BusinessDay 26 Feb 2020 by BusinessDay

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news you can trust I ** wednesDAY 26 february 2020 I vol. 19, no 507

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Low fixed income yields drive attraction

ingly skirting the lines of Ponzi schemes amid a hunt for yield by investors and weak regulations. Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture.

For many Nigerians with disposable income to invest, crowd funding platforms, many of which claim to operate in the agriculture space, have been the destination of choice in recent years.

0.00 3.66

-0.51

10 Y -0.11

30 Y -0.04

7.00

10.21

11.91

NGUS jan 29 2023 374.57

Agric crowdfunding at risk of Ponzi schemes as regulation lags griculture crowdfunding platforms that sell products promising higher returns than the rates the companies can earn on riskfree investments may be pushing risky bets that are increas-

3M 0.00 2.87

NGUS jan 27 2021 365.40

MARKETS

CALEB OJEWALE

fgn bonds

Treasury bills

The practice has become increasingly attractive as yields on fixed income assets plummet. For instance, one-year treasury bills had a yield of 5.7 percent Contin ues on page 38

NGUS jan 29 2025 379.81

Here’s why Nigeria’s economic growth in 2019 is not sustainable … FG misses non-oil targets for 4 consecutive years … Growth not sufficient to tackle poverty – Analysts MICHAEL ANI & DIPO OLADEHINDE

igeria may have recorded its biggest real economic growth yet in the past three years in 2019, but it leaves nothing to cheer as the growth was majorly driven by the oil sector, exposing the country’s weakness in achieving its diversification goals. The economy grew 2.27 percent in 2019 to record its biggest annual growth in about three years, and has got fiscal policymakers singing its praises, but analysts say the impressive growth is not sustainable since it was largely driven by developments in heavily volatile oil sector. The oil sector which accounted for about 9 percent of the country’s gross domestic prodContinues on page 38

Inside

Nigeria plans gamechanging move to allow PFAs invest in infrastructure P. 2

L-R: Anthony Eguando, MD, PROOFLOAD Services Ltd; Anthony Elis, GM, contract and procurement, Shell Nigeria; Simbi Wabote, executive secretary, NCDMB, and Michael Amaeshike, MD, West African Ventures (WAV), during the inspection of exhibition stand of WAV at the ongoing sub-Saharan Africa International Petroleum Exhibition and Conference (SAIPEC) in Lagos, yesterday.

Dangote Fertiliser commences pre-testing of $2bn plant ahead of inauguration P. 2

Wednesday 26 February 2020

BUSINESS DAY

news CBN to offer N111.11bn worth of T-Bill to investors today HOPE MOSES-ASHIKE

he Central Bank of Nigeria (CBN) will t o d ay ( We d n e s day) offer to investors N111.11 billion worth of Treasury-Bill at the Primary Market Auction (PMA). The Nigerian Treasury-Bill (NTB) consists of N20.37 billion for 91-day tenor, N38.75 billion for 182-day and N51.99 billion for 364-day tenor. The auction is likely to witness an oversubscription with a slight moderation in stop rates due to abundant system liquidity and a relatively low yield environment in the secondary market, according to financial market analysts at FSDH Merchant Bank Limited. The financial system liquidity stood at N1.2 trillion last week from all maturing investments – NT-Bills, Open Market Operation (OMO) and FGN bond. However, the regulator last week mopped up N300.0 billion from the excess liquidity via its usual OMO auction. A report by FSDH Research shows that the T-Bill market ended the trading session on a positive note on Tuesday, with average yields declining by 21 basis points to 3.90 percent as against 4.11 percent.

The average yield across long-term maturities declined by 40 basis points, while average yields across short-term and medium-term maturities remained unchanged. The fall in average yields was led by the NTB 14-Jan-21 (-110bps), NTB 26-Nov-20 (-77bps), and NTB 12-Nov-20 (-67bps) maturities, which witnessed maximum buying interest. Overnight inter-bank rate declined by 0.23 percent to close at 3.07 percent on Tuesday as against 3.30 percent. Also, the Open Buy Back (OBB) rate declined by 0.11 percent to close at 2.29 percent on the same day, from 2.40 percent on the previous day. The average OMO yields declined by 35 basis points to 11.31 percent on Tuesday as against the last close of 11.66 percent. Buying interest was witnessed across short-, medium- and long-tenor maturities, with average yields compressing by 57 basis points, 37bps, and 17bps, respectively. Yields on 22 bills fell, with the 14-May-20 maturity bill recording the highest yield decline of 256 basis, while yields on 5 bills advanced with the 10Nov-20 maturity bill registering the highest yield increase of 11 basis points.

•Continues online at www.businessday.ng

Dangote Fertiliser commences pre-testing of $2bn plant ahead of inauguration … raises hope for improved agricultural production Olusola bello

angote Fertiliser Limited has begun the countdown to the inauguration of its $2 billion granulated urea fertiliser complex located in the Dangote Free Zone, Lekki, Lagos, raising hopes for improved agricultural production in the country. With a capacity of 3 million tons per annum, the plant has been classified as the largest granulated urea fertiliser complex to emerge in in the history of the fertiliser industry. When the project becomes fully operational, Nigeria would be able to significantly reduce the importation of fertiliser and save $0.5 billion from import substitution. It will ultimately remove the need for imports and provide $0.4 billion from exports as the supply of fertiliser from the plant would be enough for the Nigerian and neighbouring markets. The project will additionally create thousands of direct and indirect jobs in construction and related fields. Several critical sections of

the plant are currently going through various stages of precommissioning and test-run. Virtually all the sections of the plant such as central control room, ammonia and urea bulk storage, cooling tower, power generator plant, and granulation plant have been completed and are going through pre-testing. “I am happy that by the time our plant is fully commissioned, the country will become self-sufficient in fertiliser production and even have the capacity to export the products to other African countries,” Devakumar Edwin, group executive director, strategy, portfolio development & capital projects, Dangote Industries Limited, said. “Right now, farmers are forced to utilise whatever fertiliser that is available as they have no choice, but we need to know that the fertiliser that will work in one state may not be suitable in another state, as they may not have the same soil type and composition. The same fertiliser you use for sorghum may not be the fertiliser you will use for

Continues on page 38 www.businessday.ng

Dapo Abiodun (l), governor, Ogun State, and Funmi Efuwape (r), state commissioner for women affairs, consoling Selimot Tiamiyu, mother of Kazeem Tiamiyu, the slain Remo Stars footballer, in Sagamu, yesterday.

Nigeria plans game-changing move to allow PFAs invest in infrastructure LOLADE AKINMURELE & SEGUN ADAMS

n infrastructurefocused fund that draws contributions from pension funds, Development Finance Institutions (DFI) and foreign investors is being set up to tackle Nigeria’s infrastructure needs and boost the economy. This is according to Dave Uduanu, CEO of Lagos-based pension fund administrator, Sigma Pensions, who has been a part of deliberations over the government initiative. The fund will be managed by the Nigerian Sovereign Investment Authority (NSIA) and would take at least one year to conceptualise and the investment would be made possibly over a five-year period, according to Uduanu, who sits on the committee planning the fund. The NSIA, National Pension Commission (PenCom),

Ministry of Finance and the Central Bank of Nigeria (CBN) are named members of the committee. Uduanu told CNBC Africa that the planned fund could possibly be the most important investment project in Nigeria in the last decade. “What we have been asking the government is to issue infrastructure bonds or create a national infrastructure fund that is run by private sector operators,” said Uduanu. The news about the planned infrastructure fund clears the air over initial suspicions that the government was going to borrow N2trn from the national pension asset to fund its budget. Pension Fund Administrators (PFAs) will invest in the infrastructure fund as typical investors as will DFIs like the African Development Bank (AfDB), hence it would not be the FG borrowing money outside an investment vehicle from pension funds as commonly

assumed. “Government is not borrowing, it is a fund that would be managed by the NSIA, it is a commercial fund,” said Uduanu. Nigeria’s infrastructure stock is only a quarter of its GDP, far below the 70 percent international benchmark, according to the International Monetary Fund. Zaniab Ahmed, minister of finance, budget and national planning, last year said investment of $100 billion annually was needed for the next 30 years to effectively tackle infrastructure challenges in the country. But the government is cash-strapped and the national budget leaves little room for capital investment already competing with the high recurrent expenditure and the cost of debt servicing. Uduanu estimates that with just around N380bn allocated to transport infrastructure in 2020, relying on the budget would take 20

years to build the projects earmarked in the national spending plan. The impasse prompted the government’s initiative for NSIA to set up a dedicated team to run the new fund which for pension funds would be one of their several investible, like private equity funds. “We (PFAs) are going to sit on the advisory board to make sure that things are done properly and the asset would be run under a publicprivate partnership (PPP) framework,” he said. Uduanu, however, said to ensure success of the project, the PPP framework has to be finalised as well as the national tolling policy to ensure that capital would be recycled back into the fund. He also noted that the concern for PFAs would be the interest rate at which the fund would issue notes given that current low interest rate environment which has been driven by recent policy directives is unsustainable.

Ogun footballer’s murder: Police Inpector, ASP dismissed, detained for trial … All satellite SARS formations dismantled, surrendered under CPs’ control … Gov Abiodun assures victim’s parents of justice RAZAQ AYINLA, Abeokuta

et-to-be-made-public Police Inspector and Assistant Superintendent of Police (ASP) who were alleged to have caused the murder of rising football star with Ogun state-based Remo Stars Football Club, Kazeem Tiamiyu, popularly known as Kaka last Saturday, have been reportedly dismissed and detained for trial by the Nigeria Police Force. Recall that the two men of Special Anti-Robbery Squads (SARS) at ObadaOko in Abeokuta had travelled

several kilometres away to Sagamu, another city in the State to effect arrest of the footballer for unknown offence which snowballed to the murder of the promising footballer along SagamuAbeokuta expressway whom the SARS operative claimed to have been killed by oncoming vehicle when the footballer attempted to evade arrest. But, developing events after the death of the footballer proved the men of Special Anti-Robbery Squads (SARS) culpable as the deceased parents and several eye witnesses who witnessed the arrest and

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death of Kaka alleged that the issue was a clear case of murder on the part of the officers who effected the arrest. Reacting to the ugly incident, Mohammed Adamu, the Inspector General of Police announced immediate dismantling of all zonal intervention squads of SARS created by the 12 Zonal Assistant Inspectors-General in the country and collapsed them under the watch and control of Commissioners of Police in all the 36 States and Abuja, the Federal Capital Territory. The Inspector-General of Police during a visit to parents of the deceased in Sagamu in @Businessdayng

company of Governor Dapo Abiodun of Ogun State, and Peter Ogunyonwo, Deputy Inspector General in charge of Criminal Investigations Department at the Force Headquarters, said, “I can tell you that the name of your son remains indelible in the history of Nigeria Police. “I have a signal here and it was based on the incident, the IG immediately ordered that all satellite offices established by all zonal commands; the twelve zones, that they should be dismantled immediately.

•Continues online at www.businessday.ng

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Rethinking microfinance model and methodology (1) Small Business handbook

Emeka Osuji

he Central Bank has given operators in the microfinance industry up to April 2021 to shore up their capital base. Of course, the idea is that the operators are poorly capitalized and need to bring in more funds to be better able to support the economically active poor people in Nigeria. The need for increased capital base for operators is one that everyone agrees has become inevitable. The challenge of pulling millions of our citizens out of poverty, as proposed by the present government, is a daunting one and we need to understand that it requires more than platitudes and catch phrases to change the course of social wellbeing of Nigerians. In other words, that task will have to be properly promoted and backed with correct tangible policies and actions. It will also have to be sold to Nigerians in such a way that it stops being one of President Buhari’s personal projects. This course of action is advised by the nature of our current poverty, which is endemic and growing. To pull so many as 100 million Nigerians out of poverty in a space of ten years is no doubt an ambitious plan. And that is what is actually good about the plan – it is not just ambitious; it is also audacious. Every vision must have that attribute of audacity. The good thing about aiming for the moon, they say, is that even if you fail, you land among the stars. We must all understand that it is not a task that the

government can perform alone. There is a tendency among those in government to often feel more Nigerian than the rest of us. This has largely informed the apathy that trails many government initiatives, and led to their failure. There are different roles that need to be played to really reduce poverty by the magnitude envisaged by the government, and many of them belong to the private sector. It must be inclusive and nationally focused. Often, we neglect our strong points and focus on the weak, on the wrong assumption the strong will take care of itself or remain strong. Northeast may be the centre of poverty and insurgency today but neglecting the struggling people in other places, just because they are yet to boil over, may be the wrong strategy. Inclusiveness is the word, even if graduated. Most of the over 730 million people living in extreme poverty in the world are found in Southeast Asia and the SubSaharan Africa where Nigeria is holding court as the poverty headquarters. Ending poverty in all its forms is one of the 17 Social Development Goals, which the world has set for itself by2030. This target can only be achieved with inclusive growth, which of course can only come through inclusive policies. The current Gross Domestic Product figures for 2020 have pointed towards an improvement in the growth trajectory of the economy. However, we still cannot say our growth is shared or inclusive. To achieve inclusive growth, we must focus on the rural communities, which host the bulk of the poor. Although agriculture is a popular occupation of the rural dwellers, and currently in the front burner of government support programmes, we still have not got it right. Sustainable access to inputs and other support resources is still not getting to farmers in the right quantum

and at the right time. Subsistence agriculture is still the vogue just as walking about with cattle as a culture is dying hard. There is little or no farming going on in most rural areas, especially the places where real farming took place, because cattle herders and “bandit” have made that impossible. We must focus attention on the poor and their needs, which stretch from finance to infrastructure. Unemployment and, relatedly, poverty have been demonized as the twin causes of insecurity in Nigeria – the biggest threat to our national survival. But unemployment and poverty are themselves mere symptoms of the failure of leadership, political, economic and social, to provide the Social Overhead Capital that would liberate and empower the mostly vibrant people of Nigeria to pursue their dreams. Public policy is still largely parochial in the sense that we do not invest in the merit of Nigerians. We invest on the bases of their tribes, clans and opportunism. Investing in the merit of Nigerians means that you encourage them to compete, and that way they up their individual games in participating in the economy – training and education. That will help to create a better crop of citizens than what we currently have. It will engender patriotism and fire innovation. The brand of politics we play in Nigeria is that, at all levels from the national to the subnational, citizens are being forced everyday by discrimination to seek alternative countries. The high wave of emigration to Europe and the Americas is not just a result of globalization. And the pattern of this exodus also tells us that it is not wide spread even among the Nigerians. Only those who feel the system has rejected them seek that ultimate solution. In all of this, we need to encourage those involved in the economic empow-

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In all of this, we need to encourage those involved in the economic empowerment of the poor, especially through microfinancing, whom I must commend for the great sacrifice they are making to help the government is its financial inclusion programme, to do more

Dr Osuji is head of the department of Economics at Pan Atlantic University Lagos. eosuji@ pau.edu.ng @Emekaosujii

Valuing our birthright

cquitting the guilty and condemning the innocent is something we’re told God doesn’t like. In fact, to use His own words, He detests it. And as someone who believes God when He says He blesses those who obey His word and curses those who don’t, the result of devaluing what God values and valuing what God devalues can only be trouble, affliction, anguish, social retardation and a multitude of other unpleasant eventualities. It wasn’t too long ago that we heard the chairman of the ruling political party telling all who cared to listen, in an effort to woo other political heavyweights away from their party to his party, that should they decamp to the ruling party, all sins would be forgiven. All this in the name of winning elections and holding on to power. If you ask me, I’ll say he took the tongue in cheek saying, “all is fair in war” a little too much to heart. One thing we continually fail to realize, much to our peril, is that when we disappoint God, we automatically disappoint ourselves. Esau, the older of the twins was foolish enough to devalue his position as the first born by carelessly mortgaging it for a pot of stew. Hunger had caused him to lose his already warped perspective and he willingly sold his birthright, just to satisfy an immediate need. Deferred gratification wasn’t a notion he was familiar with. Only “now” matters, so the future can sort itself out, as far as he was concerned. Living a life of strategy, careful planning, preparation and calculated positioning was a completely alien concept to him, and this really shouldn’t come to us as a surprise. Mensah Otabil in his book, Buy the Future, explains to us that Esau’s very profession as a hunter was one where skill, athleticism and gallantry played a major role but at the end of the day, success was largely dependent on luck. So, any day luck failed to smile on him, he had two

choices; go hungry or rely on the benevolence of others; just as he had to do on that fateful day. Jacob, the younger of the twins was described as a homely fellow, perhaps less heroic and less valiant by nature but he more than compensated for this by being more discerning, recognizing the value inherent in the first son’s birthright. He was without a doubt wiser, more forward looking, strategic in thought and tactical in pursuit of his goals. His chosen profession shaped his character too. As a livestock farmer, he had discovered the virtue of planning for the future. Nurturing his sheep, goats and other farm animals had taught him patience, helped him develop an ability to defer gratification, to calculate and make informed decisions about now and the future. Equally important, it also opened his eyes to the wisdom in sustaining reproduction, continuity, and the foolishness in consuming that which should meet your needs tomorrow and the next day, and the day after that. He had learned that life is not about daily taking a shot in the dark, but about making strategic plans that will ensure your shot hits the mark, every time. Jacob need not hunt and pray he catches game before eating; he could simply take his pick amongst his livestock. His lifestyle may not sound as glamorous or as exciting as the life of the fearless and spontaneous hunter of folklores, but it was way smarter. And though Jacob’s actions, by withholding food from his brother until his brother gave up his birthright was indeed cold and calculating, just as pretending to be Esau and cooking his father’s favourite meal, in order to obtain the blessings reserved for the first born was very deceitful, we’re ever so quick to forget a very significant point, and it’s this. Esau wanted to claim the benefit of a birthright that he no longer had. He had already sold it! So in effect, Jacob was merely claiming what was now rightfully his.

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If we should study how successive governments in this country have behaved, for as long as we care to remember, are we really that different to Esau? In our haste to make quick money, we lift our God given crude oil and sell it to those countries that have the vision to build refineries that will add good value to the raw product, who will then sell it back to us (an oil producing nation) at a price which they are at the liberty to determine. We despise the future, evident by our expertise in eating the seed along with the fruit, thereby reducing our ability to reproduce or replenish that which has been expended. Singapore is a country which cannot boast of possessing natural resources in commercial quantities and yet, through visionary leadership, it has for long established itself as one of the world’s major refiners of crude oil, with a refining capacity of just less than 1.4 million barrels per day. Our dear country, the 6th largest oil producing nation on earth and number one in Africa, has the capacity to refine a measly 445,000 barrels a day but in practice barely does half of this, due to obsolete facilities, which appear to have defied countless Turn Around Maintenance exercises, and the obscene volume of financial resources thrown at them for this purpose. One word that immediately springs to mind is corruption. Ironically, in 2018, it was the Managing Director of NNPC at the time, who revealed that our nation is the only one amongst the OPEC nations, which imports petroleum. Sadly, our propensity to hold records that nobody else desires doesn’t end there, as he also revealed that we currently stood as the largest importer of petroleum in the world. What a shame. Miniature city-states that don’t produce a drop of oil, have in the meantime usurped our position as the first born and now sell the refined product back to us, at their own terms. I’m sometimes forced to ask myself if we truly

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erment of the poor, especially through microfinancing, whom I must commend for the great sacrifice they are making to help the government is its financial inclusion programme, to do more. It is not a fancy job to do microfinancing in an environment where poverty is racing like a wild flood. You bring ten people out of poverty today, insecurity and failure of leadership shoves 50 back in. In discharging the duty of regulating the industry, we should not see only a group of people with the tendency to play the system and so focus on controls. When we deal with operators, especially as regulators, we must realize that there is a social aspect of the work of an MFB, which is both a financial and social intermediary. When the Government wanted to form an MFB to manage the many funds it accumulated and was unable to pass on to MSMEs, many had suggested that they use the instrumentality of the reach and experience of the big successful microfinance banks to disburse the intervention funds. But the government preferred to create for operators, a big and more powerful competitor in the form of a government-owned behemoth of an operator called NIRSAL Microfinance Bank. That move, some say, could discharge MFBs of any guilt if they do not reflect the social elements of their nature in dealing with the poor. More important, however, is for NIRSAL to chart the course of the industry, leading the way for all MFBs, with regard to services, outreach and innovation. With so much cheap funds available, it is already a market leaders and should be expected to practice classical microfinance, and restore the industry to orderliness.

Character Matters with Daps

Dapo Akande love God in this country; or if we just observe religious rituals, with the hope of appeasing Him? If godliness was measured by the number of religious stickers we paste on our cars, the front door of our homes and the almost involuntary outburst of religious expressions/professions, then I can confidentially say Nigerians would make up nothing less than 80 percent of the population of heaven; but it doesn’t. And the sooner we realise that, the sooner we’ll begin to behave in a way that matches our words. I believe it was Paul Wellstone who wisely said, “Never separate the life you live from the words you speak”. Life is not about mantra but about living out that which we profess. God is actually for us but a lot of the time, our actions show we’re against ourselves. There was a time when our nation was not only sustained from revenue earned from agriculture but was even made prosperous by it. As soon as oil was discovered and became a source of easy and quick income, which required very little input on our part, agriculture was abandoned. Fifty years and many false starts later, we find ourselves going back to till the land. Changing the nation...one mind at a time Akande is a graduate of the University of Surrey, UK, author of the acclaimed book: “The last fight: A personal journey to discovering values.” Contact: dapsakande25@gmail.com

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Do Nigerian leaders care for the poor as they claim?

Olanrewaju Rufai

t is not uncommon to hear Nigerian policymakers and government officials argue that their policies are designed to protect the poor. In fact, a popular go-to explanation for the rationale behind several policies implemented by the Nigerian government is “protecting the masses”. The fuel subsidy regime and ongoing border closure are just two of the current administration’s policies whose rationale, among others, has been “protecting the masses”. Reality however cannot paint a more contrasting picture. Indeed, it is often almost impossible to reconcile the utterances and proclamations of Nigerian political leaders in which they purport to protect the poor, with the actions of the same leaders when such actions exploit and further impoverish the nation’s poor. Furthermore, rather than implement the difficult but necessary reforms pivotal to the nation’s economic development, Nigerian public officials often hide behind protecting the poor to justify their inactions and unwilling-

ness to embark on these reforms, when in reality, such inactions and refusal to reform are actually detrimental to the poor. A prime example of this is the nation’s continuous subsidy of petroleum products. The usual rhetoric when Nigerian politicians discuss fuel subsidy is that the subsidy remains in place to protect the poor from high crude oil prices. The reality however is that fuel subsidy, which was initially introduced as a stop-gap measure to cushion rising international oil prices in the seventies, has mainly been a subsidy for middleclass and rich Nigerians and hardly for the poor, for whom they were purportedly designed. In addition, the fuel subsidy policy has proven to be a highly inefficient and expensive way of promoting equality and tackling poverty in Nigeria. For instance, Nigeria spent over N1.4 trillion on petroleum subsidies in the past year, a figure more than double the proposed 2018 budgetary allocation to education. This is illogical in a nation with one of every five of the world’s out-of-school children, and puts paid to the notion that the policy is for the benefit of the poor. In fact, rather than being a “dividend of democracy”, Nigeria’s fuel subsidy policy has been a constant source of multiple corruption scandals, while consuming a significant chunk of the nation’s resources with no significant upside for many Nigerian citizens. Overall, the fuel subsidy has simply been a cushion for middle-class and rich Nigerians, as well as a conduit for unscrupulous politicians to fleece the nation.

Another cursory example of a policy enacted purportedly to protect the poor, but which has only had negative consequences is the recent closure of the nation’s land borders. When the Nigerian government announced the closure of the country’s land borders to all goods months ago, the decision was severely criticized by economic experts. Nevertheless, the Buhari administration justified the decision as a tactic to stem the influx of smuggled goods from neighbouring countries and protect the poor from low-quality imports. In reality however, the effects of the border closure have been particularly damaging to the nation’s poor. Since the announcement of the border closure, the nation’s inflation rate has been on an upward trajectory. Already, basic commodities including food, transportation etc. have become more expensive, with the severest effects suffered by the nation’s poor. This does not appear to be an outcome which has proven beneficial to the poor in a nation which was only recently adjudged the poverty capital of the world. Overall, Nigerian political leaders have a knack for hiding behind protecting the poor to justify their unwillingness to embark on necessary structural reforms. In reality however, their actions and the consequences of these actions have shown that this unwillingness to tackle the nation’s serious issues via reforms has been more detrimental to the poor and the nation at large. Sadly, the costs of these inactions are borne by the Nigerian masses. For instance, the billions of Naira wasted

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Nigerian political leaders have a knack for hiding behind protecting the poor to justify their unwillingness to embark on necessary structural reforms. In reality however, their actions and the consequences of these actions have shown that this unwillingness to tackle the nation’s serious issues via reforms has been more detrimental to the poor

Google trends, African entrepreneurship and a call for hope (1)

f what we search for reflects our predilections and proclivities, then search trends can be used to estimate countries ahead of the curve and predict those who will show visible growth over the next decade. And if we can observe what we have searched for, can understand why we made these searches, it is possible for us to hack the process to shape future national tastes and behaviour. Voilà Google Trends! Google Trends is a feature that shows how frequently a given term is searched in Google’s engine relative to the site’s total search volume over a period. It showcases the popularity of top search queries in Google Search across various countries, regions, and languages, using graphs to compare the search volume of different queries. Despite efforts of Yahoo, Baidu and Microsoft’s Bing to cut into its 80 percent-plus global market share, Google, as the ubiquitous name for search has leveraged its position to tap into datasets to reflect insights across different categories ranging from People, Artistes, Stories, Trending Questions and Movies, among others. Since 2012, the company has consistently shared a year-in-review with a video that highlights the year’s search. No need for validation but… The overwhelming sentiment is that to check a nation’s cultural pulse, look at what they are searching for online. Our Google trends reflect the zeitgeist of our time. A 2016 study conducted by Nghiem, Le T.P., et al, opines that the use of Google Trends can serve as a valuable source of analysis, providing time-series information on fluctuations in public interest in numerous topics, especially across fine temporal (weekly) and spatial scales across the globe. After a rigorous analysis in Analysis of the Capacity of Google Trends to Measure Interest in Conservation Topics and the Role of Online News, the researchers surmised that Google Trends data are a powerful tool to monitor and evaluate

public interest in conservation, arguing that by conducting keyword comparisons within the discipline of conservation, it is possible to gain insight on changing public interests and use this knowledge to prioritize communication about conservation to the public. Google in Africa With about 40 percent internet penetration, an estimated 525 million people online (more than in North America-327m and the Middle East-174m combined) and approximately 60 percent of its 1.3b population under age 25, Africa is the world’s youngest and agile continent. Coupled with its pool of brainpower and talent, an estimated smartphone rate of 39 percent and home to six of the 10 fastest growing economies in the world, the potential represented by Africans coming online and participating in the digital economy is significant. Recently, mobile phone penetration in sub-Saharan Africa has increased dramatically. According to the 2019 report from GSMA, there were 747m SIM connections in sub-Saharan Africa, representing 74 percent of the population. Its 2025 projections anticipate a bigger pie; Africa will have 600m+ unique subscribers, with mobile’s contribution expected to reach $185 million (9.1 percent of GDP) enabled by improvements in productivity and efficiency fostered by increased uptake of mobile services. Understandably, tech firms are gambling on Africa as their next income frontier. As their Africa user base grows, they have become more serious about the revenue opportunity the continent represents and are now aggressively working on local presence in key markets. Within the last three years, Africa has played host to a roll call of global Big Tech CEOs from Facebook, Google, Twitter, GitHub and Alibaba. In its resolve to bolster its position across Africa, Google has been busy with Google Station to provide free Wi-Fi; Google Impact Challenge for Africa to reward non-profits with community impact in Nigeria, Kenya and South

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Africa; Digital Skills for Africa to upskill business owners; Google Partners for digital and marketing agencies; emPawa to support music talent and Accelerator programmes for technology start-ups in Africa. Google is also building a new subsea cable to connect Southern Africa to Portugal and has launched a shoal of services such as the promise of a first-in-Africa artificial intelligence lab in Ghana and the recently opened Developers space in Nigeria. As owner of the most ubiquitous operating system on mobile, Google will seek to play an even bigger role enhancing mobile-enabled platforms to disrupt traditional value chains in different verticals across the region to eliminate inefficiencies in conventional business models, as well as extend the reach of its services. Africa on Google Despite intermittent appearances by other countries, only four African countries continue to make the trends list: Egypt, Kenya, Nigeria and South Africa, largely (I suspect) because they are regional leaders represent distinct archetypes of size (of economy and population), economic growth, median age and digital momentum. Buoyed by 123.4m internet users and an internet penetration of 61.4 percent, Nigeria (West Africa) leads the pack; followed by Egypt (North Africa) with 49.2m internet users and an internet penetration of 48.7 percent; Kenya (East Africa) follows closely with 46.8m internet users and 89.8 percent internet penetration, trailed by South Africa with 32.6m internet users and an internet penetration of 56.2 percent. While their numbers may be small, Kenya and South Africa are the real leaders, paving the way for the rest of Africa. A recent research project by the Fletcher Business School at Tufts University highlights the role that enabling institutional environments and regional tech-savviness have played in the rise of the duo. South Africa is a regional leader in the deployment of innovative technologies, such

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on the subsidy of petroleum products could have been invested in the nation’s education of its youth or the provision of health care facilities. In addition, rather than close the nation’s land borders to the detriment of citizens, the government could have directed its efforts towards improving the nation’s ports and rail infrastructure, all of which will help cope with the import demands of the large Nigerian population. Unfortunately, these sorts of reforms are not only difficult to execute, they could be politically costly in the short run, and thus Nigerian public officials shy away from them. Therefore, a government which truly intends to protect the poor and eliminate poverty would embark on the difficult, far-reaching structural reforms which would have significant impacts on the nation’s citizens and not simply profess to be for the masses when their actions dictate otherwise. Such government would ensure that resources earmarked for developmental projects are not diverted to private pockets and above all, that every policy implemented has been examined for its long-term benefits and not for shortterm pecuniary gains. Unfortunately, this has not been the case in Nigeria, and perhaps explains why the nation has remained stuck in the hamster wheel of underdevelopment for decades. Rufai holds a first class degree in Management and Masters degrees in Management and Finance. He is a finance and strategy analyst and can be found on Twitter @LanreRufai_.

Temitope Osunrinde

as biometric data and payment cards, while Kenya has made a name for itself as the hotspot for some of the continent’s most innovative fin-tech enterprises, such as mPesa, Ushahidi, M-KOPA, M-TIBA etc. Nigeria and Egypt still have the most untapped opportunities for growth. Egypt leads in skilled digital jobs creation and hosts some of the fastest growing entrepreneurial hubs. Whatever Nigeria lacks in enabling infrastructure and connectivity to rural areas, it more than makes up for in its vibrant digital entrepreneurial ecosystem and mobile broadband infrastructure. Nigeria is home to some of the continent’s most reputable entrepreneurs and was Africa’s leading start up investment destination in 2018, with about $95 million in deals. In the absence of any empirical national research undertaken to understand how society is evolving, trends such as Google’s, can offer insights into citizen and customer wants, core values, lifestyle changes. In my quest to understand the cultural pulse, interests and tastes of Africans, I have followed Google Trends results for Kenya, Nigeria and South Africa between 2015 and 2019 (Egypt is missing because of the non-English language). During this period, I tracked the stories, people, trending questions (what is, how to) searched by people from these countries. I did not include trending artistes (actors and musicians), lyrics, songs, movies et al because my focus was on less seasonal behaviour. Osunrinde is a strategic marketing professional with specialisation in Sales & Marketing and Growth Strategy in industries such as Telecommunications, Management Consulting and Communications. He can be contacted via temi.osunrinde@gmail.com

Wednesday 26 February 2020

BUSINESS DAY

Editorial Publisher/Editor-in-chief

Frank Aigbogun

Red alert ahead Edo 2020 guber elections

editor Patrick Atuanya

FG must intervene to prevent political violence

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

Bashir Ibrahim Hassan

GM, BUSINESS DEVELOPMENT (South) Ignatius Chukwu

lections in Nigeria always draw out the bad sides of our politicians, but every stakeholder must take note and come together to douse the threatening conflagration in Edo State. The Independent National Electoral Commission has fixed the governorship election in Edo State for 19 September 2020. Seven months and some days to the date and the gladiators are threatening to turn Benin City into a physical battleground. The unease in Edo State concerns the bad blood between former Governor and chairman of the ruling All Progressives Congress Adams Oshiomhole and incumbent governor Mr Godwin Obaseki. Saturday, 22nd February brought out the beast as thugs disrupted the visit to Benin City of Adams Oshiomhole. Both men now accuse each other of a threat to their lives and persons. The still-unfolding Edo miasma depicts in bold relief some of the worst aspects of Nigerian democracy. It concerns control of the party structure, management and control of the state apparatus post-election and the relationship between godfather and godson as well as between

incumbents and their predecessors. Aspects of these manifestations have featured in various forms in the last 21 years of the Fourth Republic and in many states. The Edo gladiators are bent on taking it to the extreme. While the governor Godwin Obaseki accuses Oshiomhole of violation of protocol in visiting the state as a former governor, Oshiomhole says there is nothing stopping him from entering his state as and when he desires. The Edo State government raised the stakes 24 February disclaiming responsibility for any harm that could befall the APC chairman in any subsequent visit or clash. Through Crusoe Osagie, spokesman to the governor, Obaseki claimed that the visit of Oshiomhole to attend a function in Benin City caused “sudden tension in Benin metropolis which resulted in large, unruly crowds gathering in strategic points and military personnel shooting sporadically, thrusting the city into pandemonium”. Osagie added, “It is unfortunate that a former Governor who should understand basic security and protocol standards will repeatedly violate them and cause tension and severe threat to public safety and security. “Apparently, Comrade Oshiom-

hole has continuously defied all efforts by security agencies across the country, including the Inspector General of Police, and the Department of State Services (DSS), among others, to ensure peace, therefore posing a severe threat not only to Edo State but the country at large. “We, however, want to warn that since Oshiomhole has decided to carry on with his character of impunity, disrespect for processes and continuous stirring of crisis and disruption of peace in the state, the Edo State Government would not be responsible when he reaps the consequences of his unruly behaviour.” Statements by both the Edo State Government and Comrade Adams Oshiomhole amount to sabre rattling and a threat to violence. It runs against the spirit of the forthcoming elections as articulated by the INEC. The electoral umpire warned against violence and other unseemly conduct ahead of the elections only on February 21. It also warned the political parties to ensure they conduct peaceful primaries that deliver candidates without any liabilities such as have caused continued litigations post-elections in many states. We pray that INEC will fulfil its promise to “rigorously monitor the

primaries and where necessary, apply sanctions as provided by law”. The Edo State matter is a challenge to the political class and the elite of Nigeria. It calls forth the issue of elite consensus on values, processes and practices. Citizens look forward to how the elite of Edo State and the nation manage this crisis. The Nigerian Governors Forum, for one, may need to step in with its conflict resolution mechanism to resolve the differences between its current and former members. It is the call of leadership for interest groups such as the NGF. The All Progressives Congress needs to play a significant role to quench the many fires in its homestead. Civil society leaders in Edo State also need to step up to the plate. Similarly, the Edo State Government has a moral burden and constitutional duty to ensure that there is peace and security in the state, whatever its differences with the former governor. The Federal Government should initiate measures to ensure that the chairman of the ruling party and one of its governors do not cause an uncontrollable crisis in Edo State before, during and after the elections. Edo State must not become a theatre of violence for political warlords.

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Effective strategy execution: Salient factors! Franklin Ngwu

n a strategy retreat some weeks ago to review the annual performance of a firm, some interesting results and revelations came out. Based on the targets agreed in January 2019, the firm on average achieved 61 percent using financial and non-financial measures broadly categorized into revenue and profits, customer satisfaction, process/system improvement and utilization, and employee engagement. While they achieved 85 percent of revenue, 52 percent of profit, 64 percent of customer satisfaction, 67 percent for Process/ system improvement and utilisation, and for employee engagement and satisfaction, it was only 36 percent. As revealing and disturbing as the results are, what is even more worrying are the differences in the understanding of the reasons for the above outcomes across the firm. While the CEO and the Senior Management were unimpressed and maintained that a better outcome should have been achieved, the middle management and frontline employees celebrated the outcomes with a caveat that any problem with the performance can be attributed to the senior management. Expectedly, the CEO was most

worried. “I thought we prepared a good strategy plan and my executive directors kept assuring me that a better outcome will be achieved. While we had a few challenges at the beginning of 2019, I ensured that we provided most things required for better performance, at least close to 100 percent of our targets. How will I present this poor performance with increasing cost to my board? A comprehensive organizational restructuring is most needed and urgent as we cannot repeat this kind of performance this year”, the CEO lamented! In formulating the firm’s strategy in January 2019, the key critical questions were asked. These include: Do we have the right RESOURCES? Do we have the right PEOPLE? Do we have the right PROCESSES? Do we have the right CULTURE? Do we have an execution ROAD MAP? While these questions were answered largely in the affirmative, the one that I further questioned was the culture of the firm. In agreeing on the execution road map especially on sharing of tasks and information to ensure effective execution of the strategy, the enthusiasm from senior management was limited. Even though I was assured that it was not really a problem and will be attended to as I emphasised and advocated, I observed that the assurances were muted. While we will share tasks as required, we must be careful the way we share information to ensure that our strategy is not revealed to our competitors, one the Executive Directors maintained. As research reveals that 9 out of 10 firms always fail in their strategy execution even when they supposedly have a properly formulated strategy, the question is why it should be so. What factors can be responsible for such high failures in

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As research reveals that 9 out of 10 firms always fail in their strategy execution even when they supposedly have a properly formulated strategy, the question is why it should be so

strategy execution? In agreement with Neilson, Martin and Powers (2008), a key challenge in strategy execution is the emphasis on the wrong factor and limited attention on the main important factors. While many firms like the one we reviewed their performance always jump to organizational restructuring as a solution to strategy execution and performance challenges, the main solution resides in two main factors- detailed and clear decision rights, and proper information flow. When these two important factors are properly addressed, and combined with other factors such as proper incentives and restructuring (if needed), the chances of effective strategy execution of firms are significantly very high. During my interaction with the middle, junior managers and frontline employees of the firm, it was abundantly clear that the senior management maintained an enervating control of their respective units. As middle, junior managers and employees were significantly disempowered to make decisions, costs increased with limited or no innovation. Moreover, as senior management rarely delegated, decisions on important issues were delayed making the firm more of a reactive firm than a proactive one. Another major problem stated by junior managers and employees is the limited information flow disposition of the senior management. “You are only told the basic information you need to do your specific task with even the details and interconnection to other units somewhat hoarded. Outside this, any other information is through gossip which cannot be verified. A typical example is the inherent fight between my team, the business development unit and risk management team. While we look at

the risk management people as business stoppers, they (the risk people) see us as inconsiderate people that are only interested in the commission they can make. To be honest, that is true, many of us are still with the firm mainly because of commissions. That is why our engagement level is even as high as 34 percent. It is not like this in my previous firm due to the proper flow of information between and across units,” an employee lamented! While formulating a good strategy is important, what is more important is the effective execution of the strategy. In analyzing the firm described above, there is no question that the problem is more with the CEO and Senior Management and not the employees. Senior management must appreciate that sustainable and superior performance of firms can only be achieved through effective execution of their strategy. As the effective execution of strategy can only be achieved mainly from the junior managers and frontline employees of the firm, it is important to ensure that all employees especially middle, junior managers and other employees are clear about their respective tasks to the strategy of the firm, the connectedness of different units and the strategic importance of proper information flow especially how their actions and inactions contribute to the bottom line of the firm. With these two important factors properly achieved and then combined with other factors like reorganization and proper incentives, targets will most likely be surpassed. Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum. E-mail- fngwu@lbs.edu.ng

BP at 111 years of age: The oil company reinvents itself feeling high pressure

ritish Petroleum (BP) was formed in 1909: a 111 year old company. In many ways, BP is a leader in the petroleum industry. In the 1990s, BP was probably the first of the “supermajor” oil companies to publicly acknowledge the role of fossil fuels in climate change. The legendary CEO of BP in the 1990s, John Browne, was a visionary leader not only for his company but for the petroleum industry. Browne publicly acknowledged that his company had a role to play to help limit climate change. Browne rebranded his company BP to mean “Beyond Petroleum” as well as British Petroleum. Such was John Browne’s legendary self-belief and leadership that when environmental non-governmental organisations (NGOs) would question him during meetings or conferences, Browne would leave such meetings stating that the NGOs should have challenged him more. Most oil company CEOs at that time thought of environmental NGOs are problematic. John Browne saw the climate change issue as a challenge but also an opportunity for his company to streamline its operations and operate more efficiently. He was the first CEO to set CO2 reduction targets for an oil company: before Browne this was unheard of. Now enter Bernard Looney, the new CEO of BP. Looney took the helm at BP recently, about one week after assuming the role of CEO, during his first major speech on 14 February 2020,

he announced that BP needs to “reinvent” itself. This “reinvention” explains Looney, is a strategy born out of deep reflection about the state of the word, the industry and his company. According to Looney, “The world’s carbon budget is finite and running out fast; we need a rapid transition to net-zero…Trillions of dollars will need to be invested in re-plumbing and rewiring the world’s energy system.” Looney’s new BP will be a different kind of Energy Company: an oil company that intends to become a zero-carbon emission company by 2050. Looney confessed that he doesn’t know exactly how his company will achieve this goal: “We’re starting with a destination. The details will come.” One thing is certain: the oil company’s blood felt the pressure: BP. Investor pressure. A group of large investors called Climate Action 100+ has been putting pressure on large companies that emit greenhouse gases. Climate Action 100+ believes that any hope of tackling climate change must include oil and gas companies committing to a shift to a netzero carbon economy by 2050. Central to the thesis is the concept of the “carbon budget”. The United Nations Climate Change (UNCC) 2015 Paris agreement intends for the limiting of global warming below 20C and to try and achieve a limit of 1.50C temperature rise. The carbon budget takes into consideration this upper limit of 20C. To meet this target

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by the year 2100, it has been calculated that the world’s total cumulative emissions must not exceed 2900 GtCO2. The problem is that cumulative emissions had already reached about 1900 GtCO2 by the year 2011, with only about 1000 GtCO2 left in the budget for the 89 years between 2011 and 2100. In an important 2015 paper published in the journal Nature, McGlade and Ekins made shocking revelations for the oil industry: 33 percent of global oil reserves must remain in the ground, if the UN climate change reduction goals will be achieved, based on the carbon budget available. What this means, basically, is that a large fraction of oil reserves that may not be exploited could result in great financial loss to oil companies. Investment risk. But this risk has been argued away by some industry analysts. Some analysts claim that carbon capture and sequestration (CSS) technology would come of age soon and mitigate the risk. An interesting new working paper was released by the U.S. National Bureau of Economic Research (NBER) at the about the same time that the BP announcement. The authors Christina Atanasova and Eduardo Schwartz tilted their paper ‘Stranded Fossil Fuel Reserves and Firm Value’. Atanasova and Schwartz’s research was motivated by the question: Do capital markets reflect the possibility that fossil fuel reserves may become “stranded assets” in the transition to a low carbon economy?

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Uyiosa Omoregie

Developed and undeveloped reserves should obviously be assets for oil companies because oil reserves are what they are in the business for. But the researchers define “stranded assets” as “assets at risk of becoming obsolete from unanticipated or premature write-offs due to regulatory or environmental changes”. Their research results showed that capital markets in North America only value developed oil reserves while the growth of undeveloped reserves had a negative economic effect on oil companies’ value. The researchers conclude that markets in North America are penalizing oil companies’ undeveloped reserves growth due to climate policy risk. Omoregie is a petroleum economist and fellow of the Institute of Management Consultants. He can be contacted at uyiosaomoregie@yahoo.co.uk

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Wednesday 26 February 2020

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Wednesday 26 February 2020

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Wednesday 26 February 2020

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Wednesday 26 February 2020

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COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

BANKING

Investors dump banking stocks amid regulatory headwinds OLUFIKAYO OWOEYE

nvestors dumped banking stocks plunging the banking index into biggest daily loss at 4.78percent, its biggest loss since the beginning of the year, at the close of trading on the nation’s bourse on Monday. Despite a decent result by tier-1 bank Zenith on Friday, its shares tanked 3.78percent to close at N 1 9 . 1 0 , Un i t e d Ba n k for Africa shed 7.43percent to N6.85, Guaranty Trust Bank also dropped 3 . 7 6 p e rc e n t t o c l o s e at N26.90, First Bank dropped 7.83percent at N5.30, Access Bank also dropped 6.38percent. Consequently, the AllShare Index declined by 1.27percent to 27,041.03 points – the largest 1-day decline since falling by 1.55percent on 23 December 2019. The Month-toDate loss increased to -6.25percent, while the Year-to-Date return moderated to 0.74percent. Over the weekend the Bankers Committee of the apex bank, the umbrella body of Central Bank of Nigeria’s (CBN) officials and managing

…as RenCap suggests way out of regulatory conundrum

L-R: Muyiwa Ayojimi, company secretary/general counsel, International Breweries Plc; Oscar Onyema, CEO, Nigeria Stock Exchange (NSE); Olutoyin Odulate, an Independent non-executive director, IB Plc.; Bruno Zambrano, finance director, IB Plc.; Michael Daramola, corporate affairs director, IB Plc, and Alex Atuona, budget and business performance manager, IB Plc, at the ringing of the closing bell by IB Plc, at the visit to the exchange following the listing of Nigeria’s biggest Rights Issue by the company

directors of deposit money banks in the country rolled out sanctions to some banks for breaching FX rules on using wired funds to finance banned/ prohibited items. The names of the affected banks include Fidelity, Stanbic, FCMB, FBN, UBA, and GTB. The committee also

announced another set of 14 banks that violated FX rules, they include Access, Ecobank, Fidelity, FBN, FCMB, Polaris, Heritage, GTB, UBA, Zenith, etc. In what could be termed as stifling the revenues banks, the apex bank has now declared the high-yielding Open

Market Operations as poison for banks henceforth. “OMO has now become poison as against honey that it used to be. Banks are enjoined to remove its eyes from OMO and play responsibly,” CBN said. The committee also warned that that Cash

Reserve Ratio which is the share of a bank’s total deposit that is kept with the CBN shall continue at discretionary application and can be as high as 30-40percent if the apex bank detects that the banks bid for Open Market Operations (OMO) The apex had last month raised the CRR by 500bps

to 27.5percent from 22.5 percent. Amid regulatory pressures, analysts at Renaissance capital suggested that banks in the country willing to deliver higher sustainable earnings and create shareholder value should, scale growth in extant operations outside Nigeria ; evolve into a holding company model with sizeable subsidiaries in fast-growth sectors; and build lowcost business models to penetrate the bottom of the pyramid. According to the report titled Nigerian Ba n k s : Su r v i v i n g t h e squeeze, evolving into a holding structure would give Nigerian banks a route to explore earnings growth outside of the challenging banking sector, as well as room to explore cross-selling opportunities across a larger group, “One key benefit to investors from a bank adopting this structure is the earnings see-through it gives as it allows investors to value the group on a sum of the parts (SoTP) basis,” the report said.

ECONOMY

10 best performing sectors of the economy in 2019 SEGUN ADAMS

he economy in t h e l a s t t h re e months of 2019 grew by the fastest in 17 quarters to see annual growth beat expectations, although “s l o w - r e c o v e r y f r o m the 2016 recession” remained the theme. G D P, s t i l l g r o w i n g below the population growth rate at 2.6 percent, rose 2.55 percent in the Q4 to boost annual growth to 2.27 percent. These are the ‘good, better and best’ sectors. Air Transport A i r t ra n s p o r t g re w 13.17 percent year-onyear in 2019 full-year

to emerge the fastest expanding sector. The growth, though below the 20.70 percent recorded last year, followed a steady increase through Q1-Q3 (9.09%, 12.31% and 15.23%) before a decline in the last quarter to 14.98 percent. Coal Mining A brilliant first quarter and third quarter for coal mining was enough to offset the impact of a contraction in the last quarter of the year and p u s h s e c t o r ’s g row t h 1 3 . 1 5 p e rc e n t h i g h e r year-on-year. In 2019, coal mining was the second-fastest expanding sector in Nigeria. Interestingly, the sector had contracted www.businessday.ng

by almost 6 percent in 2018. Te l e c o m m u n i c a t i o n s & In f o r m a t i o n Services It might have been an anti-climactic year for the ICT services sector but it emerged the third b e s t p e r f o r m i n g s e ctor in the year, marginally surpassing its 2018 growth rate. (11.41% vs 11.33%). Road Transport Road Transport was the fourth fastest-growi n g s e c t o r i n Ni g e r i a last year after a brilliant 21.48 percent in the first quarter of the year. Road Transport grew 11.24 percent year-onyear in 2019 although it shrunk 2.58 percent

in the final quarter of the year. Water supply, sewerage, waste management and remediation This sector was the fifth fastest-growing last year with after growth printed at 4.59 percent year-on-year compared to a measly 0.97 percent in 2018. Although the sector st a r te d t h e ye a r w i t h a contraction, growth picked up in Q2, eased in the third quarter and was more-or-less maintained in the last quarter of the year. Arts, Entertainment and Recreation Growth rose impressively from 2.53 percent in 2018 to 4.12 percent

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last year. Arts, Entertainment and Recreation started the year on steroids but quickly lost momentum in Q2 after wards recovering in the latter quarters of the year. Insurance The insurance industry rose 3.59 percent to end 2019 the 7th best performing sector in terms of growth. The s e c t o r h o w e v e r g re w below its 2018 rate of 6.12 percent. Fishing Fishing grew 3.33 p e rc e nt ye a r- o n - ye a r in 2019 following a brilliant Q1 that supported growth in the year. Compared to 2018’s 1.64 percent growth, 2019 is @Businessdayng

nothing short of a leap. Cement At 3.11 percent the cement industr y is at least growing faster than the broader economy. Q3 was the best quarter for the sector last year while growth slowed compared to 2018 (4.5%). Accommodation and Food Services The Accommodation and Food services sector picked up from 2018, growing at 2.85 percent last year to be the 10th fastest grow ing s e ctor in the economy. Growth peaked in Q1 and averaged 2.41 percent for the remaining quarters.

Wednesday 26 February 2020

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cityfile Alaro City: Investors honoured with chieftaincy titles FIKAYO OWOEYE

Ibrahim El-Zakzaky and wife Zinat, leader of Islamic Movement of Nigeria (IMN) being taken to court for arraignment from the Kaduna Central Correctional Service in Kaduna on Monday. NAN

Youths give IOCs 14 days on oil producing status … as Oron protests marginalisation in A’Ibom ANIEFIOK UDONQUAK, Uyo

ouths from the five local government areas that make up the Oron nation have issued a 14-day ultimatum to International Oil Companies (IOCs) and the government of Akwa Ibom State, to list their communities among recognised oil producing communities in Akwa Ibom State. The five local government areas- Oron, Mbo, Udung Uko, Okobo and Urueoffong-Oruko had been excluded from the list of communities officially recognised as oil producing by the Akwa Ibom State government. Four local government areas in the state are recognised as oil producing

communities, though oil exploration is believed to be ongoing in many council areas. During a peaceful protest in Oron, the placardcarrying youths, blocked all major entrances to Oron town, saying that they would no longer tolerate further marginalisation of the area. They threatened to shut down oil exploration activities in the area if the oil companies do not initiate discussions on how to correct the alleged injustice done to them with regards to giving the area all benefits and privileges which accrue to oil producing communities in the state. Leader of the youths, Omen Bassey, said it was unfortunate that the five local government areas

of Oron Federal Constituency which plays host to at least eight oil producing companies have not been gazetted as oil producing communities. “Mobil has been here for 15 years now yet we have not been recognised as oil producing communities. We have been denied the benefits that accrue to oil producing communities. “It is very painful that we have a resource in our land which contributes to the wealth of the state and nation as a whole but we are languishing in poverty, joblessness and environmental degradation”, he said. In a communique read by the convener of the protest, Lovestic Esu, the group demanded that the

resolution of the National Assembly and the National Executive Council recognising Oron Federal Constituency as an oil producing area must be obeyed. The communique reads: “That we are using this medium to call on the Federal Government of Nigeria, Akwa Ibom state government, and multinational oil companies operating on our shores to implement the resolutions reached by the National Assembly (NASS) and the National Executive Counci (NEC) immediately. “That failure to do this will compel us to mobilise and lead our youths globally to Aso Rock, the National Assembly, the Akwa Ibom State House of Assembly and Government House, Uyo”.

Gridlock: FCTA bans morning vehicle inspection, trucks movement James Kwen, Abuja

s part of measures to mitigate the problem of traffic congestion in Abuja, the Federal Capital Territory Administration (FCTA) has banned personnel of the Directorate of Road Traffic Services (DRTS) from stopping vehicles for purposes of inspecting particulars in early morning hours (before 10am) each day. The FCTA also said that there was no going back on its earlier decision to restrict

the movement of heavy duty vehicles to off-peak periods, warning of severe sanctions for those who violate the order. Before now, the FCT administration had ordered that vehicle inspection should commence from 9am, but after series of meetings with stakeholders, an additional hour was added so as to avoid clogging the roads during the early morning rush hours. Chairman, FCT ministerial task team on traffic management, Ikharo Attah who disclosed this on Monday, said that the decision was www.businessday.ng

borne out of complaints from residents of the city that the checking of vehicles from 9am has compounded the traffic situation in the territory and led to loss of many hours. “By this, the road traffic officers of various agencies must focus on freeing traffic from 5am to 10am in the morning. They are to commence checking of vehicles and their particulars from 10am across the city. “The enforcement does not affect the stopping and arrest of heavy duty vehicles driving during peak traffic

periods. Any such vehicle must be stopped from plying the road in accordance with approved policy to avert fatal road crashes occasioned by break failures usually associated with such heavy duty vehicles.” Attah also dismissed reports that traffic officials were causing traffic congestion by checking vehicle particulars in the evenings on the AbujaKeffi road, explaining that, all traffic officers on evening duties do not check documents but are positioned to ensure a seamless flow of traffic.

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he Oloja of Epe Kingdom, Kamorudeen Animashaun has honoured top executives of Rendeavour, developers of Alaro City near the Lekki Free Zone, Lagos, with chieftaincy titles. The recognition, according to the monarch, is in appreciation of the firm’s contributions in the area of job creation and development of the local community. Stephen Jennings, CEO of Rendeavour, was awarded the chieftaincy title of ‘Bobatuluse of Epe Kingdom’ (one who works with the king to improve the lot of the community), while Frank Mosier, chairman of Rendeavour, was conferred with the title of “Amuludun of Epe Kingdom” (one that helps in creating harmony and joy in the land). The foreigners were honoured at a ceremony to mark the monarch’s 20th anniversary on the throne. Jennings is an investor in Nigeria. He launched Renaissance Capital, a leading investment bank in the country, in 2006, and also launched RenMoney, a leading consumer finance bank, in 2012. Mosier is also a member of the United States President’s Advisory Council on Doing Business in Africa (PAC-DBIA). The PAC provides analy-

ses and recommendations to the U.S. government on strengthening commercial engagement between the United States and Africa. Both men are the leading investors in Rendeavour. Rendeavour, in partnership with the Lagos State government, is building Alaro City, a mixed-income cityscale development in the Lekki Free Zone. Alaro City is planned as a 2000-hectare development with industrial and logistics locations, complemented by offices, homes, schools, healthcare facilities, hotels, entertainment and 150 hectares of parks and open spaces. In January, Ariel Foods, the largest ready-to-eat therapeutic food factory in Africa, launched the completion of its facility in Alaro City. Oba Animashaun said, “we need people to invest in our community like these people behind Alaro City, who because they have already showcased their investments, we want to reciprocate their goodwill,” he said. Speaking shortly after he was conferred with the chieftaincy title, Jennings said he considered the chieftaincy title as a boost in his efforts to attract foreign investment to Nigeria and the African continent. On his part, Mosier thanked the monarch for the honour and described it as a challenge to do more.”

Businessman bags 10-year jail term over N30m fraud

n Igbosere High Court in Lagos has sentenced a businessman, Jideofor Akpa, to 10 years imprisonment over N30 million fraud. The convict and his company were arraigned by the Economic and Financial Crimes Commission (EFCC) on a five-count charge of conspiracy, obtaining under false pretences, unlawful conversion and issuance of dud cheques. Justice K. O. Jose, who gave the verdict on Monday, also ordered the convict’s company, International Maritime and Shipping Limited, to pay a fine of N10 million. Delivering the judgment, the judge discharged and acquitted the convict on the charge of issuance of dud cheques, but convicted him on the charge of obtaining under false pretences and unlawful conversion of the sum of N30 million. Consequently, Jose sentenced him to five years on each of the two-count charge and ordered the convict’s company to pay a fine of N5 million on each of the two counts. He, however, ordered that the jail terms should run concurrently. The convict and his com@Businessdayng

pany were first arraigned before the court in 2015. The offences, according to the anti-graft agency, are contrary to Sections 1(2) and (3) of Advance Fee Fraud and other Fraud-related Offences Act No. 14 of 2006. EFCC also said that the offences contravened Section 1(1) of the Dishonoured Cheque (offences) Act, Cap. D11, Laws of the Federation of Nigeria, 2004 as well as Sections 278(1)(b) and 285 of the Criminal Law of Lagos State, 2015. The EFCC, in a charge marked ID/1280c/2015, stated that the convict, on May 30, 2014, fraudulently obtained the sum of N30 million from one Ifeoma Nowa-Omoregbe, the CEO of GDPC Ventures Nigeria Limited. The commission said that the convict fraudulently obtained the money through his company, International Maritime and Shipping Limited, on the false pretext that the said sum would be used to buy premium motor spirit (PMS), popularly called petrol. The EFCC also stated that the convict had promised to refund the said sum to the complainant, Nowa-Omoregbe, upon complete utilization, with additional N10 million but failed to do so.

Wednesday 26 February 2020

BUSINESS DAY

AGRIBUSINESS

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Innovation gaps in livestock production create investment opportunities Josephine Okojie

h e h u g e innovation gap i n N i g e r i a ’s agricultural sector which has continued to hurt livestock development creates investment opportunity for entrepreneurs. E x p e r t s s a y entrepreneurs can tap into the vast opportunities in livestock production if they can provide technological and innovative solutions to address problems limiting the development of the subsector. Nigeria’s livestock sector is a key part of the country’s quest for food security and in ensuring an end to the prolonged conflicts between farmers-herders. Aliyu Abdulhameed, managing director and CEO, NIRSAL during the Ecoba nk Ag r i bu si ness summit maintained that central to accelerating agr icultural grow th is improving the productivity

of the small-scale farmers above subsistence level. Across the value chain, he observed that farmers face risks from production to market. Beset by frequent drought, unpredictable rainfall, degraded soils, pests, disease, and conflicts, he said farmers struggle to produce a steady supply of crops and livestock for

consumption and sale. Such risks, according to Abdulhameed, remain too great for investors, who struggle to unlock financing to support agribusinesses. To offset these risks, he identified remedies such as the use of technologies for water harvesting and irrigation, changing harvesting times, use of

cover crops and regular soil checks among others. Nigeria had in 2019, announced N97 a 10 year National Livestock Development plan which commenced in 2018 through to 2027. “Lack of innovation is the reason why we cannot track our animals. We should turn the animal tracks to an

NPPAN signs MoU with NIFOR for production of 20m oil palm seedlings …elects new executives Josephine Okojie

n a bid to revamp the palm oil sector, t h e Nat i o na l Pa l m Produce Association of Nigeria (NPPAN) has signed a Memorandum of Understanding (MoU) with the Nigerian Institute for Oil Palm Research (NIFOR) for the production of 20million oil palm seedlings to boost production of smallholder farmers. The MoU was signed by both organisations during a facility tour by NPPAN at the research institute of oil palm in Benin, Edo recently, a statement states. Alphonsus Inyang, president, NPPAN, who was newly elected, said that the association was working with the Nigerian Institute for Oil Pa l m Res ea rch (NIFOR) to mass-produce high-yielding oil palm seeds that will start bearing fruits in two years. Iyang stated that this is to enable farmers to increase yield per hectare to the highest levels in the industry, without increasing their production areas. He says that NPPAN

seeks to develop at least 100,000 hectares of oil palm plantations across 24 states in the country within the next four years. He added that the association will provide training, technical support, extension services, and access high yielding seedlings among others to smallholder oil palm farmers across the country. The president requested a minimum of 5,000 hectares from state governments whose states have a comparative advantage in the production of the crop. He solicited for collaborations with the Central Bank of Nigeria to ensure that rural farmers easily access the N20billion development fund allocated to five crops in which oil palm is included. Speaking on the associations newly sworn-in executives, Inyang reiterated that the new executive of the association will work on the development of the country’s oil palm industry. He said the election into state chapters’ executives’ council would be conducted before April. www.businessday.ng

Alphonsus Inyang

Inyang said that t h e a s s o c i at i o n w o u l d collaborate with industry stakeholders, such as the Federal Ministry of Trade and Investment, Ministry of Agr iculture, NIFOR, Raw Materials Research and Development Council (RMRDC), state governments, CBN, Standards Organisation of Nigeria (SON) and NAFDAC among others, to develop the industry and support smallholder farmers. Henry Olatujoye, outgoing national president, appreciated the Federation Agricultural Commodities A ss o c i at i o n o f Nig e r i a (FACAN) National President, V i c t o r Iy a m a , Fe d e r a l

Ministry of Industry, Trade and Investment and NIFOR, for their support to the association. Olajutoye praised the Akwa Ibom State Government for hosting the First International Conference on Oil Palm in 2013 (IPPC 2013) in Uyo, which was attended by many countries. He acknowledged the contribution of the Ondo State Government to the development of the oil palm sector. NPPAN newly elected national executive council members are Inyang; Standard Igwe, vicepresident (Southeast); Vice President (Southsouth), Harrison Okpamen; Omiyale Abiodun, vice president (Southwest); Hassan Wa d a , v i c e p r e s i d e n t (Northcentral); Kayode Babatola, National general secretar y; Victor Atu, assistant general secretary; Bobade Adebayo, national treasurer ; Adaugo Obi, national financial secretary; Bernadette Enanem, public relation officer; Steve Eghen and Amos Gandu – exofficials.

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industry,” said Tope Damola, chairman, Shonga Farms at a panel session during the Agra Innovate Summit in Lagos. “Data on investment i s n o t e x a c t ly k n ow n . Deaths, births, losses to thefts, diseases distribution patterns and feeding sustainably rely on guesswork,” Demola said. This is an opportunity that investors can tap into by providing data-driven by technology for the livestock subsector. Damola stressed that the renewed call for a return to agriculture by Nigerians should not mean a descent to primitive agriculture that is not technology-driven. According to him, an example of primitive agriculture is the movement of cattle and sheep through bushes, a practice that destroys crop farms and creates conflicts between herdsmen and farmers. The attacks by rampaging herdsmen on farmlands have been tipped to stoke a food crisis in Africa’s most

populous nation, if not addressed, experts say. The continuous onslaught by herdsmen has led to the destruction of agro raw materials and drop in output of major crops such as cassava, grains, oranges, mangoes and other commodities that serve as food and inputs for manufacturers in the food and beverage industry. Experts say innovation and technology-driven agriculture should be for improved productivity through a more accessible veterinary service, better nutr ition and modern husbandry for the country’s livestock industry. The livestock sector recorded its lowest year on year growth of 0.16percent since 2016, while quarterly, the subsector contracted by 0.2percent in the fourth quarter from 0.02 percent in the third quarter of 2019. Experts attribute the constant yearly decline to the high rate of insecurity and the continued farmersherders clash.

OCP, IRC collaborate to support displaced farmers in Adamawa Josephine Okojie

CP Group, a global leader in phosphate production, and the International Rescue Committee (IRC) have collaborated to provide support to Adamawa farmers displaced by conflicts to regain their means of livelihoods. The support is a two-year pilot project which has since commenced in 2019, is being implemented in Muchalla, a community in Mubi North Local Government Area of Adamawa state. “For the first time through OCP School Labs, farmers in rural and conflict-affected communities are able to test their own soil fertility, identify the right type of action, and maximize financial benefits from each harvest,” said Sukuss Koroma, technical coordinator, IRC’s ERD Nigeria. “OCP is willing to fund a truly innovative and integrated approach to rural livelihoods in Nigeria,” Koroma said. The project demonstrates promising results supporting vulnerable, but key, population segments in Nigeria, a statement states. The support programme specifically targets young people between the ages of 18 @Businessdayng

and 40 years with a focus on women. According to the organisations, a total of 450 women and 50 men have benefitted from the farmeroriented training and empowerment programme. The 500 farmers were given training through Farmer Field Schools (FFS) in seed germination testing, land preparation, ridging seed dressing, and agroecosystem analysis. Each beneficiary was also given other items including improved maize seeds, r i c e s e e d s, a n d f a r m i ng implements. The beneficiaries were also grouped into village savings and loans associations (VSLAs) to help them increase their savings and have access to affordable loans. Caleb Usoh, country manager of OCP Africa in Nigeria, lauded the achievements of the pilot phase as a significant success and stated that lessons learned from the pilot will help to improve subsequent initiatives to support smallholder farmers. Usoh also called on more c o r p o ra t e o r g a n i z a t i o n s to assist in supporting the survivors of violent attacks and conflict.

Wednesday 26 February 2020

BUSINESS DAY

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‘Ethiopia, Rwanda lead Africa in agricultural development’ Michael Hailu is the director of the Technical Centre for Agricultural and Rural Cooperation (CTA) – an EU funded institution established to support smallholder farmers in Africa, the Caribbean and Pacific. In this interview with Josephine Okojie, Hailu talks about CTA interventions in Africa’s agriculture and its role in solving global food security problems as the programme comes to an end in December 2020. Can you tell us about CTA programme in Africa and the work it has done in the last 37 years? TA h a s b e e n a leader in leveraging digital technologies in agriculture to increase farm productivity, access to markets and finance for smallholder farmers and to build resilience against climate change. For example, the Climate, Livestock, and Markets (CLIMARK) project has developed cutting-edge, satellite-bas e d livesto ck insurance, which provided coverage and protection against drought for 10,000 pastoralists in northern Kenya and Ethiopia. CTA also works closely with digital start-ups such as Hello Tractor in Nigeria to help them develop their business, expand their client base, improve their business skills, and raise finance. We also organize annual Pitch Agri-Hack competitions to identify promising young tech innovators and support an online platform for African women agripreneurs to help them access networks and training.

You joined CTA in 2010 shortly after the global food price crisis, how did this shape your approach to leading the organisation? The global food price crisis was a clarion call for policymakers to prioritise sustainable agricultural development. Since then, there has been a renewed focus on agriculture as an engine for economic growth, food security and nutrition across African countries and elsewhere. CTA and its partners have risen to the challenge and demonstrated

how agricultural innovations can be shared and scaled up to improve food security and livelihoods across Africa. We prioritised the areas where we believed most differences could be made: supporting women and young people, driving forward digitalisation and sharing knowledge. But for all our achievements, there remains a lot of work to do to increase productivity, reduce food waste, build climatechange resilience and make agriculture more sustainable. The number of hungry people has been on the rise since 2016 and now totals 820 million. But what I find encouraging is the significant change in approach towards the food sector – while in the past, the focus was purely on productivity, we are now moving towards a foodsystems approach where the focus is also on food quality, sustainability and the impact of food on health and the environment. To what extent would you say CTA has contributed towards solving global food security problems? For more than 35 years, CTA has been a resource for smallholders, extension agents, agricultural development workers, and governments, providing practical information to help improve food security in Africa, the Caribbean, and Pacific. CTA’s long-running Spore magazine reached hundreds of thousands of readers over 19 years, while 19,000 people attended CTA events between 2011 and 2017. CTA programs have targeted around 700,000 smallholder farmers, training almost 245,000 extension agents in 2017 alone. We know from partner testimonials and our

market of $2 billion for digital tools and services for African smallholders, providing vital market information for those looking to develop the sector and support farmers with new technology. From your experience over th e p ast de ca de, w hich African country has done the most to develop agriculture; commercially and for rural farmers? A good reference for this would be the Biennial African Agricultural Transformation Scorecard produced by the African Union. The latest report shows that the high performing countries include Ethiopia, Rwanda, Mauritius, and Mali.

Michael Hailu

results that CTA’s work has made a real difference to some of the world’s most vulnerable people, a legacy of which we are proud. But we are under no illusions that significant challenges remain where many communities are on the frontline of climate change. In discussing rural agriculture, Africa is mostly expected. What major interventions have you led on the continent in 10 years of heading CTA? Over the last 10 years, we have implemented two strategic plans to realize CTA’s vision of smallholder agriculture as a vibrant, modern and sustainable business that creates value for farmers, entrepreneurs, youth and women, and produces affordable, nutritious and healthy food for all. We have suppor ted projects

with our partners in areas ranging from climate-smart agriculture to promoting youth entrepreneurship, digitalization, value chain development, and women empowerment. Most recently, CTA’s focus has been on positioning digitalisation as a game-changer for agricultural transformation in Africa, Caribbean and Pacific countries. We have made a significant contribution in ter ms of leveraging new technologies and the huge amounts of data being generated to make it easier for farmers to receive information in real-time. We have also played a key role in introducing digital technologies and innovations to help address imp or tant challeng es in agriculture, including climate change. Our flagship report in 2019 highlighted an untapped

Can you give an assessment of agricultural development on the African continent today, and areas of lapses you have noticed that should be fixed? A good reference for this would be the Biennial African Agricultural Transformation Scorecard produced by the African Union.

has supported a wide range of projects to help transform rural agriculture, but the most striking aspect is the number of challenges that are shared across borders. We have supported similar climatesmart agriculture projects in Jamaica, Ethiopia, and Mali, and many of the learning’s have been shared between countries. Facilitating such knowledge-sharing has been at the heart of CTA’s mission. How much has CTA spent in its work in Africa in the last 10 years? CTA’s annual budget has been approximately €16 million a year over the past six years and most of this budget is allocated to activities in Africa.

Comparatively, in your areas of operation across the world, where is rural agriculture developing the most, and if not Africa, what can Africa learn from it? In our work across Africa, the Caribbean and Pacific, CTA

Can you tell us about some of the work CTA is doing in Nigeria specifically? C TA’s P i t c h A g r i - H a c k competition has identified and supported several promising Nigerian enterprises, all of which are led or co-led by women entrepreneurs. Also, CTA has hosted a separate incubator and hackathon in Nigeria. CTA has also worked with HelloTractor and several drone operators in Nigeria to support growing levels of mechanisation and the adoption of new technologies among smallholders. And we also supported Nigeria to carry out a national appraisal of the implementation of its climate targets and supported t h e Fe d e ra l Mi n i s t r y o f E nv i ro n m e n t Ni g e r i a t o conduct a national validation of the report. Later, we worked with ECOWAS to carry out a synthesis of opportunities to finance climate actions in agriculture, also held in Abuja Nigeria.

cashew produce It was kicked off with a special prayers offered by Saadu Bolaji, for a fruitful season. Abdullateef Muhamadu Jamiu, chairman of the state association, announced that the measuring pan which was initially sold at the cost of will be sold N2,500 has been reduced and will be sold N2,000 this year. Jamiu appealed to members to be considerate while doing business and

should not place a heavy rate on buyers in a bid to make much profit. Also, Moshood Shogo, national general secretary of the association and secretary - board of trustees, Kwara State Produces Dealers Association, said that a value chain exists in the marketing and buying of cashew produce must not be followed. Shogo, however, advised buyers not to cut corners but take the right channel when buying their goods.

Now that CTA is leaving, is there any framework in place to ensure projects for developing agriculture in Africa will continue? We are confident that our partners will ensure that CTA’s accomplishments will be built upon and will serve to meet the aspirations of the ACP countries for agricultural transformation.

Kwara set to introduce organic cashew seedlings to farmers SIKIRAT SHEHU, Ilorin

s part of the plans to boost production and increase the yield of cashew farming, the Kwara State government says it will introduce organic cashew seedlings for farmers in the state. Adenike Afolabi Oshatimehin, the state commissioner for Agriculture and Natural Resources disclosed this weekend, at the official flag-off of this year’s

cashew season held in Ilorin, the state capital. Oshatimehin, who was represented at the programme by Mosho o d Soleye, the Director of P ro d u c e, ap p re c i at e t h e association for the steps taken to see that members of the association continue to grow and increase. He says that leaders of the association had earlier paid a visit to the ministry where they pleaded their support to the government. www.businessday.ng

According to him, part of the efforts of the Kwara State government to introduce o r g a n i c c a s h e w ( Hy b r i d Cashew) seedlings will boost the yield of the farmers, and distributed to them. While admonishing members to be law-abiding and resolve issues of illegal transportation of cashew amicably and through the r i g h t c h a n n e l s, h e s a y s members should ensure to register and obtain the license that will enable them trade in

the cashew business. Meanwhile, the National Cashew Association of Nigeria, Kwara State chapter flagged-Off the new season w i t h a re q u e s t f o r s t at e government support. The event held at Hiwanu Nasirudeen Primary School, Kuntu, in Ilorin witness Zonal Chairmen and members of the association throughout Kwara State, under the Agriculture Produce Marketers Association, including some Indians who are buyers of the

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Wednesday 26 February 2020

BUSINESS DAY

Harvard Business Review

MANAGEMENTDIGEST

Why catalogs are making a comeback JONATHAN Z. ZHANG

espite two decades of email and social media marketing, and the digitization of the consumer experience, catalog mailings have been steadily increasing since 2015. What’s more is that consumers are surprisingly enthusiastic about receiving them — response rates from catalogs have increased by 170% from 2004 to 2018. The effects are not just confined to digital laggards who do not go online. In fact, there’s evidence that Millennials are particularly interested in catalogs they receive in the mail. Has the catalog made a comeback? Retailers in some categories appear to think so. Many brands and retailers, such as Nordstrom, Patagonia, Crate and Barrel, Restoration Hardware and leisure services, such as vacations and cruise lines, are investing heavily in physical catalogs. Even pure-online retailers that prided themselves in creating efficient and digitized consumer experiences such as Wayfair, Bonobos, Birchbox, and Amazon are now printing catalogs. What is happening with this ages-old, analog marketing tool that email and social media marketing were promised to replace? Is “the catalog effect” here to stay? How can e-commerce companies benefit from them? We’ve used recent trends in retail technology, decades of research in consumer psychology and a recent field experiment to answer these questions. EVIDENCE FROM A LARGE-SCALE FIELD EXPERIMENT WITH A LUXURY E-COMMERCE RETAILER To test the effectiveness of catalogs, we partnered with a U.S.-based specialty e-commerce retailer with a global clientele — buyers of luxury watches and jewelry — and without a physical

Diran Otegbade, CEO Realtor.ng; Fukunda Mbaru, and Taher Ezzi, speaking at Harvard Business School on the use of technology in the Real Estate Industry in Nigeria.

store presence. The company generates annual revenue of $60 million and an operating profit of $12 million, with a database of approximately 28,000 customers. The company acquires new customers through online search and other online platforms, so all customers are comfortable with e-commerce and digital communication. More than 75% of the company’s revenue comes from repeat purchasers, so relationship development efforts are critical. When a customer’s first order ships, the company obtains permission for future marketing contacts, then uses weekly email marketing campaigns to promote repeat purchases. Acting on our advice, the company launched a new bimonthly catalog campaign featuring professional and artistically rendered product photography with high-quality printing. The company conducted the field experiment using a random 30% of its U.S.-based customers. Of those customers, 5% of them received neither email nor catalogs for six months, 55% of them received a weekly marketing email and 40% of them received the new bimonthly catalogs in addition to the weekly email marketing. To control for effects of content, over 90% of the products were the same across emails and catalogs. The same set of photos and descriptions were also used in both media. Results showed that the www.businessday.ng

“Email + catalog” group experienced a 15% lift in sales and a 27% lift in inquiries, compared to the “Email-only” group. Compared to the Control group, the “Email + catalog” group experienced a 49% lift in sales and a 125% lift in inquiries. In comparison, the “Email-only” group only had a 28% increase in sales and a 77 % lift in inquiries over the control group. The sales and inquiry lifts from catalogs almost doubled those from email marketing. Furthermore, of those customers that received the catalogs and also made product inquiries, surveys by the company’s staff found that over 90% of the customers have browsed through the catalogs and kept them for an average of seven days. The open rate was much higher than that of the email campaign which was around 26%. During the six-month experimental period, customers in the email only group purchased an average of 0.3 additional products. A quick ROI calculation indicates that a 15% increase in sales on an average order size of $6,700 due to the catalog campaign, at approximately 30% gross margin, translates to an additional $90 profit (or $180 additional annual profit) per customer. The average cost of the mailing with front-end design cost factored in is $5, yielding a direct ROI of 600%, not to mention the additional customer engagement from increased inquiries. If this

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campaign is instituted across the entire customer base similar response rates would result in an incremental annual profit of over $5 million, a boost of 40% from its current profit level. Finally, we surveyed 500 random customers from each of the “email-only” and “email + catalogs” groups and measured their perceived vividness of the emails vs. the catalogs. We told them that we were in the process of evaluating and improving catalog designs, and asked them the following two questions: 1) How easy it is for you to imagine wearing the product? (Scale of 1 to 7.) 2) How vivid are the product descriptions in the email (or catalog)? (Scale of 1 to 7.) Those in the email-only group gave an average rating of 4.3, whereas those in the catalog condition gave a rating of 5.6, and the difference is statistically significant. These results provide evidence that catalogs can increase sales and consumer engagements through enhanced product vividness and the ease of product imagination. WHY CATALOGS STILL WORK When we marry our research above with a review of retail trends and consumer psychology, we see how catalogs stand apart from the increasingly cluttered digital inboxes and social media feeds. As physical products, they can linger in consum@Businessdayng

ers’ houses long after emails are deleted, which increases top-of-mind awareness among consumers. But their real power is how, for certain products, they increase the vividness of a product by enhancing consumer’s ability to visualize and imagine product usage experiences. Vividness is highly influential in consumer behavior as it can increase consumer involvement and joy in the purchasing process, ultimately influencing preferences and sales. Vividness is especially important for hedonic products and services that are purchased for fun, enjoyment and pleasure, and contain richer experiential aspects. Finally, physical stores are expensive. For e-commerce retailers, especially those in hedonic categories who do not have or do not want physical stores, welldesigned catalog campaigns allow them to make the product presentation more vivid, tactile, and memorable. The potential results are increased customer involvement, loyalty, and sales, all without the geographic constraints and the expenses associated with stores. CREATIVITY, AESTHETICS AND EMPATHY WILL DETERMINE COMPETITIVE ADVANTAGES FOR MODERN E-COMMERCE Based on our research, we recommend that e-retailers that sell products that people purchase for fun, pleasure, and excitement consider investing in aesthetic designs and experimenting with catalog mailings. Whether other retailers should dive into catalogs is a subject for further research. Creative and aesthetic capabilities and firms’ abilities to empathize with consumers and evoke emotional connections will constitute crucial competitive advantages in modern ecommerce. Catalogs can be a powerful medium to achieve them.

Jonathan Z. Zhang is on the marketing faculty at Colorado State University.

Wednesday 26 February 2020

BUSINESS DAY

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Wednesday 26 February 2020

BUSINESS DAY

insurance today

E-mail: insurancetoday@businessdayonline.com

NASS, NAICOM agree on speedy amendment of insurance laws to enhance sector contribution to economy Modestus Anaesoronye

he House Representative Committee on Insurance and Actuarial Matters and the National Insurance Commission (NAICOM) have agreed on the need to speed up the process of amendment of existing insurance laws to enable the insurance sector make significant contribution to the economy. The legislators, assessing the request of the Commission with respect to the laws governing operations of insurance business in Nigeria, noted that the laws are no doubt obsolete and needs to be amended urgently to enable the industry take its rightful place in the nation’s financial services sector. Darlington Nwokocha, chairman, House of Representative Committee on Insurance and Actuarial Matters speaking a Retreat organized his members by NAICOM in Uyo, Akwa- Ibom State said “as legislators, we have the responsibility to ensure that the industry we over see is repositioned because of its role in the economy.” Nwokocha, representing Isiala Ngwa North/South Federal Constituency said the insurance Act we have today is obsolete and it is our responsibility to ensure that the spirit and provisions of the Act are in tandem with current realities. “We are going to ensure that we commence the process of amendment and accelerated hearing of the Act, he said. According to insurance revolves around the economy, and could help address some of the challenges facing the country. The law maker noted that insurance will help ensure that our security agencies that lay their lives to protect all of us are not left without adequate compensation to their families in the event of the unexpected happening. Sunday Thomas, acting Commissioner for Insurance/ CEO of the NAICOM in his welcome remarks informed the Committee that the Commission derives its powers from the National Insurance Commission Act 1997 and Insurance Act 2003, stating that some of their provisions are fast becoming obsolete and require urgent amendment. He also informed them that a Bill to amend the insurance laws has been in the works for some years now, therefore calling on the 9th Assembly to give it an accelerated attention. Thomas noted that the Commission had hitherto been hindered in its various efforts to

L-R: Ahmed Jaha, deputy chairman, House of Representative Committee on Insurance and Actuarial Matters; Darlington Nwokocha, chairman, House of Representative Committee on Insurance and Actuarial Matters; and Sunday Thomas, acting commissioner for Insurance/CEO, National Insurance Commission (NAICOM) at the Retreat organized by the Commission for the Committee in Uyo, Akwa Ibom State.

implement provisions of the current Laws by a number of challenges which are not within its control. “We believe that going forward, and in view of our renewed collaboration with the National Assembly, relevant security and sister agencies, enforcement of compliance with the laws will become much easier in no distant time.” According to him, the Commission is committed to ensuring adequate protection of policyholders as part of its core mandate. “This effort has been taken in many fronts such as ensuring that genuine claims are promptly paid by insurers, ensuring financial soundness and viability of the insurers to protect investments, right prizing of insurance products, value for money, use of technology for ease of transaction etc.

As part of the Commission’s effort to develop the insurance market, it has commenced the process of attaining the full digitization of insurance business in Nigeria in order to keep tab with current realities. There is no hiding the fact in saying that the industry is currently lagging behind other financial services sectors in this regards, Thomas said. He further stated that the Commission is now more prepared to drive the IT revolution in the sector starting with itself. It is on this premise that NAICOM is working assiduously to see that all its operations are done online and real time by digitalising its processes and encouraging the industry to imbibe same. Appropriate steps are being taking to launch the Commission’s portal which will go a long way in blocking leak-

ages in the sector, Thomas informed the legislators. It will be recalled that Insurance Industry has since initiated the Insurance Consolidated Bill 2013, which had moved between the ministry of Finance and the presidency but without much progress. Kemi Adeosun, former minister of Finance had also constituted a Committee to review the Draft Insurance (Consolidated) Bill during her tenure, with a view to making it a framework or principle-based legislation; a comparative review of the bill to align it with the powers of other financial regulators in the country as well as a thorough examination of current market problems and recommendation of appropriate regulatory powers to allow the insurance regulatory authority act appropriately.

Meristem tasks Nigerians on proper retirement planning Modestus Anaesoronye

igerians have been advised to pay attention to comprehensive financial planning and wealth management to improve their incomes, savings and investments for a desired retirement life. Speaking at a private breakfast session on retirement, tax and wills held by Meristem Wealth Management Limited in Lagos, at the weekend, finance, tax and investment experts underscored the importance of retirement planning, tax planning, will and trust. Sulaiman Adedokun,, deputy group managing director, Meristem Securities Limited, speaking on Retirement Planning identified

dynamics of what to live on to include “My Children; Myself; My Pension and My savings, also noted reasons why people don’t want to discuss retirement as ‘The Illusion of ever-presence’; ‘The Pressure of Time’ and ‘Not close to retirement’. The four big risk about retirement planning according to him, are Longevity ‘the risk of outliving your assets’; Flexibility ‘the risk of not being able to access your assets at required or on death’; Inflation ‘the risk of your income falling in real terms’ and Volatility ‘the risk of volatile investment returns impacting your income.’ On the way forward to managing the risks for a wonderful retirement, Adedokun stressed the need for people to “understand their assets and future sources of income, e.g. www.businessday.ng

various pension pots, investments, property equity and state pension. “Assess and articulate their needs through retirement, acknowledging that these will change over time. Make choices about which objectives are most important and understand the risks they are willing or need to take in order to have the best chance of meeting these objectives. “Investigate and understand the array of financial options available for them to match Steps above.” He further explained that retirement planning should not be treated as an activity for the old or about to retire, but rather as a starter pack for a fulfilled career. Mercy Aminah, managing director, Meristem Trustees stressed the need for proper estate planning, to avoid dispute when the

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owner of the estate is no more. She dispelled the belief that estate planning is to invoke death, but to leave a legacy for a peaceful and harmonious co-existence among the heirs of the estate and called on Nigerians to always engage experts in the management of their estates. Mercy said proper planning will ensure that the right tools are deployed, having considered unique individual and family circumstances. The Meristem Wealth Management Private Breakfast Session is a quarterly gathering of professionals, industry leaders and entrepreneurs hosted by Meristem; to discuss various topical issues in the financial space, in a bid to demystify all myths and help individuals make better informed financial and investment decisions.

@Businessdayng

Wednesday 26 February 2020

BUSINESS DAY

insurance today E-mail: insurancetoday@businessdayonline.com

Insurers looking to close 2019 at N491bn gross premium …pays N330 billion in claims Modestus Anaesoronye

he nation’s insurance industry is looking to close 2019 financial year at N490.99 billion, as against N426.21 billion in 2018, according to provisional result released by the National Insurance Commision (NAICOM). According to the Commission, total claims are expected to hit N330.37 billion, as against N252.19 billion in 2018. The industry was also noted to have invested N1.13 trillion in the economy in 2019, as against N1.01 trillion in 2018. There are currently 55 insurance companies in Nigeria, two re-insurance, three takaful and two microinsurance operators; with over 500 insurance brokers and 2,000 agents. The Commission over the years in the course of discharging its duties and keeping to its mandate had incepted a number of initiatives, especially in the area of market development to boost insurance penetration and growth.

While a lot has been achieved by the Commission in this regards, there is a lot to be done if we must attain the desired goals as an industry. According to NAICOM, these figures try to give clarifications especially to the vexed issue of nonpayment of claims by insurance operators. There is no denying the fact that there are indeed

some cases of delays in the payment of claims by some operators, the Commission is however addressing such cases as soon as they are brought to our notice. It is for this reason that the Commission has strengthened its Complaint Bureau Unit in order to effectively address consumers’ complaints within the shortest possible time, Sunday Thomas, acting commis-

sioner for Insurance said. He noted that the Commission has also as a matter of deliberate policy adjusted its strategy to focus more on developmental issues than compliance issues going forward in the overall interest of all stakeholders. “As you may have been aware, the Commission had in 2019 initiated the process to recapitalise the

STI marks 25 years of successful business, hinge growth of industry on technology adoption Modestus Anaesoronye

nderwriting firm, Sovereign Trust Insurance Plc has marked its 25 years of successful business in Nigeria and contributions to the growth of the industry, emphasizing the importance of technology adoption in advancing growth of the business. Coming on the heels of the various regulatory reforms in the Insurance Industry in recent times, the Oluseun O. Ajayi, pioneer managing director and current chairman of Sovereign Trust Insurance Plc lending his voice to what seem an ongoing discourse about the future of insurance practice in Nigeria, said the future of the business hinges on em-

bracing technology. He made his views known to the media at an interactive session to mark the 25th anniversary of the underwriting firm in Lagos. According to him, technology, and specifically, insure-tech is the way to go in driving the business of insurance in Nigeria. He said the number of Nigerians who are yet to be captured in the fray of insurance far outnumbers those that are currently enjoying one form of insurance service or the other. In his words, “operators in the insurance market space in Nigeria are yet to take optimal advantage of the teledensity in the country both in the urban and rural areas in pushing the frontiers of their products and services to Nigerians, far and near”. He stated that Managers www.businessday.ng

of insurance business in Nigeria should consciously and deliberately invest in robust Information Technology apparatus that will assist in providing top-notch service delivery to their customers, home and abroad.

Ajayi

He alluded to the recent statement made by Sunday Thomas, the acting commissioner of Insurance, that the Commission is working assiduously in ensuring that all processes in the practice of insurance in Nigeria will be digitalized as from this year. Ajayi noted that, the initiative is a right step in the right direction if properly monitored and implemented. He argued that the role of technology is very crucial to the growth of the Insurance Industry in Nigeria, considering the fact, that the world is gradually becoming a global village and insurance practitioners cannot stand aloof in the equation if indeed, we are serious and concerned about the growth and development of the business.

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insurance industry in order to upscale its financial standing to meet up with current economic realities and avoid imminent systemic collapse and solvency crisis in the insurance sector.” According to him, this will ensure that the industry becomes more robust in its technical competence and financial base, build confidence, trust and en-

hance market value. It is further aimed at repositioning the sector for selfactualization in terms of growth and development. The process is expected to be concluded by 31st December, 2020, Thomas said. In 2009, the Commission launched the Market Development and Restructuring Initiative (MDRI) project aimed at a comprehensive pursuit of development of the industry as well as ensuring full compliance with extant Laws in respect of compulsory insurances. The first phase of the project was carried out in all the six geo-political zones in the country, while the second phase of the MDRI project according to NAICOM will soon be unveiled and hope to mark out clear targets and tasks for all stakeholders in the industry. The Commission is committed to vigorously pursue the continued implementation of Compulsory Insurances to which collaboration and support from all stakeholders is keyed towards achieving the desired goal, the Commission promised.

Reinsurance earnings return Global Indemnity to growth

pecialty property and casualty re/insurer, Global Indemnity returned to the black in 2019, posting net income of $70 million for the year, versus a net loss of $56.7 million in 2018. Performance was helped by a 18.9 percent increase in net written premiums, which totalled $562.1 million for the twelve-month period. Notably, this included an 83.8 percent increase in net written premiums for the company’s reinsurance segment, which came to $88.3 million, up from $48.0 million in the previous year. Global Indemnity said the growth in reinsurance premiums was mainly due to entering a new casualty treaty during 2019 and rate increases within the property catastrophe line of business. @Businessdayng

Looking at other segments, net premiums grew by 14.1 percent for commercial specialty due to new programs and increases in excess & surplus lines submissions, and by 6.0 percentfor farm, ranch, & stable due to an increase in pricing as well as new agent appointments. In specialty property, net written premiums increased by 10.4 percent but gross written premiums were down by 3.9 percent due to a continued reductions of catastrophe exposed business, which has meant fewer premiums were ceded to reinsurers. Global Indemnity recorded a combined ratio of 92.2 percent in 2019, consisting of a loss ratio of 52.5 percent and an expense ratio of 39.7 percent.

Wednesday 26 February 2020

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

‘TSS Shacman trucks will meet Dangote’s logistics needs’ …Sacked ANAMMCO workers are back, says Frank Nneji

Railways plans hourly train services on Lagos-Ibadan route

MIKE OCHONMA Transport Editor

MIKE OCHONMA

ransit Support Services (TSS) Limited, assemblers of Shacman trucks in Nigeria has assured that, it will satisfy the logistics needs of the Dangote group following the conglomerate’s placement of large orders for the local assembly for the supply of the Chinese trucks for its diverse onshore and off-shore operation in the country. Dangote is 90 percent the principal fleet customer for the Shacman range of trucks being assembled under the TSS Limited in Nigeria. Before this positive development, there are insinuations that Aliko Dangote, President of Dangote group; Africa’s richest man and also ranked among the first 100 world richest according to Forbes from the northern extraction is not beaming his searchlight on the Southerneastern part of Nigeria in his investments expansion drive. Prior to this piece of good news, current indices in terms of Dangote group’s unfolding economic impacts in the South-east and by extension the South-south region points to the contrary following the company’s 3,500 Shacman locally trucks assembled inside the Anambra Motor Manufacturing Company (ANAMMCO) automotive assembly plant in Emene, Enugu. Each of the assembled trucks under the semi knocked categorisation is valued at N18 million bringing the total amount of investment to N63billion. Since the past five years when the agreement was sealed between Dangote group and TSS Limited, economic activities within the South-east and South-south economic activities are gradually picking up following the surge in operations at the ANAMMCO assembly plant in Emene, Enugu where TSS

Limited is chunning out the Chinese trucks under what is referred to as contract assembly. BusinessDay checks show that the assembly plant has the capacity to produce 15,000 units on two shifts when there is demand, 7,500 units on a single shift, about 50 units per week and over 200 units in a month totaling an estimated 3000 units per annum. Frank Nneji, chairman and chief executive of TSS Limited, assemblers of Shacman truck told our reporter in Enugu that following the commencement of Shacman trucks, about 220 workers under the former ANAMMCO management were recalled including 15 expatriate partners that are resident in Enugu providing specific training to the workers on how to produce the trucks. According to Nneji, ‘’in recall-

ing them back, we have to recruit experienced workers among them that have experience working with ANAMMCO before. There is also a training school within the plant facility that handles training modules on mecha-tronics about automobile engineering including students on industrial training attachments’’. From these pool of experienced trainees, other assemblers can hire the qualified ones to work with them, more-so when Enugu and other parts of the Eastern region are gradually becoming a cluster or motorcity because of its exposure to ANAMMCO in the past 40 years during which period a lot of manpower have been developed. So far, the re-calibration of local Shacman trucks assembly have generated between 350 and 400 direct jobs, most of them benefactors to their immediate families. This is apart from the drivers and motorboys that deliver these trucks to their various destinations where they are rolled out of the assembly lines. Apart from this numbers, there

are also the multiplier effect to those directly engaged such as the local suppliers of lubricants, electrolytes and other manual workers not directly related to the day to day assembly line operations. Fielding questions on how long the relationship between the duo would last, Nneji assured that the relationship between TSS Limited and Dangote group has come to stay as long as Dangote is satisfied with the truck. While reiterating that if it is a short term relationship, it would not have lasted till date since 2016, he pointed that Dangote group has absolute trust on the quality of the locally assembled Shacman trucks that are backed by warranty that is of global standard and after-sales services. ‘’We are very hopeful that Dangote group will continue to remain our strong partner even as we are also working hard to develop capacity and backward integrate, create more jobs and more local inputs’’. Frank Nneji said.

s a way of meeting traveling schedules of passengers, the Nigerian Railway Corporation (NRC) is planning to roll out hourly train services on the Lagos-Ibadan standard gauge rail line corridor. Jerry Oche, the Lagos railway district manager (RDM) of the NRC told the News Agency of Nigeria (NAN) in Lagos that more activities would soon be seen on the Lagos axis of the corridor. Jeery Oche said that, the NRC will commence operations at Agege Railway Station whenever the standard gauge line gets to Agege from Iju Station where it is currently. He also said as the line extends inward Lagos axis from Iju, the NRC would continue to shift point of boarding for the ongoing Lagos-Ibadan free train ride flagged off by the Minister of Transport, Rotimi Amaechi, in 2019. “We have gotten to Ibadan; so Ibadan end is no longer our headache any more. It is Lagos end that is our headache from Iju, Agege, Ebute-Metta Junction,” he said. On the congestion of Lagos-Ogun mass train services on narrow gauge, Oche said that the corporation was working hard to increase the number of coaches in the two trains being operated from 12 to 14. According to him, the district is equally working hard to introduce the third train to add to the fleet. The RDM said that China Civil Engineering Construction Corporation (CCECC); the construction company handling the project is working assiduously to meet the set target. “I can tell you, in no distant time, the hourly train service between Lagos and Ibadan that we have been talking about will come to reality,” he said. “We hope to see more activities on the standard gauge. There is going to be more activities when the standard gauge rail line gets to Agege and EbuteMetta Junction from Iju.” Jerry Oche stated.

Travelers comfort gets better as Weststar’s MB-Invictus 1200 arrives MIKE OCHONMA

eststar Associates Limited, distributors of MercedesBenz in Nigeria in collaboration with Utobras Nigeria Limited, authorized representative of Comil buses in the country recently unveiled the new Mercedes-Benz Comil Campione Invictus 1200 bus to the local market. Campione Invictus 1200 bus is a solution aimed at long distance road lines; it comes with an advanced concept in its body design and architecture while highlighting a modern design with curves and more fluid lines following current trends in the automotive industry. Dealerhship sources say that, following the tradition and reputation of the Brazilian bus operators which spans over 70 years, Comil has made products that come with the highest quality materials, which also follow the latest design trends in the

bus industry. Their key selling point however is the cost effectiveness. Bus operators in Nigeria can now increase their fleet with the quality they require for their businesses without breaking the bank. It comes with the traditional robustness and durability of the Comil line with new coverings, expanded passenger access, a large glass area www.businessday.ng

features and a cabin with improved ergonomics for the driver. The bus comes with a capacity to carry up to 24 tonnes, a length of up to 14 meters long, a width of about 2.6 meters and is built on the ever-reliable MercedesBenz 0 500 RSD bus chassis developed for middle- and long-distance travel. The exterior comes with standout features like the headlamp set with

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LED daytime lighting which comes in an exclusive Comil design. It also complies with DRL (daytime running light) legislations in major markets while rear lights also get a new design and they are divided into two parts, with full LED lighting. Front view has been re-shaped to blend with modern design trends, this gives the bus a more rounded and dynamic design with lower drag co-efficient and less air resistance. The front water flow is another key feature in the exterior design. Its interior features a new partition with a curved glass door which can be equipped with a reinforced partition wall; this improves the use of the cabin space and the spaciousness of the hall. There is also improved ergonomics and space for the driver as the cab is better optimized and designed to comfortably serve drivers with above average height. The passenger area is fully remodeled with new finishes on the seat packages, the roof comes in a new modern design and with ambient @Businessdayng

lighting, there are more covering and curtain options, a media display, USB ports for passengers and the roof AC is another major highlight. Mirko Plath, managing director, Weststar Associates Limited, commended the collaboration with Utobras Nigeria Limited to introduce the bus to the Nigerian market. He emphasized Weststar’s continued commitment to providing the best products in a bid to aid the transport system in Nigeria, he also pointed out that bus operators would see a lot of benefit in the MercedesBenz Comil combination, as the ever-reliable O 500 Chassis runs in the modern bus design of the Campione Invictus 1200. The chassis comes with high quality materials, an ever-reliable power train and designs from the latest trends in the bus industry. All these come at a more competitive price. It is now available for immediate order courtesy Weststar Associates Limited and Utobras Nigeria Limited.

Wednesday 26 February 2020

BUSINESS DAY

TRANSPORTATION Motoring

RailBusiness

ModernTravel

Roads

Embedded Spotify brings music to new Jaguar F-Type drivers ity driving is becoming more fun with the new Jaguar F-Type; a true driver-focused sports car is offering reward and engagement like no other. A new embedded Spotify app enhances the driving experience further, giving Premium Spotify subscribers instant, on-demand access to a growing library of more than 50 million tracks and more than 700 thousand podcasts. Developed with Spotify, the new app is integrated within the fast, intuitive Touch Pro infotainment system so customers can enjoy their favourite playlists without connecting their phone. And through the Spotify Connect feature, playback can resume seamlessly from any other device when customers get into their car. Alan Volkaerts, Vehicle Line Director, Jaguar F-Type, said: “Our customers expect the latest infotainment and connectivity technology, and the new embedded Spotify app has been developed to offer them exactly that. “Our engineers have worked closely with Spotify to integrate this app into the Touch Pro infotainment system, and as a result our customers can have access to a huge library of music without needing to connect their phones. And the seamless playback between devices in the home to the car and back again makes the new

F-Type even more enjoyable to drive.” The new F-Type features a wealth of other driverfocused technologies, including a reconfigurable, high-definition, 12.3-inch TFT instrument cluster and Smartphone Pack with Apple CarPlay® and Android Auto as standard. The two superb Meridian audio systems – including a surround sound system with 12 speakers including two sub-woofers – offer enhanced sound reproduction. SOTA functionality means future software updates can be made to the Touch Pro infotainment system at the customer’s convenience without having to visit a dealer. It is the first Jaguar model to feature the embedded Spotify app, which is also backward-compatible with existing Jaguar models equipped with the Touch Pro infotainment, Online Media feature and software-over-the-air (SOTA) functionality. Installing it is easy: Via a micro-SIM card in the vehicle or through a Wi-Fi connection, customers can, in three simple steps, download the app and update the online media sources with Spotify. The F-Type will be introduced to sub-Sahara Africa in the second quarter of 2020. All Jaguar vehicles come standard with a 5 Year Care Plan giving peace of mind with a 100 000km warranty and servicing within in 5 year period, whichever comes first.

He disclosed that ambulances will be provided and marshals will be stationed at those critical points to render assistance to tourists and other road users. He assured that FRSC would collaborate with other security agencies to protect people and properties before, during and after the festival. In his response, the Emir thanked the FRSC for aligning with the hopes and aspirations of the people of Kebbi state in ensuring road safety. He assured the FRSC of his maximum support as the community believes in sanctity of lives. He appreciated the quick response of the Corps marshal in providing new vehicles to the Argungu unit command among other logistics

and commended the efforts of the officers and men of the corps in the area. The monarch enjoined the unit command to step up its enlightenment and enforcement activities in the area and admonished all road users to always comply with traffic rules and regulations. He condemned the act of putting passengers in the trunk of vehicles. He called on vehicle operators to desist from overloading their vehicles and conveying together animals and persons in vehicles and decried loss of many lives due to the unsafe acts. The Royal Father believes prosecution of violators will discourage people from unsafe practices on the road calling on all stakeholders to collaborate.

MIKE OCHONMA

Green transport set to overtake cars in world’s major cities 2030 REUTERS

rom public transport to cycling, sustainable transport is on course to overtake driving in the world’s biggest cities within a decade, according to a study released this month. Private car trips will drop by 10 percent on average by 2030 to make up less than half of all city journeys, while public transport, walking and bicycle will all increase in popularity, the Mobility Futures study found. “It’s a job for every mayor, for every city government to do something. Cities are beginning to understand that you do not build your city around a certain means of

transport ... You should build your city around the people”. Said Rolf Kullen, mobility director at research consultancy firm Kantar, which produced the study, based on surveys in 31 cities. More than half the world’s population lives in cities and that is expected to rise to almost 70 percent by 2050, creating increasing pressure for space. Many urban authorities battling gridlocked centres and air pollution are looking to discourage private car journeys, while a boom in bike-sharing schemes and electric-powered small vehicles are giving residents new ways to get around. Private car journeys currently represent just over half of all trips made in ma-

jor cities, but will sink to 46 percent by 2030, according to researchers who surveyed more than 200,000 residents in cities from New York to Nairobi. Trips made on public transport, bicycle or on foot will all rise to reach a combined 49 percent of city journeys over the same period, creating a global “tipping point” towards sustainable travel, found the study. Much of the change is being driven by a rise in rental transport schemes and moves by authorities to share the streets, said researchers, while a generational shift has seen younger people embrace new ways to get around. Some 40 percent of people globally said they were open

to new forms of travel, said researchers, though cities must act to invest in technology such as digital payments and sharing schemes to enable the shift towards greener transport. Growing awareness of pollution and congestion caused by car use was helping to drive change, agreed Yoann Le Petit from environmental campaign group Transport And Environment, though he said cities should go further. “We are witnessing this trend but we should not just relax and lay back,” he told the Thomson Reuters Foundation. We should really make sure that the alternatives to a private car are zero-emission, are shared and are attractive at the same time”. Yoann Le Petit concluded.

FRSC Sokoto command prepares for Argungu Motor Rally ...moves to curb overloading MIKE OCHONMA

ederal Road Safety Corps (FRSC) Sokoto zone is mapping out strategies aim at ensuring free flow of traffic and ensuring safety of lives and property during the forthcoming Argungu International Fishing Festival taking place in the first week of March 2020. FRSC is also tackling issues of overloading, dangerous driving as well as enforce number plate regulations throughout the zone comprising of Sokoto,.Kebbi and Zamfara states. Zonal commanding officer (ZCO), assistant corps marshal Kayode Olagunju in charge of Sokoto and Kebbi

states disclosed this while on a courtesy call to the Emir of Argungu, Muhammad Mera in his palace recently. The ZCO appreciated the support and cooperation of the Emir and the Emirate Council to FRSC and assured the royal father that the Corps will continue to partner with the community to evolve better road culture in the area. He informed the Emir that the FRSC headquarters has also assured of interventions that would result in effective management of traffic during the festival, more-so with activities Motor Rally from Abuja to Argungu and cycling competition that will take place on the road. The traffic density is ex-

L-R: Assisitant corps marshal (ACM) Kayode Olagunju, zonal commanding officer of the FRSC Sokoto and Kebbi with Muhammed Iliyasu Bashar, the Emir of Gwandu, and chairman Kebbi state council of chiefs with and Ebenezer Asaniyan, Kebbi state sector commander during a courtesy visit to the monarch by the FRSC officials recently.

pected to be high as the festival attracts global attention hence influx of people into the community. Olagunju also informed the monarch

that three help areas that would work twenty four hours would also be established in the area to assist during emergencies.

Wednesday 26 February 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

WACT to expand port capacity with phase two terminal upgrade in Onne …Set to deploy more Mobile Harbour Cranes, RTGs amaka Anagor-Ewuzie

etermined to expand its capacity to handle more volumes, the West Africa Container Terminal (WACT), a leading container terminal in the Eastern part of Nigeria, said it has perfected arrangements to begin the Phase 2 of its terminal upgrade within the next 18 months. WACT, which has become the most preferred container terminal outside the Lagos area, is fast gaining reputation as the gateway to Eastern Nigeria and the alternative to the ports in Lagos. Noah Sheriff, commercial manager of WACT, said the Phase 2 upgrade will consist of the acquisition of three additional Mobile Harbour Cranes (MHCs) to bring the number of MHCs at the terminal to five; acquisition of 20 Rubber Tyre Gantry Cranes (RTGs); three Reach

Stackers; 13 terminal trucks and trailers as well as an empty container handler. To him, the upgrade will include deployment of reefer racks with 600 plugs capacity, as well as expansion and paving of the current yard by 13 hectares, building new workshop and new terminal gate complex.

“We anticipate additional volume growth as more and more shipping lines, importers and exporters continue to develop confidence in our ability to handle their cargo. This further investment is to ensure that we are well prepared to handle the additional business in the future,” he said.

According to Sheriff, the new investments will increase productivity and reliability of cargo delivery while reducing port stays and vessel idle time, adding that all the above will lead to greater customer satisfaction. Recall that in 2019, WACT spent US$14 million to acquire equipment includ-

s part of its efforts to decongest its terminal of overtime containers and create space for new ones, APM Terminals Apapa, an operator of the busiest container terminal in Nigeria, said on Monday that it has concluded plans to open a grace window for owners of longstanding containers to clear their consig nments on discounted rates. According to the operator, the move was aimed at decongesting the por t, adding that it will offer 50 percent discount on storage charges of 1,290 selected containers that have been in the terminal for 365 days to 4000 days. “In support of the efforts of the Nigerian Ports Authority (NPA) to decongest the port to enable the discharge of new containers, APM Terminals urgently requests the importers of some 1,290 containers that have been

in the terminal for 365 days to 4000 days, to clear them,” the operator stated in a notice to port users on Monday. It added that it was determined, in support of government policy, to assist importers by offering 50 percent discount on the storage charges for any of the selected containers delivered until 15th March 2020. While encouraging cargo owners to make maximum use of the opportunity in clearing their consignments, the operator further explained that full tariff on such containers, will be payable from 16th March 2020, which is at the expiration of the grace period. Recently, APM Terminals Apapa had urged importers to ensure prompt delivery of their containers to avoid buildup at the port as a result of increasing volumes. “We have recently experienced a substantial increase in volume of containers arriving through www.businessday.ng

the seaports. This positive development can be attributed to various positive government policies such as improvement in the implementation of Ease of Doing Business policy, the Agriculture Promotion Policy and closure of land borders to curtail smuggling activities amongst others,” the operator had said in a statement issued in November 2019. Continuing, it stated: “However, if these containers are not cleared by customers soon enough, this volume increase could lead to high yard density which could impact berthing of vessels resulting in vessel queues. We are anticipating further improvement in throughput ahead of Christmas and year end,” the leading terminal. It however urged all the relevant stakeholders and the wider port community to ensure timely delivery of containers in an effective manner without compromising government’s policies and procedures.

that, they have acquired a lot of equipment to ease cargo clearance and we commend them for that because they are doing very well,” said Gabriel Okonkwo, chairman, Association of Registered Freight Forwarders of Nigeria (AREFFN), Onne Port. According to him, WACT is keeping up with the demand, and it can receive vessels, load and drop containers for examination at the same time. WACT is one of the first Greenfield terminals to be built in Nigeria under a public, private partnership initiated by the Federal government in 2003. Located in the Onne Oil and Gas Free Zone near Port Harcourt, the port caters to the greater Port Harcourt area and Eastern Nigeria, including the Nigeria oil and gas industry. Since inception, WACT has successfully played a pivotal role in connecting East, North, West Central Nigeria and River State to the world.

NASS pushes bill to ban plastics, eliminate sources of Marine Litters

APM Terminals to decongest terminal with 50% discount on overtime containers amaka Anagor-Ewuzie

ing two Mobile Harbour Cranes, 14 specialised terminal trucks and two reach stackers. This first phase of investment last year brought high operational efficiency and set WACT apart from other ports in East Nigeria. “Our vision is to make WACT the best performing container terminal in West Africa. We believe this vision can be realised through active collaboration with the government to reduce the security challenges faced by vessels in our waters, and improved road connectivity,” stated Aamir Mirza, managing director of WACT. Since December 2019, WACT has been handling gearless vessels, which previously could only be handled at the ports in Lagos. Several stakeholders have commended WACT for being proactive and for its long-term commitment to the Nigerian economy. “There has been substantial increase in import volume and to measure up with

amaka Anagor-Ewuzie “We assure the shipping lines and our landside customers, that we are dedicating adequate resources despite the seasonal bad weather, working closely with the Port authority, other relevant agencies and stakeholders for improved terminal performance, to ensure prompt cargo delivery after release by the Nigeria Customs Service,” the company had added at the time. The operator however commended NPA for operating the Lilypond Transit Truck Park and the Presidential Task Team on decongesting Apapa access roads for the effective implementation of call-up system as well as traffic management system. Re call that Nig er ian port is presently experiencing its worst congestion years after concession as it now takes between 10 to 25 days in waiting time for ships with laden containers to berth in the terminals in Lagos ports due to lack of space to discharge the containers.

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he National Assembly and the Federal Ministry of Environment are presently putting finishing touches to a bill meant to ban the production of plastics in the country. Tolulope Odebiyi, a member of the Senate Committee on Marine Transport, disclosed this in Lagos at the launch of the Maritime Action Plan for Marine Litter and Plastics Management in Nigeria by the Nigerian Maritime Administration and Safety Agency (NIMASA). Odebiyi, the brain behind the proposed bill, who represented the chairman of the committee, Danjuma Goje, said the bill would be harmonised with input from the Federal Ministry of Environment, to make a holistic law that would impose tough sanctions on the production of organic polymers. According to him, the National Assembly was solidly behind NIMASA in the implementation of the action plan, which foresees the elimination of land-based sources of marine litter within five years. “NIMASA has taken the @Businessdayng

lead in ensuring that our waterways and bodies are clean, safe, and a vital source of economic activity for us. The issue is getting to an alarming state such that Nigeria is spending billions of naira tiding up the environment while many have been making billions of naira contributing to the plastic pollution menace,” he said. He said that people cannot continue to generate pollution, clog the waterways, cause erosion, flooding and cause all kinds of problems. Dakuku Peterside, director-general of NIMASA, decried that Nigeria was among the 20 countries generating more than 80 percent of the land-based plastic wastes that ends up in the oceans. He said the event was organised to raise public awareness about the deleterious effects of marine pollution and chart a national roadmap on solution to the menace. “The solution to this global challenge are multiple and require consideration of a systematic approach to the various sources generating the pollution, both land- and sea-based contributors, and a combination of intervention in different sectors and at different levels,” Peterside said.

Wednesday 26 February 2020

BUSINESS DAY

MARITIMEBUSINESS Shipping

Logistics

Maritime e-Commerce

Akeredolu seeks FG’s declaration for proposed Ondo Deep Seaport Project …Targets N500bn worth of investment amaka Anagor-Ewuzie

ndo State Government said it’s presently w o rk i n g t o wards obtaining from the Federal Government, a Port Declaration for the planned Deep Seaport project in the state. The development of a deep seaport project in Ondo State will generate more than N500 billion investments to the host communities in Ilaje Local Government Area where government is proposing to establish the port, says Oluwarotimi Akeredolu, Governor of the State. Speaking at the stakeholders’ forum relating to the Environmental Site Investment Assessment (ESIA) and Resettlement Action Plan (RAP) for the project, where he met with traditional rulers and representatives of the community in Akure, Ondo State capital on Wednesday, Akeredolu assured that the project remains at top priority list of the state. Also present were the

consultants to the project, representatives of the Federal and State Ministry of Environment and Community Based Organisations (CBOs). Akeredolu, while soliciting the support of the host communities and traditional rulers towards the actualisation of the project, said the State Government had spent hundreds of millions of naira on carrying out the required studies by local and international consultants. “The deep seaport and the Industrial City project will attract massive investment to the State in particular and Nigeria in general. The one singular project that will change this State totally is the port. Building the port alone will bring about N500 billion economic activities to that area,” he said. According to him, the port is the most serious business and important project the state government wants to embark on, adding that every other thing in the State has become secondary. “We don’t have money but we will set aside as many projects as we can to get this port done so that its quality

will meet the standard expected of us by the Federal Government,” he said. Akeredolu, stated that the state government has three levels of efforts to put into the project, which include getting declaration from Federal Government, the work to be done level an creating

enabling environment for the consultants to do their work in the affected communities. He assured affected communities whose property, farm lands and means of livelihood would be affected by the construction of the seaport, of adequate compensation and relocation to

comfortable sites. This, he said, is why government places premium on the processes and procedures of the Environmental Site Investment Assessment (ESIA) and the Resettlement Action Plan (RAP). Boye Oyewumi, special adviser, Development and

L-R: Boye Oyewunmi, special adviser to Ondo State Governor on Investment/CEO, Ondo State Development and Investment Promotion Agency (ONDIPA); Oluwarotimi Akeredolu, Ondo State Governor, and Agboola Ajayi, deputy governor, at a community/stakeholders’ forum on the Ondo Deep Seaport project at Akure on Wednesday.

Investment/CEO, Ondo State Development and Investment Promotion Agency (ONDIPA), said the port, upon completion, will be a game changer not just for the State but the country. He said it is expected that the OBC, which is the last set of reports for the port declaration would be completed before the end of April. The various traditional rulers present at the meeting including the Olugbo of Ugbo kingdom, and Oba Fredrick Obateru Akinruntan, chairman, Ondo State Council of Obas, assured Governor Akeredolu of unalloyed support and cooperation of the Ilaje community in ensuring the realisation of the port project in view of its benefits to the state. The site of the proposed Port of Ondo, which also has an industrial city with Free Trade Zone status, measures 2,771.2 hectares, and it is accessible from Ore through a new dual carriageway, which will be constructed from Araromi to Lekki in Lagos and when completed, it will take only 45 minutes from the port to Lagos.

Omajuwa, SIFAX Off Dock GM gets Marketing fellowship amaka Anagor-Ewuzie

liver Omajuwa, g e n e ra l ma nager, SIFAX Off D o c k Ni g e r i a Limited, has been conferred with the fellowship award by the National Institute of Marketing of Nigeria (NIMN) alongside other 76 members from various sectors.

Tony Agenmonmen, president/chairman of Council, NIMN said during the event held recently in Lagos that the new set of awardees comprised of men and women, who have distinguished themselves in the area of marketing in their various organisations. Omajuwa, who joined the Institute in 2011, is a graduate of Business Ad-

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ministration from Ambrose Alli University, Ekpoma and also holds a Master of Business Administration with specialisation in Marketing from Ladoke Akintola University of Technology (LAUTECH). He is also an alumnus of Pan African University (Lagos Business School). His professional experience cut across roles like

Sales Analyst (Classic Beverages - producers of La Casera range of beverages) and Chief Marketing Officer- Air Separation Nig. Ltd - manufacturers of medical and industrial oxygen gas with the parent company in Buffalo, U.S.A. He also worked as the Admin/Marketing Manager, Duraclean Gases before he joined SIFAX Group in Oc-

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tober 3, 2006 as Marketing/ Corporate Affairs Officer. He rose through the ranks in SIFAX Group and was promoted to general manager, SIFAX Off Dock Nigeria Limited in April 2015 where he is now the head of the subsidiary and a member of the management team. Asides his membership of NIMN, he is also a mem-

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ber of the Nigerian Institute of Public Relations (NIPR), fellow of International Logistics & Administration (ILA) and member of Nigerian Institute of Shipping (NIS). He attended high profile sales/marketing, management, leadership and public relations courses/seminars, workshops and lectures both in Nigeria and abroad.

Wednesday 26 February 2020

BUSINESS DAY

FEATURE

The US Visa restriction throws light on deeper issues to reflect on ENDURANCE OKAFOR

n January 31, Nigerians received with surprise, the news that Nigeria had been added to US immigrant visa ban list, along with five other countries including Eritrea, Myanmar, Kyrgyzstan, Sudan and Tanzania. According to the White House, the temporary ban was necessary because of the national security and public safety risk posed to the US by foreign nationals from countries with inadequate identitymanagement practices. The US, with this action, is concerned that it will not be able to sufficiently vet potential migrants from these countries. Observers and public commentators have rightly blamed the government and its relevant agencies for not foreseeing – much less – forestalling the unfortunate occurrence. More critical observers say that the Nigerian authorities had foreknowledge of the US’s intentions, but footdragged until the hammer eventually fell. Indeed, the US government confirmed that it notified the affected countries as far back as March 2019 when its review process started. But even if Nigerian officials foreknew, were they equipped to address the issues raised by the US in a timely manner? The issues are far-reaching and even foundational. It implies that Nigeria must revisit an uncomfortable issue that it has ignored for so long. Citizens have heaped blame on the government as they look to rationalize this development. A House of Representatives member has gone as far as suggesting that government agencies that allowed this to happen ought to be punished. Several theories

Rauf Aregbesola, minister of Interior

have been propounded to justify it. Some have said that Nigeria’s passport data is held by 3rd party actors, and as a result, seamless information sharing with the US has been hampered. Other more conspiratorial views suggest that this was

‘

the continuation of long running issues stemming from when President Buhari was a military head of state. These views are inaccurate. The discomfiting reality is that the government has been for so long, der-

The Nigerian e-passport booklet is, for all intents and purposes, a tech product. According to Iris Smart technologies, the company behind the epassport, the booklet production constitutes only 20% of the e-Passport project, and the security printing aspect constitutes only 13% of all the components of an e-Passport booklet

elict in its duty of proper record keeping. The minister of information, Rauf Aregbesola, acknowledged this much when he said last Friday that the federal government was working towards better surveillance and intelligence gathering, through digitizing the management and control of the nation’s land borders. In the light of the now rampant internal security challenges, this should have come a long time ago. Nigeria has had very limited knowledge of its own citizens, and this ought to change urgently. But there are glimmers of hope. Examples of stellar work that have been done in the area of digital identity management are Nigeria’s e-passport scheme, and the BVN by Nigeria’s banks. A lot of Nigerians do not realise how robust these digital identity management platforms are. The Nigerian e-passport booklet is, for all intents and purposes, a tech product. According to Iris Smart technologies, the company

behind the e-passport, the booklet production constitutes only 20% of the e-Passport project, and the security printing aspect constitutes only 13% of all the components of an e-Passport booklet. Nigeria’s e-Passport scheme is recognized by the International Civil Aviation Organisation (ICAO) as one of the most innovative globally. In 2009, this recognition was bestowed, and subsequently, Nigeria was appointed into ICAO Technical Committee for Public Key Directory/Public Key Infrastructure Lessons from these two areas should have been learned and deployed in critical areas of public administration like identity management – which has implications for administering social security and maintaining domestic security. This is a long-term project that frankly should have started ages ago. And ignoring this task has resulted in poor outcomes such as the huge gap in our national database.

Wednesday 26 February 2020

BUSINESS DAY

BANKING Not all CBN’s policy changes help banks make money

LAPO engages customers on cancer sensitisation campaign

Stories by HOPE MOSES-ASHIKE

ast year saw series of policy directives from the Central Bank of Nigeria (CBN) to the Deposit Money Banks (DMBs). But not all the CBN’s changes help banks make money, according Coronation Merchant Bank Limited. Nigeria’s banks spent the second half of 2019 reacting to policy changes aimed at increasing their engagement in the economy. In July 2019, the CBN introduced the policy requirement to target Loan to Deposit Ratio (LDR) at a minimum of 60 percent by the end of September 2019 and later increased it to 65 percent by the end of December 2019. In October, the banks’ corporate customers were barred from buying new Open Market Operation (OMO) bills from the CBN, an action which sent Treasury bill rates and loan rates tumbling. “The desired effect was achieved, because the private sector credit began to grow again after a long period of stagnation,” analysts at Coronation Merchant bank said. Gross credit in the industry grew by N1.9 trillion

between the end of May 2019 and the end of December 2019; channelled primarily to employmentgenerating sectors such as agriculture and manufacturing. This is in addition to increased lending to the retail and SME segments, expected to help boost domestic output growth in the short to medium term in support of the economic diversification agenda of government. The recently announced reduction in card maintenance and fund transfer fees in December 2019, is a negative development the analysts said, especially, in

view of the positive trend in fee and commission income in recent years. In its year ahead 2020 report, titled ‘Re-risking the financial system’, the bank said re-pricing deposits when loan rates are falling is difficult and growing loans rapidly may open the way to increases in Non-Performing Loans (NPL). The banking industry NPLs reduced further to 6.1 percent at the end of December 2019, from 6.6 percent at the end of October 2019. Zenith Bank’s asset quality has remained strong through the years, the NPL

ratio has remained sub 5.0 percent over the last five years and Cost Of Risk (COR) of 1.0 percet annualised for nine months 2019 gives the analysts confidence that the impact of impairment charges on the bottom line will be low at full year 2019 result. Strong asset quality and low impairment charges have resulted in increased retained earnings and a build-up of the bank’s capital base (capital adequacy ratio of 23.8% at 9M 2019). “Given the regulatory minimum LDR of 65 percent effective December 31, 2019, the bank is in a com-

fortable position to grow its loan book without raising additional capital,” analysts at Coronation said. For GTBank, the report said the bank did not grow risk assets in aggregate between 206-2018, but a change in this trend could be seen in 2019e and 2020f. In order to comply with minimum LDR, GTbank will have to grow its loan book by approximately N220 billion (+13.8%) above the 9M number, or reduce its deposits. “If it chooses the former we may see an increase in COR and impairment provisions in 2020f,” the analysts said in the report. According to the report, Access Bank’s asset quality deteriorated upon its merger with Diamond bank. The NPL ratio increased from 2.5 percent in FY 2018 to 6.4 percent in 9M 2019. “If its recent acquisition in Kenya goes ahead, then we think there may be a further slight decline in asset quality in aggregate in 2020f. Therefore, we do not see any substantial reduction in impairment provisions in 2020f”. However, the report noted that Treasury bill rates have fallen so low that several banks are likely to pay dividends much higher than Treasury bill yield, in some cases more than twice the Treasury bill yield.

ift Above Poverty Organization (LAPO) has enjoined its numerous customers and other Nigerians to embrace the culture of regular medical cancer screening as a preventive measure against the infection. Speaking at the 2020 World Cancer Day Campaign organised by LAPO in Benin City, Sabina Idowu-Osehobo, executive director, expressed concern that cancer is now a major cause of mortality in Nigeria with over 100,000 persons diagnosed yearly and about 80 percent die even though over 80 percent of the disease is preventable with early detection. Idowu-Osehobo said the organization initiated the LAPO Community Campaign for Cancer Control (LAPO -C4) project in 2016 towards preventing and mitigating cancer-related deaths in Nigeria through mass awareness creation, screening services for the detection of pre-malignant conditions and building referral linkages for the uptake of medical services. The project is being implemented in collaboration with 13 Community-Based Organizations across Lagos, Edo, Imo, Abuja and Rivers State. She stated that LAPO has created cancer awareness amongst five million community members till date, screened 27,689 community members for the ailment, referred 19,893 for screening with 339 persons with health conditions referred for treatment in government-approved health facilities.

Ecobank reiterates Africa wide network advantage

cobank Nigeria is providing opportunity for exporters and importers within the African region to exhibit their products in a marketplace scenario. The bank will achieve this through its 2020 regional trade forum in Lagos. The forum taking place in March, will be a two-day event with panel discussions by highly experienced and diversified stakeholders and leaders of thought in the industry. Ecobank Nigeria is a member of the pan African banking group with unparalleled Africa wide Network Advantage across 33 countries catering for businesses and providing world class trade services to its customers. The Ecobank

Group network has over 30 years been enhancing the financial integration of the

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continent. The Group provides solutions to facilitate trade in the various trade

corridors and groupings across Africa Announcing the trade forum in Lagos, Sunday Abah, head trade finance of Ecobank Nigeria said Ecobank is using the forum to unveil its comprehensive trade solutions to its existing and prospective customers alike by sharing the various payment methods available to facilitate cross border trade throughout its network across Africa. According to him, Ecobank recognizes the role of exporters and importers in driving economies through trade. “By creating a networking forum for importers and exporters via the trade exhibition slated for the first day of the forum, the Bank extends support to stakeholders in export and import

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businesses. Ecobank’s trade products and solutions are designed around two broad areas: Trade finance which enables customers benefit from adequate and well mitigated credit facilitation in the area of Import finance, export finance, bill discounting, trade loans, distributor finance, structured trade and commodity finance amongst others; also we do Trade Services, which gives our customers the advantage of speedy turnaround time and error free processing of Import Letters of Credit, Import collections, Customs bonds, Export collections and regional trade services amongst others” he noted. Ecobank’s unique intraAfrica trade solutions enable settlements of trade @Businessdayng

transactions and mitigation of payment risk; provide regional solutions and enable exporters obtain payment guarantees without the need for a letter of credit and its related costs to the importer. Ecobank works closely with clients in reviewing key factors regarding transactions processing, settlements, financing, and risk mitigation as well as credit enhancement. The bank boasts of a unique and large Pan-African platform that positions it to support trade at all levels. Its technology platform is designed to help unlock the opportunities of the continent through standardization across 33 countries, while fuelling regional integration, trade and investment across borders.

Wednesday 26 February 2020

BUSINESS DAY

FINANCIAL INCLUSION

& INNOVATION

CBN needs to leverage technology to achieve 80% inclusion target - stakeholders Stories by Endurance Okafor

f 80 percent of Nigeria’s adult population are going to have access to affordable and sustainable financial services by 2020 as projected in the National Financial Inclusion Strategy (NFIS) the central bank would have to leverage on technology, industry stakeholders have advised. Nigeria has about 40 million adult population who do not have access to a basic bank account and according to the World Bank, access to savings account it the first step towards achieving financial inclusion. The Central Bank of Nigeria, however, has a plan to ensure only 20 percent of the country’s population are excluded from the financial net. “What technology does for us and in a market like this is it helps us leapfrog infrastructure challenges,” Dayo Odulate-Ademola, Head of innovation at EFInA said on Monday at the Social Media Week. The 2018 data by EFInA put Nigeria’s financial inclusion rate at 63.2percent, meaning that as much 36.8 percent or about 40 million adults still lack access. If the apex bank is to achieve its objective through the strategy launched seven years ago, it would have to bridge the 16.8 percent inclusion gap before year-end. But the CBN had in a circular on July 2018, lamented that Nigeria was not meeting any of the financial inclusion targets agreed and contained in the 2012 Financial Inclusion Strategy. “To achieve financial inclusion target that the CBN’s inclusion strategy has set up at 80 percent irate by 2020, technology has to play a significant role. What I see technology doing in terms of Nigeria’s financial inclusion is actually

to democratize access, that is the first thing it does,” Wole Adeniyi, executive director at personal & business banking, Stanbic IBTC Bank said. The target by the Central Bank of Nigeria to ensure 80 percent of Nigerian adult have access to financial services by 2020 is unlikely to happen, EFInA, the organization that conducts biennial report on Nigeria’s financial inclusion industry have said. Haven covered Nigeria’s financial inclusion space in the last 12 years, EFInA said the 20 percent exclusion target is unlikely to be achieved as its data shows that Nigeria’s exclusion gap was widening. It said even though its 20218 data showed that more people became financially included the financial inclusion pace was however not matching the country’s population growth rate. “What we saw between the 2016 and 2018 data was that more people were becoming financially included but not at the same pace as the population growth rate which is why the 80 percent target of financial inclusion for this year or conversely the

20 percent exclusion target is unlikely to be met if we are all particularly realistic,” OdulateAdemola said. If the Central Bank of Nigeria is going to beat the projection and achieve its target, it would have to ride on technology as a catalyst, industry experts said. “Inclusive financial inclusion can be achieved through the use of technology,” Uzuma Dozie, the founder and CEO of Sparkle. High poverty rate, lack of identity, illiteracy and closeness to financial service providers are some of the reasons responsible for Nigeria’s high financial exclusion rate. According to Yele Okeremi, MD/CEO of PFS, Nigerians will remain financially excluded because they are financially disempowered. “We still have a large population living below two dollars a day, how do you want to include them financially?” the CEO questioned. The lack of incentive to open a bank account is another reason why the exclusion rate is high in Nigeria, Uzoma said asking why a low income earning Nigerian would want

to be financially included. “What is the benefit, what is the incentive?” The founder added saying “beyond financial inclusion, there is also social inclusion; why do I need a bank account if I can’t afford it?” According to the consumer division of financial services, multinational Citigroup countries that should grow fast in driving financial inclusion through technology (in mobile money) but have faced policy roadblocks include Egypt and Nigeria. “We now flag Nigeria as the market most likely to see rapid growth in the short term as we foresee an industry transformation following regulatory changes that will allow telcoled mobile money models,” New York-based lender said. Telecommunication operators’ push to offer mobile money services in Nigeria received the official nod of the regulator, the Central Bank with the issuance of guidelines for players to apply for the payment service bank (PSB) licence. “The roll-out of Payment Service Banks guidelines that allows licensing of telco

subsidiaries is welcome and should be implemented,” International Monetary Fund (IMF) said in April 2019. About a year and six months after the Central Bank loosened its policy to accommodate new players in Nigeria’s financial services industry; the direction of the mobile money initiative remains unclear. Since October 2018 when the apex bank requested that industry players should apply for the licence to operate as a Payment Service Bank, only three firms; Hope PSB a subsidiary of Unified Payment, Globacom’s Money Master and 9Mobile’s 9PSB have been issued Approval-in-Principle (AIP). A PSB license will allow the companies to among other things; maintain savings accounts and accept deposits from individuals and small businesses, which is covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and prepaid cards, and operate an electronic purse or wallet. According to London based Group Special Mobile Association (GSMA), “from a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers such as Mobile Network Operators (MNOs). Before October 2018, only banks and licensed financial institutions were allowed to provide financial services in Nigeria. Although telecom operators and other Fintech companies indicated interests to operate in the market, the CBN policy would not allow them. The regulator eventually shifted because of the increas-

ing rate of financially excluded people in Nigeria and the lack of progress in getting banks to provide financial services to people living in areas that lack access. Telco-led financial inclusion model in African countries has led to tremendous progress in the number of people with access to financial services owing to the already existing large customer base of the Telcos. Kenya has about 60 percent mobile money service penetration, while Ghana has about 40 percent service penetration, and Nigeria with a lot more population numbers, remains at 1 percent owing to its bank-led model. Ghana’s decision to have a Telco led model resulted in a 73 percent increase in registered mobile money customers in just one year, according to World Bank data, and has helped lift financial inclusion rates in Ghana to 58 percent in 2017 from 41 percent in 2014. This was not different for Ivory Coast who has experienced a mobile money revolution. As a result, there are now more adults with mobile money accounts of 24.3 percent than with bank accounts of 15 percent. Ivory Coast has the fifth highest rate of mobile money accounts in the world behind Kenya (58 percent), Somalia (37 percent), Uganda (35 percent), and Tanzania (32 percent), according to Brookings Institute, a Washingtonbased nonprofit public policy organization. Kenya also improved to 81.6 percent financial inclusion rate in 2017 from 74.7 percent in 2014, Ivory Coast improved to 41.3 percent from 34.3 percent and South Africa increased marginally to 69.2 percent from 70.3 percent. “The new data for 2020 will tell how close to the 80 percent financial inclusion target we’ll land,” Odulate-Ademola said.

He said access to telecom services by distant, isolated, unserved and underserved communities would enable more citizens to embrace a digital financial culture. Executive Vice Chairman, said the Central Bank of Nigeria (CBN) has issued Mobile Money Payment Services license to some mobile network operators to enable them to undertake mobile financial transaction services. He advocated renewed and greater collaboration

between the banking and telecommunications sectors to harmonise the cost of transactions for financial services in an equitable manner. Abiodun Jagun, a delegate of Bill and Melinda Gates Foundation said the foundation requested for the meeting with NCC, to deepen the partnership between the foundation and the Federal Government of Nigeria and to increase citizens’ access to financial resources.

Telcos are best enabler for financial inclusion drive - NCC

he Nigerian Communications Commission (NCC), the regulator of Nigeria’s telecom industry has said telecommunications remains the best enabler in expanding the frontiers of financial inclusion in Nigeria. Umar Danbatta, Executive Vice Chairman (EVC) of NCC made this known recently when he received a team from the Bill and Melinda Gates Foundation (BMGF) in Abuja.

According to him the realisation of the centrality of telecommunication to all aspects of the economy explains NCC’s upbeat in identifying access gaps and in instituting processes for the expansion of telecom infrastructure across the country. “The infrastructure companies (Infracos) have been licensed by the commission to connect fibre from landing ports to the hinterland of Nigeria, especially the 774

local government areas in Nigeria,” Danbatta said during a visit by the Gates foundation’s led by Glenbrooks Partners, to the commission. He was optimistic that the federal government would take a concrete position soon to enable the Infracos to commence operations because “fibre is the real solution to the volume of transactions in the financial services sector.” Danbatta, said 35 million Nigerians have no access to

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telecommunications services and by implication, they lack access to digital financial services, a condition that undermines financial inclusion. He said, “the challenge is caused by the inadequacy of both wireless and fibre connectivity infrastructure. “We need to do more investment in both fixed and wireless infrastructure to enable us to reach our target of at least 80 percent level of financial inclusion in about four years.”

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Wednesday 26 February 2020

BUSINESS DAY

POLITICS & POLICY

Metuh sentenced to 39 years in prison for money laundering Felix Omohomhion, Abuja

Federal High Court sitting in Abuja on Tuesday sentenced Olisa Metuh, a former People’s Democratic Party (PDP) National Publicity Secretary, to 39 years in jail for money laundering and corruption charges. In the judgment that lasted over four hours, Justice Okon Abang sentenced Metuh to seven years on count one; seen years on count two; five years on count three, seven in count four; three years on count five; three years on count six, and seven years on count seven, making a total of 39 years. Metuh, who was convicted on all the seven-count criminal charges brought against him by the federal government, will however spend only seven years in prison. The sentences are to run concurrently. The sentence is to take

effect from Tuesday, according to Justice Abang, the trial judge. The former PDP spokesman was also ordered to forfeit the sum N375million and another N25million to the Federal Government. Delivering judgment on the corruption charges against Metuh, Justice Abang also ordered that his family company, Destra Investment Limited be wound up and all its accounts with the Diamond Bank closed and all the money there-in to be forfeited to the federal government. The court found the former PDP spokesman guilty of unlawfully taking possession of N400 million from the account of the Office of the National Security Adviser (ONSA), domiciled at the Central Bank of Nigeria. Justice Abang held that the money, being a proceed of unlawful activity of the former NSA, Col. Sambo Dasuki (rtd) was expended recklessly to fund the campaign of the

Olisa Metuh

PDP during the 2015 general elections. The Court rejected the claim of Metuh that former President Goodluck Jonathan approved the release of the money to him for the execution of a national assignment bordering on security issue, adding that throughout the trial, the convict did not show

Reps pass bill seeking immunity for presiding officers James Kwen, Abuja

he House of Representatives on Tuesday passed for second reading, the bill seeking the amendment of the 1999 Constitution in order to extend immunity to the Presiding Officers of the legislature. The Presiding Officers are: President of the Senate, Deputy President of the Senate, Speaker and Deputy Speaker of the House of Representatives, Speaker and Deputy Speaker of a State House of Assembly. Titled: ‘Bill for an Act to Alter Section 308 of the Constitution of the Federal Republic of Nigeria, 1999 to extend Immunity to cover Presiding Officers of Legislative Institutions; and for Related Matters’, the bill scaled

through second reading after several debates. According to the sponsor of the bill, Odebunmi Olusegun (APC, Lagos), it is intended to protect the institution of the legislature from distraction caused by unnecessary legal actions against Presiding Officers. In a lead debate on the general principles of the bill, Olusegun said, in spite of the uninterrupted concentration required for carrying out effective legislative duty, the institution has suffered serious distractions in the past. He argued that either genuine or not, such distractions have had serious negative impact on quality of legislation, as well as discouraging presiding officers of the Legislative

institutions at National and State levels from taking the bull by the horns or taking certain critical decisions when necessary for fear of the unknown. “Therefore, for our democracy to continue flourishing, no action meant to strengthen the legislative institution could be out of proportion. Extending immunity to the Presiding Officers of the National and State Assemblies is not a means of shielding them from answering any question generated by their action or preventing members of the House from exercising their powers of choosing or changing their leaders when required as provided for by the laws but a genuine way of protecting the most sacred institution in democracy,” he stated.

any contract document his company entered with ONSA to justify the payment to him. Although Metuh claimed that the money was released to him on the instruction of former President Jonathan, Justice Abang held that the convict abandoned his struggle to invite the former president to give evidence

in his favour, while Dasuki, who was in court as his witness was not of help to him as he requested for time to refresh his memory but never showed up again. The judge also agreed with EFCC lawyer, Sylvanus Tahir, that the convict ought to have reasonably known that the N400 million was a proceed of fraud because there was no contract paper or procurement to justify the release of the money to him. To worsen the situation, Justice Abang held that Metuh, in his claim named several PDP chieftains in attendance when the purported security contract was awarded, adding that no single service chief, who was in control of security of the country was called as witness. Justice Abang also held that the ways and manners in which the N400 million was disbursed by Metuh did not leave anybody in doubt that the public money was recklessly used to fund the

campaign of the ruling party in the 2015 general election. Among others, the judge found as facts that Metuh gave N25 million to Abba Dabo for media advocacy on 2015 election, N21.7 million to late Chief Tony Anenih, N5 million to Kema Chikwe, a former Aviation minister, N31.5 million to Richard Ewedioha, N50 million to Kanayo Olisa Metuh, and another N200 million to Daniel Ford International, while N50 million was also transferred to his wife’s personal account. Justice Abang held that the claim of Metuh that the N400 million was for national security assignment cannot stand in the face of the law in view of the fact that the money was deployed to the political activities of his party. The court also found Metuh guilty of concealment of $2 million cash, which origin was not established throughout the four-year trial of the charges against the convict.

Obaseki, Oshiomhole’s loyalists in war of words over alleged planned protests IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

he crisis in the Edo State chapter of the All Progressives Congress (APC) remains unabated as loyalists of the state Governor, Godwin Obaseki and the National Chairman of the party, Adams Oshiomhole trade words over the alleged planned protests across the state. A statement made available to newsmen in Benin City by Crusoe Osagie, special adviser, Media and Communication Strategy on Tuesday accused the national chairman of the party and members of Edo People’s Move-

ment of plotting sponsored protests across the state. Osagie alleged that the sponsored protests were geared towards inciting members of the public and to cause disaffection in the state in order to slow down the rapid pace of development. But reacting to the statement, Samson Osagie, a former Minority Whip in the House of Representatives alleged that the state government is reputed for sponsoring thugs and arsonists against political opponents. Osagie, a chieftain of the All Progressives Congress (APC), opined that an executive governor governs by law. He alleged that the state

governor, Godwin Obaseki doesn’t govern by law that is why he is running the State House of Assembly with 9 members against 24 legislative members. “Obaseki is the architect of the violence in Edo state. Why will Adams Oshiomhole mastermind such protest? Is he contesting for a governorship position? “We are all card-carrying members of the All Progressives Congress (APC) and his piece of write up should be discountenanced because he is suffering from gross frustration arising from the inability to seek endorsement from Adams Oshiomhole,” he said.

we are trying to create a state police, it is not,” he added. He said that the governor and the parliament requested the Nigeria Police to license the operatives of Amotekun with guns. He urged the pessimist to come to terms with the benefit the creation of Amotekun will bring to the nation. The Aare noted that some statements from some group about the outfit, especially Miyetti Allah Cattle Breeders Association (MACBAN) were provocative. Adams said that the South-

west would remain focus and resist every prompt to react. He said that Oodua People’s Congress (OPC) was feared by most of the pessimists about the outfit. The Aare commended Governor Babajide Sanwo-Olu of Lagos State and the Lagos Assembly for the public hearing on the outfit, saying it was for the good of the Yoruba race. He said that the outfit would feature member of OPC, hunters, vigilante, Agbekoya, Lagos State Neighborhood Safety Corps (LNSC), saying that the LNSC could not do it alone.

‘Amotekun’ to improve Nigeria’s economy - Gani Adams Iniobong Iwok

he Aare Ona Kankanfo of Yoruba, Iba Gani Adams on Tuesday said that Southwest security outfit; codenamed ‘Amotekun’ would lured more investors into the zone and improve the nation’s economy. Adams, who spoke with newsmen after a Stakeholders’ Forum on ‘A bill for a Law to amend the Lagos State Neighborhood Safety Corps Agency Law, 2019 to establish Lagos Amotekun Corps’. The public hearing was or-

ganised by the Lagos State House of Assembly’s House Committee on Information, Strategy and Security headed by Tunde Braimoh. According to him, “Amotekun is welcome development, psychologically it will send signal to the criminals that Yoruba people are ready to maintain law and order and complement the efforts security agencies in Nigeria. “As a matter of fact if SouthWest is well secured, the investors will troop in to the zone and it will an advantage to the economy of Nigeria. If www.businessday.ng

the economy of the country is booming, it is not only the South West that will benefit from it. The common wealth will be shared to other regions.” Adams said that the outfit will give an opportunity for various people in their communities to secure their areas and gather intelligence for the other security organisations and even the government agencies. “Amotekun is not meant to or going to harm any ethnic nationality. Amotekun is not an enemy of non-Yoruba people. The non-Yoruba people have

been residing in Lagos for more than 200 years. “We are not tribalistic and we believe in justice and fair play. We believe that irrespective of where you come from, you are a Lagosians, you are a Westerner in as much that you are not a criminal. “When you are a criminal, you are an enemy of Amotekun; you are enemy of Yoruba land. By the time you are leaving and believing in law and order, there won’t be a problem. “I am telling you categorical, the fear of some people is that

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Wednesday 26 February 2020

BUSINESS DAY

tax issues Significant Economic Presence – A newcomer into the Nigerian Tax Laws Ann Olalere and Oluwatoyin Bello

he famous free encyclopedia, Wikipedia, states that the digital economy is an economy based on digital computing technologies and is perceived as conducting business through the internet and the World Wide Web. Interestingly, the evolution of the digital economy reduces the need for physical presence or ‘face-toface’ meeting to carry out transactions. This disrupts the traditional way of moving goods, capital and labour across borders and thus blurs the tax footprint. It is important to note that the main challenges with taxation of the digital economy is the continual increase in the potential of digital technologies and the reduced need for physical presence in order to carry on business. Secondly, the growth in sophistication of information technologies has permitted companies in the digital economy to gather and use information across borders to an unprecedented level. This raises the issue of how to attribute value created from the generation of data through digital products and services, and how to characterise for tax purposes, the supply of data in a transaction (example as a free supply of a good or as a good with value which can be sold). Thirdly, the development of new digital products or means of delivering services creates uncertainties in characterization of payments for such products and services. All these challenges create issues around when and how the tax authorities will subject such entities to tax i.e. when will they be deemed to have earned sufficient revenue, or how to make the decision on whether they have sufficient economic presence in a particular jurisdiction, to impose tax. In addressing these issues, Nigeria joined 9 other countries in 2019 to recognize the impact of double non-taxation and tax leakages from digital economy, through the introduction of the Finance Act 2019, which was signed into law by President Muhammadu Buhari on 13 January, 2020. The Finance Act introduces the concept of significant economic presence to respond to the challenges of taxation of digital services and the associated loss of tax revenue. The Concept of Significant Economic Presence (SEP) The Organisation for Economic Co-operation and Development (OECD) Report on Action 1 of the BEPS Action Plan – “Addressing the challenges of the digital economy”

proposes a new concept for taxation termed a “significant economic presence”. This was based on one of OECD’s three proposals/options to expand the taxing rights jurisdictions. The options were user participation, marketing intangibles and significant economic presence (SEP). Based on the above, Nigeria adopted the SEP option included in the recently signed Finance Act 2019. The concept of SEP means that a non-resident company would create a taxable presence in a country (when it has a significant economic presence in that country based on factors that indicate a deliberate and sustained interaction with the economy of that country via technology and other automated tools. Factors in determining the existence of SEP The Finance Act does not provide the basis for establishing whether a non-resident company has a SEP in Nigeria. Rather, it provides that Nigeria’s Honourable Minister of Finance, Budget and National Planning (“the Minister”) will determine what constitutes SEP of a non-resident company through an Order. Therefore, we have highlighted some factors proposed by OECD1 that the Minister may consider in coming up with the guidelines to establish the existence of a SEP for a non-resident company (NRC), who carries on digital services in Nigeria. • Revenue-based factors The amount of revenue generated by an NRC is considered as one of the distinct potential indicators of the existence of a significant economic presence in a country. The core element of the revenue factor www.businessday.ng

could be the gross revenue threshold generated from the transactions concluded in Nigeria. The amount should, however, be high enough to minimise the compliance and administration burden and low enough to ensure that sufficient taxes are collected. For example, the European Commission proposed that there is a significant digital presence in a member state if the revenue from providing digital services to users in a jurisdiction exceeds €7 million (approximately N2.3billion ) in a tax period. The Italian government, in imposing its newly introduced Digital Service Tax, also set an annual revenue threshold of €5.5 million (N1.8 billion) within the Italian territory . Also, France introduced a 3percent of turnover as digital tax on digital services conducted in France. This include advertising revenue, commission earned by platforms and revenues from resale of personal data. The French Government targets digital companies with global annual sales of more than €750 million and sales in France of at least €25 million (NGN8.3 billion). Once the revenue threshold is set by the Minister, then digital NRCs who fall within this threshold will be required to register as taxpayers. • Digital factors The use of a Nigerian website address may indicate that an NRC places some significance on its activities in the country. In addition, where the websites are established to include features (such as language, local marketing, local terms of services) intended to facilitate interaction with Nigerian users and customers, then a SEP may have

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been triggered. Finally, the use of local forms of payment by an NRC is an indication of SEP in the country. For example, the integration of local forms of payment into a website’s commercial features is a complicated technical, commercial, and legal exercise requiring substantial resources. Hence, a non-resident company would normally not undertake such an investment unless it purposefully participates in the country’s economic life. • User- based factors It is important to ascertain the level of interaction with the economy of Nigeria, through digital platforms, in order to determine the existence of SEP. Consequently, OECD suggested a range of factors that could be used to reflect the level of participation in the economic life of a country. Examples include monthly active users, online contract conclusion, data collected etc. Monthly Active Users (MAU), according to OECD, refers to the registered users who logged in and visited a company’s digital platform in the last 30-days. The more the number of users, the higher the possibility of a SEP. Another factor in establishing SEP is the number of online contracts concluded through a digital platform with customers resident in Nigeria. Therefore, the number of contracts concluded should be monitored to determine whether an NRC has a SEP in Nigeria. Also, the volume of digital data collected from a country in a year can also assist to determine the existence of SEP, this is regardless of where the data is stored and subsequently processed. @Businessdayng

For example, the European Commission proposed that there is a significant digital presence in a Member State if there are more than 100,000 users of a digital platform or if the number of business contracts for digital services exceeds 3,000 in a particular year. Finally, OECD suggests that the most appropriate means of establishing SEP is a combination of the revenue-based factors and any of the other two factors discussed above. Conclusion The introduction of a framework for the taxation of digital economy in Nigeria is a step in the right direction as this will provide a level playing field for both the traditional brick and mortal stores and digital businesses. It will also ensure that these companies pay their fair share of taxes where economic benefit is derived. It is therefore essential that the threshold set in determining SEP is sufficiently high to safely exclude small cases where profits attributable to a digital presence would not even cover the tax compliance cost for a permanent establishment. In addition, the registration process and compliance administration should not be burdensome to ensure ease of compliance by the MNEs. The Federal Government must also put in place the appropriate infrastructure to track the income generated by these MNEs from Nigeria to ascertain when the revenue threshold is met. The Nigerian Government should also be ready to make the necessary investment in the technology, relevant digital tools and human resources (IT experts) that will assist in ascertaining SEP. Finally, while we wait for the Minister to determine what will constitute SEP in Nigeria, companies that currently play in the digital space may need to clearly delineate their revenue from economic activities in Nigeria to ensure that they can clearly show whether they would qualify to have SEP in Nigeria. Also, Nigerian affiliates of such companies may come under scrutiny when the SEP Order is passed as they may be the reference point for such digital companies with the tax authorities. Similarly, other companies such as banks, financial technology companies, payment service companies, data management, research and intelligence companies, delivery companies etc. who are involved in the value chain for providing digital services may also play a role in the final determination of what constitute SEP in Nigeria. Olalere and Bello are managers at KPMG in Nigeria

Wednesday 26 February 2020

BUSINESS DAY

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Wednesday 26 February 2020

BUSINESS DAY

news Here’s why Nigeria’s economic growth... Continued from page 1

uct expanded at an average

L-R: Emeka Emuwa, chief executive officer, Union Bank of Nigeria plc; Mohammed Adamu, inspector-general of police, and Ibrahim Lamorde, AIG Intelligence, when the Union Bank CEO paid a courtesy visit to the IGP in his office at the force headquarters, Abuja.

Agric crowdfunding at risk of Ponzi schemes... Continued from page 1

as at February 25 this year,

down from 12.94 percent in October 2019, according to FMDQ data. Logically, people are looking for more attractive investment windows, but a pitfall could be near if crowdfunding platforms continue to operate without quick, comprehensive regulation. “I just stay completely away from any investment (especially business) that promises 30 percent and above returns a year,” said Michael Olafusi, a financial modelling and valuation expert. “Even small street sense dictates that if there is nothing fishy, those businesses would rather borrow the money themselves from legal or shadowy sources and keep all those crazy high returns to themselves.” Under the guise of operating crowdfunding platforms for agriculture, the sector may soon become the Trojan horse potential fraudsters and Ponzi scheme operators will use in finding ways to the pockets of unsuspecting members of the public. A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from product sales or the advertised business, and they remain unaware that other investors are the source of funds. Mary Uduk, acting director-general, Securities and Exchange Commission (SEC),

said last week that the commission was planning to introduce some form of regulation for crowdfunding later this year, but introducing these guidelines appear more urgent before any permanent damage is done. As lack of regulation continues to pervade the crowdfunding practice, which has become a multi-billion naira venture, investors fear it is becoming increasingly attractive for unscrupulous elements, making the risks equally higher for the investing public. Recently, a new agric crowdfunding platform offered 50 percent returns in six months for a supposed maize farm. This was particularly worrisome for some people. Even if the company would deliver 100 percent returns in one year, which is more than 15 times the current annual returns from investing in riskfree government treasurybills, there is no regulatory oversight to ensure investors do not lose their funds. While maize could deliver double the returns on investment, this is only possible under specific conditions that are not easily achievable, said Oluwafemi Abioye, CEO, Agric Media, which has investments covering several hundred hectares of agricultural land in Nigeria’s South-West. On paper, he said “corporate farmers promoting an agric investment” may say double or more returns can be possible, but in reality, not always.

Dangote Fertiliser commences pre-testing... Continued from page 2

sugarcane,” Edwin said. Saipem of Italy is the engineering, procurement and supervision (EP) contractor for the project, while Tata Consulting Engineers of India is the project management consultant (PMC) for the project. Already, Dangote Feritiser has started receiving gas supply from the Nigerian Gas Company and Chev-

ron Nigeria Limited under the Gas Sale and Purchase Agreement to supply 70 million standard cubic feet per day (Scf/d) of natural gas to Dangote Fertiliser Limited. Edwin said the Dangote Fertiliser complex, which is sited on 500 hectares of land, has the capacity to expand as it is only occupying a small fraction of the allotted portion. He said the management www.businessday.ng

“These mouth-watering offers are really very risky,” said Amechi Ebeledike, a retiree who has invested with Farmcrowdy, Thrive Agric and recently, AgroPartnerships. “In fact, the last one I invested with AgroPartnership farmfortes has continued to give me sleepless nights at 35 percent for seven months! I’m waiting for the crystallisation early next month before I can have rest of mind,” said Ebeledike, who has so far invested over N60 million through the different platforms. Dare Akinnuoye, a fellow of the Institute of Chartered Accountants of Nigeria (ICAN), said, “The returns are indeed mouth-watering. This is where regulators especially the SEC need to step in.” He explained that when viewed from two perspectives, certain questions determine where regulation should come from. Can the crowdfunded amount be seen from a sense of classical public offers? That is, raising money to do business. “If this is the case, SEC should step in and regulate,” said Akinnuoye, who added that he knows people who invested in some of these platform even though he has personally not. Secondly, he explained that the proprietors of these businesses could argue that this is not an offer to the public. In this case, he told BusinessDay that the Central Bank of Nigeria (CBN) should step in because no unlicensed body can take deposits from the public. “At 30 percent in six months, I am still holding

my breath till I am paid,” said Babajide Olowu, an engineer who said he has invested with AgroPartnerships. “I can confirm today that we are in constant conversations with the necessary authorities who will be responsible for regulating the crowdfunding space,” Onyeka Akumah, founder/ CEO, Farmcrowdy, said in an emailed response to BusinessDay request for comments. “As an innovator in crowdfunding within Nigeria, Farmcrowdy has been carried along concerning a possible roadmap and eventually a sandbox that will regulate the entire fintech space in Nigeria including crowdfunding.” Uka Eje, CEO, Thrive Agric, said his company “started having conversations with SEC last year and that has driven us to exploring a trustee relationship for subscribers’ funds”. Eje, in an emailed response to BusinessDay inquiries, explained that currently, the business structure involves reporting to its equity investors and board (which includes Ycombinator investors in Airbnb, Stripe and Dropbox) alongside this, offering regular farm updates and farm visits to subscribers. In the end, regulation, and a comprehensive one at that, is what investors see putting their minds at ease. “I’m not comfortable with non-regulation,” said Ebeledike, noting he is not comfortable that the incomes are not being subjected to withholding taxes except it is a deliberate waiver policy by government.

of the complex is confident that the fertiliser business will deliver reasonable profit to the company and its shareholders, as it is projected that population growth and the need for food production will jack up the consumption of urea fertiliser beginning from 2020 when production would have commenced in earnest. The current consumption of urea estimated at a dismal 700,000 tons per annum by Nigerian farmers is said to be due to very poor usage and is believed to be the cause

of poor product yield, which threatens food security in the country. By 2020, Nigerian population is projected to increase to about 207 million which would drive the need for increased food production. Estimates say around 5 million tons of fertilisers is required per year in Nigeria in the next five to seven years bifurcated into 3.5 million tons of urea and 1.5 million tons of NPK, while current production levels are at 1.6 million tons as at 2019.

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of 4.59 percent in 2019 from as low as 0.97 percent in the preceding year, pushing up the growth in economic activities. However, only 0.2 percent of Nigeria’s working population are employed in the oil sector and most citizens have no link to the industry, so are unlikely to feel any progress being made in that industry directly. What affects most people directly is growth in the non-oil sector, which is currently not growing fast enough to improve people’s standards of living. The non-oil sector which accounts for about 91.2 percent of Nigeria’s GDP remained flat at 2.06 percent from a 2.00 percent growth in 2018, making a mockery of the much-talked-about Economic Recovery and Growth Plan (ERGP) which focused on further economic diversification and macroeconomic stability and expected to run from 2017 to 2020. The non-oil sector growth target set by the Federal Government in its ERGP has also missed its mark for four consecutive years. The ERGP non-oil sector growth projections of -0.07 percent in 2016, 0.20 percent in 2017, 4.83 percent in 2018, and 4.52 percent in 2019 all fell short of actual figures of 0.22 percent in 2016, 0.47 percent in 2017, 2.0 percent in 2018 and 2.06 percent in 2019. Also, subsectors of the economy which account for a larger share of the country’s GDP and have the power to shoot up economic activities either recorded negative growth, or saw their growth remain flat. Trade, for instance, which accounts for as much as 16 percent of GDP, continued further in three-quarters of negative growth to close the year at 0.38 percent growth, while the construction and the real estate sector dipped further, signposting what analysts say is a lack of structural reforms. “The flat growth shows that the performance of the non-oil sector is still very weak and a reflection of shoddy macroeconomic fundamentals in the broad economy,” said Gbolahan Ologunro, a research analyst at Lagos-based CSL Stockbrokers. Since the discovery of oil in large quantities in the mid50s, Nigeria has been largely dependent on the sector to attract revenue and grow its finances. Despite employing less than 5 percent of its labour force, the oil sector generates over 85 percent of Nigeria’s foreign exchange and 70 percent of the country’s revenue. This has made the country susceptible to external shocks and developments in the oil sector. On the other hand, the country gets less than 2 percent of its revenue from the agricultural sector despite employing well over 40 percent of the labour force. If the agriculture sector, for @Businessdayng

example, grew at the rate of the oil sector, a lot more Nigerians would benefit because that industry employs nearly 50 percent of the country’s working population. “Only a serious country can transit into an industrialised one and achieve very strong productivity,” said Omotola Abimbola, a macro and fixed-income analyst at Chapel Hill Denham. “There are a lot of things that need to be put in place for sectors like agric and manufacturing to succeed because both are very competitive sectors.” Abimbola highlighted structural reforms in infrastructure, human capital developments and land reforms system as major developments that must happen to drive productivity rather than focusing on closing borders and/or boosting credit alone. President Muhammadu Buhari has vowed to diversify the economy away from the oil sector to lift on an annual basis 10 million of citizens out of poverty through 10 years after a lengthy recession greeted his first tenure in office. While the growth could be seen as sporadic going by where the country is coming from (-1.58 percent) after a fall in oil prices and restiveness in the Niger Delta region nearly brought economic activities to a halt, analysts have said a 2.27 percent growth leaves nothing for policymakers to cheer or celebrate about. Their argument appears plausible when Nigeria’s growth lies side by side with other smaller African countries that lack the kind of human and economic potentials which the West African nation has. For the past three years through 2019, Nigeria’s West African neighbour, Ghana has posted an average GDP growth of 7 percent and aiming to hit a growth rate by 8 percent. Also, Rwanda, Egypt, Ethiopia, Mauritius and Kenya all recorded growths of 7.7 percent, 5.03 percent, 9 percent, 3.7 percent and 5.7 percent respectively. Nigeria’s GDP at 2.27 percent is only higher South Africa, whose economy has to a large extent suffered blackouts due to its debt-ridden state utility firm, Eskom. It is also higher than Central African nation and the continents second largest oil producers, Angola, whose economy has been in crisis since 2014 due to a fall in oil prices and high indebtedness by the nation. The Nigeria’s economy is still growing behind its population growth of 3.2 percent making it impossible for the improvement in economic activities to translate into the needed growth that would be all-inclusive. The country is still faced with numerous challenge of high poverty, widening inequality and an unemployment rate that reached an alltime high of 23 percent in the third quarter of 2018.

•Continues online at www.businessday.ng

Wednesday 26 February 2020

BUSINESS DAY

news

African stakeholders mull strategies to combat fake, substandard drugs in continent Godsgift Onyedinefu, Abuja

rominent scientists and stakeholders across 43 countries in Africa are currently in Abuja, Nigeria, over the next four days to map out strategies to combat the menace of substandard and falsified medicine in Africa at the ongoing African Medicines Quality Forum (AMQF). The third annual meeting of the AMQF is being hosted by the National Agency for Food and Drug Administration and Control (NAFDAC) with the theme “2020: Perfect Vision for Quality Medicines in Africa”. Osagie Ehanire, Nigeria’s minister of health, who declared the forum open on Tuesday tasked members to immediately map out continental strategy towards reduction and complete eradication of substandard and falsified medicine in Africa. The emergence of AMQF has given Africa a chance to address the menace, Ehanire said, and called on the Forum to strengthen collaboration among African medicine regulatory authorities and assist member countries in developing capacity and structure to fight the proliferation of substandard and falsified medicines. “I also enjoin AMQF to develop a framework to conduct regular medicine quality survey

across regional and national boundaries, and to provide government with reliable data on distribution of substandard and falsified medicines and also for planning safe health care delivery to our citizens. “I urge AMQF to use this platform to facilitate information sharing on best practices to set conformity assessment standards, provide technical leadership and also serve as an advocacy platform for global visibility of national quality control laboratories in Africa,” the minister said. Also, Mojisola Adeyeye, director-general, NAFDAC, said the aim of the forum was to promote quality control among national laboratories, build and strengthen the capacity of African countries in medicine quality control and regional post market surveillance. “We want to make sure that Africans get the medicine they ought to get,” Adeyeye said. The AMQF is the Quality Control (QC) voice of the African Medicines Regulatory Harmonisation (AMRH). Objectives of the forum include to; complete the roadmap for strengthening National Quality Control Laboratories (NQCL) infrastructure and systems to help make informed, reliable and consistent regulatory decision, draw up proposal for regional/cross-border survey of medicines of public health importance in Africa, among others.

How Africa can tackle rising youth unemployment rate - say ILO, social partners JOSHUA BASSEY

nternational Labour Organisation (ILO) and its social partners have offered an insight into how African countries can reduce rising unemployment rate, especially among the youth population. This is also as Nigeria’s minister of labour and employment, Chris Ngige, warned that Africa could be sitting on a time bomb unless drastic measures were taken to address increased youth unemployment on the continent. At the sixth Africa Social Partners summit organised by International Organisation of Employers (IOE) and hosted by the Nigeria Employers’ Consultative Association (NECA),

… as Ngige warns of consequences in Lagos on Tuesday, the ILO submitted that the number of productive jobs on the continent would have to increase by over 300 million or some 26 million per year, more than doubling the number of existing productive jobs to reach 579 million by 2030. According to Cynthia Samuel-Olonjuwon, ILO assistant director-general and regional director for Africa, around half of the 26 million jobs (13m) required per year in Africa would need to be in form of new jobs to provide productive employment for the large number of net entrants into the labour market each year. Even with the attainment of the above estimates, according to Samuel-Olonjuwon, an ad-

ditional 2.2 million new productive jobs would need to be created annually to eliminate unemployment while approximately 10.6 million productive jobs annually would be needed to eliminate working poverty. This, she explained, will be either by increasing the productivity and incomes of the working poor in their current jobs or by enabling them to move to more productive jobs. “This would mean, in practice, almost trebling the current annual growth of productive jobs of 9.5 million per year (between 2010 and 2017) to over 26 million per year until 2030,” said Samuel-Olonjuwon. On his part, Ngige said efforts towards addressing the

high unemployment figures led the Federal Government to introduce in the N-Power scheme with the sole aim to train and create job opportunities for young Nigerians in various sectors of the economy. The Blueprint for Jobs in Africa, which was adopted by the social partners in December 2015 in Casablanca, Morocco, showed that 63 percent of the African population is less than 25 years old. The Blueprint further showed that every month, at least one million young people on the continent enter the job market. And out of about 73 million jobs created on the continent in the past few years, only about 16 million jobs were grabbed by youth population of Africa which is put at over 200 million people.

IMF MD appoints Sayeh, a Liberian, as deputy MD Onyinye Nwachukwu, Abuja

nternational Monetary Fund (IMF) managing director, Kristalina Georgieva, on Tuesday proposed the appointment of Antoinette Sayeh, a Liberian, as a deputy managing director, effective March 16, 2020. The appointment is, however, subject to approval by the IMF’s Executive Board. “We are welcoming back a dear friend and member of the IMF family. Antoinette is very well known and highly respected, having served as Director of the African Department between 2008 and 2016, where she led a major transformation of the Fund’s relationship with our African member countries,” Georgieva said, announcing the selection of Sayeh. “Antoinette demonstrates a rare combination of institutional leadership, deep analytical capacity, and an unwavering commitment to fairness. I have always been impressed by her genuine care for the well-being of the people we serve and her ability to place them front and centre in our efforts. I personally have known and worked with her for many years in a wide range of positions that she has held. I look forward to working closely with her again as she joins the management team.” Born on July 12, 1958, in

Monrovia, Liberia, Sayeh is a Liberian economist. Sayeh served as the director of the African Department at the IMF from July 14, 2008, to August 31, 2016. Since 2016, Sayeh has been a Distinguished Visiting Fellow at the Centre for Global Development (CGD) and was also the external co-chair for the recently concluded 19th Replenishment of the World Bank Group’s International Development Association (IDA19). Prior to her term at the IMF, she served from January 2006 as minister of finance in the cabinet of former Liberian President Ellen Johnson Sirleaf, the second woman in Liberia’s history to hold that position, the first being Ellen Johnson Sirleaf. As minister of finance in post-conflict Liberia from January 2006 through June 2008, Sayeh led the country through the clearance of its long-standing multilateral debt arrears. Before joining President Ellen Johnson Sirleaf’s Cabinet, she worked for the World Bank Group for 17 years, holding various senior positions. Prior to that, Ms. Sayeh worked in Liberia’s Ministries of Finance and Planning. She graduated with a bachelor’s degree with honors in economics from Swarthmore College in Pennsylvania and a PhD in International Economic Relations from the Fletcher School at Tufts University in Massachusetts. www.businessday.ng

L-R: Vipin Chawla, chief technology officer, Eat’N’Go Limited; Opeyemi Okesola, deputy chief information officer, African Alliance Insurance; Pratik Roy, business group director, security and modern workplace, Microsoft, and Dele Adeyemo, group IT manager, Dufil Prima Foods Limited, during the 2020 Cyber Africa Conference in Lagos, yesterday.

Dolphin Senior High School wins Sahara Group’s #CleanLoveFeb Chess competition SEGUN ADAMS

olphin Senior High School Lagos has emerged winners of Sahara Group’s #CleanLoveFeb Chess Competition organised as part of the energy conglomerate’s ongoing campaign against substance abuse, especially among young people. The competition featured two

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players each from four government owned schools including Dolphin Senior High School, Boys’ Senior Academy, Girls’ Senior Academy and Ebute Elefun Senior High School, all located within Lagos Island. The chess tourney, according to Bethel Obioma, head, corporate communications, Sahara Group, is designed to serve as a platform to inspire young people to look to

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sports, books and educative web portals for recreation and academic excellence. “Chess is a game that stimulates mental alertness and critical thinking. We chose public secondary schools to encourage the students to aspire to challenging for laurels in a game that is considered elitist. The competition also served the purpose of creating awareness on the dangers of substance abuse

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and inspiring these young future leaders to channel their energies into activities that will help them realise their dreams,” he said. At the preliminary stage which held on Wednesday, February 19, 2020, the four schools competed intensely and played skilfully for over four hours before Dolphin Senior High School and Boys’ Senior Academy made it to the finals.

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This is to notify the general public that my surname was wrongly written as Fatai in ARM pension Managers capturing form Instead of my correct surname Jinadu, Fatai Adeshina. All former documents remain valid. General Public should take note.

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I, formerly known and addressed as Olawole Risikat Omolara now wish to be known and addressed as Agboola Risikat Omolara. All former documents remain valid. General public please take note.

Wednesday 26 February 2020

BUSINESS DAY

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Benin storm-water project, others will be completed to improve livelihoods, says Obaseki

do State governor, Godwin Obaseki, has expressed his commitment to completing the Benin stormwater project and other ongoing infrastructural projects across the state to improve livelihoods and engender sustainable development. The governor gave the assurance while inspecting the underground drainage system being constructed at the Ekehuan-Ugbiyokho Road-axis of Benin City, the Edo State capital. The state government is expending taxpayers’ money prudently with a focus on building durable infrastructure, Obaseki said, noting, “This project is money well-spent. We negotiated prudently with our contractors. We are spending Edo tax payers money judiciously and getting greater value to improve the lives of the people. Our focus is to build infrastructure and make life easier, as we are committed to creating an enabling environment for our citizens to prosper. “Our actions are causing pain to some people who in the

past didn’t really see the need of expending Edo taxpayers’ money on massive infrastructure that will benefit majority of the people.” He said the project would be connected to the Benin River Port, noting, “We will take this alignment to Gelegele and do another alignment at the location of the sea port.” He said his government would ensure every part of the state benefitted from the developmental strides being recorded under his administration, assuring that residents in Evbuotubu would also benefit from the massive infrastructural development. “We will certainly move in to Evbuotubu when we are done with the work at Textile Mill Road and here. When I get another term in office, our development strides will continue. Right now, most banks and contractors are reluctant to give us credit and money due to the uncertainty created in the state. This has affected us and we are unable to move as fast as we would have loved to.

AU endorses Nigeria’s Adesina for second term as AfDB president HOPE MOSES-ASHIKE with agency report

he executive council of the African Union has approved Akinwumi Adesina’s candidacy for a second term as president of the African Development Bank (AfDB). The decision was taken during the 36th Ordinary Session of the AU Executive Council held during the AU Summit in Addis Ababa, Ethiopia, 6-7 February 2020. Adesina was elected to his first term as president by the bank’s board of governors at its annual meetings in Abidjan on 28 May, 2015. He is the eighth president of the African Development Bank Group and the first Nigerian in the post. During his first term, the bank’s shareholders approved a landmark $108 billion capital increase in late October. The

increase in the capital base, from $93 billion to $208 billion, signalled strong support from the board of governors in the continent’s foremost financial institution. Adesina is a renowned development economist who has held a number of high-profile international positions, including with the Rockefeller Foundation, and as Nigeria’s minister of agriculture and rural development from 2011 to 2015. The African Union Executive Council comprises 55 ministers of foreign affairs representing the member-states of the Union. In December 2019, the Economic Community of West African States (ECOWAS) also endorsed Adesina for a second term as the bank’s chief. The election will again take place at the bank’s annual meetings in May in Abidjan.

Border closure: Nigeria stands to benefit more from inter-regional trade – Rewane JOSHUA BASSEY with agency report

igeria stands to benefit more from inter-regional trade because we are a bigger country and the largest economy in Africa, as well as in West Africa, Bismarck Rewane, managing director/CEO of Financial Directives Company, said. Rewane said this in Lagos on Tuesday at the event organised by Rotary District 9110 to commemorate the 2020 World Peace and Understanding Day with the theme: ‘Promoting World Pace and Understanding through Food Security.’ Rewane, who described border closure as a temporary measure leading to spike in prices of certain products due to supply gap in the country, stated that it

was in Nigeria’s own best interest to open up the borders in order to dominate those markets. According to Rewane, the border closure would not be definite because the Federal Government would open it again after addressing the concerns it has with the neighbouring West African countries. “We will likely see inflation going up to 13 or 13.5 percent because the current food inflation will be here with us till the next two to three months before Nigerians would begin to see decline in food inflation,” he said. While drawing a line between insecurity and high prices of food, Rewane pointed out that insecurity is not just a northern phenomenon due to insecurity other parts of the country including Niger-Delta. www.businessday.ng

L-R: Hakeem Odumosu, commissioner of police, Lagos State; Lamidi Adeosun, representing chief of Army staff; Amina Shamaki, representing Secretary to the Government of the Federation; Julius Adelusi-Adeluyi, chairman of the occasion; Toki Mabokunje, president/chairman of council, Lagos Chamber of Commerce and Industry (LCCI); Ado Inuwa, representing chief of Defence staff, and Oladele Daji, representing chief of Naval staff, at the 2020 LCCI security meets business dialogue in Lagos, yesterday. Pic by Olawale Amoo

Chances of children flourishing in Africa higher in Egypt than Nigeria Temitayo Ayetoto

o country performs well across all measuretoprotectchildren against dire future, but when juxtaposing among African countries of low-middle-income category, Egypt offers children a better start in life than Africa’s largest economy, Nigeria, according to a report of a Commission convened by the World Health Organisation (WHO), UNICEF and The Lancet. The report, which includes a new global index of 180 countries, tied the performance on child flourishing to measures of survival and well-being, such as health, education and nutrition; sustainability, with a proxy for greenhouse gas emissions, and equity, or income gaps. At 103rd position on the child flourishing ranking, Egypt’s scorecard places it 71 spots ahead of Nigeria. Nigeria grabbed a seat at 174th position among the bottom 10 countries for child flourishing, butcameaheadofEgyptatthe40th position for sustainability index.

Norway, Republic of Korea, Netherlands, France, and Ireland were top five countries that measured up to survival, health, education and nutrition indicators. Although it also remains far behind, Egypt has not kept alms akimbo to stay ahead of African peers. It has managed to build child-friendly cities where the system of governance is committed to implementing the rights enshrined in the Convention on the Rights of the Child (CRC). National commitments are translated into local action, often delivering institutional, legal, and budgetary transformations, the report says. In Alexandria, Egypt, for instance, a child-friendly city initiative launched in 2006 established a coordinating mechanism to strengthen the protective framework for children, resulting in the identification and referral of more than 7,000 children at risk to appropriate services. Helen Clark, former Prime Minister of New Zealand and co-chair of the Commission, says around 250 million children under five years old in low- and

middle-income countries are at risk of not reaching their developmental potential, based on proxy measures of stunting and poverty. She expresses worry that children worldwide now face existential threats from climate change andcommercialpressures,saying “despite improvements in child and adolescent health over the past 20 years, progress has stalled and is set to reverse”. The main outcome of the report points to the inconvenient truth that the health and future of every child and adolescent worldwide is under immediate threat from ecological degradation, climate change and exploitative marketing practices that push heavily processed fast food, sugary drinks, alcohol and tobacco at children. According to the report, evidence suggests that children in some countries see as many as 30,000 advertisements on television alone in a single year, while youth exposure to e-cigarettes advertisements rose by more than 250 percent in the US over two years, reaching more than 24

million young people. Nigerian children are part of five and six year olds sampled in LMIC, who could identify at least one cigarette brand logo. The report suggests that children in countries with weaker government regulation might be at greater risk of advert exposure, citing 2008 report by the BBC suggesting that British American Tobacco, London, UK violated its own voluntary international marketing standards in Nigeria, Malawi, and Mauritius. On the other hand, when children from one of Nigeria’s biggest cities, Ibadan, were asked about health and wellbeing, they cited parental love and presence of complete family as their first priority. Also, Nigerian children and youth often mentioned the desire to participate in cleaning up their local environments, even by clearing brush. But in other cases, children spoke of being beaten or hit in their homes and said this was wrong: “(parents) should not be harsh on them; it is child abuse for small children”.

Experts advocate real sector investment to leverage population growth in Nigeria Endurance Okafor

s prominent personalities and experts continue to share insights and perspectives on whether or not Nigeria’s huge population growth rate is a blessing or a curse to the nation’s economic growth, managing director, Old Mutual Life Assurance, Olusegun Omosehin, has called for more investments in real sector to leverage population growth for economic development. “Nigeria’s huge population of about2001millionpeopleisrather ablessing.Wehaveanactivepopulation that is attractive to investors. People between the ages of 15 and 64 years make up 50 percent of our population,” Omoshein said. These were some of the submissionsatapaneldiscussiondur-

ing the BusinessDay 2020 Nigeria Economic Outlook Conference held in Lagos, recently. According to the panel, a quick takeonexploringthepotentialsofa growingpopulationwouldbeadeliberateeffortbythegovernmentto grow entrepreneurs in the country to address the issue of unemployment and underemployment, particularly among the youth. “Withtherightpolicies,Nigeria canfullyoptimisethepowerinherentinitshugepopulation.Weneed to focus more on youth entrepreneurship and support the growth of Small and Medium Enterprises (SMEs),” Omosehin noted. As an intervention, Omosehin explained that the insurance sector had great potentials of enhancing a viable environment for engagement for the businesses by

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undertaking capital investments, whilealsoimplementingmedium and long term insurance policies, which could support the SMEs. “The insurance sector is capable of accelerating economic growth in Nigeria. According to him, insurance sector needs the right policies to become the backbone of the economy. With the right policies in place, insurance can encourage long-term savings and mobilise funds to finance critical infrastructure deficit in the areasofTransportation,Powerand Housing to accelerate economic growth,” he explained. In his reaction, the Chief Economist, Development Bank of Nigeria, Joseph Nnanna, aligned his position on the propositions and further urged the government to focusoninvestinginqualityeduca@Businessdayng

tion, infrastructure, SMEs and girl child empowerment to enhance development and propel Nigeria for a double-digit growth. The theme for this year’s conference is Nigeria’s Prosperity Ahead 2030: Population, Data, Productivity.OghoOkiti,managing director, BusinessDay Media, had inhiskeynoteaddressemphasised the need for an extensive diversification of the Nigeria economic. Even as the economy of Nigeria advanced 2.28 percent year-onyear in the third quarter of 2019 compared to an upwardly revised 2.12 percent rise in the previous period,makingitthefastestexpansion since the fourth quarter of 2018,asoiloutputgrewthemostin over three years, Okiti opined that reliant on oil might not be sustainable on the long run.

Wednesday 26 February 2020

BUSINESS DAY

news

We need minimum of 1400mw to provide 24 hours power supply - BEDC IDRIS UMAR MOMOH, Benin

anagement of Benin Electricity Distribution Company (BEDC) plc says it needs a minimum of 1400 megawatts of electricity to be able to provide 24 hours power supply to customers in its franchise areas. The BEDC franchise areas are Edo, Delta, Ondo and Ekiti states. Abel Enechaziam, chief state head, BEDC, made the disclosure during the Nigerian Electricity Regulatory Agency (NERC) and the BEDC plc public consultation forum in Benin City. “We need a minimum of 1400mw but what is currently available to us is below between 300mw and 350mw, which is far below what we need to give customers 24 hours power supply,” Enechaziam said. Enechaziam said, as part of plan to address the deficit, the company was partnering embedded companies to generate between 800mw and 1000mw through willing buyers. The BEDC chief state head, who said the company loses about 55 percent of power to the activities of vandals,

electricity theft among others, noted that the company also lost billions of naira to debtors. While assuring of improved power supply in 2020 to customers, he however admitted that the company had not achieved 100 percent in its performance. On his part, Shittu Shaibu, deputy general manager, Customer Complaints Division, NERC, however urged electricity consumers not to pay for the service not render to them by Electricity Distribution Companies (Discos). “Electricity is two side thing; if you don’t get the service, you don’t need to pay for it. If you don’t fuel or repair generator you cannot pay electrician. “But we want as much as possible to ensure that they have what to serve you better. The most critical thing is that they must serve you before they get paid. “First, you have to report to the Customers Complaint Unit, and if you are not satisfied, you take it to the Forum Office and after which, you pass on to the Commission, and your issues will be resolved. It doesn’t matter whether it is metering, whether it is transformer or service delivery.

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Corruption: Financial incentives not sustainable for whistle-blowing policy - Olowo Joshua Bassey

agos State commissioner for finance, Rabiu Olowo, has called for a reappraisal of the policy of financial incentives on whistleblowing, insisting that preventing theft is better than recovery efforts and chasing thieves. Olowo stated this in an address he delivered at the ongoing Institute of Chartered Accountants of Nigeria (ICAN Malaysia District) conference ongoing at Kuching, Malaysia. According to Olowo, while whistleblowing is a patriotic activity and should be embraced by all, it will not be a selfless undertaking if tied solely to material gain. He stated that in more advanced countries like the United Kingdom for example, whistle-blowers were usually motivated by the good of the society, arguing that the policy might not be sustainable in the long run if civic duty was not emphasised. The commissioner raised three pertinent questions in his address: First, “what if those who steal public funds first settle potential whistle-blowers with part of the money, would they still blow the whistle after collecting their own share? “Second, are those who

collect financial incentives actually patriotic or they are seeking for their share of stolen money? Third, should financial incentives be paid before recovery of stolen money or after? What if the monies are not recovered?” He further argued that it might be better to emphasise policies that prevent corruption, in the first instance, than policies seeking to recover funds after they might had disappeared. While financial incentives have led to a sharp increase in whistleblowing cases, there is need for critical analysis and further research to determine the efficacy and sustainability of financial incentives in a country with a norm for corruption, he said. “For instance, financial incentives introduced in the Nigerian case are witnessing a lot of hiccups, arguments, accusations and counter accusations. There have also been several cases of fake whistleblowing as desperate wealth seekers may have turned it into a ‘money making business’,” he said. The current administration in Lagos State believes in effective internal controls and prudent management of public funds, as this is vision of Governor Babajide SanwoOlu, he said.

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Anambra signs MoU with BudgIT to promote fiscal transparency HOPE MOSES-ASHIKE

nambra State government on Tuesday signed a MoU with BudgIT on open budget system that aims to promote fiscal transparency in the state. In a statement made available to BusinessDay, this initiative is with the support of the Rule of Law and Anti-corruption (RoLAC) programme funded by the European Union, being implemented by the British Council in five states - Adamawa, Anambra, Edo, Kano and Lagos. Anambra government went a step further, having signed up to Open Government Partnership (OGP) to finalise its OGP State Action Plan (SAP) 2019-2021, as well as the Anambra State Anticorruption Strategy (ANSACS) and launched both after the signing of the MoU with BudgIT. Over the years, BudgIT, through open alliance, has been at the forefront of a subnational transparency campaign that encourages and supports states to sign up to the OGP, to foster fiscal transparency, access to information, citizens participation and innovation needed for inclusive development and efficient service delivery for its citizens. With the step Anambra has

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taken, it has become the sixth state in Nigeria to have an approved SAP. Gabriel Okeowo, BudgIT’s principal lead, notes that BudgIT is glad to work with the Anambra State government and citizens to achieve a transparent fiscal system by supporting the state with technical resources to make its budget more open, develop citizens’ budget and a webbased feedback mechanism for citizens participation as well as enlist the state on a national web portal (developed by BudgIT) where all states financial documents will be published for increased access and citizen’s participation in the governance process. Anambra is one of the 13 states in Nigeria to sign on to OGP initiative but the 8th state to develop a State Action Plan (SAP). This means that five states are yet to develop or approve a plan that captures the commitments of both Government and citizens to be coimplemented by state and nonstate actors in the co-creation process under the OGP. BudgIT calls on other states to be bold in their commitment to an open and inclusive government that encourages increased confidence in government and foster development at the subnational level.

Wednesday 26 February 2020

BUSINESS DAY

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Persistent maritime crimes have brought enough embarrassment to Nigeria - Peterside AMAKA ANAGOR-EWUZIE

ersistent attacks on ships calling Nigerian ports by pirates and sea robbers have brought high levelled embarrassment to Nigeria, Dakuku Peterside, director-general, Nigerian Maritime Administration and Safety Agency (NIMASA), says. Speaking in Lagos on Tuesday at the reception of the second Special Mission Vessels of the Deep Blue Project for the security patrol on Nigeria’s waterways, Peterside pledged that NIMASA was ready to change the narrative with the acquisition of Special Mission Vessels for fight against maritime crimes. He warned the perpetrators of crimes on the nation’s waterways and the entire Gulf of Guinea region to desist or face the full wrath of the law. Peterside, who was represented by the executive director, Operations of the agency, Rotimi Fashakin, said the de-

ployment of the special intervention vessels on the waters would stop searonnery, piracy, kidnapping and other maritime crimes on the water. “This ceremony aptly brings us near crescendo of our preparations to stop all criminality on our maritime space. This is the desire of President Muhammadu Buhari to have absolute tranquillity on our maritime space,” he said. According to Peterside, armed robbery, banditry and kidnapping have caused embarrassment to Nigeria as a nation. “This is the game changer and is a message to all responsible for illegal activities in our maritime domain that such will cease to happen henceforth,” he warned. He further stated that the vessel came with sophisticated weapons, showing that Nigeria was ready to stop maritime crimes on its waters. “This asset is to bring out our nation from criminal activities. I am glad that finally, and judging

by the sophisticated weapons, I can say clearly that Nigeria is getting ready and as a Nigerian this is a concerted effort that we are ready to change the narrative,” he said. Earlier, Ibok Ete-Ibas, chief of Naval Staff, commended NIMASA for its contribution towards restoring sanity on the nation’s waterway. Represented by Rear Admiral Muritala Bashir, EteIbas stated that the combination of NIMASA and Navy’s asset would bring about a secured Nigerian maritime domain. “The asset acquisition will contribute to the existing maritime architecture because we have realised overtime that an agency cannot do it alone. So, it is in the best interest of all agencies and stakeholders to pull their common resources so that we don’t duplicate effort,” he said. To him, it is a welcome development, even as he congratulated NIMASA for the success recorded in Deep Blue project.

Ogun mulls adoption of tax credit initiative with Dangote Group to fix federal roads RAZAQ AYINLA, Abeokuta

s part of measures to reduce the foreign exchange spent on importation of bitumen asphalt for roads construction, Governor Dapo Abiodun of Ogun State has mulled possibility of engaging Dangote Group of Companies on concrete road construction, seeking to replicate tax credit initiative that Dangote Group applies to Apapa-Oshodi Expressway currently under construction. Recall that Dangote Group, which has second largest cement plants in Ibese in Yewa North Local Government Area of Ogun State, is converting

taxes it supposed to remit to the Federal Government’s coffers to construct several – kilometres of concrete roads in Lagos State and other parts of the country, with a view to fixing critical infrastructure like roads, rail, among others. Speaking at the correspondents’ dialogue organised by Correspondents’ Chapel of Nigerian Union of Journalists (NUJ), Ogun State council on Monday, Governor Abiodun said some of the roads intended to be fixed include Papalanto/Sagamu Interchange road that links Lagos-Ibadan expressway, a road stretch, which Dangote Cement trucks ply on daily basis though di-

lapidated and Ogun State Government is ready to engage Dangote Group to reconstruct on public-private partnership if Federal Government could cede the road to Ogun State. The governor, who spoke through his special adviser on media and public communications, Remmy Hassan, noted that Ogun State government was working towards securing Federal Government’s consent for rehabilitation, maintenance and tolling of reconstructed federal roads in Ogun State corridors through the Public-Private Partnership Arrangement earlier passed into Law by Ogun State House of Assembly.

West Africa Clean Energy and Environment Festival holds September ISAAC ESOWE

he West African Clean Energy and Environment (WACEE) has finalised plans to hold its maiden conference and exhibition in Lagos, Nigeria’s commercial capital. The conference will take place between September 1 and 2, 2020, at the Landmark Events Centre, Victoria Island, Lagos. Since its inception in 2012, the event has been organised in Accra in Ghana, by the delegation from the German Industry and Commerce and in collaboration with the local and international institutional partners. This year’s event will bring stakeholders from the clean energy, circular economy and water sectors together to deliberate on the theme: “The business of Sustainability”. The festival will feature a 2-day conference and exhibition, competitions, workshop, trainings, and open sessions. Through this event, WACEE

’20 will help participants determine whether the sub-region’s desire for sustainable development can be met in an economically feasible manner using practical solutions. Addressing journalist on Monday, Katharian Felgenhauer, a member of the delegation of German Industry and Commerce in Nigeria (AHL Nigeria), stated that “the private sector approached the topic sustainability through ad-hoc and short-lived initiatives in order to comply with regulations or appear to have “green” credentials”. This view is however changing, with more companies adopting a more holistic approach and treating sustainability as a core business issue that is critical for their long-term survival and growth. German companies in Nigeria are also taking up the issue of sustainability, she said. In his contribution, Gbenga Adebija, director-general of the Nigerian German Chamber

of Commerce (NGCC), stated that the ninety German firms in Nigeria have recorded a turnover of $1 billion and employ over 10,000 direct staff. He also stated the Nigeria is Germany largest trading partner in the West African sub-region with a trade volume of €3.5 billion. He further highlighted that a platform like WACEE will help to strengthen the trade relationship between both countries. “With the topic of sustainability gaining prominence in the way companies do business, WACEE’20 will highlight the opportunities for individuals, companies, and governments in West Africa to create value by placing sustainability at the heart of their activities. Adopting sustainable solutions will require a rethinking of the nature of value chains, business processes and consumption to reduce waste and converse resources”, said Godwin Aigbokhan, head, Energy and Environment Competence Centre, AHK Nigeria.

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Wednesday 26 February 2020

BUSINESS DAY

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Wall Street slumps as coronavirus spreads around globe Fresh wave of stock selling after Japan and Italy step up warnings over impact of outbreak PHILIP GEORGIADIS, COLBY SMITH, ROBIN HARDING AND HUDSON LOCKETT

fresh wave of selling pressure rippled across global markets on Tuesday as new evidence emerged about the coronavirus’s spread and Japan and Italy issued warnings on the impact of the outbreak. Wall Street’s three main indices each fell sharply, giving up opening gains on a day that saw investor sentiment swing on a near-hourly basis. The S&P 500 fell 1.3 per cent by mid-morning in New York, a day after it dropped 3.4 per cent in its biggest slide since trade tensions rattled markets in February 2018. US Treasuries rallied, sending the yield on the 30-year bond to a fresh record low of 1.78 per cent. The yield on the benchmark 10-year note fall to 1.32 per cent, just shy of an all-time record low. The losses were heaviest in Europe, where the Stoxx Europe 600 index closed 1.8 per cent down, bringing its declines this week to more than 5.5 per cent. The index, a benchmark of the region’s biggest companies, swung nearly 2.5 per cent between its intraday highs and lows, as traders struggled to price the likely economic disruption from the outbreak. Stocks in Italy, the European country hit hardest with 283 confirmed infections and seven dead, closed down 1.4 per cent, extending losses this week to 6.5 per cent. London’s FTSE 100 fell to its lowest level since February 2019 as it slid 2.1 per cent. The choppy trading came amid

A government panel warned that Japan was at a ‘crossroads’ in the coronavrius outbreak, with companies urged to prepare for more flexible working strategies to cope © Philip Fong/AFP/Getty

concerns over the wider disruption caused by the coronavirus, which has infected more than 80,000 and resulted in over 2,700 deaths worldwide. The health crisis has led to restrictions on how companies operate amid a breakdown of global supply chains. Michael Arone, chief investment strategist at State Street Global Advisors, said investors increasingly believed the Federal Reserve would step in to shore up the US economy to fend off any negative impact on growth and earnings. “Investors believe that [the coronavirus] has accelerated the Fed’s willingness to act,” he said. “History proves that central banks will often

come in to help support markets at times of stress.” Japan had earlier urged companies to adopt remote working, stagger shifts and hold online meetings to reduce the spread of the illness. An expert government panel said there had been 146 infections confirmed in more than 16 different prefectures, excluding cases from an infected cruise ship and Japanese evacuees from China. “We are at the crossroads,” Shigeru Omi, head of the Japan Community Health Care Organization, said at a press briefing. “Local transmission is already going on.” Prime Minister Shinzo Abe asked companies to adopt the new

strategy after his cabinet on Tuesday approved an antivirus plan. Italy warned that the EU should offer flexibility on its budget targets should the coronavirus outbreak in its industrialised northern regions have a prolonged impact on an economy already teetering on edge of a recession. The majority of cases were clustered in Lombardy and Veneto, regions which together make up a third of output for the eurozone’s third-largest economy and about half of its exports. In Tenerife, authorities put a hotel with hundreds of guests and staff under quarantine after an Italian doctor staying there tested positive. Switzerland also reported its

first case, a pensioner who had visited Milan. Iranian health officials said 95 had tested positive for the disease and 15 people had died in the country, the highest number of coronavirus deaths outside of China. The high mortality rate has sparked concerns that Iran is struggling to contain the outbreak and prompted neighbouring countries to impose border restrictions. Among those infected is Iran’s deputy health minister. A spike in cases in South Korea, where authorities say nine people have died and there have been 893 confirmed infections, prompted officials in Washington and Seoul to consider scaling back joint military exercises. US officials also raised the travel warning to South Korea to its highest level, warning Americans against all but essential travel to the country. The expert panel in Japan recommended changing its strategy of keeping the infection out altogether to containing it and slowing its spread. It no longer made sense to test everybody who might have been exposed to the virus, they said, as doing so would overwhelm the healthcare system. Instead, Japan was asking anybody who felt ill to isolate themselves and said they should only seek medical help if they suffered severe symptoms. “The biggest objective of our response from this point should be to control the speed of the infection’s spread and minimise the number of deaths and people with severe symptoms,” the panel said. It also said that the next one to two weeks would be decisive in preventing the spread of the virus.

EU and UK stake out positions for Brexit trade talks Brussels warns Britain not to backtrack on Northern Ireland protocol JIM BRUNSDEN AND GEORGE PARKER

he EU has told the UK that talks on a new trading relationship will be scuppered unless the country honours commitments to put in place checks on goods moving between Britain and Northern Ireland. As European affairs ministers signed off their negotiating mandate for talks with the UK, due to start next week, they warned Boris Johnson’s government that they will grind to a halt unless Britain fully implements the Brexit deal that the EU and UK agreed last year. Mr Johnson broke the deadlock with the EU last October by agreeing a new plan for Northern Ireland that places the region in both the EU customs union and the UK’s customs territory, replacing the controversial Irish backstop, hated by hard Brexiters in the UK who

feared it would keep Britain in the EU’s orbit indefinitely. Instead of a hardening of the border on the island of Ireland, the new protocol places a customs and regulatory border down the Irish Sea. But Brussels was alarmed by comments from Mr Johnson during the UK’s December election campaign that checks would not be needed on trade between Britain and Northern Ireland. EU concerns have been heightened by reports at the weekend that the UK is looking for ways to minimise checks. Arriving at the ministerial meeting in Brussels, Germany’s Europe minister Michael Roth said: “My message is crystal clear to our friends in London, keep your promises based on the protocol.” Ireland’s foreign minister Simon Coveney went further, and said: “The implementation of agreements that have already been struck are the test of good faith and trust. www.businessday.ng

“If there is not progress on the infrastructure needed to implement the Irish protocol as part of the withdrawal agreement in the next few months, then I think this is going to be a very worrying signal for whether or not it’s going to be possible to conclude something sensible before the end of the year.” The adoption of the mandate means that the EU is ready to begin what Brussels expects to be a brutally difficult negotiation with Britain. On Tuesday senior ministers signed off Britain’s negotiating mandate for an EU trade deal, with Downing Street saying it hoped it would pave the way for “constructive” talks beginning next week in Brussels. Number 10 said Britain would seek a deal “based on other existing free trade agreements between the EU and like-minded sovereign nations”; the EU’s trade deals with Canada, Japan and South Korea have previously been cited as models.

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The UK negotiating mandate was agreed by the “XS” cabinet committee — senior ministers led by Mr Johnson overseeing the trade talks — and will be published in parliament on Thursday. Downing Street confirmed that negotiations with the EU would take place in Brussels and London, with talks in the British capital expected in mid-March. Meanwhile, Mr Johnson and his ministers are studying the EU’s negotiating mandate amid fears in London that the EU27 countries are making excessively onerous demands. The EU’s mandate underlines that Britain will have to agree to uphold a “level playing field” of common rules in areas such as environmental policy, labour law and state aid in exchange for a tariff-free, quota-free trade deal. The final version of the text says that Britain will have to commit to keep its own rulemaking broadly @Businessdayng

in line with EU regulations as they evolve “over time”. The UK has firmly rejected such demands as an affront to the country’s sovereignty. French Europe minister Amélie de Montchalin warned Britain that it must also give ground on fishing rights if a trade deal is to be reached this year, saying that the EU will not “cede to time pressure” in the negotiations. Ms Montchalin told reporters that Paris would have “absolute vigilance” when it came to the talks on fish, saying that the issue was part of a set of core set of concerns for Paris that also include “the conditions of fair competition” between the EU and UK and the governance of any deal. “It’s important to be clear . . . that we will not cede to the pressure of the calendar, that we will not make little arrangements, or compromise our principles,” Ms Montchalin said. “We should be very firm on the route we are going to take.”

Wednesday 26 February 2020

BUSINESS DAY

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Activist Edward Bramson urges Barclays to end ‘cycle of disruption’ Letter to investors comes after investigation of Epstein links to chief executive Jes Staley DAVID CROW

dward Bramson, the activist investor targeting Barclays, has called on the bank’s chairman to end the “cycle of disruption” at the lender after British regulators opened an investigation into the relationship between its chief executive and Jeffrey Epstein. In a letter to his investors, Mr Bramson said the Epstein probe was “another example of governance weakness that has led, inevitably, to the recurrent public disappointments and embarrassments which have plagued Barclays for so long”. Mr Bramson sent the letter, which has been seen by the Financial Times, to shareholders in his Sherborne Investors vehicle last week, shortly after the bank revealed that chief executive Jes Staley was being investigated over his characterisation of the relationship with the deceased paedophile financier. The investigation by the Financial Conduct Authority and the Bank of England’s Prudential Regulation Authority is focused on whether Mr Staley downplayed his relationship with Epstein by characterising it as professional, according to multiple people briefed on the probe. It is the second time that Mr Staley has faced a regulatory enforcement investigation. The latest probe comes less than two years after he nar-

rowly kept his job following a whistleblowing scandal, which resulted in him being fined £640,000 for twice trying to reveal the identity of an anonymous whistleblower. Mr Bramson stopped short of calling for Mr Staley to be fired, but said he hoped that the bank’s board would take “these matters seriously”. He also urged Nigel Higgins, Barclays’ chairman, to “indicate what long-term governance changes the board will make to end this cycle of disruption”. Earlier this week, the FT reported that Barclays was preparing to start the search for a

chief executive to succeed Mr Staley, who is planning to step down next year. Spokespeople for Barclays and Mr Bramson declined to comment on the letter. Sherborne Investors and other funds managed by Mr Bramson are collectively the second-largest shareholder in Barclays, according to the letter, which was first reported by Bloomberg. The activist controls about 5.5 per cent of Barclays shares, according to one person briefed on the holdings. The missive is the latest salvo in the battle between Barclays and Mr Bramson, who first

invested in the bank in 2018 before agitating for the company to restructure its low-returning investment bank. Last year, the activist investor was heavily defeated in his attempt to secure a board seat, which he wanted so he could push the bank to scale the unit back. Mr Bramson renewed his criticism of Barclays’ investment bank in the letter, arguing that it produces “such low returns” that its other businesses — UK retail and consumer credit cards — are unable to bring the lender’s overall profitability “anywhere near to its cost of equity”.

It follows a period of uneasy truce between Barclays and Mr Bramson, who dialled down his attacks after his board seat setback, saying he wanted to give Mr Higgins some time to turn the bank around since he took his position a year ago. However, Mr Bramson signalled that he intends to revive his attack on the bank. “It has been roughly a year since we had a meeting with the chairman, Mr Higgins. We have requested another meeting with him, as he has now had several quarters of results from which to devise remedies for the strategic weaknesses,” he said.

Saudi Arabia’s former energy minister returns in cabinet reshuffle Khalid al-Falih to lead a new government ministry for investment

tourism and human resources as well as new government appointments. halid al-Falih, who was Until last year, Mr Falih was removed from his position one of the highest ranking officials as Saudi Arabia’s energy in the kingdom. An oil industry minister last year, has returned to veteran for decades, he oversaw a lead a new government ministry Saudi super-ministry that stradfor investment as part of a cabinet dled energy, industry and mining. reshuffle announced on Tuesday. But his inability to deliver The state news agency pub- a rapid overhaul of industrial lished a series of royal decrees strategy and a cautious approach that also announced the creation to the stock market offering of of new ministries for sports, Saudi Aramco - much sought AHMED AL OMRAN AND ANJLI RAVAL

after by Crown Prince Mohammed bin Salman - were among reasons he fell from grace in a dramatic fashion. Within a few days in September he lost a series of positions including his role as the head of oil policy and the chairman of the state energy giant, moves that revealed the ruthless nature of governance in the kingdom. The new investment ministry that would oversee, regulate and promote foreign flows into

the kingdom replaces the Saudi Arabian General Investment Authority. Saudi Arabia has sought foreign investment to help diversify its economy and end its dependence on oil revenues. How Mr Falih’s new ministry will work alongside the kingdom’s Public Investment Fund is unclear. The PIF, which has invested in companies such as ride-hailing app Uber and space tourism company Virgin Galactic, has un-

til now been Prince Mohammed’s chosen vehicle to lead economic reforms. But it has come under fire as these big ticket investments have yet to yield the kinds of returns that will meaningfully shift the country away from hydrocarbons and generate millions of jobs Saudi Arabia needs. In one decree it was announced that the media minister Turki al-Shabana would be removed from his position after less than 14 months on the job.

Wednesday 26 February 2020

BUSINESS DAY

ANALYSIS

A decade on, did Man Group’s $1.6bn bet on GLG pay off? The deal created a hedge fund giant but the transformation did not go as planned LAURENCE FLETCHER

n spring 2010, two of the most powerful figures in the European hedge fund industry unveiled one of the biggest deals in the sector’s history. Peter Clarke, the chief executive of Man Group, and Manny Roman, co-CEO of GLG Partners, announced that Man Group would buy GLG for $1.6bn. The contrast between the two groups was striking. Man Group was a quantitative investing specialist with a button-down culture. GLG had plenty of high-profile and high-earning traders whose uniform appeared to be jeans. But the merger thesis was simple: Man Group wanted to add discretionary hedge fund strategies — where manager skill is relied upon — to its portfolio of predominantly quant funds, which depend on complex algorithms programmed by teams of PhD scientists. Sales of Man Group’s lucrative structured products linked to its flagship quantitative strategy, AHL, were rapidly drying up. Its fund of hedge funds business had been left reeling after it was found to have invested with fraudster Bernard Madoff. And AHL itself was volatile: after a jackpot year in 2008, it suffered a large loss the following year. GLG, it bet, would bring a steadier, and different, source of profits. A decade on and the deal has transformed Man Group, just not in the way that its architects had envisaged. GLG’s value has been written down by more than $1bn, confirming the fears of some investors who always warned the price was too high. Performance has at times flagged, notably in 2014 and 2016. Yet GLG provided the next generation of Man Group’s exec-

utive management team, which has, ironically, turned its back on star managers and driven deeper into quant investing. Man Group’s current chief executive Luke Ellis, who arrived with GLG and was a close ally of Mr Roman, said recently the industry would no longer rely on “Masters of Mayfair”, referring to the upscale London district where star traders have traditionally worked. Man Group is Europe’s largest hedge fund manager and under its ownership, GLG’s assets have grown from $23.7bn, at the time the deal was announced, to $33.5bn, although they have shrunk slightly in the past two years. Much of the asset growth has come in long-only funds, which tend to command lower fees than hedge funds, and have benefited from the bull market of the past decade. “Back in 2010, the Man-GLG merger was seen as the embrace of two struggling giants that had a great future behind them,” said Amin Rajan, chief executive of consultancy CREATE-Research. Since then GLG’s “star culture has withered on the vine”, he added. Nonetheless, Man Group’s products have expanded, it is using quant processes across its whole business and its client base has changed markedly. Mr Rajan said: “Its transformation has confounded the sceptics. It has followed a trajectory that few expected at the time.” Man Group hasn’t been able to emulate the success of the large multi-strats that rely upon a very developed risk-controlled approach to generating returns Jim Neumann, Sussex Partners In the past decade, Man Group has grown its quant business substantially, with funds that now rank among its top performers. It has raised billions

of dollars from clients for its long-only funds, and four years ago further diversified its asset base by adding a private markets business that focuses on real estate and direct lending. The profound changes at Man Group, which reports its full-year results on Friday, mirror how the wider $3.3tn hedge fund industry has also evolved. An industry that once ran money for rich individuals and was dominated by highly-paid stars has become a lower-fee business that manages money for big institutions whose risk appetite is less tolerant of the big investment bets of the past. The famous GLG traders such as Greg Coffey, Philippe Jabre and Pierre Lagrange have long since left. “Things are very different to 10 years ago,” said Mr Ellis. The use of quant has “increased remarkably” in the past decade, notably in trade execution. “Trading has gone from being people hollering down phones […] to computers doing things with other computers,” he added. Man Group’s reboot was kicked off by Mr Roman, a former Goldman Sachs partner who succeeded beleaguered Mr Clarke as chief executive in 2013, after a testing period of client withdrawals and poor performance at AHL. Despite attempting to diversify through the GLG acquisition, Man Group was in trouble: its shares, trading above 300p in early 2011, had slumped below 70p by summer 2012. Mr Roman embarked on sweeping cost cuts and appointed Mr Ellis as the company’s president. Sandy Rattray, another former Goldman employee and co-creator of the Vix volatility index, became head of AHL. That helped the division diversify into new strategies, beyond its staple of following market trends, and

into new, untapped markets. “There was quite a lot of rethinking of the business that needed to be done in the first year or two when we got here,” said Mr Ellis. “The move to increasing the proportion of quant was conscious,” he added. “We definitely re-engineered what AHL was about, and we re-engineered what GLG was about. We’ve broadened out the content for both.” Over the past decade, AHL’s assets have surged by 40 per cent to about $30bn, reflecting increased investor demand for computer-driven funds. After disappointing returns from some of the industry’s best-known discretionary traders, clients have turned to quant funds. Their various techniques include spotting market patterns or using artificial intelligence to scour satellite imagery and credit card data for trade ideas. Like many of the big hedge fund firms that have survived over the past decade, Man Group has pivoted its business away from investors such as funds of funds and wealthy clients — many of whom became disillusioned with the sector after the financial crisis — in favour of pension funds, insurance companies and other big institutions. But these inflows come at a cost. Institutions tend to bargain harder and pay lower fees. Since 2014, Man Group’s management fee margins have dropped by more than a third. “The criticism of taking on institutional business is that it’s lower fee,” said Mr Rattray, now Man’s chief investment officer. “Well, it might be, but it feels very sticky. It’s slow to come, but often it’s going to be with us for a long period of time.” Mr Rattray also does not agree with Leda Braga, founder of quant hedge fund rival System-

atica Investments, who has described the sector as “very low margin”. “This is a high-margin industry, it just is, by [comparison with] almost any other industry,” he said. Regardless of the rebound in Man Group’s quantitative division, some investors believe that the GLG acquisition represents a missed opportunity. GLG’s performance has been patchy and its star has faded. This is in contrast to US multi-strategy firms such as Ken Griffin’s $30bn manager Citadel and Izzy Englander’s $40bn Millennium Management, which have gone from strength to strength since the financial crisis. Man Group is publicly listed and rivals say it faces tough competition for talent from large unlisted hedge fund groups that operate outside the scrutiny of public markets and can offer higher pay packages. “Man Group hasn’t been able to emulate the success of the large multi-strats that rely upon a very developed risk-controlled approach to generating returns,” said Jim Neumann, partner at Sussex Partners, which advises clients on hedge fund investments. Mr Ellis said GLG had been successful in attracting talent and said the fact Man Group was listed makes “zero” difference to its ability to attract the best traders. He said fund managers at GLG had the opportunity to have a career and can run their own funds. “If somebody wants maximum short-term compensation there are other people who will pay more than we will,” he said. But “you will be out the door very quickly at the moment you have a small drawdown [loss].” While rival firms “pick the odd one from us”, said Mr Ellis, “we’re doing very well [in the battle for talent]. We get the people we want to.”

Wednesday 26 February 2020

BUSINESS DAY

PRIVATEEQUITY &FUNDRAISING

CBN flags off long-term naira contract and PE players have these to say MICHAEL ANI

he move by the Central Bank aimed at providing a longterm naira contract for investors to hedge funds against a devaluation is a step in the right direction, however, the challenge of dollar scarcity persists, fund managers and private equity investors (PE) have said. The move would provide investors with the right naira pricing that would prevent their investments from eroding in the wake of currency devaluation, but getting dollars to exchange for the naira is always the problem, they said. “Yes, it is a good initiative in terms of the pricing and the ability for investors to hedge against currency risk but one significant thing that PE firms still consider is that signing into the contract still means they are taking the CBN risk,” one Lagos-based fund manager who manages money for over 100 foreign investors said. In a bid to attract more foreign inflows, shore up its dwindling dollar reserves and prevent the currency from weakening, the CBN on Thursday last week introduced longer-term contracts on the naira.

Godwin Emefiele

The financial regulator offered naira-futures contracts for five-year settlement for the first time, priced at 379.81 nairas to the U.S. dollar. The longest tenor before this move was a 13-month contract, which the central bank has offered for more than a year. This implies that forty-seven (47) new monthly OTC FX Futures contracts, in addition to the

existing thirteen (13) contracts have been introduced from February 13, 2020, bringing the total number of open OTC FX Futures contracts at any point to sixty (60). The contracts trade on the FMDQ OTC Securities Exchange. Although the introduction of the longer-term contracts on the naira holds big implications for investors particularly

private equity players and fund managers who manage dollar funds in local currencies, as they have raised red flag of currency devaluation as being their biggest threat in 2020, but can now hedge against such for more than a year yet there are concerns that in the wake of a devaluation, there would be naira looking for dollars to exchange with. Their fears arose from a 2016 scenario where the country suffered an acute dollar shortage owing to a fall in oil prices that followed with a five-quarter of negative growth. At that time, foreign investors searched for dollars to exchange with their naira but barely found any. This spiked inflation to a record high of 18 per cent and made investors pay as much as N500 to get a dollar in the black market. It was not until the Central bank established the Importers and Exporters (I&E) window before investors found comfort. “What the CBN does in FX futures is that your settlement is in Naira however one still have to find dollars then, as the apex bank is not obliged to provide dollars,” one investment banker who doesn’t want name mentioned due to the sensitivity of the matter told BusinessDay.

“Now today, there isn’t a dollar crisis hence one can get dollars, but if there is a run on the currency, one of the things that would happen is that dollars would become scares hence an investor will be sitting down with his naira looking for dollars to exchange with,” the person said. The person noted that the issue of dollar scarcity is what makes private equity players prefer to hedge externally. Pricing at the international market hovers around 395, signalling a huge margin differential between what happens outside and what exit inside in terms of hedging against currency devaluation, however, most PE About four years ago, the Central Bank introduced the naira settlement OTC FX futures to stabilize the market by bringing comfort to investors who had a bad time for their investments after rates where moved from 198-363. Players still prefer to hedge externally since they would have enough dollars at their disposal, the person said Since its inception, about $36 billion worth of contracts has been traded with about $26 billion of the amount settled. Some $10 billion worth of contracts are still outstanding.

How Blockchain can help African start-ups raise funds LUKAS HOFER

frican start-ups struggle to attract funding, mainly because the market lacks liquidity. Blockchain could help investors to realize exit opportunities, which in turn creates a broader funding market for start-ups. African start-ups raised a record $1.34 billion in venture capital funding last year, compared to just under $200 million in 2015, according to media firm WeeTracker. Despite the impressive growth rate, African start-ups still struggle to attract funding. Lack of exit opportunities: Investors hesitate A major challenge for investors in Africa is the lack of exit op-

portunities. “It is easy to invest money in Africa right now, but it is hard to make money in investing here. The key is to be exit centric — we only invest in entrepreneurs who are focusing on building sustainable businesses that can exit,” says Ben White, CEO of Venture Capital for Africa (VC4A). Traditionally, venture capital investors look at three major exit avenues: IPOs, mergers and acquisitions. But each of those requires that a company achieves a reasonable level of growth. In Africa, however, it often takes more time to reach this growth, in particular for tech start-ups, as the ecosystem is not yet well-developed. Thus, other investments might achieve higher returns – the Central Bank of Nigeria’s Open Markets Op-

erations Bills currently returns about 15 percent per annum. Both investors and start-ups need a more liquid equity market. “One of my key thesis is that if we have more secondary markets in Africa that allow earlystage investors to get liquidity, we will be able to recycle funds within the ecosystem,” said Yele Bademosi, Director at Binance Labs and founder of Nigeriabased angel investment firm Microtraction. Token-based financing to tackle the liquidity challenge That’s where blockchain-based financing can help. It can increase market access for earlystage start-ups and create a secondary market for investors to resell their initial investments.

“There is an opportunity to create our own funding infrastructure using blockchain to issue security tokens or hybrid tokens,” says Bademosi. One example is Malta-based equity crowdfunding company Bloomio, which has built such a blockchain-based infrastructure to help startups raise early-stage capital in exchange for security tokens. After the seed round, investors can trade on blockchainpowered secondary markets. Some African startups have already started using Bloomio. “Blockchain-powered equity crowdfunding can open up access to emerging tech startup hubs like Nigeria, South Africa and Kenya to a new set of investors,” said Bloomio’s CEO Maxim Lyadvinsky. “Investors who are looking to diversify

their expected profit-risk levels can now access vetted startup opportunities.” Moreover, as most funding in Africa comes from sources outside of Africa, the global reach of token-financing can help to connect international investors and domestic entrepreneurs. With security tokens, it becomes relatively easy to invest everywhere in the world. The blockchain revolution is yet to come in Africa. Although there were some high-profile ICOs such as Golix, a crypto exchange based in Zimbabwe that raised $23 million in June last year not that much has happened on a larger scale. However, the potential for token-based financing in Africa is enormous, and the first milestones have been achieved. Way to go!

BusinessDay PRIVATE EQUITY & FUNDRAISING (Team lead: LOLADE AKINMURELE - Analysts: MICHEAL ANI, ... Graphics: DAVID OGAR ) Businessday’s Private Equity and Fundraising section is a weekly publication that provides in-depth analysis on private equity trends and tracks deal activity in Nigeria.

Email the PE & F team loladeakinmurele@gmail.com

Continues on page 34

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here is a critical role traveling beyond a place where people are used to plays in the education of young people, says experts. The experts were speaking on the second day of the ongoing Social Media Week Lagos, at a session tagged 'The Value of Nigerian Cultural Economy for Travel'. Nigeria has one of the most diverse cultural heritages in Africa and the world. It is shaped by the country's multiple ethnic groups. Nigeria has over 521 languages and over 1150 dialects and ethnic groups. The four largest ethnic groups are the Hausa and Fulani who are predominant in the north, the Igbo who are predominant in the southeast, and the Yoruba who are predominant in the southwest. The Edo people are predominant

in the region between Yorubaland and Igboland. Much of the Edo tend to be Christian According to the experts, the country offers tremendous opportunities for educating young people, but decried that many of them hardly get to see the wealth of cultural heritage the country possesses. Beyond traveling within the country is the need to expose young people to other places outside the country. Prisca Omenai, a travel expert said traveling was beyond going on vacation. "We need to take our children traveling. And go beyond regular vacation or just going to London and lodging in your family house or doing the same things they do back home," she said. She emphasised that traveling is educational hence young people need to be allowed to experience the culture and the place.

Emeka Okocha, CEO of Nothing to Do in Lagos, described it as creative tourism. Creative tourism is defined as the type of tourism which offers visitors the opportunity to develop their creative potential through active participation in courses and learning experiences, which are characteristic of the holiday destination where they are taken. "Creative tourism is not far fetched. It is as simple as looking at things already in your environment and adding your personal, creative tweak to it," said Okocha. Part of the benefit of creative tourism is that it helps to preserve both tangible and intangible values. It helps to preserve the local heritage, creates work places for locals, contributes to the improvement of local economy through income to local residents, and is highly sustainable Ojomai Ochai said there was a need to be flexible with the definition of culture. "In Nigeria, we often tend to refer to culture as the things our forefathers did. But that is wrong. That is heritage. Culture is what we do now, how we live." said Ochai.

as positive impact could be a better selling point for private sector investors. 54Gene which has benefitted from impact investing needed to be seen as a money making business making a positive impact to be attractive to investors. The IIF and Ford Foundation report also acknowledges that most of the capital available in the market seeks commercial returns, thereby posing significant challenge in driving blend-

ed finance. Hence there is a need for further incentivization to entice investors to accept more below-market returns. “Companies shouldn’t depend on impact investors, they should focus more on being impact companies that will attract the interest of investors,” Ene-Obong said. However, for companies unable to mark the line between charity and profit making, Adesuwa Ighile,

representative of Innocent Chukwuma the Regional Director, West Africa Ford Foundation said the foundation still deploys capital with little or no expectations on returns on investment. According to Adesuwa Ighile, representative of @ FordFoundation W/Africa regional director, Innocent Chukwuma, Ford foundation deploys Capital with little or no expectation on returns on Investment.

FRANK ELEANYA

xperts have said that private sector involvement is critical to a sustainable impact investing capital for Nigeria and the rest of Africa. Hence there is a need to reposition impact investing to incentivize and attract more private investors. A study conducted by Impact Investors Foundation (IIF) and Ford Foundation have found that the impact investing market grew from $1.9 billion in 2015 to $4.7 billion in 2019. The report defines impact investing as investments made into companies, organisations, funds, with the intention to generate social and environmental impact alongside a financial return. While almost all the investment (81%) came from Development Financial Institutions (DFIs), the private sector has largely shown reluctance in tapping into the burgeoning market. Apart from DFIs, in Nigeria the burden of social impact projects are mostly borne

by the government. Speaking during the BusinessDay session on Impact Investing & Funding SDGs in Nigeria at the ongoing Social Media Week, Maryam Uwais, special adviser to President Muhammadu Buhari on Social Investment, said getting private sector participation in government’s social programmes has remained a challenge. “The private sector wants to see immediate return on investments but social enterprise takes time. We need to develop the economic value chain of these enterprises before bringing in the private sector,” Uwais said. A better approach could be by broadening the scope of impact investing and deemphasising the concept as mere charity, says Professor Olayinka David-West, Academic Director, Lagos Business School. In this case, the emphasis should be about what impact is the investment going to create. “To achieve the SDGs, we need interventions. Inter-

ventions cost money. And these interventions must be sustainable even after the funding stops.” David-West said. Abasi Ene-Obong, CEO, 54Gene agrees that the intent to make profit as well

L-R: Lehle Balde, senior associate, BusinessDay/moderator; Maryam Uwais, special adviser to the President on social investments; Sam Nwanze, chief investment officer, Heirs Holdings; Adesuwa Ighile, representing Innocent Chukwuma, regional director, West Africa, Ford Foundation; Olayinka David-West, academic director, Lagos Business School (LBS), and Abasi Eneobong, founder/CEO, 54gene, after the BusinessDay special panel session, at the Social Media Week in Lagos, yesterday. Pic by David Apara

Wednesday 26 February 2020

BUSINESS DAY

Live @ The Exchanges Nigeria’s equities market closes in red as sell pressure persists Stories by Iheanyi Nwachukwu

igeria’s equities market closed negative on Tuesday February 25 as investors continued to sell stocks. Trading session on the 9th floor of the Exchange was dominated by relatively calm mood as dealers priced in fragile macroeconomic environment as well as fears of slowing global economy. Only 8 stocks gained as against 21 losers. As a result, the Nigerian Stock Exchange

(NSE) All Share Index (ASI) decreased by 0.03percent. The stock market’s yearto-date (ytd) return stood lower at +0.71percent. At the sound of the closing gong, the All Share Index (ASI) stood at 27,033.10 points, lower than the preceding day’s 27,041.03 points. Also, the Market Capitalisation decreased to N14.083 trillion as against preceding day’s close of N14.087 trillion, indicating N4billion loss. Having lost significantly in the last few weeks, (-6.28percent month-todate) market watchers anticipate some level of cherry

picking among fundamentally sound stocks. Zenith Bank, GTBank, UBA, Transcorp, and UPDC REIT were actively traded stocks. The volume of stock traded decreased by 43.7percent from 429million to 241.71million, while the total value of stocks traded decreased by 51.30percent, from N7.298 billion to N3.554 billion in 4,456 deals. The Financial Services sector led the activity chart with 172.19 million shares exchanged for N2.33billion; followed by Conglomerates with 29.327 million shares traded for N41 million.

SEC to hold international commodities conference

n a bid to further deepen the capital market a n d hav e a v i b ra nt commodities exchange, the Securities and Exchange Commission (SEC) is set to host an international conference on the Nigeria commodities market The conference with the theme, “Commodities Trading Ecosystem: Key to Diversifying N i g e r i a’s E c o n o m y ” i s scheduled for March 16 and 17, 2020 in Abuja and will have President Muhammadu Buhari as Special Guest of Honour. According to acting director-general, SEC, Mary Uduk, the conference will bring together relevant stakeholders in the commodities ecosystem as well as relevant stakeholders from the international community to discuss issues pertaining to the commodities ecosystem

in Nigeria including creating an enabling environment for players at all levels to interact, as well as push for high level developmental and legal supporting structures. Uduk said the commission is collaborating with relevant stakeholders to implement the 10-year capital market master plan and make Nigeria one of the world’s most liquid and Africa’s largest economy by 2025. Sh e s a i d “o n e o f t h e crucial initiatives of the plan was to develop a thriving commodities trading ecosystem and fully utilise the nation’s potentials. We believe that if we can develop a vibrant commodities trading ecosystem in Nigeria, we can substantially address lack of storage, poor pricing, non-standardisation and

Neimeth records impressive performance

eimeth International Pharmaceuticals Plc is riding on the strength of operating and finance efficiency to grow its bottom-line as the leading pharmaceutical company continues to improve its market share in the highly competitive healthcare sector. Full-year audited report and accounts for the 2018/2019 business year and the first quarter results for the current financial year which began October 1, 2019 showed that the company sustained impressive growth in both sales and profitability. The audited report and accounts of Neimeth International Pharmaceuticals for the year ended September 30, 2019 showed that t h e c o m p a n y re c o rd e d modest growth in sales but considerable improvement i n o p e rat i ng e f f i c i e n c y boosted the profitability of the company. Administrative expenses dropped byN168 million from N543 million for 2017/2018 financial year to N375 million for 2018/2019 business year, representing a 30.9 per cent decrease in administrative expenses during the period, thereby growingoperating profit by 47.9 per cent to N413.38 million in 2019 as against N279.42 million in 2018. Finance costs also declined from N112.96 million to N108.9 million. Profit before tax jumped by 82.9 per cent from N166.46 million in 2017/2018 to N304.44 million for the immediate past financial year. After taxes, net profit increased by 48.7 per cent from N148.02 million to N220.15 million for the two periods respectively. Earnings per share rose by 50 per cent to 12 kobo in 2019 as

against 8kobo in 2018. The top-line had sustained steady growth as turnover rose from N2.27 billion in 2018 to N2.37 billion in 2019. Gross profit margin also indicated similar modest growth rising from N1.16billion in 2018 to N1.20 billion in 2019. The company’s balance sheet also showed considerable i m p rov e m e n t s a s t o t a l assets grew by 19 per cent to N2.75 billion in 2019 compared with N2.31 billion in 2018. Shareholders’ funds improved by 24.6percent, from N858.83million to N1.07billion. Performance ratios underscored significant improvements in the profitability of the company. While gross profit margin dropped from 51.1 percent in 2018 to 50.6 percent in 2019 due to industry wide headwinds, operating profit margin, which denotes the company’s managerial ability to curtail headwinds and drive core business operations profitably, improved by five percentage points from 12.3 percent in 2018 to 17.4 percent in 2019. Pre-tax profit margin-which measures untaxed profit per unit of sales, nearly doubled from 7.3 percent in 2018 to 12.8 per cent in 2019. Net profit, after taxes, also improved from 6.52 percent in 2018 to 9.28 percent in 2019. The first quarter report for the three-month period ended December 31, 2019 showed that turnover leapt by 167.1 percent to N606.5 million compared with N227.07 million recorded in comparable period of 2018/2019 business year. Gross profit quadrupled by 465.6 percent from N53.52 million to N302.71 million. www.businessday.ng

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low contribution of foreign exchange affecting our commodities sub-sector”. “A vibrant commodities ecosystem would aid diversification from oil to nonoil sector and it would also boost the nation’s revenues and foreign exchange (forex) earnings”. The acting director general stated that the role of commodity exchanges was critical to economic growth, especially in the areas of price transparency and value addition to farmers, ensuring quality products for buyers and providing investment opportunities across the value chain. Uduk said Nigeria was still challenged in the area of transiting from an informal commodity trading system to one consummated on the platforms of commodity exchanges.

Wednesday 26 February 2020

BUSINESS DAY

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BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Tuesday 25 February 2020 Company

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 319,907.03 9.00 2.27 191 12,437,356 UNITED BANK FOR AFRICA PLC 234,266.04 6.85 -0.73 489 28,869,725 ZENITH BANK PLC 598,103.21 19.05 -0.26 933 43,318,951 1,613 84,626,032 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 195,629.35 5.45 2.83 224 7,355,780 224 7,355,780 1,837 91,981,812 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,361,123.51 116.00 - 55 133,058 55 133,058 55 133,058 BUILDING MATERIALS DANGOTE CEMENT PLC 2,896,886.26 170.00 - 123 1,697,703 LAFARGE AFRICA PLC. 249,670.83 15.50 - 89 827,918 212 2,525,621 212 2,525,621 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 356,008.96 605.00 - 7 1,395 7 1,395 7 1,395 2,111 94,641,886 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 -9.94 2 992,584 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 8,405.05 3.15 -8.70 18 20,149,284 20 21,141,868 20 21,141,868 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 20 21,141,868 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 64,865.88 68.00 - 18 25,928 OKOMU OIL PALM PLC. PRESCO PLC 49,850.00 49.85 - 5 6,601 23 32,529 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,890.00 0.63 -5.97 14 182,961 14 182,961 37 215,490 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 217.92 0.56 - 2 23,486 1,903.99 2.93 - 0 0 S C O A NIG. PLC. TRANSNATIONAL CORPORATION OF NIGERIA PLC 36,583.19 0.90 -2.17 61 27,373,644 U A C N PLC. 24,491.02 8.50 1.19 80 1,929,900 143 29,327,030 143 29,327,030 BUILDING CONSTRUCTION ARBICO PLC. 469.26 3.16 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 29,568.00 22.40 - 56 873,556 ROADS NIG PLC. 165.00 6.60 - 0 0 56 873,556 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 2,312.57 0.89 -1.11 22 771,839 22 771,839 78 1,645,395 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 6,341.89 0.81 -7.95 9 266,400 GOLDEN GUINEA BREW. PLC. 220.45 0.81 - 0 0 GUINNESS NIG PLC 55,197.65 25.20 - 24 43,016 INTERNATIONAL BREWERIES PLC. 189,377.58 7.05 - 7 14,412 NIGERIAN BREW. PLC. 367,857.49 46.00 -2.13 43 462,819 83 786,647 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 145,200.00 12.10 - 41 225,041 FLOUR MILLS NIG. PLC. 94,308.73 23.00 - 54 952,475 HONEYWELL FLOUR MILL PLC 7,612.99 0.96 -2.04 7 1,006,498 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 34,442.70 13.00 - 17 100,807 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 119 2,284,821 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 16,903.82 9.00 9.76 22 266,681 NESTLE NIGERIA PLC. 895,701.56 1,130.00 - 76 596,897 98 863,578 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,641.31 4.51 - 13 66,700 13 66,700 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 19,852.39 5.00 - 11 12,396 UNILEVER NIGERIA PLC. 86,175.08 15.00 - 36 68,073 47 80,469 360 4,082,215 BANKING ECOBANK TRANSNATIONAL INCORPORATED 119,272.08 6.50 1.56 80 1,303,630 FIDELITY BANK PLC 59,398.33 2.05 0.49 81 5,913,973 GUARANTY TRUST BANK PLC. 788,755.60 26.80 -0.37 427 38,737,126 JAIZ BANK PLC 17,089.26 0.58 -7.94 20 1,825,319 STERLING BANK PLC. 42,897.72 1.49 -0.67 83 5,265,754 UNION BANK NIG.PLC. 200,933.19 6.90 - 26 279,976 UNITY BANK PLC 6,312.24 0.54 -6.90 12 312,994 22,758.93 0.59 - 12 286,640 WEMA BANK PLC. 741 53,925,412 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 9,857.28 0.87 -9.37 42 2,143,936 AXAMANSARD INSURANCE PLC 18,900.00 1.80 - 12 188,122 CONSOLIDATED HALLMARK INSURANCE PLC 2,601.60 0.32 - 0 0 CORNERSTONE INSURANCE PLC 8,248.52 0.56 - 4 105,500 909.99 0.20 - 0 0 GOLDLINK INSURANCE PLC GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,757.62 0.24 -7.69 11 1,084,160 LAW UNION AND ROCK INS. PLC. 3,780.77 0.88 10.00 14 909,500 LINKAGE ASSURANCE PLC 3,280.00 0.41 -8.89 11 546,000 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 4 222,157 NEM INSURANCE PLC 10,561.01 2.00 -3.85 29 1,635,600 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 4 205,850 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 0 0 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 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 2 59,125 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 4,282.48 0.32 - 18 265,691 151 7,365,641 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,561.03 1.12 -9.68 6 434,205 6 434,205

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 5,796.93 1.39 - 0 0 INFINITY TRUST MORTGAGE BANK PLC RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 10,220.00 5.11 4.29 182 6,813,525 CUSTODIAN INVESTMENT PLC 32,056.16 5.45 - 8 24,028 DEAP CAPITAL MANAGEMENT & TRUST PLC 540.00 0.36 - 0 0 FCMB GROUP PLC. 34,654.74 1.75 -1.13 42 1,244,872 ROYAL EXCHANGE PLC. 1,183.44 0.23 - 3 185,448 404,441.24 38.50 - 20 110,393 STANBIC IBTC HOLDINGS PLC UNITED CAPITAL PLC 20,100.00 3.35 0.90 217 10,110,594 472 18,488,860 1,370 80,214,118 HEALTHCARE PROVIDERS EKOCORP PLC. 2,592.72 5.20 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 710.63 0.20 - 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 5,299.36 2.54 - 10 150,897 GLAXO SMITHKLINE CONSUMER NIG. PLC. 5,501.03 4.60 2.22 22 285,287 3,226.19 1.87 - 10 144,142 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 854.62 0.45 - 5 37,600 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 325.23 1.50 - 1 200 PHARMA-DEKO PLC. 48 618,126 48 618,126 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 781.44 0.22 - 1 19,000 1 19,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,206.13 0.41 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 262.44 2.43 - 0 0 287.07 0.58 - 0 0 TRIPPLE GEE AND COMPANY PLC. 0 0 PROCESSING SYSTEMS CHAMS PLC 1,267.94 0.27 - 9 1,754,800 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 9 1,754,800 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 4 9 4 9 14 1,773,809 BUILDING MATERIALS BERGER PAINTS PLC 1,956.31 6.75 - 6 71,051 BUA CEMENT PLC 1,215,730.31 35.90 - 21 178,658 17,220.00 24.60 - 2 3,350 CAP PLC MEYER PLC. 244.37 0.46 - 1 27,998 1,769.32 2.23 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC PREMIER PAINTS PLC. 1,156.20 9.40 - 0 0 30 281,057 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 2,465.85 1.40 - 13 83,878 CUTIX PLC. 13 83,878 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 1 500 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 500 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 44 365,435 CHEMICALS B.O.C. GASES PLC. 1,685.79 4.05 - 3 90,030 3 90,030 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. 77.00 0.35 - 0 0 0 0 3 90,030 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 10 2,298,336 10 2,298,336 INTEGRATED OIL AND GAS SERVICES OANDO PLC 39,531.89 3.18 - 80 1,563,699 80 1,563,699 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 48,031.29 133.20 - 12 15,096 ARDOVA PLC 21,751.43 16.70 - 8 8,238 CONOIL PLC 12,491.14 18.00 - 14 36,407 ETERNA PLC. 2,869.12 2.20 - 13 285,033 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 2 814 TOTAL NIGERIA PLC. 36,328.84 107.00 - 6 35,839 55 381,427 145 4,243,462 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,363.88 4.01 - 5 94,200 TRANS-NATIONWIDE EXPRESS PLC. 421.96 0.90 - 0 0 5 94,200 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 2,515.34 1.21 - 2 2,660 TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,781.64 4.05 - 1 512 3 3,172 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 223.78 0.37 - 0 0 LEARN AFRICA PLC 956.60 1.24 - 2 14,429 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 539.26 1.25 - 4 77,154 6 91,583 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 580.20 0.35 - 5 126,979 5 126,979 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0 SECURE ELECTRONIC TECHNOLOGY PLC 1,126.31 0.20 - 0 0

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BUSINESS DAY Wednesday 26 February 2020 www.businessday.ng

Libya: How regional rivalries fuel the civil war

With two factions fighting over Tripoli, the country is grasping for a solution to a proxy war featuring European powers Andrew England, FT

ick-up trucks carrying fighters from Libya’s Brothers Brigade speed along sandy roads, past the carcasses of burnt-out cars, shuttered shops and wrecked buildings, their empty shells disfigured with the ugly pockmarks of battle. On reaching the frontline, the men take cover in homes long abandoned, as sporadic bursts of gunfire echo across a once bustling neighbourhood of Tripoli that has been transformed by war into a militarised wasteland. Striding between buildings, Captain Mohammed Mukhtar nods in the direction of enemy fighters, forces loyal to General Khalifa Haftar, who are spearheading his assault on the Libyan capital and are hunkered down a few hundred metres to the south-east in yet more deserted buildings of the Ain Zarah suburb. “It’s been quiet the past few days, but we are worried about what they will do next,” Cpt Mukhtar says. “The enemy will try to push into Tripoli again.” It is not his only concern. Among the ranks on the other side are Russians from the Wagner private security group, including snipers, he says. “They bring Janjaweed [Sudanese mercenaries] and Russians to kill their Libyan brothers. Why do they do that?” Like many of his countrymen, the 30-year-old fighter is worried about the rising internationalisation of a 10-month conflict in the oil-rich north African nation. Lined up behind Gen Haftar — who controls the east, central and southern areas of the country — are the United Arab Emirates, Egypt and Russia with political backing, at least, from France. On the other side, Turkey has ramped up its military support for the UN-backed Government of National Accord in Tripoli, for which Cpt Mukhtar is fighting. Many Libyans believe it will be these outside powers that determine whether the fighting ends, amid warnings from diplomats that all the protagonists risk being sucked deeper into a protracted proxy war that threatens to reverberate from the Sahel across north Africa to the Mediterranean. These developments have already inflamed tensions between Gen Haftar’s backers and Turkey, which is increasingly viewed by Abu Dhabi, Cairo and Riyadh as a destabilising force in the Arab world and supportive of Islamist movements they deem a threat to the region. Libya has

become the theatre where these rivalries are playing out to deadly effect on the battlefield. Libyans offer multiple theories for the outside involvement in their country, from the desire of foreign powers to spread their influence to gaining control or access to Libya’s abundant resources and Mediterranean ports. “The problem is not [just] Libyan,” says Fathi Bashagha, the country’s interior minister. “It’s 20 per cent Libyan and we can solve this; 80 per cent is from the outside countries involved in Libya.” The years since the toppling of Muammer Gaddafi in 2011 have been characterised by cycles of violence that have created fertile ground for criminal gangs, extremists and human traffickers preying on vulnerable migrants desperate to begin new lives in Europe. At least 2,000 Libyans have been killed and more than 150,000 forced to flee their homes in areas such as Ain Zarah since Gen Haftar launched a surprise assault on Tripoli last April. The dynamics of the war shift-

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Libyans offer multiple theories for the outside involvement in their country, from the desire of foreign powers to spread their influence to gaining control or access to Libya’s abundant resources and Mediterranean ports

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The years since the toppling of Muammer Gaddafi in 2011 have been characterised by cycles of violence that have created fertile ground for criminal gangs, extremists and human traffickers preying on vulnerable migrants desperate to begin new lives in Europe ed in January after Turkey deployed troops to Libya, heeding a plea from the besieged Tripoli government as Russian mercenaries and air superiority offered by Chinese-made drones — supplied and allegedly operated by the UAE — appeared to tip the balance in Gen Haftar’s favour. Ankara parachuted in military advisers, artillery, ammunition and other equipment, Libyans and diplomats say. Crucially, Turkey has provided US-made Hawk air defence systems to cover a stretch of governmentcontrolled territory from Zawiya, west of Tripoli, to Misurata, east of the capital, that appear to have neutralised the threat of the drones. Turkey insists its troops will have no combat role. But Ankara has dispatched Syrian Turkmen militias to Libya, adding yet another foreign ingredient to the mix. Having started to arrive in December, there are estimated to be some 3,000 Syrian fighters in Libya, a foreign diplomat says. Ankara’s message to Gen Haftar and his backers seemed clear: it would not allow Tripoli to fall. Its forceful intervention triggered a flurry of diplomacy. In January a Russian-Turkish effort to mediate a truce between Gen Haftar and Fayez al-Sarraj, prime minister of the Tripoli-based government, was launched. But it floundered when Gen Haftar left Moscow without signing a deal. But the sight of Moscow and Ankara taking the initiative seemed to jolt western powers

into action. Days later, Germany hosted a conference in Berlin attended by European leaders and the foreign powers involved in the conflict. The gathering called for a halt to the hostilities and an end to foreign interference. Instead, more weapons poured into Libya, with foreign players arming their proxies to curb their regional rivals’ influence. António Guterres, the UN secretary-general, in February described what is happening in Libya as “a scandal”. His envoy, Ghassan Salame, said both sides in the Libyan conflict had “benefited from new arrivals of weapons, new kinds of weapons and ammunition and also from the arrival of new recruits or new foreign fighters”. The UN is still pushing ahead with diplomatic efforts and a Joint Military Commission, made up of officers from the rival Libyan factions, met this month. But given the failure of past initiatives, the arms build-up, the bitter mistrust between the sides and Gen Haftar’s history of disdain for diplomacy, few in Tripoli were betting on a swift resolution. Last week, the Tripoli government suspended talks after Gen Haftar’s forces shelled the capital’s only functioning airport, killing three people. “Haftar cannot stop the war because his project is to rule by tank and artillery,” says Mr Bashagha. “This is a big investment for Haftar and the [United Arab] Emirates, it’s impossible

for them to stop the war.” The Turkish support has also emboldened factions loyal to the Sarraj government, meaning they now appear less willing to negotiate. “Now [Haftar] doesn’t control the air I think we are moving shortly from a defensive phase to an attack phase. At the same time, we are insisting on a political solution that doesn’t include Haftar,” says Khalid al-Mishri, head of the High Council of State, an advisory body to the Tripoli administration. “Sarraj started weak; now he’s much better. He’s learned from time. Before he trusted Haftar; now he doesn’t.” In downtown Tripoli, life proceeds with a semblance of normality. Supermarket shelves are well stocked and cafés and restaurants enjoy steady trade as generous state subsidies and a civil service that employs more than 1.8m of the country’s 6.5m people have cushioned the conflict’s economic damage. But Haftar-loyalists have blocked Libya’s oil exports — the country’s lifeline — since the eve of the Berlin meeting, meaning the economic situation could rapidly deteriorate. It has already cost the country more than $2.1bn in lost revenue, according to official data. The frustration of Libyans is palpable. “We need a strong government, but it’s weak. Now everything is broken, we are starting from zero again,” says Malik, a health official, sitting in a sandbag-protected corner of a field hospital set up in a warehouse packed with nappies. “It’s a Game of Thrones, everybody in Libya wants the chair. Money, guns and oil — it’s like the mafia.” The field hospital is in one of the many southern Tripoli neighbourhoods that abut front lines where people live with the daily threat of rocket fire. Homes, factories and shops, along with the airport, have been hit by Gen Haftar’s forces.

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