337 MRS OIL NIGERIA PLC. 4,663.23 15.30 - 7 27,300 TOTAL NIGERIA PLC. 37,652.97 110.90 - 34 48,396 138 2,481,779 241 7,621,738 ADVERTISING AFROMEDIA PLC 1,642.45 0.37 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 1 2,000 1 2,000 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 270.56 0.23 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,623.26 4.45 - 4 11,100 TRANS-NATIONWIDE EXPRESS PLC. 398.52 0.85 - 2 1,500,000 6 1,511,100 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,259.15 2.75 - 0 0 IKEJA HOTEL PLC 2,598.50 1.25 9.65 3 220,860 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 0 0 TRANSCORP HOTELS PLC 41,042.18 5.40 - 3 9,500 6 230,360 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 972.03 1.26 - 4 50,000 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 608.29 1.41 -0.70 11 1,000,734 15 1,050,734 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 679.66 0.41 - 0 0 0 0 SPECIALTY INTERLINKED TECHNOLOGIES PLC 757.44 3.20 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

https://www.facebook.com/businessdayng

@Businessdayng

Company IN FOCUS

BUSINESS DAY Monday 25 November 2019 www.businessday.ng

May & Baker plc: Sustaining the path of profitability amid economic headwinds, cash-strapped consumers OLUFIKAYO OWOEYE

Pharmaceutical Society of Nigeria, Member of the Nigerian Institute of Management and an alumnus of the Lagos Business School. As at 21 March 2019, he has 14.5million units of shares in the company. The company recently appointed Daisy Danjuma, as chairman following the retirement of T.Y Danjuma, a retired army general. She was first appointed to the Board of Directors of the company on 30th July 1999 until 8th October 2003 and later on 30th May 2019. As at 21st March 2019, T.Y. Danjuma, through T.Y. Holdi ng s Lt d ; O i l Te c h Nig. Lt d ; Osis Yuvic Ltd; has an indirect shareholding amounting to 746.84million units of shares. Other non-executive directors includes Adetunj Adeleke, who holds a Master Degree in Business Administration (MBA) from Delta State University, Abraka and a current member of the Niger ian Institute of Management., Edudie Abebe, a retired federal permanent secretary Fellow, London Society of Hygiene and Tropical Medicine, Ishaya Dankaro, an expert in power plant systems e n g i n e e r a n d a m e mb e r o f the International Association of Mechanical Engineers and the National Soceity of Black Engineers, USA. Dankaro has 61.63million units of shares as at 21 March 2019. Wave of economic contraction The d r ug-make r was not s h i e l d e d f ro m t h e w av e o f e c o n o m i c c o n t ra c t i o n t h a t swept the country in 2016 as it plunged the company into

a loss of N41.09million. The company however emerged from its loss path in 2017 and maintained it in 2018 recording a net profit of N336.61million and N585.20million. In its recently released thirdquarter result for the period ende d 30th S eptemb er, the drugmaker reported a decline in its top-line (Revenue) of 9.57percent to N5.91 billion

”

n the last few years, several quoted healthcare companies have closed shops with others struggling to stay afloat in a challenging operating environment. Notable among these is Evans Me dical Plc which was taken over by First Bank and defunct Skye Bank Plc for defaulting on a loan facility. The drugmaker recently won the World Health Organization’s prequalification license that gives it an opportunity to participate in international bids, sadly, before it could reap the dividend, the two lenders came for its jugular. Also, drugmaker, Swiss Pharma Nig Ltd (Swipha) was in 2017 acquired by French pharmaceutical multinational firm, Biogaran, a subsidiary of the Servier Group specialized in generic medicines. The 2016 economic recession also dealt a big blow to their bottomlines while consumers shifted to cheap and smuggled substandard drugs. There has also been a shift to traditional medicine by most low-income households. In spite of these, May & Baker Plc has continued to maintain the tempo of profitability. Business operations May & Baker manufactures and distributes pharmaceutical products, diagnostic equipment, reagents, consumer products, and human vaccines’ The Company also engages as contracts manufacture for other companies and organisations. It signed a Joint Venture Agreement for the-production of a nutritional supplement with FIIRO through the Ministry of health. The Company has three subsidiaries, Osworth Nig er ia L imite d, Tydipacks Nigeria Limited and serviiure Nigeria Limited and has the majority shareholding in Biovaclines Nigeria. In April 2018, May & Baker sold its food production line, worth some N775 million to DE United Foods Industries Limited (DUFIL), owners of Indomie noodles. The food production line covers its noodles business under the brand name, Mimee Noodles. Corporate Governance The company has Nnamdi Okafor as its managing director/CEO. He holds a Bachelor of Pharmacy (Honours) degree from the prestigious University of Ife, Ile-Ife (now Obafemi Awolowo University, Ife) as well as Master of Business Administration (MBA) in Marketing from ESUT Business School, Lagos. He is a Fellow of the

The revenue decline was due to the discontinuation of some key products in compliance with industrywide regulatory directives and the sale of her noodles (Food) business

as compared to N6.54 billion reported in the same period in 2018. Bottom-line (Profits) als o ballo one d 14.2p ercent from N414.75 million in 2018 to N473.57 million in 2019. The phar maceutical unit which contributes over 90percent to total revenue recorded revenue of N5.85 billion in the period. This was however lower by 6.95percent when compared to the same period in 2018. According to the company, this was a general industr y trend attributed to a decline in consumer purchasing power, industry regulatory headwinds and unfavourable macroeconomic conditions. “The revenue decline was due to the discontinuation of some key products in compliance with industry-wide regulatory directives and the sale of her noodles (Food) business,” the company said. Its other unit, the beverage business unit showed some resilience surging 9.18percent to N57million. Th e b e ve rag e u n i t, h ow e v e r, r e c o r d e d s o m e l e v e l of resilience, inching upwards by 9.18percent, to print at N56.79million from N52.02million Its fina n ce co st d ro p p e d 41.55percent to N175.90 million compared to N300.94million in third quarter 2018, thanks to the recently concluded rights issue which saw it reduced some of its debts. Overall, net margin improved to 8.01percent from 6.34percent in the corresponding period. Cost of sales within the third quarter also dropped 0.69per-

cent to N3.75bn putting costt o -s a l e s at 6 3 . 4 5 p e rc e nt a s compared to 63.53percent in same period 2018. Distribution and marketing expenses declined 22.69percent to N756.56million. Ad m i n i s t rat i v e e x p e n s e s increased by 16.59percent to N626.07million, wiping out the gains from the direct costs and distribution expenses. The company consummated an agreement with the Federal Government of Nigeria for a joint venture project in Biovaccines Nigeria Limited, a special purpose vehicle for local vaccine production. According to management of the company, the Biovaccines has taken off as a business and the roadmap to berth Nigeria’s local vaccines is in full swing. Similarly, the drug company has signed agreement with the National Institute for Pharmaceutical Research (NIPRD) for the production and commercialization of an anti-sickling drug, NAPRISAN, which will provide succor to millions of homes with sickle cell patients. It is also working on a project with the Federal Institute of Industrial Research for the development of a nutraceutical product. T h e N i g e r i a n S t o c k E xchange (NSE) listed additional 745,234,886 ordinar y shares of May & Baker Nigeria Plc issued by way of a Rights Issue. The additional shares arose from company’s Rights Issue of 980,000,000 ordinary shares of 50 kobo each at N2.50 per share on the basis of one new ordinary shares for every one shares ordinar y shares held as at 4 September 2018. The company realised about N1.86 billion from the right issue as it was 76.04 per cent successful. Nnamdi Okafor, managing director, said the continuing improvement in the profitability of the company underscores the success of strategic initiatives aimed at optimizing value for all stakeholders. He said the company has been positioned for sustained growth noting that ongoing investments in additional production capacity and investment in marketing and promotions among other strategic initiatives would provide impetus for growth in the years ahead. The company has continued to explore opportunities to broaden its products base and top-line including recent investments in vaccine production, new pharmaceutical products, nutraceuticals and herbal products that are expected to further diversify revenue base overtime.

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.