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CBN forecasts subdued growth for rest of 2018

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CBN forecasts subdued growth for rest of 2018

China Mobile Nigeria Retains MPR at 14% Throws lifeline for minority shareholders in defunct Skye Bank eyes after MTN deal

HOPE MOSES-ASHIKE, BUNMI BAILEY, DIPO OLADEINDE, EMEKA UCHEAGA & UDOKA MOKWUNYE

iger ia’s economic growth is seen to be subdued for the rest of the year as the Central Bank of Nigeria (CBN), which kept it policy stance unchanged at 14 percent on Tuesday, projected expansion of just 1.75 percent for 2018. The forecast rate is equivalent to the average growth rate Nigeria has managed in the first 2 quarters of 2018. The country’s economy grew at 1.5 percent in the second quarter of the year, down from 1.9 percent recorded in preceding quarter, according to the National Bureau of Statistics (NBS). The Monetary Policy Committee (MPC) also retained the Cash Reserve Ratio (CRR) at 22.5 percent, Liquidity Ratio at 30.0 per cent; and Asymmet-

ric corridor at +200 and -500 basis points around the Monetary Policy Rate (MPR), in consideration of weak growth, inflationary pressure, election spending, among other factors. “Tightening would tame inflationary pressure, stir the reversal of portfolio capital, improve the external reverses and maintain stability in the foreign exchange market. Conversely the MPC felt that raising rates would further weaken growth as credit would become more expensive, Non- Performing Loans (NPL)s would increase further leading to a deceleration in output,” Godwin Emefiele, governor, CBN said after the MPC meeting. However, three out of 10 members that participated at the meeting voted to raise the CRR by 150 basis points, signalling a tightening preference. Reacting to the MPC decision, Razia Khan, Chief Economist for Africa and the Middle East, Standard Chartered Bank, said, “While liquid-

ity pressures around the elections are a risk (rising FAAC allocations, rising election spending) – these should be relatively short-lived, and should not pose a lasting threat to price stability.” Khan said the bigger question is which direction monetary policy should take post-election as growth remains weak. “A more immediate concern is to maintain portfolio investor confidence through the election period – and we expect the authorities will rely on rising Open Market Operation (OMO) yields to try to achieve this. Given the global context however, this may well be a challenge. Higher oil prices and favourable OMO yields may not be sufficient to counter other concerns,” Khan said in emailed response to BusinessDay. Nigeria’s inflation rate increased to 11.23percentinAugust2018from11.14 percent in July, according to the NBS. Bismarck Rewane, managing director/Chief Executive Officer of

Financial Derivatives Company Limited, said, “there is a guidance that after the U.S interest rates go up and after we see the next hike in inflation, we have to tighten. So, I think fairly speaking this was a good move.” Speaking from the viewpoint of the market, Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited said, “we think that managing the system liquidity and making rates attractive for investors at least from the short-end of the treasury bills level will be good to ensure stability in the system.” Emefiele, while responding to questions on the MTN saga said, “We will resolve this matter and I am very optimistic and I believe that everyone will be happy. MTN will be happy, the banks will be happy, CBN and government will be happy”. Meanwhile minority shareholders in Skye bank may now be able to

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L-R: Ibrahim Garba, vice chancellor, Ahmadu Bello University (ABU); Terry Little, representing Trust for African Rock Art (TARA); Stella Effah-Attre, representing University of Calabar (UNICAL); Abdulkerim Kadiri, acting directorgeneral, National Commission for Monuments and Museums (NCMM), and Stuart Symington, U.S. Ambassador to Nigeria, at the signing of MoU to give a grant of $125,000 to TARA, NCMM, UNICAL and ABU, Zaria, for preservation of Nigeria’s Rock Art in Abuja. NAN

hina Mobile says it has opened an office in Johannesburg and signed an agreement with MTN, raising the prospects the cash rich Chinese telecoms giant could be angling for a stake in Africa’s largest economy. TheChinesefirmsaidinastatement on its website on September 10 that it had opened an office in Johannesburg and that it had signed an agreement with MTN for a strategic alliance relationship but gave no further details. “The two companies will collaborate on international business expansion, international transmission interconnection and network resources sharing etcetera,” the Chinese operator said. Analysts say the Chinese firm could be interested in gaining a foothold in Nigeria but an MTN spokesperson said the group was not yet in a position to discuss the partnership. Analysts now say with MTN’s share price at its worst level in a decade, the emerging-markets operator could be in the sight better endowed international operators. After Nigerian authorities said MTN needed to send $8.1bn worth of dividends back to the country, and then slapped a $2bn tax bill on the stunned operator, the group’s shares have plunged to less than a third of the highs reached four years ago. At these levels, MTN could be attractive to operators such as China Mobile, which is sitting on net cash of about $70bn and has signalled its intent to make deals, Alastair Jones, a UK-based analyst at New Street Research told Businessday South Africa. Jones said it was possible that China Mobile could be interested in buying MTN’s troublesome business in Nigeria, which the market now values at close to zero, or that it could purchase a minoritystakeintheentireMTNGroup. The Chinese operator bought an 18 percent stake in Thai operator True Corp in 2014. A 20 percent stake in MTN would cost it just $2.090bn at current valuations, a mere drop in the ocean for the Hong Kong-listed giant. Having a state-owned Chinese

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NSE demutualisation crosses major hurdle as Buhari signs bill DIPO OLADEHINDE & UDOKA MOKWUNYE

he Nigerian Stock Exchange (NSE) has finally crossed a major huddle in its demutualization processes as President Muhammadu Buhari has finally signed the bill into law that will transmute the Lagos based bourse from a mutual association of exchange members to a limited liability company which is accountable to shareholders. The President assented to the bill on the 29th of August 2018, according to documents seen by BusinessDay.

A demutualised NSE will allow the stock exchange become a company limited by shares; having share capital or shareholders, a board of directors, management that is separate and independent from the board and subject to rules and regulations of company operations in Nigeria. According to the Explanatory Memorandum seen by BusinessDay, the act facilitates the expeditious conversion and registration of NSE from a company limited by guarantee to a public company limited by share in order to adopt and efficiently implement the global practice of the demutualization of

stock exchanges. “The exchange is empowered to adopt any process, procedure, structure or plan as may be required by its council for the purpose of converting to a public company limited by shares provided that the prior authorization of the Securities and Exchange Commission (SEC) has obtained and all the procedures and requirement of the demutualization rules of SEC have been complied with,” the Demutualization of NSE Act 2018 stated. The members of the exchange, upon the conversion and re-registration of the exchange to a public

company limited by shares, may only be liable to pay tax on dividends declared by the exchange. The act further stated that upon the conversion and registration of the exchange from a company limited by guarantee to a public company limited by shares, all income, assets, property and liability of the exchange held prior to the commencement of the act shall continue, without any limitation, inhibition or restriction to the income, assets, property and liabilities of the exchange as a public limited by shares. According to the Act, NSE will establish a Claims Review Panel

made up of a chairman and four other members which will review and determine any assertion by any person to any right in the share of the exchange as such assertion having been made anytime between the coming into force of this act and six years after conversion of the exchange from a company limited by guarantee to a public company limited by shares. Ayodeji Ebo managing director at Afrinvest Securities Limited said the new development is positive as it’s long overdue. “This will open

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Fear grips gas stakeholders as Payment Assurance Guaranty Programme ends December OWEDE AGBAJILEKE, Abuja

he power sector industry may run into another round of trouble by January 2019 as gas stakeholders are worried of what would be the future of the invoices that would come after expiration of the tenure of the current Payment Assurance Guaranty Programme which supported power sector with N701 billion. They said the tenure of the programme covers from January 2017 to January 2018, wondering what the government would do after the December 2018 when the tenure would have expired. Dada Thomas, president of the Nigeria Gas Association, while speaking in respect of the 11th Inter-

national Gas Conference and Exhibition planned for Abuja in October this year, lamented that nothing is said about the debts the power sector is owing the gas sector before 2017 and that the government is also not saying what would happen come January 2019. “Come January 2019, what system would be put in place that would ensure that gas suppliers to the power sector get their invoices paid from that month forward?” Dada asked. “No answer from the government yet, we believe they understand the urgency to either extend the tenure of this programme or put in place a new programme that would assure gas producers that they would be paid as at when due. Payment is actually the biggest

issue,” he added. He, however, said that only about 26 percent of N701 billion was paid to gas suppliers last year in 2017 and in 2018, but they have just received only 27.6 per cent of the money. According to him, the major feature of the conference this year is to provide the needed platform to hear industry and other perspectives on ways to re-energise and maximise Nigeria’s natural gas potentials as the country shifts to gas economy. “While the global debate about evolving business models for an evolving global gas business continues to grab the spotlight, closer to home, the discourse about the role of gas in Africa’s energy mix, particularly Nigeria, needs to continue. With this in mind,

we at NGA have continued to ask ourselves the questions on the current state of the natural gas industry in Nigeria in addition to evaluating the potential for its future development across the West African region. He said that even with obvious challenges, companies are making significant strategic investments in gas pipelines and production to power Independent Power Plants (IPPs) and industrial customers and it is estimated that about 1,000 MW of IPP capacity is presently idle due to a lack of gas delivery. As the market moves towards the concept of “willing buyer-willing seller” and the government continues to make the investment environment more attractive, the country has massive prospects.

L-R: Tony Attah, managing director, Nigeria LNG Limited; Segun Ogunsanya, CEO/MD, Airtel Nigeria, and Akin Osuntoki, chief executive officer, Richardson Oil & Gas Limited during the presentation of Special Achievement Award in recognition of his support to Health, Safety, Security & Environment (HSSE) Management and Local Content Development in Nigeria in Lagos.

Wednesday 26 September 2018

Togolese President sees innovative partnership with private sector tackling coastal erosion CHUKA UROKO

ith sustainable solutions and innovative partnership with private sector, government can tackle coastal erosion and bring an end to environmental issue experienced by many African countries, President Faure Gnassingbe of Togo has said. Gnassingbe, who was on a visit to the Eko Atlantic City in Lagos, noted that coastal areas like Victoria Island, seaside communities along Togo’s coast and in many African countries have long lived with the consequences of erosion from the Atlantic Ocean. The President, known for paying particular attention to the issues of fight against global warming and protection against coastal degradation in Africa, commended the planners and developers of Eko Atlantic City for the technique they adopted to provide a permanent solution to coastal erosion. Eko Atlantic City is being developed by South Energyx Nigeria Limited. The city came up as a solution to address the erosion that was fast destroying the coast of Victoria Island and its environs. Coastal Erosion, a menace experienced through-out West Africa, including Nigeria and Togo, has been an ongoing problem for hundreds of years impacting the lives of millions of Africans. But, commendably, Eko Atlantic City has proved to be a sustainable solution to this threat with

the construction of a great sea revetment known as the ‘Great Wall of Lagos’. The Great Wall of Lagos was constructed soon after the collapse of Bar Beach in 2005. Its construction was an urgent action required to protect the shoreline of Victoria Island and Lekki and the potential loss of thousands of lives, homes, businesses and vast areas of developed land. “We recognized that an urgent step had to be taken to protect the shoreline of Victoria Island and reclaim the land that had been lost. As a result, the Eko Atlantic City project came up as a permanent solution to the coastal erosion of Victoria Island and parts of Lekki and we have ensured this through the construction of the ‘Great Wall of Lagos,” explained Ronald Chagoury, chairman of South Energyx. Continuing, he said, “In fact, this endeavour has not only stopped erosion, it has created a smart city, a financial hub and has united us with our neighbours to come together in the fight against on-going coastal erosion”. With Eko Atlantic City in place, thousands of lives, homes, businesses and vast areas of developed land in Victoria Island, Lekki and other areas have been saved from the fury of Atlantic Ocean. Approximately 6.5 kilometers of a total of 8.5 kilometers of the Great Wall of Lagos has been completed. “This great wall will continue to protect Victoria Island and parts of Lekki from erosion”, Chagoury assured.

Osun: PDP demands Yakubu, Zakari’s resignation from INEC Osinbajo reiterates FG commitment to grow small scale businesses OWEDE AGBAJILEKE, Abuja

he Peoples Democratic Party (PDP) has demanded the immediate resignation of Mahmood Yakubu, chairman, Independent National Election Commission (INEC), over his role in the commission’s decision to declare the Osun governorship election as inconclusive. The main opposition party also asked Amina Zakari, the Commission’s director of operations, in charge of Information Communication Technology (ICT) Department, to step down. Addressing a press conference in Abuja on Tuesday, Kola Ologbondiyan, PDP national publicity secretary, said the INEC chairman can no longer be

trusted to conduct credible elections in 2019. He accused the commission of robbing the party of over 4,387 votes at the gubernatorial election, insisting that its winning margin should have been 4,740 votes as against the 353 votes declared by INEC. The party also disclosed that it will approach a Federal High Court in Abuja on Wednesday to quash the ‘illegal’ declaration of the September 22, 2018 Osun governorship election as inconclusive by the electoral body. It, however, said while the party would challenge the decision, its candidate, Ademola Adeleke, would partake in Thursday supplementary poll in the state. “With INEC’s fraudulent conduct in the Osun Governorship election, and

approval that a concluded election be declared inconclusive, the PDP and indeed all well-meaning Nigerians no longer have confidence in Prof. Yakubu. “It is completely inexcusable that Prof. Yakubu presides over an atrocious and compromised electoral umpire that manipulates electoral processes, doctors figures, allocates fictitious votes and subverts the will of the people in an election. “The PDP has additional documentary evidence of how this compromised INEC, through its Operations and ICT Department, doctored results from polling centers, directly shortchanged the PDP with no fewer than 4,387 votes by slashing votes cast for the PDP at the polling centers while allocating fictitious figures to the APC.

KELECHI EWUZIE

emi Osinbajo, vice president of Nigeria, says the Federal government will continue to pursue the deliberate implementation of policies that will assist micro businesses to grow in order to reduce the poverty level. Osinbajo said the current administration would ensure that the welfare of Nigerians remains its major priority as it pilots the affairs of the country. Speaking at the formal lunch of the Trader-Moni policy at the Owerri Relief Market, Imo State, Osinbajo said the initiative is a deliberate policy of the Federal Government to assist small-scale businesses in the country to

grow as well as to reduce poverty among the people According to him, “The Traders Moni is an instant collateral free cash loan to registered micro small scale businesses at rural areas which provide access to funds to help their businesses”. Toyin Adeniyi, executive director, Micro Enterprise department of the Bank of Industry, said that it is part of the policies of the federal government to assist petty traders in the country to grow their businesses. She urged beneficiaries to ensure that they repay the loan within six months to enable them access more loans to help their businesses. Traders at the Relief Market in the Owerri metropolis, who registered

for the immediate cash transfer of N10, 000 soft loans, said they had earlier heard the announcement on the radio, but that they had thought that it was one of those gimmicks of government which never works. Oni Agnes one of the traders expressed gratitude to the federal government as she had received an alert immediately she completed her registration while still at the point of registration. “It worked like magic because as soon as I registered and provided them with my account number I received an alert of N10, 000. It is now that I know it is real,” she said. She said that the loan would assist many of the women in their petty trading.

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Nigeria ranks 171st among countries investing in education, health care – Study IFEOMA OKEKE

igeria ranks 171st in the world in relation to investments in education and health care, according to the first-ever scientific study ranking countries for their levels of human capital. The country placed just behind the Democratic Republic of the Congo (ranked 170th) and just ahead of Zambia (ranked 172nd). The United States ranked 27th, while South Africa was placed 144th. “Our findings show the association between investments in education and health and improved human capital and GDP – which policymakers ignore at their own peril,” Christopher Murray, director of the Institute for Health Metrics and Evaluation (IHME) at the University of Washington, said. “As the world economy grows increasingly dependent

on digital technology, from agriculture to manufacturing to the service industry, human capital grows increasingly important for stimulating local and national economies.” Jim Yong Kim, World Bank president, defines human capital as “the sum total of a population’s health, skills, knowledge, experience, and habits.” Nigeria’s ranking of 171st in 2016 represents a drop from its 1990 ranking of 155th. It comes from having five years of expected human capital, measured as the number of years a person can be expected to work in the years of peak productivity, taking into account life expectancy, functional health, years of schooling, and learning. Overall, Nigeria’s residents had 36 out of a possible 45 years of life between the ages of 20 and 64; expected educational attainment of nine years out of a possible of 18 years in school; and a learning score of 66 and a functional health

score of 45, both out of 100. Learning is based on average student scores on internationally comparable tests. Components measured in the functional health score include stunting, wasting, anaemia, cognitive impairments, hearing and vision loss, and infectious diseases such as HIV/AIDS, malaria, and tuberculosis. Kim has stated that measuring and ranking countries by their human capital will enable comparisons over time, thereby providing governments and investors insights into where critical investments are needed to improve health and education. The study entitled, ‘Measuring human capital: A systematic analysis of 195 countries and territories, 1990 to 2016’, is based on a systematic analysis of an extensive array of data from numerous sources, including government agencies, schools, and health care system

Growing FinTech poses challenge to policy makers—CBN deputy governor HOPE MOSES-ASHIKE

… AS FITC trains 6,741 banks, OFIs directors

he rapidly expanding Financial Technology (FinTech) poses a challenge to policy makers in the area of managing conflicting priorities such as market growth, competition, and safety in the financial system, said Aishah Ahmad, deputy governor, financial system stability, Central Bank of Nigeria (CBN). “Striking that balance may involve altering mature regulatory structures, defining how non-traditional financial service providers—such as technology companies and retailers—fit within these structures; creating agencies, licenses, or rules to oversee innovation; or fostering desirable financial services,” said Ahmad. Ahmad, who was represented at the CBN Financial Institutions Training Centre (FITC)

two-day Continuous Education Programme (CEP) in Lagos, said whichever approaches regulators choose can have substantial effects on people’s financial well-being. “Developments in financial technology in addition to impacting businesses could also affect the direction of regulation in the financial services industry,” she said. Given the emerging disruptive financial technology environment and directors’ personal accountability for their roles, she said it is pertinent that corporate boards are equipped with skills to perform their onerous oversight functions effectively while positioning their institutions for superior performance. The FITC has trained about 6,741 directors of deposit money banks and other financial institutions

SSS confirms detention of Aisha Buhari’s ADC

he State Security Service (SSS) has confirmed that it is in custody of the Aide De Camp (ADC) to the wife of the president, Aisha Buhari. The secret police said Sani Baba-Inna, a chief superintendent of police, is undergoing interrogation. Premium Times had reported Monday that Aisha Buhari had petitioned the police alleging her ADC defrauded her of N2.5 billion. Following the petition, the police, last Friday, arrested Baba-Inna and raided his home in the Garki District of Abuja. However, the outcome of the raid and

IHEANYI NWACHUKWU

afarge Africa, with his ambition to grow in Nigeria, has decided to further strengthen the company through a new rights issue. The proposed plan includes raising N90 billion via a Rights Issue and the restructuring of its outstanding short term $315 million shareholder loans. At an extra-ordinary general meeting held in Lagos on Tuesday, shareholders of the leading building solutions provider approved the plan to raise up to N90 billion in additional capital and the restructuring of its short term US Dollar shareholder loans.

Mobolaji Balogun, chairman of the board of directors said, “The additional capital to be raised will further help to deleverage the company’s balance sheet and provide head room for the expansion of our business.” The company foresees a stable pricing environment and favourable economic conditions in its Nigeria market while its South Africa operations are undergoing a turnaround plan. Speaking on the company’s refinancing plan, the CEO Michel Puchercos said, “It is aimed at preparing for future development in Nigeria, improving the company’s leverage as well as strengthen its profitability.”

(OFIs) in the directors’ education series. Ahmad noted that FITC is leveraging on a number of initiatives to deliver specially designed board leadership training programs, in line with global standards, yet contextualised in domestic and regional issues, using empirically based practice impacting adult learning methodologies. In her welcome remarks, Lucy Newman, managing director/CEO, FITC, noted that this edition of the programme, was the 13th in collaboration with the CBN and FITCs 34th edition from 1985. Newman, who will be retiring next year after 10 years of serving as the CEO of FITC, said the number of participants in the FITC trainings have risen to 65,000 currently compared to a total of 28,000 when she assumed office as the managing director. L-R: Temitope Ajewole, relationship manager, Stanbic IBTC Asset Management Ltd; Akan Williams, deputy vice chancellor, Covenant University, Ota; Nkolika Okoli, head, personal banking, Stanbic IBTC Bank Plc, and Foluke Michael, CEO/ project director, Creative Youth Community Development Initiative (CYCDI), during the United Nations General Assembly Global People’s Summit at Covenant University, Ota, Ogun State.

checks on his bank account showed that money of such magnitude was not in those locations. Not satisfied, the first lady Aisha Buhari is said to have asked the SSS to take over the investigation. According to Premium Times the spokesperson of the service, Peter Afunanya, confirmed that Baba-Inna was in custody at the headquarters of his agency in Abuja. “He was handed over by the police and investigation is ongoing,” he said. A member of the BabaInna family also informed that the SSS allowed Hassana, the wife of the ADC to meet him.

Lafarge Africa’s shareholders approve N90bn rights issue

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Ebonyi earmarks N300m for reconstruction of failed roads JACOB OGODO, Abakaliki

bonyi State Government has earmarked N300 million for the reconstruction of the section of road from Akanu Ibiam to Offia Nwali flyover junction to remedy failed portions of the Tran Saharan highway. Uchechi Okah, senior special assistant to the governor on project monitoring, disclosed this to journalists after the weekly council meeting presided over by Governor David Umahi, at Government House, Abakaliki. The SSA said that the state executive council took the decision in order to put the failed dualisation part of the road in the right shape using the concrete pavement.

She said that the project would be executed using direct labour through state Ministry of works. “With the quality of work we have done from Akanu explained Ibiam round about to Offia Nwai round about, it becomes necessary that we should use concrete road to embark on quality of work based on quality of work that has been done.” Also speaking, Obinna Nwachukwu, commissioner for finance, said the state government had assessed part of its share of the fund from the federal government, stressing that the club fund would be channelled to workers welfare. Also, as part of the decision reached at the State Executive Council meeting ,Ebonyi state government has compelled

commercial banks in the state transacting business with it to release statements of accounts from 2007 to 2017. The government said it took the decision to recover all the monies hanging at various banks transacting business with the state government Queen Agwu, state accountant-general, who was flanked by Nwachukwu, alleged that there were monies the banks supposed to refund to the state government which had not been refunded. “We have discovered that there are monies hanging here and there in the hands of banks. There are over deductions, over charges, over refund of all sorts. Then the government engaged consultants to work bank duty audit. “The consultants worked

back from 2007-2016 and some part of 2017 and some reasonable money was discovered that the banks are supposed to refund to us. “Governments is asking the banks to please provide us with all banks statements, all correspondences, all agreements and documents that has to do with funds transactions between the government and the banks from 2007-September 2018. “The banks should provide us with every document because if they don’t provide us with these documents, henceforth it will no longer be tolerable,” she said. On his part, Nwachukwu said demanding the document from banks does not imply investigating the past administration in the state.

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COMMENT SMALL BUSINESS HANDBOOK

EMEKA OSUJI Dr Emeka Osuji School of Management and Social Sciences Pan Atlantic University Lagos. eosuji@pau.edu.ng @Emyosuji

or emphasis, let us reaffirm that a nation without a middle class is like a car without a functional engine. It is for this reason that we began and would, for the time being, continue to focus on the importance of this category of economic players in the development of our economy. During the past week, we presented some facts on the level of poverty in Nigeria and the danger that awaits us in the area of social stability and peace, if we continue to promote it, either consciously or unconsciously. We insist that the 8,000 Nigerians that enter into extreme poverty everyday are not a special “brood of vipers” that must burn in hell. They are not only innocent Nigerian workers, they did nothing close to what many of us have done to this country to warrant the carnage, which poverty has been permitted to visit upon them. Above all, they come, almost entirely, from the middle class. If the attrition of the class continues, and given its importance in the growth and prosperity of nations, and indeed any cluster of humans, it will not be long before Nigeria is drained of the critical blood and juice of life needed to drive its efforts in socio-economic development. Why do we consider them the life wire of the economic development of any CHARACTER MATTERS WITH DAPS

DAPO AKANDE 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

t is a real shame that many of my compatriots have lost hope in our country. The “This is Nigeria” mantra has become permanently imprinted on most minds and in the absence of a more nationally accepted outlook, it is fast becoming the national ideology. “This is Nigeria” so anything goes; “this is Nigeria” so you do it if you believe you can get away with it; all your idealism of a better Nigeria is just grammar as “this is Nigeria”, this is our reality. It is sad because so long as this attitude persists, nothing good can happen. It is not a curse but simply the truth. I cannot say I am too familiar with the precepts of other religions but in Christianity, which I am proud to practice, one of the most fundamental requirements is faith. You must first

Wednesday 26 September 2018

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Poverty and the death of the middle class (2) nation and how can we prove that our country actually depends on the middle class to grow and meet the needs of her people? The answers are nearby. Economists often find it convenient to trade punches from two camps, especially when it comes to issues concerning the working of the economy and development in general. Over the past two millennia, the United States of America has grown from a collection of disparate and rebellious colonies to a cohesive country that is undoubtedly the greatest political, social, military and economic entity in the world. This is a feat that no other group of people has achieved, even though that supremacy is now under threat from some quarters. The attention of scholars and analysts has been, and will probably continue to be, occupied for the time being, by the study of the reasons behind the success of nations, especially the American nation-building experiment. A lot of lessons are to be learned from that. As for the economists, there is this undying contest between two camps – the supply and the demand side economists. The former believe in the trickle down thesis, which proposes that in a dynamic economy, policies that benefit the big corporations will eventually, through the process of trickling down, also benefit the poor. Growth and employment, according to this group, can increase only with an increase in the capacity of these few big economic agents to produce and invest in the economy. Such increase is made possible only if the savings, investment and capital formation by the small privileged class or group are increased. On the other hand, the Demand siders propose a more democratic approach to growth and development. It ascribes national economic prosperity to the efforts

‘

By the time we properly situate the role of the middle class in the sustenance of our own economy, we may begin to realize the degree of crime, our political leaders are committing against all generations of Nigerians by doing absolutely nothing to protect the middle class

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of the several million people who work, save, spend and indeed drive consumer expenditure, which is the propeller of over 60 per cent of aggregate demand. These are members of the working class or generally, the middle class. For this group to which I belong, even if for this particular argument, the middle class holds the key to economic prosperity. Whatever side of the divide we may individually belong, it is important to re-examine our stand based on knowledge, enlightenment and the absence of ignorance laced with impunity. Ignorance wrapped up in impunity has been the bane of many countries in Africa. We continue to promote that disability, which has been elevated to high art in many spheres of African life, by providing some facts on the middle class. It is now settled, at least in the case of the United States, that the middle class is the engine driving growth across all the sectors in that economy. Not only

does the middle class produce the bulk of the energy (mental and physical) exerted in the productive activities of the nation, it also accounts for the bulk of the consumption spending that keeps industrial machines humming, and workers running many shifts that increase their family incomes. This is the class hell-bent on innovation and entrepreneurship. They are the workers and the investors; the thinkers and the striving men and women we see at work every day. The supremacy of the working class in the United States in the drive to economic prosperity is further established and documented by the Centre for American Progress, which in its book, “The American Middle Class, Income Inequality, and the Strength of Our Economy”, described the middle class as the heartbeat of the American economy. According to the centre, the middle class is not only the provider of the indispensable workforce that drives production, it provided the spending power that keeps inventories turning over. By the time we properly situate the role of the middle class in the sustenance of our own economy, we may begin to realize the degree of crime, our political leaders are committing against all generations of Nigerians by doing absolutely nothing to protect the middle class. The scandalously low regard for education displayed by successive governments in Nigeria is understandable. People cannot be expected to give what they do not have. Good education is not one of the requirements for leadership here. This has largely explained the disdain with which learning and scholarship are viewed and starved of funds in Nigeria, The impact of this sad state would have spelt doom for the country but for the intervention of the middle class. When the military and their politician collaborators and successors jointly and severally debased Nigeria’s educa-

tional system, the middle class quickly invested in private schools, creating some of the world-class educational institutions now in Nigeria. As the devastation of the educational system continued apace with the introduction of backward curricula and administrative bottlenecks that deprive children of meaningful education, the middle class took their children abroad, staking practically all they earn to get their kids good educated. It is also the middle class that builds factories, largely from their savings, to create jobs. They are the ones that set up small and medium enterprises, generating tax revenue from corporate taxes, personal income taxes and the sumptuous value-added tax for government. If there is any group that still claims to think in Nigeria, especially as politician go about telling lies to the people to the people they deceived four years ago, and making promises to which nobody can hold them to account, it is the middle class. Innovation comes almost exclusively from that group. The goose that lays the golden egg is the middle class. It is unfortunately, badly disregarded, even by the greatest beneficiaries of their labour – the politicians. Strangely, the politicians do not see the nexus between the moneys they steal every day from their various corners and the labour of the middle class. That is probably why it is so hard for them to create the environment that promotes enterprise in their states beyond the rhetoric. Their enlightened self-interest should have made them realize that the more the workers are satisfied, the more they produce the resources to be looted, which is why the occupation of public office is now a matter of life or death in Nigeria.

willing to take the bold step of throwing their hat in the ring. In this era of money politics, can they afford to spend the little they have in a playing field that is all but level? Even if it is just the hugely unequal availability of resources we have to go by. How well has the relevant authority done over the years to uphold the law that limits an individual’s financial contribution towards an election? Your guess is as good as mine. This feeling of hopelessness shows its ugly head so poignantly in the way we vote. There was a time, before the advent of the electronic voter’s card when people voted for a candidate and I daresay, party, not because they had even the minute expectation that they would serve the people once they get to office but because we all suffer from the same “this is Nigeria” syndrome, coupled with a negative side to the “Warri no dey carry last” mind-set. What do I mean by this? Nigerians, who consider it a thing of unequalled shame to be on the losing side would voluntarily trek to the polling booth and equally on their own volition, vote for someone they know very well will impoverish them the more! How crazy is that? And all this because “they don’t want to waste their vote!” As far as they are concerned, the results will be rigged anyway so they might as well console themselves with the fact that they are on the “winning team”. A team that

no longer recognises 99% of its players once the final whistle is blown can hardly be called a team. Many rogues have been legitimately voted into office as a result of this warped mind-set. Call me a pessimist, but I fear even now the electronic voting system is here to stay we may still not fare much better. This is because though our votes may count, which we are grateful for, the generality of our people have lost hope that even an untainted candidate, with all appearance of sincerity about his intentions, will put the people first when he gets there. As far as many are concerned, even the best of us will forget the people once we get there so they decide to look out for number one, now. So they proceed to sell their birth right and that of future generations by collecting peanuts for their votes. Voluntarily collecting sums so small it may not go beyond that day in exchange for a minimum of four years of bondage. A devastating combination of penury, ignorance and of course, perceived helplessness, causes them to self-inflict a level of suffering even the most virulent of curses from the village could never match.

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Elections...here we go again believe. For a nation that prides itself with having one of largest numbers of churches in the world, this critical element appears to be very noticeably absent. Regrettably, this attitude qualifies us as a classic case study of “learned helplessness”. An illusionary state of impotency where you conclude, erroneously, that no matter what you do, it would not make any difference; so what do you do? Nothing. A lab rat is placed in a cage. At one end of the cage is a tempting block of cheese and all it needs to do is move a few inches across to the other side of the cage to get it. Unknown to it, right down the middle of the cage is an invisible electric fence. Each time it tries to scurry to the other half it gets a terrible electric shock. He tries it once, then again and yet once more. Each time, the shock appears worse than the previous. Eventually, it learns its lesson so it stops trying. Now, switch off the electric fence and physically try to nudge it to across and it will resist vehemently. Even though the previous impediment has been removed, it has lost the will to try. It has learned to become helpless when it really is not. This appears to be the Nigerian story. The brutal and relentless battering of our collective psyche over the years has certainly taken its toll. Economically, psychologically and often times physically, successive govern-

ments and the security agencies whose primary assignment (ironically) is to protect us, have all but beaten us into submission. Nigerians no longer believe in the Nigerian project. “The rogues will always have their way anyway so what is the point?” This is the common response to any suggestion of trying to make a difference. It now appears foolish to even train one’s children on the finer points of civility. How far will the inculcation of the right moral values get them in a society where that seems to be an albatross? Teaching and preparing them directly, implicitly or by one’s actions on how to “get ahead” or “make it” based on this country’s peculiar context now appears like an easier and more realistic proposition. And so the cycle continues and the nation is all the worse for it. You have to give it to the likes of Kingsley Moghalu, Tope Fashua and others. Against all odds, they still believe. They refuse to be helpless. Unlike other political aspirants running under the banner of better established parties, they do not have all the money in the world. Their strategy is not to utilize a bottomless chest of funds to “win” votes but to convince the electorate by means of sound manifestoes and an antecedence of integrity that they have what it takes to salvage this country, which beyond all known logic, fast approaches the bottom of the supposed bottomless pit. There are many more equally brilliant potential candidates out there but few

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Wednesday 26 September 2018

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COMMENT TOMINIYI OWOLABI, CHUKWUEMEKA OSUJI AND CHIDUBEM OKOYE Dr Owolabi, Osuji and Okoye are Partner, Senior Associate and Associate respectively in Olaniwun Ajayi LP

igeria’s quest to curb gas flaring recently received a boost with the issuance of the Flare Gas (Prevention of Waste and Pollution) Regulations, 2018 (the regulations), which is the latest in a long line of legislation and policy measures aimed at reducing and ultimately eliminating gas flaring in Nigeria. Prior to the issuance of the regulations, the 2017 National Gas Policy (NGP) had articulated the Federal Government of Nigeria’s (FGN) commitment to achieve a flare out date in 2020, by adopting a combination of targeted policy interventions such as requiring oil companies to mandatorily include viable and executable gas utilization plans in their field development plans. The NGP had also buttressed the need for upstream companies to maximise utilisation of their associated gas; and expressed the FGN’s intention to work collaboratively with industry, development partners, providers of flare-capture technologies and third party investors towards ensuring that flare capture and gas utilisation projects are developed. Also, the FGN launched the Nigerian Gas Flare Commercialisation Programme (NGFCP) as a marketled mechanism aimed at attracting competent third party investors to commercialise Nigeria’s flared gas. Objectives The Regulations sets out the legal and commercial framework for the commercialisation of flared gas

CLETUS T ADOLE

BUSINESS DAY

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Overview of the flare gas (prevention of waste and pollution) regulations, 2018 by the FGN through permit holders. FGN’s right to flare gas The right of the FGN to take flare gas (free of cost) is recognized in paragraph 35(b)(i) of the first schedule of the Petroleum Act. With the issuance of the regulations, all gas flare in the country would henceforth be available to qualified applicants in line with the regulations, and producers do not have the right to utilise such flare gas, except a permit to use is obtained from the minister. A producer who wishes to commercialize its flare gas would have to demonstrate, among others, that the flare gas would be utilized (a) by its midstream subsidiary; and (b) for a project which is viable enough to achieve commercial operations by 1 January, 2020. Such a project, described as producer’s approved flare gas project, must meet certain criteria set out in the regulations, as validated and approved by the Department of Petroleum Resources . It should be noted that the regulations do not prevent a producer from utilising its associated gas for its own purposes, provided that such utilisation does not reduce or affect any flare gas volume that is subject of a bid process conducted by the FGN or has been assigned to any permit holder. Thus, existing gas utilisation projects undertaken by producers can proceed unhindered, provided that the project does not utilise the producer’s flare gas, or impact the producer’s flare gas volumes which are subject of a bid process conducted by the FGN or has been assigned to a permit holder. Prohibition of gas flaring The regulation provides that no producer shall flare gas without obtaining a certificate from the minister in accordance with the Associated

‘ A significant development

introduced by the regulation, is the express prohibition of routine flaring on Greenfield projects, which is a marked departure from the hitherto state of play, where any upstream company could engage in gas flaring activities (routine or nonroutine) with the consent of the minister

’

Gas Re-injection Act (AGRA), 1979. Further, the regulation recognises two categories of gas flaring viz. (i) Routine flaring, which entails the flaring of associated gas due to the absence of sufficient facilities to re-inject or utilise the gas; and (ii) Non-routine flaring which is intermittent, planned or unplanned flaring on account of reasons such as temporary failure of facilities, abrupt change of operating conditions, and exploration, appraisal, or production well testing etc. A significant development introduced by the regulation, is the express prohibition of routine flaring on Greenfield projects, which is a marked departure from the hitherto state of play, where any upstream company could engage in gas flaring activities (routine or non-routine) with the consent of the minister. Given the above,

Greenfield projects would be unable to proceed until they present a proper integrated plan for the development of the hydrocarbons which ensures that no gas flaring occurs, except in cases of Non-routine flaring which covers special circumstances such as emergencies etc. As it relates to permit holders (i.e. midstream companies), the regulation prohibits routine flaring and venting from facilities. Whilst not expressly stated in the regulations, this suggests that non-routine flaring is allowed for permit holders. The regulation also sets the flare payment (for both routine and non-routine flaring) at $2.00 per 28.317 standard cubic meters for oil mining leases and marginal fields which produces over 10,000 bpd, and $0.50 per 28.317 standard cubic meters for oil mining leases and marginal fields which produce less than 10,000bpd. Commercialization of flare gas in breach of regulations A producer who commercialises its flare gas in breach of the regulations, or otherwise flouts any provision of the regulations, exposes itself to risk of revocation of the certificate to flare gas issued pursuant to the AGRA, thus triggering the penalties set out in the AGRA namely, forfeiture of the concessions granted to such a producer in relation to the field concerned. In addition, the minister may order the withholding of all or part of any entitlements of such a producer, which would then be applied towards the cost of implementation of re-injection scheme, or the repair or restoration of any reservoir in the field in accordance with good oilfield practice. Further, a producer who fails to provide required information or prevents a qualified applicant or a permit holder to access a flare gas site or flare gas date, would be liable to an

additional flare gas payment, and in cases of continued breach, revocation of its concession. Access to flare gas data and flare gas To enable third parties evaluate details relating to flare gas, producers are required to provide flare gas date to the DPR, who conducts a bid process and issues tender documentation. Interested parties would then apply for a data access permit which would entitle the applicant to access the flare gas data. Producers are also required to submit an annual report to the DPR with respect to each flare site. Where an applicant meets the criteria set by the DPR, the minister may then issue a permit to flare gas (permit) to such an applicant, designated a permit holder, to access such flare gas at the flare site on behalf of the FGN, for such period as may be specified in the permit. Notably, only a Nigerian registered company, which is not an upstream entity, can qualify as permit holder. This suggests that irrespective of the shareholding or foreign participation elements of such a midstream company, it can apply for, and obtain a permit, subject to meeting other conditions in the Regulations. The permit authorises the permit holder to take gas from one or more flare sites on an exclusive basis, subject to payment of an award fee for grant of the permit as well as other fees payable to the FGN (as may be specified from time to time by the DPR); a handling fee to the producer; and where applicable, a guarantee fee. Note: The rest of this article continues in the online edition of Business Day @ https://businessdayonline.com

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Single digit interest rate for DFI’s is neither possible nor sustainable

Adole is a policy analyst

n interesting national conversation regarding the possibility of development finance institutions (DFIs) delivering single-digit interest loans to their customers is currently going on. The conversation is taking place largely within the financial sector, policy think tanks, the ivory tower and related spaces. But more Nigerians outside these privileged and rarefied circles should be paying attention and contributing to the conversation. The reason is obvious. Like other parts of the world where DFI’s operates within multiple sectors of the economy, the establishment of development finance institutions in Nigeria is based on the need to achieve significant turnaround of critical sectors of the economy by unleashing the innate strengths of strategic sectors which have been held hostage by wrong policies and poor implementation, boost overall economic development, create jobs, improve infrastructure and provide a better life for the people. In Nigeria, DFIs are ubiquitous. They have become the popular policy tool of successive governments to “kick start”––a favourite government phrase––development in strategic areas. The Central Bank of Nigeria (CBN) website lists the following as

DFIs under its supervision: Bank of Agriculture (BOA), Bank of Industry, Federal Mortgage Bank of Nigeria, NERFUND (National Economic Reconstruction Fund), Nigeria Export Import Bank and The Infrastructure Bank. But this is an incomplete list because in spite of their access to nonbudgetary funds, private sector-driven focus and superior governance, the Development Bank of Nigeria and the Nigeria Incentive-Based RiskSharing System for Agricultural Lending (NIRSAL) also operate as DFIs. This is because they largely meet the conditions set out by Adesoye, A. Bolaji and Atanda, Akinwande Abdulmaliq in their important 2012 paper “Development Finance Institutions in Nigeria: Structure, Roles and Assessment”. According to the authors, the failure of the formal banking sector to meet the needs of critical sectors of the economy “necessitated the emergence of development financial institutions to render services to the large un-catered economic agents (especially in the rural areas) by the universal banks. (These) institutions are expected to offer specialized and micro financial services, offer relatively cheap and accessible financing options, provide long-term finance for infrastructure development, industrial growth, agriculture, small and medium enter-

prises (SME) development and provide financial products for certain sections of the people.” The key issue in the ongoing conversation is this: given the current fiscal and monetary policies of the government and the realities of the highly challenging Nigerian business environment, can DFIs realistically be expected to provide single digit interest facilities? To say the obvious, the failure of the Nigerian financial system is central to the emergence of DFIs. Nigerian banks have a reputation, some of which they have earned, for their long-standing lack of enthusiasm for low interest rates. They have been the butt of constant criticism by successive governments, civil society and the public for allegedly sabotaging policies and initiatives designed to achieve a significant reduction in interest rates which are sorely needed to empower entrepreneurs so that MSMEs, the most critical catalysts for economic growth, can flourish. Dr Joseph Nnanna, a CBN deputy governor will not give the banks a free pass. But he acknowledges what many critics ignore: banks are not autonomous actors in the economy; enthusiastic or not, there are hard realities in the operating environment which hamper their ability to deliver a single interest rate regime. “Banks have some challenges at

lending at a single digit interest rate not because they don’t want to do so, but because there are compelling needs, and I am saying this without any fear of contradiction.” As he put it: “If the government in its self is willing to borrow at 18 per cent from the banks through treasury bills, why should any banker lend to anybody at a single digit? So, that is the problem. If government can stop borrowing and start living within its means, liquidity will be there and banks will be constrained to lend at a single digit.” Still, Nnanna believes that finally the much desired single interest rate, is finally within sight and achievable. His explanation: “Now, see what is happening; the government has decided to finance part of its budget externally, they are offloading treasury bills and treasury bills rate have now dropped from 18 per cent; and as I speak to you now, it is 10 per cent…. So, banks will be awash with liquidity and they will look out for MSMEs and lend the money to them.” Nnanna added that the CBN in partnership with the Bankers’ Committee is taking robust action to empower MSMEs via a special N30bn fund to improve access to affordable ﬁnancing for the MSMEs, particularly those operating in the agricultural sector of the economy. To underscore the seriousness of the initiative, Deposit

Money Banks have committed to set aside five per cent of their proﬁt after tax annually to ﬁnance eligible projects under the scheme. Nnanna’s comments have started generating optimistic ripples. In an editorial titled “Single digit interest rate in sight?” based on the CBN deputy governor’s comments, Daily Trust declared that “hopes for single digit interest loans in the Nigerian economy may materialize following a cash glut in the country’s deposit banking sector, with the recent crash in the Treasury Bills rate from 18% to 10.5%.” The paper added that “the government needs to work towards a consolidation of the emerging lending opportunities in the banks’ portfolios courtesy of the liquidity glut. The need to ensure that banks in their quest for quick profits, and sundry gains, do not marginalize real sector loan applicants comprising manufacturers and agricultural enterprises, who will drive productivity, in favour of politically motivated loan requests, remains critical.”

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Wednesday 26 September 2018

to deny the report, virtually everyone with knowledge of Boko Haram activities and the negotiations that went into the release of some of the Chibok and later Dapchi girls know that the Nigerian government has been paying ransoms to Boko Haram – and it is indeed these ransom payments that is fuelling further kidnaps by the sect and largely funding the activities of the terrorist sect. What is good for the goose is also good for the gander. Since the government had whetted the appetite of the terrorists by paying them ransom to release some of the abducted girls, it must do all within its power to ensure that all the girls, and particularly, Leah, who was left behind on account of her religion, is released and reunited with her family. Thankfully, her abductors are making demands and are willing to talk. The presidency was on record pledging that president Buhari will ensure that “the lone girl is not abandoned” and promised to bring her safely back home to her parents as he has done for the other girls. It is eight months now and he and the government he leads have gone silent on the girl. That

must not be allowed to happen. Mr President must get it clear: Leah Sharibu cannot remain in captivity while he goes about campaigning for people’s votes. He promised to get her out and he must be held to that promise until it is fulfilled. What we have seen over the last weeks is that her release is very possible and all it takes is a firm commitment on the part of the president and his team to secure her release. No explanations will be accepted for the government’s failure to get her released. A s a l w ay s , w e c o m m e n d the efforts of the Bring Back Our Girls (BBOG) group, civil society, religious group, the media, as well as concerned Nigerians who have continued to put her issue and those of the other abducted Chibok girls in the front burner and for always demanding for their release. We particularly appreciate the concern of Thomas Brake, a British MP, who held a one man rally outside the Nigerian High Commission in London demanding her release. We must not be tired; we must continue to pile the pressure on government and make them uncomfortable until Leah regains her freedom.

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

#freeleah campaign

t is now about 8 months sinc e L eah Sharibu was taken into captivity by the breakaway faction of Boko Haram who now trades as Islamic State West Africa Province (ISWAP). Leah and her 118 schoolmates were abducted from their school, Government Girls Secondary School, GGSS, Dapchi, Yobe State, on February 19. Few days later, over 100 of them were set free after negotiations were made with the terrorists. Five were reported to have died in captivity, leaving Leah the only girl abducted from Dapchi still languishing in the terrorist den. Reports have it that the terrorists “regretted” abducting the schoolgirls because they were Muslims. If this report could be relied upon, this could inform the reason why Leah was not part of the c onsideration during th e negotiation. It has been said that the terrorists refused to free Leah because she refused to denounce here Christian faith. It is unfortunate and quite insensitive on the part of the government to leave out

Leah from consideration during the negotiation. On Monday, August 27, The Cable published audio of Leah appealing to President Buhari as well as Nigerians to free her. Both the federal government and Leah’s parents have acknowle dge d the message was from Leah – and it was apparently released by the group holding her hostage to pressure the government to begin negotiations for her release. Worr yingly however, and perceiving the government’s unwillingness to negotiate her release, her captors recently issued strong threat to kill her if ransom is not paid to secure her release. This must not be allowed to happen. We join the countless voices, groups and organisations within and outside Nigeria campaigning for her release to urge the Nigerian government to wake up to its responsibility and ensure that Leah is released unhurt from the clutches of the terrorists. This call has become more urgent considering a UN report that said that the Nigerian government paid “huge ransom” for the release of the kidnapped Dapchi school girls in February. Although the government tried

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Wednesday 26 September 2018

BUSINESS

COMPANIES & MARKETS

DAY

Investors must diversify investments based on specific goals – FBNQuest

Pg. 14

C o m pa n y n e w s a n a ly s i s a n d i n s i g h t

Dangote Refinery jetty receives first cargo ship named ‘BBC Naples’ AMAKA ANAGOR-EWUZIE

he Dangote Oil Refinery jetty located at the Lekki Free Trade Zone, Lagos has received its first ever ship call. The ship named “BBC Naples” berthed at the new jetty on Sunday evening to deliver essential equipment for ongoing construction work at the refinery. The 132 metres long, 9,755 tonnes general cargo ship is operated by BB Chartering and has Hull Blyth Nigeria Limited as the ship agent. BBC Naples, which arrived at Dangote Refinery jetty at 18.18 hours on Sunday after a 40-day voyage, loaded its cargoes for the Dangote Oil Refinery at Jebel Ali, United Arab Emirates and Richards Bay, South Africa. Commenting on the historic ship call, Denis Bandura, managing director of BBC Chartering Mideast Ltd said, “Today our vessel ‘BBC Naples’ arrived at the Dangote Lekki Jetty. It is the maiden call

at the newly constructed jetty, and BBC Chartering is very proud to have partnered with Dangote Group to make this milestone a reality. He said that the vessel delivered essential equipment for the construction of Dangote Oil Refinery, adding that BBC Chartering remains committed to providing its full capacity to ensure the successful delivery of this very important project. Christian Holm, managing director of Hull Blyth, also expressed delight at the berthing of the ship. “Hull Blyth is honored to oversee the first vessel - ‘BBC Naples’ - at the Dangote Lekki Jetty. The unrelenting effort of Dangote Group, Nigerian Ports Authority (NPA), and BBC Chartering has made the opening of the jetty a reality, and it starts a new important phase in the construction of the Dangote Oil Refinery,” he said. “Hull Blyth has a long history of logistic support to Dangote Group, and the oil refinery project has utmost priority as it will provide decisive benefit to Nigeria for

L-R: Mike Ochonma, transport editor, BusinessDay; Anthony Osae-Brown, editor; Hope Moses-Asike, editor money market; Dolapo Ashiru, chartered broker, Nigerian Stock Exchange (NSE), and Patrick Atuanya, news editor, BusinessDay, during the Pic by Olawale Amoo BusinessDay Knowledge sharing series lecture in Lagos.

many years to come.” With a projected capacity of 650,000 barrels per day, the Dangote Refinery is expected to be the world’s biggest single-train facility

OPIC’s 80% local inputs sourcing raises hope for low-cost housing CHUKA UROKO

igeria is today the second most expensive housing market in Africa, after Angola, and one of the reasons frequently cited for the high house price in the country is the cost of building materials which are largely (about 60 percent) imported. It is estimated that building material constitutes 20-30 percent of total construction cost, making the new initiative by the Ogun State Property and Investment Corporation (OPIC) on sourcing building materials locally not only attractive, but also a source of hope for low cost housing. OPIC is now offering prospective buyers houses constructed with 80 percent locally sourced inputs. Apart from its capacity to reduce house price, the initiative is

also part of efforts to boost the country’s economy, creating direct and indirect job opportunities for Nigerians. The corporation is an arm of Ogun State’s Ministries of Housing and Commerce and Industry. It is a frontline property investment and development company in Nigeria, currently making efforts to create housing hubs along the Lagos-Ibadan Expressway corridor. The expansive New Makun City housing project at Sagamu interchange and the MTR Garden Estates at Isheri end of the expressway are testaments of the corporation’s drive towards providing affordable housing for home buyers and investors. According to Jide Odusolu, managing director of OPIC, 256 housing units will be completed in the first phase and delivered to prospective allottees in the second quarter of this year. This is in addition to constructing several

kilometres of link roads from Lagos-Ibadan expressway to the new estates. OPIC has earmarked N4.5 billion for capital projects to cover the development of housing units and link roads to both New Makun City and MTR Garden Estates; rehabilitate roads, repair and upgrade housing units in both Agbara Residential Estates in Agbara and Alamala Estates in Abeokuta. There is high expectation that with this drive to open up local communities with good roads network coupled with the local sourcing of building inputs, access to housing will be a lot easier for a good number of people, especially the low income earners. Building materials prices in Nigeria are way out of the reach of many would-be builders. There was however, a significant drop in the prices of these materials in the first half of this year (H1 2018).

upon completion in 2020. The multi-billion dollars refinery will produce various petroleum products including Euro-V quality gasoline and diesel, as well as jet fuel and

polypropylene. The refinery project, which is expected to end Nigeria’s dependence on imported petroleum products, is projected to generate an estimated 9,500

direct and 25,000 indirect jobs. Aliko Dangote, president of Dangote Group, recently said he had mobilised more than $4.5 billion in debt financing for the project.

Investors must diversify investments based on specific goals – FBNQuest

f you have medium to long-term investment goals, and are looking for steady income and access to cash from your chosen investment option, the FBN Fixed Income Fund may be an ideal choice for you. The Fund is designed to preserve and maximise your return on capital, as it is a low-to-medium risk product which invests in bonds issued by the Federal Government of Nigeria (FGN), State Governments and highly rated corporate institutions. It therefore presents an opportunity for retail investors to earn an income from investing in bonds, while still having access to cash when they need it. The FBN Fixed Income Fund is a tactical product for investors who seek to maximize income at low-medium risk. Analysis from the Securities and Exchange Commission (SEC) revealed that the FBN Fixed Income Fund, which was launched in 2012, is the largest Bond Mutual Fund in Nigeria as at the 27th of July 2018. The total assets under manage-

ment within Bond Mutual Funds in Nigeria as reported by SEC was N11 billion and the FBN Nigeria Fixed Income Fund’s Net Asset Value (NAV) accounted for about 49 percent in that space. NAV is the value per share of a mutual fund on a specific date or time, and the FBN Fixed Income Fund’s NAV grew 9.64 percent from N5.01 billion on the 29th of December 2017 to N5.40 billion as at the 27th of July 2018. This simply means the bonds and securities selected and invested in by the fund returned positive growth in that time period, which the investors in turn enjoyed. “We are trying to spread the message that investing is not only for the wealthy. The minimum investment into the FBN Fixed Income Fund is only fifty thousand naira (N50,000), which makes it accessible to many people. Investors’ funds are combined and invested in a diversified portfolio of high quality fixed income securities that aim to preserve the initial investment and deliver maximised

returns.” Ike Onyia, the managing director of FBNQuest Asset Management, said. Onyia further stated, ‘A lot of investors choose FBNQuest Asset Management because we are personal investment managers. Our approach is guided by the customer’s unique investment objective and appetite, and our mutual funds are managed by experienced and skilled investment experts whose primary responsibility is to monitor each Fund and maintain the strong investment performance the firm is known for.” The FBN Fixed Income Fund is regulated by the SEC, and the Fund Manager operates within the guidelines provided. From an asset allocation point of view, the Fund Manager can invest between 15 percent and 75 percent of the Fund in FGN bonds, up to 30 percent can be invested in State government bonds, up to 30 percent may be invested in corporate bonds while up to 15 percent may be invested in Eurobonds.

BUSINESS DAY

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Wednesday 26 September 2018

COMPANIES & MARKETS Konga plans N2.9bn investment in e-commerce delivery Jumoke Akiyode-Lawanson

l u s i j i Ij o gu n , chairman of Konga, Nigeria’s comp osite ecommerce company, has revealed that the company is set to invest N2.9 billion in its logistics arm, Kxpress to build a world-class delivery solutions company that will resolve the logistics challenges in Nigeria. Ijogun who revealed the company’s plans to invest this amount in delivery solutions while speaking to journalists at the weekend, said that although logistics remains a major challenge for e-commerce, the new management of Konga has injected over 43 new vehicles and 100 brand new motorcycles into the system since the company was acquired by Zinox Group and

merged with Yudala. He noted that the company has already commenced work to create a lasting solution that will work not only for Konga but other third-party logistics companies in Nigeria. “We have received approval from the board of Konga to invest about N2.9billion in Kxpress to expand the fleet of vehicles available in the pool in order to reach the last-mile faster and more conveniently,” Ijogun said. “The plan is to add 200 new vans and 1000 motorcycles to the system nationwide. One aspect of this investment is our intention to work with other credible, hardworking Nigerians as franchises to create jobs for more people while the second part is our determination to guarantee same day delivery anywhere in Nigeria. Customers in Abuja, for instance, may start enjoying

same day delivery from first week of October and same will be extended gradually nationwide. “We must understand, however, that solving this challenge goes beyond increasing the number of vehicles at our disposal. We are also investing heavily in setting up logistics centers nationwide, boosting our technology and human capital,” he added. While urging customers who have had to bear some inconveniences to keep faith with the Konga brand, Ijogun who assumed the position of Chairman at Konga in April 2018, further noted that the management of the company is working hard behind the scenes to raise standards in the e-commerce industry, noting that the new initiatives will manifest in the first quarter of 2019.

Business Event

L-R: Kayode Pitan, MD/CEO, Bank of Industry; Amina Mohammed, deputy secretary general, United Nations, and Bola Adesola, managing director, Standard Chartered Bank, at the UN Global Compact Leadership Summit 2018 which held at the UN Headquarters, New York on the sidelines of the UN General Assembly.

Jobberman unveils new Website for improved Job Search

obberman Nigeria has upgraded its platform, in order to provide an easier and more effective job search experience for jobseekers and a refined recruitment experience for employers. Since going live in August 2009, Jobberman has grown to become Nigeria’s first and foremost online recruitment platform, West Africa’s most popular job search engine (Forbes) and one of Africa’s top 5 recruitment sites (IT News Africa). For over 9 years, Jobberman has helped Job seekers find job opportunities, provided career tips, given employers access to qualified candidates & administered recruitment advice. As a brand that listens, Jobberman has taken its audience feedback consisting of over 2 million career professionals and

50, 000 employers who connect daily on the platform by including new features that can help employers and jobseekers accomplish more of their career and company goal. Employers on the Jobberman platform can now manage their Job and Applications better with the newly designed Applicant Tracking System (ATS) and create candidate pools for future use. Jobseekers can now: set up or update their profiles with a Profile Picture, which is visible to employers; create a Career Summary & Professional Headline that summarises education, experience, skills and goals; specify preferred jobs for easier job matching; let recruiters know their Job Search Availability status; add Projects & Portfolio to their profiles, allowing employers

to see samples of previous accomplishments, amongst other new features. This new platform has been designed to help professionals move forward at every step of their career; from entry level to experienced professional, giving the jobseeker more control over the outcome of his or her career. What are you waiting for? Take a look around and share your experience on our new website. Feel free to share with your friends and connect with us on our different social platforms on Facebook, Twitter, LinkedIn and Instagram. We are continuously committed to connecting job seekers to the right job opportunities and employers to qualified professionals. Join us to experience the new and improved Jobberman Nigeria!

Management experts to focus on human capital building at 34th Omolayole lecture series

ey management experts across the nation’s management and economic development spectrum will on Thursday addressed the issues around ‘Human capacity building: Imperative for economic recovery and transformation,’ one of the critical topics in management at the 34th Annual Omolayole management lecture series. The annual lecture is organized by AIESEC Alumni Nigeria (AAN), a nonprofit organization of graduates who were members of AIESEC – the world’s largest youth-run organization present in over 1,700 universities across 126 countries and territories that allows university students to explore and develop their leadership potential. Since 2013, the Omolayole Management Lecture has been organised in collaboration with

four other organisations in which Michael Omolayole has played a significant role over the years. They include: The Lagos Chamber of Commerce & Industry (LCCI), Chartered Institute of Personnel Management (CIPM), Nigeria Institute of Management (NIM) and Nigeria Employers’ Consultative Association (NECA). This year’s lecture will be hosted by the Nigeria Employers’ Consultative Association (NECA) tomorrow while Foluso Philips, of Phillips Consulting, will proffer fresh insights on critical management issues, as regards the development of Nigeria’s human capital. The 34th edition of the lecture is particularly significant as Michael Omolayole will be celebrating his 90th birthday at the end of the year. The lecture will have in attendance guests and participants from diverse

sectors of the economy including CEOs of multinationals, financial institutions, SMEs, Social entrepreneurs, non-governmental organizations and corporate organisations. Since 1985, the lectures have covered diverse topics delivered by notable speakers and these eminent personalities includes Ernest A. O. Shonekan, who delivered the first paper in the series; “Industrialisation and Economic Recovery”; Olusegun Osunkeye, the 1989 guest speaker with the topic “The Effect of Current National Financial Policies on the Manufacturing Sector” to the more recent 28th and 29th lectures by Sola DavidBorha “Financing Infrastructural Development in Nigeria: The Power Sector” ; and Gbenga Oyebode, “Agricultural Innovation & Contemporary Investment Opportunities.

L-R: Sheila Chukwulozie, alumni, Sarafina Foundation; Chimamanda Ngozi Adichie, Novelist, and Sam Onyemelukwe, CEO Trace Television/ Sub-Sahara Africa, during an interactive session with Chimamanda Ngozi Adichie in Lagos. Pic by OlawaleAmoo

L-R: Iyke Ejimofor, executive secretary, Nigeria-South Africa Chamber of Commerce; Sam Oniovosa, treasurer, Nigeria-South Africa Chamber of Commerce; Kikelomo Longe, principal, Capital Alliance Nigeria Limited; Dr. Amine Mati, IMF Mission chief/senior resident representative; Osayaba GiwaOsagie, director, Nigeria-South Africa Chamber of Commerce; Andrew Mashanda, executive director, Stanbic IBTC and Olu Delano, head: consumer coverage, Stanbic IBTC at the chamber breakfast forum sponsored by Stanbic IBTC in Lagos, recently.

L-R: Mai Atafo, celebrity fashion designer; Yahaya Taofiq, masters of style 2018 winner, and Charles Nnochiri, head of marketing, PZ Cussons Consumer, at the official Dare 2 Dream Season 5 prize presentation at Terra Kulture, Victoria Island, Lagos.

Politics & Policy Wednesday 26 September 2018

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BUSINESS DAY

Don’t take Lagos voters for granted, NIM warns Tinubu, others

…Congratulates Osun people for ‘rejecting Lagos king makers’ INNOCENT ODOH, Abuja

he Nigeria Intervention Movement (NIM), the umbrella platform of fresh breed political leaders in the emergent third force movement of Nigeria on Monday cautioned the National Leader of the All Progressives Congress (APC), Asiwaju Bola Tinubu and power brokers in Nigeria to learn from the outcome of the Osun State governorship elections and desist from actions tending towards taking voters for granted. NIM, a pan-Nigerian body currently mobilising towards ‘ballot based political revolution’, in a statement issued on Monday by its National Publicity Secretary, Naseer Kura, said it was particularly important for Tinubu and his political loyalists in the southwest to immediately stop abusing the goodwill of the electorate but quickly learn from the strong signals from Osun election which, according to it, clearly rejected politics of godfather and imposition of anointed candidates by power brokers. Reacting to the Osun election, which was declared inconclusive by the Independent National Electoral Commission (INEC), NIM

Agbakoba

strongly chided power brokers and godfathers in the country for indulging in taking the Nigerian electorate for granted by engaging in what it termed “cabalistic self -serving politics” which is currently rocking and heating the Lagos polity. NIM in the statement decried the unfolding political drama in the Lagos APC, saying it was time for the actors to stop their reckless display of power without proper considerations for the voters. “We, the fresh breed political leaders in the country again wish to decry the unfolding political drama in Lagos, which is involving the ruling APC cabal in Lagos and the State Governor, Akinwunmi

Change has come to stay in Kwara - Moshood Mustapha SIKIRAT SHEHU, Ilorin

oshood Mustapha, a governorship aspirant of All Progressives Congress (APC), in Kwara State has declared that his administration will create a solid economic base for the state through rapid industrialization and sustainable agricultural development programmes to change face of kwara. Mustapha, the Special Adviser on Inter-parliamentary Affairs, Protocol and Special duties to the Senate President of the Federal Republic of Nigeria, who stated this in his manifesto presented on Monday in Ilorin, the state capital, promised to alleviate and ultimately eradicate poverty through productive work and social development. According to him, Kwara State has been grappling with a lot of challenges ranging from infrastructural deficit to lack of adequate health-care delivery, lack of quality education, inadequate power supply, youths unemployment among others, thereby hindering the state from development and if given the chance

to govern the state, he will change the system for better kwara. The governorship hopeful affirmed, “my gubernatorial ambition is borne out of the need to reposition Kwara State in the socio- political and economic spheres, thereby, making it a force to be reckoned with not only in Nigeria but the world at large. “While our vision is to create a kwara that works for all irrespective if tribe, genda, religion and political affiliation, our mission is to drive drive Sustainable Economic Development, Inclusive Governance, Poverty Alleviation and Wealth Creation (SIP). “We believe in change agenda of the administration of President Muhammadu Buhari and we will consolidate the efforts of the federal government in sustaining and adding value to the peace, tranquility and development Nigeria is presently enjoying.” The governorship hopeful further stated, “safety of Kwara citizens is not negotiable so, we will do everything within our capacity and work with all the security agencies to ensure peace and a crime -free state.”

Tinubu

Ambode, who is being pressured by power brokers within the Lagos Mandate Group to step down and forgo his reelection bid for their anointed candidate, in person of one Jide Sanwoolu. “We think this kind of reckless power display by Tinubu and his clique of King makers in Lagos makes a mockery of the principle of internal party democracy as it also demeans the value and dignity of Lagos teeming electorate and voting populace to the effect that they can even jettison the performance of Ambode, who is regarded as the whiz-kid of Lagos development for the blind loyalty of Sanwoolu,” NIM said. The movement, which is being

jointly led by human rights icon, Dr Olisa Agbakoba (SAN) and Dr Abdujalil Tafawa Balewa, son of the former Nigeria’s Prime Minister, added that the ‘sort of paternalistic politics,’ being displayed by Tinubu and his proteges could be best described as self -overreaching and abusive of the longstanding goodwill they had been enjoying in Lagos. While congratulating Osun electorate for rejecting what it called ‘Lagos king makers,’ NIM said it was not surprising that the people spoke with their vote to reject Tinubu and his overreaching actions and power show. “We are, therefore, not surprised that this power show was roundly rejected in Osun, after Tinubu

goofed and overstretched his goodwill by daring to assert during one of the campaign trains of APC to an Osun monarch that he and Oyetola, his cousin, anointed as the governorship candidate of APC, are richer than the State of Osun. “To us, the Osun Governorship elections could not have come at a better time than this as the outcome has turned out to be a big sign of what is to come in 2019, especially in Lagos. So, in a State like Lagos where Tinubu’s power brokers are already boasting about unilaterally determining, who becomes the next Governor of the State, we are of the firm opinion that the electorate would be wise enough this time to reject any anointed candidate of godfathers, as any attempt to deny Ambode the APC ticket in Lagos should really send a strong signal to the Lagos electorate that their power and mandate are being undermined. “The APC power brokers should know that the electorate can reenact the Osun 2018 dose again in Lagos for the first time since 1991, when a similar power tussle among power brokers in the camp of the more popular Social Democratic Party (SDP) providentially foisted the candidate of the National Republican Convention (NRC), the Late Sir Michael Otedola as the Governor of Lagos,” the group said.

Pate, Bauchi Gov bicker over APC Primaries ... As Dasuki promises economic revival in Gombe JAMES KWEN, Abuja

ormer Minister of State for Health and a leading aspirant seeking the governorship ticket of the ruling All Progressives Congress (APC) in Bauchi state, Ali Pate has replied Governor Muhammed Abubakar for describing him as a ‘spoiler’ for his opting for direct mode of primaries in the state. Pate insisted that he is “truly a spoiler of a failed government”, like that the current Bauchi state governor. The Bauchi state governor in a statement by his spokesman had described Pate’s earlier view on Direct Primaries in the state as tantamount to spoiling their regressive show. But responding in a statement signed yesterday in Abuja, Pate Gubernatorial Campaign Support Group in Bauchi state, expressed surprised that such comment was coming from the state government and not the state chapter of the APC, who its felt knows better. The statement said: “Direct Pri-

maries approach is a clear option in the constitution of the APC. It is also the preferred option for President Muhammad Buhari, Lagos, Kano and some other states, which is already adopted. “The Direct approach to primaries is more democratic and in line with the popular, progressive ideology of the APC, which the current Bauchi governor is not aware. “The reality is that, the current Bauchi state governor, Barrister M. A. Abubakar has failed woefully in governance. He should take the path of honour and resign honorably without dragging down APC in Bauchi state. Dr. Ali Pate is indeed a spoiler of failed governance and the people of Bauchi state understand it.” Meanhile, immediate past National Youth Leader of the ruling All Progressives Congress (APC) Ibrahim Dasuki has vowed to redefine economy of Gombe state if given opportunity to serve as Governor of the state. Dasuki who is one of the governorship aspirants seeking the ticket of APC told newsmen that he will bring

his experiences to bear as former Local Government Chairman of Gombe in lifting the state to greater heights. Speaking with newsmen at the weekend in Abuja after he was screened by the APC governorship Screening panel, Dasuki said he will ensure that businesses are booming in Gombe because the state is an economic center of the North-east. “Like you have seen, I have come here to do my screening and I’m done and I am happy to announce to you and what is left for me is the election. And by God’s grace if I win this election, I will ensure that I bring all my experience to bear on Gombe, I will ensure that I lift Gombe to greater heights. “Gombe is the commercial centre of North-east and if given the opportunity, these are some of the priorities I am going to ensure that businesses are booming so that our people can have something to do and also to generate revenue for my state so also to develop critical infrastructure, particularly roads, electricity, schools, hospitals and the rest of them are my priorities.

BUSINESS DAY

Wednesday 26 September 2018

BUSINESS DAY

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Wednesday 26 September 2018

Politics & Policy

Osun guber: Can INEC guideline override the constitution? OWEDE AGBAJILEKE, Abuja

he decision of the Independent National Electoral Commission to declare the Osun State governorship election inconclusive has come under serious scrutiny from a cross section of Nigerians. While some pundits believe the decision is in order, others have accused the electoral body of playing double standard. They argued that in a reversed role, the Commission would have declared the APC winner of the poll. They cited the commission’s declaration of the All Progressive Congress (APC) candidate, Haruna Isah as winner of the Lokoja/Kogi Federal constituency bye-election in August 2018 even when the total cancelled votes, 19,960, was more than the margin between the two leading parties. The APC had scored 26,860 votes as against 14,843 polled by PDP despite a margin of 12,015. In a keenly contested governorship election in Osun State at the weekend, PDP candidate, Ademola Adeleke had garnered 254,698 votes to defeat that of the All Progressives Congress, Gboyega Oyetola, who polled 254,345 votes. But citing INEC’s guidelines, the Returning Officer of the election, Joseph Fowape, said since the margin between the two leading candidates was lower than the registered cancelled votes, the election had to be declared inconclusive. He therefore announced that a supplementary election would take place in seven polling units in Orolu, Ife South, Ife North and Osogbo council areas on Thursday, September 27, 2018. BusinessDay reports that Paragraph 4, Section N of the 2015 INEC Guidelines, issued pursuant to Section 153 of the Electoral Act, 2010 (as amended) empowers the Commission to declare a poll inconclusive where the margin of victory in an election is lower than the number of voters in units where elections are cancelled. The Commission had also used the same guideline to declare the Kogi and Bayelsa and Imo governorship elections inconclusive. The immediate past Second Vice President of the Nigerian Bar Association (NBA) Monday Ubani has thrown his weight behind the commission. To him, INEC was justified in law to declare the election inconclusive. “Since the difference in the number of votes between the two leading candidates of the PDP and the APC was less than the cumulative number of registered voters in the units where votes were cancelled, INEC, by law, has the power to declare the election inconclusive. “In the Osun election, the leading candidate had 353 votes more than the APC candidate. The figure is less than the over 3,000 registered

Yakubu, INEC chairman

Gboyega Oyetola, APC candidate

Ademola Adeleke, PDP candidate

voters in the units where the election was cancelled. But whether or not the votes were justifiably cancelled is another question,” he said. Ubani’s position was corroborated by Lagos-based lawyer and human rights advocate, Inibehe Effiong, who said the declaration was in order. This, he emphasised, was backed by judicial precedence, adding that even if the opposition party approaches the law courts to seek legal redress, it would fall like a pack of cards. “The Supreme Court has never nullified an election. Re-run, though a creation of INEC Guidelines, has been validated by the Courts,” he said. He cited similar instances in Kogi and Bayelsa where INEC declared the governorship elections inconclusive, despite the emergence of a winner, to buttress his argument. But the million dollar question on the lips of most political commentators is whether INEC guideline is superior to the 1999 Constitution (as amended). Section 179 (2) (b) of the Constitution provides that: “A candidate for an election to the office of Governor of a State shall be deemed to have been duly elected where, there being two or more candidates - (a) he has the highest number of votes cast at the election; and (b) he has not less than one-quarter of all the votes cast in each of at least twothirds of all the local government areas in the State”. For Senate President Bukola Saraki, Adeleke should have been declared winner, having won the highest number of votes and fulfilled the condition for geographical spread stipulated in Section 179 (2) (a) and (b) of the Constitution. In a statement personally signed by him, Saraki who doubles as Chairman of the PDP Presidential Council on Osun Gubernatorial Election, urged his party and the candidate to challenge the decision of the electoral body by seeking legal interpretation in the law courts. While submitting that the reputation of the electoral body is at stake, the nation’s Number Three Citizen pointed out that the way the Commission conclusively handles the Osun election will determine global expectations from our politi-

cal process. He said: “In my lay man’s opinion, the INEC was wrong in declaring the election as inconclusive because the votes in certain polling units were cancelled. The decision of INEC to cancel the election in those areas after voting had taken place means INEC had already excluded the votes in these areas from the election process and therefore those units should have no place in the overall results. My opinion would have been different if the election in the affected units did not take place at all, may be as a result of malfunctioning of the card reader machine or unavailability of the electoral materials. Since the voting took place and was cancelled, only the courts could reverse the initial decision by INEC to cancel the votes in these areas. “That is why I call on our party and its candidate to seek further legal interpretation on this decision by the electoral body. One cannot but wonder whether if the places were reversed and the candidate of the ruling All Progressives Congress (APC) is the one leading in the election, the INEC will take the same decision it has taken now. “At this point, it is necessary to also call on INEC to display courage, boldness, independence, neutrality and patriotism so as to send signals to the world at large that Nigerian electoral system has come of age and that our democracy has matured. The electoral body needs to re-assure all and sundry that the 2019 election and other elections will be free of manipulations and undue interference. “The INEC should note that the Osun gubernatorial election is not only about that South-western state. It is about our country and the entire world is watching. Our national interest is at stake. The integrity of our electoral system is at stake. The reputation of the electoral body is at stake. The future of our democracy is on the line. It should therefore ensure that the wish of the Osun State electorate eventually prevail”. A former Chairman of the Independent National Electoral Commission (INEC) Maurice Iwu has faulted the Independent National Electoral Commission’s decision to reschedule part of the election.

In a statement, Iwu who said that he invented the inconclusive elections outcomes, particularly where elections did not hold for one reason or the other, said he later discovered that the proposal violated provisions of the constitution and was forced to drop it. His words: “Actually, during the review of INEC’s Elections’ Manual, my committee and I as the Chair, invented the inconclusive elections outcomes, particularly where elections did not hold for one reason or the other. “However, we the initiators of the inconclusive elections realised that our proposal was against the provisions of the 1999 Constitution (as amended), particularly the presidential and the governorship elections and rerun. “Our proposals could be applied only in Senatorial, Federal House of Representatives, and State Assembly elections and rerun, for which the Constitution did not specify how these rerun should be made. “In this, what is required by the constitution is that the ‘first past the post’ and/or that the candidate must have the polled majority of the votes cast. “Secondly, that the candidate in addition to it, must obtain 25 per cent of the total votes cast in two-third of the LGAs of the state in question or of the states in case of presidential election. “The electoral act or INEC guide lines cannot supersede the constitutional provisions for that purpose. “As the Constitution has clearly spelt out the manner and how a rerun should be made in the cases of governorship or presidential election rerun. Now that the abuse of this tool is becoming obvious, the beneficiaries of this anomaly have refused to listen or adjust accordingly.” On his part, a former member of the House of Representatives from Edo state, West Idahosa, faulted the premise on which INEC declined to name PDP as winner of the election. In a legal opinion on the Osun rerun, Idahosa said INEC is probably relying on their 2015 guidelines which appear contrary to constitutional provisions on the matter. “It may make sense if the votes involved are in relation to centres were elections were not held due to no fault of the voters.

“However, were elections were held and votes are cancelled, they remain cancelled. They ought not to form part of the counting process and should not influence the outcome of the elections for any reason whatsoever. “In Oshiomhole vs Osunbor & ors, cancelled votes were added to PDP’s scores. All the courts held that cancelled votes had no role to play in an election. “The votes were deducted and Oshomhole was declared winner of the election. Why is INEC giving so much priority to cancelled votes on this occasion? I can’t fathom it. This may be more political than legal”, he stated. In the same token, former Vice President Atiku Abubakar, urged INEC to resist every temptation to be used to tamper with the will of the people of Osun State. While saying that the people of Osun have freely given their mandate to Adeleke and the PDP, the presidential hopeful declared that he was in Osun on Wednesday September 19 and saw first-hand the love the people of Osun have for Adeleke and the PDP. “The attempt by the All Progressives Congress to snatch victory from the jaws of defeat will be resisted with every legitimate and democratic means at our disposal. “As I said in my statement condemning the police invitation to Senator Ademola Adeleke this past Wednesday, I stand with him and the people of Osun. In good times and bad times, the PDP and I will always be with Senator Adeleke and the good people of Osun. “I hereby offer Senator Adeleke and the Osun State chapter of the PDP my right hand of fellowship as they work to retrieve their victory, which is already in sight. The vote against APC was overwhelming; the people are not happy with status quo. “We must all stand united at this point in time. The PDP secured a simple majority, even with the N16.7 billion that the federal government surreptitiously paid to the incumbent Osun State APC government, and the desperate Tradermoni bait that Vice President Osinbajo dangled at the electorate in Osun. This is a testament to the fact that the APC has lost favour all over Nigeria. “What has happened in Osun State is a turning point and our people have spoken and democracy is safe. INEC must do the needful”, he cautioned. On the conflict between INEC guideline and the constitution, Abuja-based legal practitioner, Kayode Ajulo, averred that the former will, to the extent of its inconsistency with the constitution, be null and void. As Nigerians express divergent views on the matter, it is hoped that a legal interpretation would be sought to forestall any political logjam that may arise, considering that the 2019 General Elections is less than five months away.

Wednesday 26 September 2018

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BUSINESS DAY

Politics & Policy

I’ve never lost elections, so I can’t lose Kwara governorship – Zakari Zakari Mohammed, a two term member of the House of Representatives is optimistic of winning the governorship election in Kwara state. In this interview with KEHINDE AKINTOLA and select journalists, Mohammed reeled out his manifesto for the forthcoming election. Excerpts: What are your plans for the people of Kwara State in the forthcoming governorship election? Apart from the fact that Kwara is very conducive for business and for living, it also has location advantage. Kwara is in the mid-land between the north and the south and what that tells you is that you can leverage on both sides of the divide of Nigeria. It has a wider border spanning close to 100 kilometers. So you will leverage on the fact that whatever you do, Kwara has an international border and at the same time the people are agrarian in nature. We also have fertile lands so we would have to concentrate on agriculture and when we concentrate on agriculture farmers will sell and of course when they sell their food items, the state government will become the buyers of last resort and what that means is that you can now sell and make money out of it and of course your citizenry are well fed. The other one is a football academy. Apart from the fact that the football academy will sustain itself, it will give revenue to the state and I believe that with prudent management of resources you’ll be able to recognise Kwara state in the map of Nigeria in certain things because we know that when you mention some certain states in Nigeria there are things that they are known for, so I will make Kwara state a destination for agriculture. If you could remember there was a time Zimbabwean farmers were brought into Kwara state, they’re still there working and when that project started, I could remember the subvention that was going to Ido local government which was in the range of between 15 and 16 million then. When we started way back in 2004 when the farmers started their activities the money increased to close to 30 million and what happened is that the farmers were bringing out money to pay for the workers and the farmers around there were learning new techniques of farming. Rural development is about creating roads and I am from an agrarian community and I know what the feeling and pains of the people are in terms of roads and water. So when you open up roads you can be sure that food items will come and it would be cheaper and Kwara state will become an agricultural hub of the entire area. As of today Kwara feeds states like Oyo and Lagos by extension particularly yam flour. Their yam flour is sourced from Kwara and all the western states take their yam

For me I have told you that when I set my mind on task, I don’t look back. I have run for elections twice, I have not lost any and I won’t lose this. I exactly know where it matters because this game is about knowing what matters. If you look at the arithmetic in Kwara state for instance, you will know that in central Kwara we had the governor for 12 years, Governor Lawan was there for four years, Bukola Saraki was there for eight years so 12 years in Kwara central so power has shifted to Kwara south for eight years and so the legitimate place for power to go is Kwara north and I believe that I am well placed.

Zakari

flour from Kwara state. So why can’t we up it to the second level, bring up processing plants that can process yam flour to certain standards that can now increase the selling power of the farmers, that is one area I want to concentrate on and I know that with God being on our side with the federal interventions, the state will deepen development in the agriculture sector. What is your relationship with the Kwara traditional council, chiefs and others? For me where I come from we cherish the traditional institutions. I believe that they have been playing their part in terms of stabilizing our politics and they have been very useful because the good thing is that you scarcely know a traditional ruler in Kwara of note that is not educated. For instance in my constituency I have a traditional ruler who is a professor, he is a Harvard trained Economist, he was a lecturer, he is retired and he is at home. I have one of the former permanent secretaries of finance in Kwara, he was the accounting officer of ministries, he is there as a traditional ruler now. One of the emirs is a former member of the House of Reps, former chairman of the local council, one was the former controller of the Nigeria Population commission, one was a retired permanent secretary too. So in my constituency I actually have about five paramount rulers who are all lettered. We have accountants, medical doctors, di-

rectors in the civil service, retired judges, school teachers, so we have a lot of traditional rulers who are lettered. So you have a state that is highly enlightened and having to relate to them is a lot easier. Infrastructure in Kwara state especially federal roads are in a very bad state. If you become the governor, how would you resolve these issues especially if you have a federal government that is not from the same party with you? I think we are missing the point, what is important is that political parties are platform for us to get to office and once we get into office, governance should take preeminence over every other things. The truth of the matter is that if you are in party A, you shouldn’t preclude the fact that there are people who are in that party A or a particular state without party B. That you are in party A at the centre, does not preclude that there are people who are Nigerians and they are on the other side of the divide too. So, what I think should happen is that more importance should be placed on governance rather political parties. Part of our problem has been the fact that we politic all through the term and governance has to be given preeminence so that at the end of the day whether party A or B, what is important is the people, it is about service delivery, is about giving them what specifically they are supposed to have. Do you have any Plan B in case your governorship ambition fails?

There are quite a lot of you from the same Saraki family that have contested for this very position, does it mean there is a division within the family and how would you resolve this? There is no crack in the family, what I just think is that everybody would want to have a try and at the appropriate time we have our machinery for sorting out our issues and I know that, it has never been out of our capacity to sort out our problems. So don’t get carried away by the array of people collecting forms to run for the office of governor in the camp of Saraki. What I know is that at the appropriate time we have internal mechanism and machinery, we will sit down and sort it out and of course we will all support each other. You know in 2011 there were so many candidates that came out who wanted to be governor but the current governor got it and of course every other person queued behind him and we had success. So this wouldn’t be the first time we had people coming out to say at least they want to govern. Earlier you talked about agriculture in the north of Kwara being very productive, can you throw more light on this? Yes with due respect I believe that the north is the food basket of Kwara because the Nupe speaking area of the north is predominantly made up of farmers who produce groundnut, rice and of course fishing. If you come to the other divide in Kwara, they produce yam, sorghum, soya beans and all that and I believe that every person who needs agricultural products will head to the north of Kwara because they are the ones who are agrarian in nature because of their cultural background. So, I believe as someone from that kind of environment I would be doing justice to myself by promoting

agriculture so that all other parts of the state will have a feel and begin to say that Kwara state will be known as the hub of agricultural production. How do you intend to curb the issue of insecurity in Kwara state? Kwara state is just one out of many states in Nigeria and a society is judged by the component parts of it. Everything that is in Kwara is in every other part of Nigeria. For me agriculture will engage the youths and of course when they are engaged, they will think less of crime. If somebody goes to the farm in the morning, he will not have time to say he is going out to cause violence. So we have to look at our youths and we channel their energy into useful ventures so that at the end of the day you will have very low crime rates. A whole of these developmental issues are on agriculture, how would you stem the issue of Fulani herders-farmers clashes? Of course that issue does not even come up in Kwara, clashes are at the border line. This is because we have a harmonious working relationship. The traditional institution is deeply involved in reconciliation and crisis management. And of course a lot of the Fulani’s that stay in Kwara are indigenous in the sense that if you come to Ilorin there are places that are Fulani of origin, there are places that are Yoruba of origin, so it is a melting point and that is why I said Kwara is a mini Nigeria where you have cultures meeting together. Inter marriages are taking place so that at the end of the day, even if you are A tribe, how do you attack B tribe because definitely your mother or your cousin is from the other divide. So intermarriages and intermingling has curbed the mutual suspicion. In the recently release ranking in WAEC, I don’t think the position of Kwara state was that impressive; so how do you intend to tackle education and health? I said it at the beginning that education is very key and why it is key is that whatever infrastructure developments you are putting in place, unless the citizenry are educated they will end up destroying it, so it is better to get them educated so that they will have maintenance culture and they will appreciate the fact that government property is your own property too and they will begin to protect them; so they can see the policies of government rather than towards the fact that the government means well.

BUSINESS DAY

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Rising flood incidence threatens Nigeria’s food security JOSEPHINE OKOJIE

igeria’s food security may be under threat owing to the rising flood incidence recorded across the country recently, which adds to the burning pressure on Nigerian farmers who are already contending with high cost of inputs. The recent flood recorded in major agricultural producing states such as Benue and Niger among others is a major challenge to the country’s food security as many farmlands were submerged in floods beyond the level that the crops could survive. “The flood incidences reported in major agricultural states is a big threat to the Federal Government food security and export drive quest,” says AfricanFarmer Mogaji, chief executive officer, X-ray Farms Limited. “We are going to experience food shortage because a lot of farmlands have been destroyed by the floods and those that survive, the yields would be lower,” Mogaji says. According to experts, when severe floods occur, farmers incur huge losses, as their crops get submerged beyond a level they could thrive. Furthermore, fungal diseases usually become more rampant when extensive flooding overtakes farms. Recently, more than 10 states have been ravaged by floods and have caused unprecedented havoc

L-R: Joyce Akpata, director-general, Nigerian-American Chamber of Commerce (NACC); Kunle Ahmed, CEO, AXA Mansard Insurance Plc; Oluwatoyin Akomolafe, president, NACC, and Yomi Onifade, executive director, Technical Division, AXA Mansard during NACC’s courtesy visit to AXA Mansard in Lagos recently.

across the country with a possibility of more destruction to come if the rainfall continues. The agricultural sector has been the most affected from the flood disaster as farmers across the country have recorded huge losses owing to the floods that affected their farmlands. “My seven hectare of cassava I planted three months ago has been submerged by flood,” Austine Orabotor, a cassava farmer in

Ukpodo area of Edo State says. “The situation is very bad and this would affect our production this year. The country might experience further increase in prices of food this year,” Orabotor adds. Recent reports from Kano says that many farmlands in Wudi, Warawa, Gaya and Gabasawa areas of the state where submerged with flood, thereby resulting to crop and livestock losses. In many of the farms, rice, wheat,

millet and beans were submerged beyond redemption. According to the experts, if the flood situation is not address, the country might experience food shortages in some major crops, as farmers would not be able to farm large areas owing to the huge losses incur during the floods. The solutions proffered by experts to address the issue of flood include the need to construct more and better drainage systems across the country,

and more dams to be developed to take up water from presently overworked reservoirs. Experts have pointed out the need for farmers to adopt humidity resistant seeds and effective fungal chemicals, which they described as important in managing crop loss. The solutions proffered by experts to address the issue of flood include the need to construct more and better drainage systems across the country, and more dams to be developed to take up water from presently overworked reservoirs. The experts further pointed out the need for farmers to adopt humidity resistant seeds and effective fungal chemicals, which they described as important in managing crop loss. “We need to engage more seeds that are resistant to high humidity,” Mogaji says. The National Hydrological Services Agency had earlier in the year warned against flooding, stating that 35 states in the country would experience severe flooding on the account of a rise in water levels of eight major rivers across the country. “The effect of the flood on the agricultural sector will be very profound this year and it would be a major threat to the country’s food security because we do not have any mechanism in place to manage the risks,” Muda Yusuf, director general, Lagos Chamber of Commerce and Industry (LCCI) says.

How bad roads frustrate Nigeria’s smallholder farmers JOSEPHINE OKOJIE

xperts in the country’s agricultural sector have called on the Federal Government to improve on critical infrastructure such as motorable roads to farmlands if it hopes to stabilise food prices, achieve food security for its large population and build a virile agric sector. Lack of motorable roads has remained one of the greatest problems confronting smallholder farmers and communities in Nigeria. This has continued to hindered market access for farmers in rural communities who work assiduously to eke out a living from farming. “The road leading to my cocoa farm is very bad. Cars cannot access the road to my farm. Each time it rains I spend at least three hours to get into the farm with my bike,” Emmanuel Ogar a cocoa farmer at Akun in Effraya Etung local government in Cross River state told BusinessDay. Nigeria has continues to suffer low levels of agricultural productivity due to infrastructural deficit across the country. Most times, fresh farm produce gets spoilt in transit as a result of many hours or days spent in transporting the crops from where

is was produce to where they are needed owing to bad roads. Meanwhile, urban dwellers have to spend very large percentage of their income to buy food. This is because the food that gets to the towns and cities far more expensive than what the poor struggling farmers would have sold them. The high prices of these commodities are blamed on the middlemen who are also quick to point out that they incur huge costs transporting the food as a

result of bad roads. “The roads are bad; it takes an average of three days to transport my yam produce from Benue (located in middle belt of Nigeria) to Lagos, Nigeria’s commercial centre,” Godwin Apak a yam farmer in Benue state who usually brings his produce to sell at Mile 12 market in Lagos said. “If the roads were good it should take at most 24 hours to get the yams to Lagos,” Apak said. Apak case is similar to the

challenge most smallholder farmers in the rural communities experience. Before the produce is transported out of the farm lands to places they can access roads to the market, most off their crops are lost in the process especially the perishable crops. The inability of farmers to market their farm produce means lack of adequate income for production inputs and to expand production, As a result, many farmers are still unable to afford consumer goods and meet

their immediate cash requirements, educate their children, live in decent houses and afford good healthcare. Many roads are totally impassable after few days of heavy rainfall cutting off some communities completely from being accessed. Even when commuters offer to pay higher fares, many commercial motorists refuse to go to such communities for fear that their vehicles would sink. “A big challenge to agricultural productivity and food security in Nigeria is the lack of adequate infrastructure to support food production and distribution,” Titus Awokuse, chair of the department of Economics and Statistics, University of Delaware’s college of Agriculture and Natural Resource. Farmers’ efforts to escape poverty and lift themselves above subsistence levels are still limited by the present poor access to markets, supplies and vital information. Local roads and tracks are often impassable making it difficult, if not impossible for rural families to access the urban economy. The provision of good road network is a pre-requisite for enabling Nigeria stimulate economic growth and to reach the targets for economic recovery and poverty alleviation.

Wednesday 26 September 2018

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How to establish oil palm plantation of the land. It is usually better to use the hybrid variety called tenera which bears fruits as from the third or fourth year. Other requirements include seedlings procurement; this can be obtained from reputable nurseries. Prospective investors must engage the services of agricultural experts in the course of establishing this project. Other cultural practices are planting, regular weeding, pruning and fertilizer application. Serious minded investors will be guided accordingly in the implementation of this project.

OLUMAKINDE ONI

il palm is a native to West Africa and Nigeria use to be the world’s largest producer of before crude oil was discovered in commercial quantity. Indonesia has now taken over the leading position and oil palm and allied industries are now the main stay of the country’s economy. Malaysia, second largest global producers of oil palm came to Nigeria in the seventies to get oil palm seedlings and seeds and now have become a power house in it production. Oil palm has various uses apart from household consumption. It serves as a by-product to numerous industries such as the food and b e v e ra g e, c o s m e t i c s a n d t h e pharmaceutical industry. Apart from extracting crude palm oil and other by products from the fresh fruits, the palm trees can be used in numerous ways. The leaves are used in making brooms and roofing materials (in the rural areas). The bark of the fond can be peeled and woven into baskets. The main trunk can be splitted like dawn timbers and used as part of building materials. Palm wine can be

obtained from the tree as well. When the fruit is processed the residue obtained can be used as fuel (for cooking and fertilizer to improve soil nutrient). Crude palm oil (CPO) can be extracted from the nut. The residue obtainable in the process of palm kernel oil extraction otherwise called palm kernel cake is used to as livestock feed. Palm kernel oil is used in vegetable oil and soap making. Palm Kernel shells are also useful as energy source and industrial raw materials such as mosquito coils when binded. The uses to which oil palm can be

AfDB, Purdue University collaborate to upscale Africa’s agric innovations …to hold conference

he African Development Bank (AfDB) and Purdue University have collaborated to scale up agricultural innovations on the continent as it set to hold a conference to drive the goal. The Scale Up Conference will focus on how to shift agricultural innovations from research institutions to smallholder farmers across Africa. Akinwumi Adesina, president, AfDB will be the keynote speaker at the conference. Together with Jennifer Blanke, AfDB vice president for agriculture, human and social development, Adesina will meet with university management and other stakeholders on partnership opportunities, including the Technologies for African Agricultural Transformation (TAAT) initiative, being steered by the Bank. TAAT is a knowledge- and innovation-based response to the recognized need for scaling up proven technologies across Africa. “This will be the first multi-day conference on this topic that includes presentations, panel discussions, case studies, and breakout group discussions to help conference participants develop a thorough understanding of how to scale up agricultural innovations to reach millions,” Indrajeet Chaubey, associate dean and director of international programs for the College of Agriculture at Purdue University said in a statement made available to BusinessDay.

Dozens of speakers who have implemented scale up processes in agricultural landscapes will participate. “In the College of Agriculture we work to develop solutions to real world problems while also finding methods to realistically deliver and grow these technologies,” Karen Plaut, dean of the college of agriculture said. “The Scale Up Conference is about taking those technologies and applying them in the developing world,” Plaut added. Par ticipants are expected to gain an understanding of successful, sustainable large-scale implementation. Researchers, implementing organizations, the business community, governments, polic ymakers and the donor community will come together to discuss best practices for scaling up agricultural technologies. For more than 60 years, Purdue University’s College of Agriculture has led and managed large agricultural research and development projects. In addition to a long history of significant agricultural innovations, the university has produced three World Food Prize laureates. The conference is expected to bring together hundreds of individuals and organizations engaged in the introduction, diffusion, and adoption of agricultural innovations that have the potential to reach millions. The conference is scheduled for September 25th – 27th, 2018.

made seem non exhaustive. This clearly indicates that investment made in the establishment of oil palm plantation is nothing but a wise one. The market is guaranteed for all the products of oil palm plantation in this era of global food crisis. Technical information To establish an oil palm plantation involves getting a good site that well drained acidic soils are abundant. The soil should have adequate quantities of potassium, magnesium and nitrogen. Soil tests should therefore be carried out to determine the nutrient status

Financial aspect We are recommending a 20 hectares plantation for a start. The land can conveniently service a palm oil mill that will be established by the owner when the trees commence fruiting. To establish a 20 hectare plantation a sum of N19.3 million will be required and it is broken down as follows: Pre-Investments: N300, 000 Land Acquisition: N10, 000,000 Land Clearing/Preparation: N3, 000,000 Seedlings procurement 400/hectare (8000 @ N500): N4, 000,000 Other Cultural practices @ N100,000/hectare.: N2,000,000 Total N14, 000,000

September 12 - September 19, 2018

========= Note: The project scope can be higher or lower depending on the financial strength of the prospective investors. Governments at various levels can also set up this project and lease it out to individuals and corporate bodies. Income analysis A matured plantation with good agronomy practice adopted would produce 12.5 tons per hectare of fresh palm fruits per annum of which 250 metric tons of CPO can be obtained annually. A ton of oil palm will cost a minimum of N150,000, this implies that gross revenue of N37.5 million is obtained from red palm oil. Also, we can also get 7.5 metric tons of palm kernels per hectare. This gives us 375 tons from 20 hectares. This translates to annual income of N26.5 million. Total income realizable is about N64 million while the annual operating expenses is put at N15 million. This leaves us with net income N49 million annually for the investor. There are still other sources of income such as palm fronds and palm kernel shells. Serious minded investors can be assisted in the realization of this worthwhile investment. Author ’s contact 08023058045 or olumakindeoni2@ yahoo.com

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Pension Today

Wednesday 26 September 2018

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Micro pension: What available windows for helpless employees?

number of workers in the Contributor y Pension Scheme (CPS) who are currently not getting the best from either their employers or have been without paid employment for some time, but are earning income from other sundry activities and are willing to continue saving for retirement, are eagerly waiting for the take off of micro pension on January 1, 2019. This group of people includes registered contributors, whom their employers are not paying their pensions; they are registered contributors whom their pensions were deducted but are not remitted to their Pension Fund Administrators; they are those who probably earn other incomes that they could direct to voluntary contributions but cannot because the law does not allow such monies that did not pass through employer; they are those who already have a PIN number in the formal CPS, but want to continue contributing as informal sector workers based on their current employment position(self employed); and a lot of others. A guideline that provides the window for transition into the informal sector, and allow those who have extra contributions to make will give a lot of reprieve to so many people, as that is their prayer to the National Pension Commission (PenCom). At the 2018 Media Retreat for pension journalist held in Lagos, stakeholders implored PenCom to find a means to accommodate these groups of people so that they could strengthen

Members of the Pension Fund Operators Association of Nigeria PenOp during the 2018 Media Retreat for Journalist held in Lagos

their safety net in the new micro pension scheme. Peter Aghaghowa, head. Corporate Communication, PenCom said the Commission did not anticipate the lapses that has resulted due to non remittance by the employers, but assured that PenCom was taking note of the gaps and something. Pension regulator, the National Pension Commission (PenCom) says the planned micro pension scheme aimed at expanding the Contributory Pension Scheme (CPS) into the informal sector will take-off in January 2019. The Commission says the necessary infrastructure needed to enable implementation of the micro pension scheme is almost completed, and whatever left will be ready by end of this month (September). Aisha Dahir-Umar, acting director-general, Na-

tional Pension Commission speaking at the 6th Conference for Directors of Pension Operators organized by the Commission in Lagos said “the Commission was finalising arrangement for the introduction of the Micro Pension Plan, which seeks to extend the benefits of the CPS to the informal sector.” She said the Commission has received the approval of the Secretary to the Government of the Federation of the guideline, having put in place necessary infrastructure to implement the scheme. “We hope to achieve this latest by the first quarter of 2019 and we believe that the product would be part of the efforts towards ensuring in the long term, the sustainability of the Federal Government’s social empowerment programme.” PenCom had released the draft guidelines on mi-

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Diamond Pension Fund Custodian Limited 1A, Tiamiyu Savage Street, Victoria Island, Lagos State. Tel: 01-4613753, 2713680, 2713954 Fax: 01-2713955 Email: info@diamondpfc.com Website: www.diamondpfc.com

cro pension scheme, bringing flexibility in eligibility for participation to enable many Nigerians in the informal sector benefit from old age protection, which the scheme promises to offer. The draft guidelines for the extension of pension coverage in accordance with section 2(3) of the

A unique feature of these guidelines is the flexibility it offers, as every contributor have the right of his contributions splited into two

PRA 2014 (Micro Pension Plan) 2018, requires that stakeholders and concerned publics make their inputs that will enable the PenCom come up with the final guidelines for the scheme. According to the document, persons not below 18 years of age with legitimate source of income shall be eligible for participation in the Micro Pension Plan under Section 2 (3) of the PRA 2014: Such persons must be self-employed persons that belong to a Trade, Profession or Business Association; self-employed persons with a business registration as a company, partnership or enterprise; employees operating in the informal sector who work with or without formal written employment contract; as well as other self-employed individuals. According to the guide-

lines, notwithstanding the above, persons from 15 years and below 18 years may also participate subject to the approval/consent of their guardians. A unique feature of these guidelines is the flexibility it offers, as every contributor have the right of his contributions splited into two, to comprise 25 percent for contingent withdrawals and 75 percent for retirement benefits. Contributions under the Micro Pension Plan shall be managed as two separate funds namely: Micro Pension Contingent Fund (MPCF) for the 25 percent contingent contributions and Micro Pension Retirement Benefits Fund (MPRBF) for the 75 percent retirement benefits contributions. The participation of the informal sector in the Contributory Pension Scheme as provided by Section 2(3) of the PRA 2014 is primarily to provide for retirement benefits. Withdrawals/accessing benefits shall be two types reflecting the flexibility incorporated in the treatment of the contributions. The objectives of the CPS are: to (a) ensure that every person who worked in either the Public Service of the Federation, Federal Capital Territory or Private Sector receives his retirement benefits as and when due; (b) assist improvident individuals by ensuring that they save in order to cater for their livelihood during old age; and (c) establish a uniform set of rules, regulations and standards for the administration and payments of retirement benefits for the Public Service of the Federation, Federal Capital Territory and the Private Sector.

This section is created to increase awarness and deepen knowledge about the contributory pension scheme. If you have enquiries or contributions, send to this e-mail: diamondpfcbusday@yahoo.com

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Specialisation, innovation key to customer satisfaction in insurance Stories by Modestus Anaesoronye

takeholders in the Nigerian insurance industry believe that in order to operate in the new regime, operators must embrace specialisation in core areas of competence and continually come up with innovative ideas to improve customer satisfaction. Besides that, they believe that improving insurance awareness is a collective responsibility of all stakeholders in the insurance industry. In a communiqué issued at the end of the 2018 Insurance Professional Forum held in Abeokuta, Ogun State, with the theme “The Insurance Industry: Beyond Limits” participants resolved that operators must put machinery in motion that will ensure regular updates of operational data to aid making current informed decisions as-at-when-due. The Forum also advised all insurance operators to self-regulate, and apply necessary discipline on erring members when required, instead of waiting for the regulator to always wade in before achieving major milestones. While aligning with the regulator position of sanctioning any company that engages in de-marketing under the ongoing Tier-Based Minimum Solvency Capital Policy, the forum agreed that de-marketing acts by operators in any form should be dealt with as applicable. They also agreed on the need to ensure regular training and retraining of personnel to meet up with current realities and also encourage the inflow of manpower from other disciplines into the insurance industry for versatility. Other resolutions reached at the meeting includes that “proactive measures should be taken by the Industry to ensure that no further business line is statutorily, disruptively or otherwise

L-R: Wole Oshin, group managing director/CEO, Custodian Investment Plc; Racheal Emenike; Bala Zakariya’u, chairman of the session; Eddie Efekoha, president, Chartered Insurance Institute of Nigeria; Val Ojumah, managing director/CEO, FBInsurance and Oye Hassan-Odukale, managing director/CEO, Leadway Assurance Plc during a Panelist Session at the 2018 Insurance Professional Forum held in Abeokuta, Ogun State.

lost to any other sector of the economy; implored operators to update their information technology base to global standards to operate; embrace effective professional development of their staff to enhance competence, deliver improved services to consumers and meet the expectation of investor; embrace ethical culture to have a disciplined, trusted and respected insurance industry. The forum also agreed that whistle blowers should come out boldly on cases, and the identity of whistle blowers must always be protected at all times when issues are escalated to the Chartered Insurance Institute of Nigeria The forum agreed that the Institute will continually come up with addendum and circulate same to all practitioners as the contents of the changes and amendments evolve as time un-

folds, and it is her responsibility to regularly follow up with all those assigned responsibility of implementation of the communiqué to ensure the resolutions are worked upon and achieved. Eddie Efehoha, president, Chartered Insurance Institute of Nigeria in his opening address at the forum said this year’s theme is an expression of what we all want the insurance industry develop into. He said that we all know that the balance of power is heavily tilting towards the consumers and new and ongoing social trends are shaking traditional business patterns in the insurance industry. “Definitely, the relentless march of online and mobile technology will continue to fuel the constant change in customer expectations. Online social networks are becoming pooling

mechanisms for insurance and whether we like to admit it or not, insurance companies are fast changing roles from being product manufacturers to administrative service providers. The evolution is here and we must embrace it.” Efekoha further stated that advances in software and hardware are transforming “big data” into information that gives enough insight into the future for decision makers to take action. “As the insurance Industry reaps gains from the most recent wave of automation, new technologies are significantly enhancing operational efficiencies, increasing revenue opportunities and improving customer experience.” He said “we need to ensure persistence, respect, integrity and passion by way of ethics in the industry to boost the confidence of customers.

Always home

eing a stranger in any country would not be a thing if you travel with a CHI PLC Travel Insurance. Other policies are often rejected but when using our Travel Insurance, you can be guaranteed that you are home wherever you are. The Plan is designed to address the needs of our numerous clients and members of the public who during trips outside the country, encounter several unforeseen losses of property and huge expenses in health bills. It is our desire therefore that our clients Travel with their mind at rest by obtaining this plan. Expenses incurred due to trip cancellation is payable under the cover provided while the plan also makes provision for compensation in respect of expenses incurred for delayed departure. The policy also covers medical expenses and hospitalisation during the trip while abroad. In the event of loss of luggage, the Travel Plan covers cost of replacement up to the pre-agreed amount covered by the policy. The policy holder can upgrade cover to include injury that may be sustained whilst engaging in winter sporting activities during the trip. The CHI Plc Travel Insurance covers the Schengen and other European countries, Asian, African countries and America and has International Underwriting partnership for the cover provided is firmly in place with MAPFRE Asistencia of Spain. The cover is available for short trip and up to a period of twelve months, renewable thereafter. Special Plans are in place under the plan to cater to the needs of Pilgrims during trips to the holy lands (Pilgrimage Protection), and Students special Travel Plan. Our travel insurance rates are the lowest in the industry and start at N3, 800.

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Expert sees greater economic growth with stronger insurance, pension industry Stories by Modestus Anaesoronye

he role of insurance and pension industry in any economy particularly in mobilization of longterm funds cannot be taken for granted in the pursuit for economic growth and development in any nation, Glory Etaduovie, Managing Director/CEO, IEI Anchor Pensions Ltd has said. Etaduovie who made the remark in a presentation titled “Contributions of the Insurance and Pension industries to the Economic Growth of Nigeria” said insurance and pension have enhanced the confidence to be adventurous knowing there is a back-up plan in the event of any mishap –be it corporate or individual. “The confidence of secure savings will reduce the possibility of corruption in preparation for retirement or associated anxiety.” He said, obviously, pension cannot be relied on solely. The Pension Industry provides a pool of usable funds that, in Nigeria, have accumulated over N8 trillion and still growing. With a chosen average 20 percent growth annually, it is sure to double in five years. Presently, at the current exchange rate to the dollar, it is about half of our national foreign Reserves. This amount competes with our National annual budget which for 2017 was N7.3 trillion, so the funds are there for use, though not without conditions. “While the funds are available, accessibility would require the strong comfort that accountability would guarantee. The people’s

nderwriting firm, Veritas Kapital Assurance Plc said its capacity to underwrite risks even in the long term remains solid despite volatility in the economic environment. Thomas Etuh, chairman of the company who disclosed this during the Company’s 41st Annual General Meeting held in Abuja said notwithstanding the challenges in the operating environment , the capacity of the company to continue to do business on a long-term basis remain solid. “We are very much aware of the task ahead of us and are prepared to become more productive, smarter and more rigorous in dealing with necessary changes.” Etuh said the firm’s strategic focus continues to lean on sustainable growth while it improves on her delivery channels through digital adoption. “Learning from the past, we have taken deliberate steps risk management framework and corporate governance, and we are now better positioned to deliver comparable performance for 2018

Tope Smart, chairman, NIA

Glory Etaduovie, MD, IEI Anchor Pensions

future is tied to it, lest its purpose be defeated and contributors lose faith in the Industry. Consequently, the sanctity of the funds must be maintained, if the current advantages are to remain. It is like a pretty bride to be who must be careful in selecting from the array of suitors to be sure who would not leave her broken- hearted. The funds are sacrosanct.” Etaduovie further stated that “this is the first time that the country’s savings culture has been so robust and discreetly managed. It thus raises many curiosities, suspicions and doubts. Despite all of these, it is our money, Nigerian money. Whether we keep it, grow it or destroy it and all its potentials, it

is in our hands. We may thus harness greater possibilities through very focused government policies, a clear strategic direction and of course a clear understanding of dangers and opportunities that exist using the funds for misadventures.” Looking at the challenges, he said pension in its new setting, is budding. “It can harness a lot more and do more for the Nigerian economy. Given our previous history when pension funds were abused, there are strong cautionary measures in the control and safety of funds. Overtime, it is reasonable to think that the industry regulators will encourage a more creative

and competitive environment, as it is already doing with a variety of financial instruments.” “PFAs may, at some point in time, be allowed to initiate certain products relating to infrastructure and economic development as long as they are bank-able, with entry and exit points and meet security and regulatory standards.” “The current level of growth of the pension funds vis-a-vis available investable instruments suggests that shortly, more funds will begin to chase lesser available investment products. This will create demand and supply related challenges. As such, the investment/ development related ideologies need a

revamp, as we might thus just begin to waste great development opportunities, if not addressed urgently.” He further stated that part of the greater challenge facing the country, which cascades down to pension’s investment, is the absence of a strong sciences and technology background. This reduces national initiatives and productivity which should create wider circles of growth, development, financing and dynamics of financing. This must be addressed on both long and short term basis. “No doubt, pension is a major partner in repositioning our economy. But, the dream has to be clear, well defined and driven with passion and a sense of urgency”.

Veritas Kapital Assurance maintains strong capacity despite volatility in economy

Lloyd’s managing agents enjoy InsurTech advantages, analysts find

…pays N1.2bn claims in 2017

loyd’s managing agents hold significant advantages in the technology ‘arms race’ due to their ability to quickly deploy supplier InsurTechs and take distribution platforms global, according to a new study undertaken for the Lloyd’s Market Association (LMA) by management consultancy Oxbow Partners. Analysts noted that Lloyd’s managing agents are generally more nimble than larger insurance groups, and can rely on Lloyd’s extensive licences to utilise distribution-based InsurTechs internationally, supported by their own relatively simple management structures. The study also commended recent examples of tech integration amongst Lloyd’s managing agents, such as the Breach Response cyber product by Beazley and XL Accelerate’s collaboration with Gatwick Airport and Oxbotica, among others.

and beyond.” Meanwhile, in the 2017 financial year, the Company recorded positives in key indices, where gross premium generated grew by 14 percent to N2.41 billion as against N2.110 billion in 2016, while net premium income up by 10 percent to N1.792 billion, which

Polycarp Didam, MD, Veritas Kapital

according to the company was due to ongoing efforts to reposition the brand for accelerated growth. Investment income grew by 22 percent reflecting portfolio efficiency and high yield environment, but on the backdrop of ongoing investment in technology infrastructure, operating expense increased by 38 percent. Also during the financial year, the Company met its claims payment obligations as and when due to the tune of N1.194 billion. The steep rise in claims expense was as a result of exposure in oil and gas sector, the effect of this was moderated by existing re-insurance treaties which remain robust, the chairman said. Total assets inched up slightly to close at N11.334 billion, its highest balance sheet position ever, while retained earnings and equity were depressed however due to re-

stating of prior year financials. Other decisions by the company in the review year,were the appointment of the Polycarp Didam as managing director in charge of technical and operations, as well as Priya Heal, as a non-executive director. Etuh said with their appointments, we gained an executive team with extensive insurance industry experience, a proven track record of delivering impressive financial performance and growth and a roadmap to improving our performance and growing market share. “Since their arrival, they have outlined a clear strategy for the company focused on pursuing long-term profitable growth, attracting new leaders to complement and strengthen the management team and improving core insurance operations.”

Wednesday 26 September 2018

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BUSINESS DAY

LegalPerspectives With Odunayo Oyasiji Effective corporate governance code is important to boost the confidence of investors

ecent research points to the fact that the rate at which Nigeria attracts Foreign Direct Investment (FDI) has dropped. More attention is now on Egypt and South Africa as better investment destinations. What could be the reason? No doubt, one of the factors that an investor considers before investing in an economy is the level of accountability and financial transparency that exists in the process of administering companies. This is usually the role of corporate governance code. Therefore, any country that seeks to attract FDI must work on getting this area right. Corporate governance in Nigeria is an area that needs to be properly put in shape as we aim to attract more FDI. Signing bilateral agreements and memorandum of understanding with possible trade partners will not replace the role that a good and effective corporate governance code will play in securing the confidence of investors in our economy. It must be noted that ownership and administration of a company differs in most cases (especially big companies). Shareholders don’t necessarily participate in the day to day running of businesses. Accountability and financial transparency is therefore essential to promote the confidence of people who invest their money in a business without playing any role in its administration. The collapse of big corporate organisations across the world in recent years revived the issue of accountability and financial transparency in the administration of a company. Examples of notable companies that collapsed are- Enron (an American energy company) in 2001 as the company was able to deceive regulators by hiding billions of dollars debt through accounting loopholes and the collapse of Equitable Life Assurance Society (a UK insurance Company) as the directors of the company unlawfully used money from people holding guaranteed annuity rate policies to subsidise people with current annuity rate policies. This issue also affected the banking industry in Nigeria and this led to the collapse of Oceanic Bank, In-

tercontinental Bank, Afribank, Platinum Habib Bank and Spring Bank. In the light of the foregoing, different countries saw the need to work on their corporate governance code to promote accountability and financial transparency in corporate organisations. Both the United Kingdom and the United States came up with new codes to avert future collapse of companies. Nigeria hasn’t been able to successfully come up with a national code of corporate governance till date. However, regulators have developed codes of corporate governance to promote best practices in their sectors. Their effectiveness is doubtful. In 2016, the Financial Reporting Council of Nigeria based on the powers conferred on it by sections 50 and 51 of the Financial Reporting Council of Nigeria Act, 2011 came up with a National Code of Corporate Governance. This was done in an attempt to harmonize the existing sector specific corporate governance codes within the country. Examples of the sector specific codes in existence are - Code of Corporate Governance for Insurance Industry in Nigeria 2009, Code of Corporate Governance for Licensed Pensions Operators 2008, Code of Corporate Governance for Banks in Nigeria Post-Consolidation 2006, Central Bank of Nigeria Code of Corporate Governance for Banks and Discount Houses 2014, SEC Code of Corporate Governance in Nigeria 2011, and Code of Corporate Governance for the Telecommunications Industry. The

introduction of the national code of corporate governance sparked up criticisms across the country- with regards to its provisions and applicability. This led to the suspension of the code by the Minister of Industry, Trade and Investment twenty-one days after it was introduced. The main reason from the criticism is because some of the provisions of the code contradict the provisions of Companies and Allied Matters Act (CAMA). The code is divided into three parts i.e. Code of Corporate Governance for private sector, Code of Corporate Governance for public sector and Code of Corporate Governance for not for profit entities. All public companies (whether listed or not), private companies that are holding companies or subsidiaries of public companies and private companies that file returns to any regulatory authority other than the Federal Inland Revenue Service and the Corporate Affairs Commission are bound to obey the Code of Corporate Governance for private sector. Companies with less than eight employees have the choice to either comply with the code or not to. The code for the public sector is only to operate after an executive directive is obtained from the Federal Government while that of not for profit entities operates on comply or explain basis. This means that not for profit entities can either comply or offer explanation for non-compliance. The basis on which the explanation will be acceptable is not stated in the code.

Some of the provisions of the code which contradicts the provisions of CAMA are examined below1. Notice of MeetingCAMA provides for twenty-one days from the day the notice was sent out and also provides for situations where shorter notice will be acceptable. The code only makes provision for twenty-one days without stating anything about shorter notice. 2. Appointment of Directors- CAMA provides for appointment of Directors at Annual General Meeting (AGM) and that the Board of Directors can only appoint to fill casual vacancy (which is still subject to approval at the next AGM). The code on the other hand provides for appointment by the Board of Directors subject to the approval of industry regulators. 3. Remuneration of Directors- CAMA provides that the remuneration of Directors is to be determined at the general meeting while that of the Managing Director is to be determined by the Board of Directors. The code provides that the remuneration of the Managing Director is to be determined by the remuneration committee and must reflect in the annual report of the company. 4. Special Rights on NonExecutive Directors- The code provides that it will take 75% of the full board to approve a decision that is opposed by majority of the independent nonexecutive directors. CAMA only provides that board decisions are to be approved by the majority of directors without making reference to non-executive directors separately. 5. Director’s meetingCAMA gives directors discretion on how to go about their meetings. The code provides that directors must meet at least once in three months and a director must attend at least two-third of the meetings. 6. Composition of the Board of Directors- CAMA provides that membership of the Board of Directors should not be less than two. The code provides that the membership should be eight and not less than five in case of a regulated private company. It must be noted that the provisions of the code are made under the powers of the

Financial Reporting Council of Nigeria to make subsidiary rules. CAMA is the principal Act (made by the National Assembly) regulating businesses and as such its provisions overrides that of the code. The code is not a guideline, it is more of a mandatory rule that must be followed by corporate bodies. It therefore places a burden of compliance on small companies. This is not the situation in some other jurisdictions of the world- like Australia and United Kingdom where it is more of a guideline. The code provides that there will be sanction for non-compliance. However, the nature of sanction is not stated. As earlier pointed out, multiple corporate governance code exists in Nigeria. This situation tends to cause confusion in a situation where their provisions conflict. This alone is capable of discouraging companies from abiding by the rules. Also, some companies are listed on the stock exchange of more than one country and as such are under compulsion to abide by the corporate governance rules in all the countries. This is another area that can place unnecessary burden on corporate organisations. Some countries have adopted the style of exempting such companies from their own rules and allow them to abide by the corporate governance rule of the originating country of the company. It is essential that a proper review of the code be done and a new code be put in place to harmonize all the sector specific codes and make it more effective. Also, one of the reasons why Nigeria is ranked very low (145 out of 190) in the World Bank’s ease of doing business report is because we are not doing enough in the area of rules and regulations that aids business. One of the things that is measured is “minority shareholders’ rights in related party transaction and in corporate governance”. The absence of a national code of corporate governance speaks volume about the importance we attach to it as a country. Therefore, an urgent step must be taken to fix this anomaly if we truly want to attract foreign direct investment into the country.

28 BUSINESS DAY

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Leadership

Wednesday 26 September 2018

SHAPING PEOPLE INTO A TEAM

Re-evaluating incremental ALISON BEARD

SWINGING FOR THE FENCES CAN YIELD LOWER RETURNS. decade ago Insead marketing professor Marcel Corstjens was consulting with employees at a multinational consumer packaged goods company about ways to rejuvenate one of its biggest brands. During three days of meetings, he found a one-hour presentation by the company’s research and development team deeply fascinating. But no one else did. “There were many ideas that could have been developed,” he says, “but at the end of the R&D session everyone said, ‘OK, let’s get back to the communications and advertising issues,’ and nobody ever talked about the R&D again.” It’s no secret that large CPG companies are marketing powerhouses, but this apparent disregard for R&D insights stuck with him. Although CPG companies rank far behind high-tech and health care companies in R&D spending, some do devote more than $1 billion a year to R&D. Corstjens wondered: What kinds of returns are they getting? To find out, he and two colleagues conducted a statistical analysis of R&D spending and growth, using data on the world’s top 2,500 firms. After excluding companies with less than $1 billion in revenue, they examined the relationship between sales and a number of variables: R&D spending, labor costs, capital expenditures and marketing spending (using selling, general and administrative expenses as a proxy). They then calculated each variable’s effect on sales growth. They conducted their analysis first by industry, focusing on pharmaceuticals, food and CPG, and then by company. The industry analysis showed that in the CPG firms, R&D

spending did not drive sales; marketing spending seemed to be the primary driver. But in the pharmaceutical industry, the researchers found strong and significant gains from both R&D and marketing spending. Turning to individual CPG companies, the researchers discovered a distinction between those with relatively large R&D budgets and those with smaller ones. The former (including Procter & Gamble, whose $2 billion R&D budget is the world’s largest) saw no measurable relationship between that investment and sales. The latter (including Henkel, L’Oréal, Beiersdorf and Reckitt Benckiser) did see a correlation. After studying the pattern and interviewing experienced R&D executives, the researchers concluded that companies with very large R&D budgets are incentivized to pursue expensive, largescale innovation efforts that have the potential to become blockbuster new products — and that those projects receive the bulk of R&D funding. The problem with this high-risk, high-reward

strategy is that it may not pay off. “Despite spending on average $2 billion per year on R&D for the past 15 years, P&G has had far more failures than hits,” the researchers write. “Simply put: The company has bet big and lost big.” The researchers found that, in contrast, Reckitt Benckiser — the British firm whose brands include Clearasil, Lysol and Woolite — exemplifies a more profitable strategy of pursuing less ambitious innovations that, without fanfare, drive sales higher. They call this the Lorenzian strategy, after the Massachusetts Institute of Technology mathematician Edward Lorenz, who described how a small action (such as a butterfly’s flapping its wings) can lead to an improbably large event (such as a tornado). “[Reckitt Benckiser] doesn’t have the deep pockets to spend on big-bang innovation,” they write. “So it opts for a different approach: spend small, but focus that investment on marginal improvements in their most valuable brands, aimed at solving real consumer

problems, that consumers value and would pay a little more for.” They cite the company’s Finish brand of dishwasher detergent. Decades after the original product’s launch, Reckitt Benckiser added a rinse agent and changed the name to Finish 2-in-1. A few years later it added a salt component and renamed the detergent Finish 3-in-1. Today the product is Finish All-in-1, owing to the addition of a glaze-protection agent. With each incremental improvement, sales and profits grew. Other successful small-scale innovations involve packaging. In 2004, when McDonald’s changed how it sold its milk, going from cardboard boxes to translucent plastic jugs resembling old-fashioned milk bottles, sales tripled in just a year. Heinz has grown sales of ketchup by introducing new packaging, including bottles that are stored upside down (to facilitate easy pouring) and fast-food dipping trays that make it less messy to eat ketchup with fries. On the basis of their interviews with R&D employees, Corstjens and Northwestern professor Gregory Carpenter conclude that companies placing bigger bets on R&D do see some returns on those investments, but they may not be obvious, top-line payoffs. For instance, he says, R&D can help a company reduce costs, thereby increasing profits without generating additional revenue. He points to one company where researchers focused on ways to increase food products’ shelf life. Still, he observes that companies operate under two distinctly different philosophies depending on the size of their R&D budgets. “The motto of companies with big R&D budgets is ‘bigger, better, faster,’” he says, whereas companies with smaller R&D budgets “seem to do extremely well by tweaking and improving things in their brands

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and creating a lot more sales.” The tension between the pursuit of ambitious R&D efforts and more-incremental innovation isn’t new. In a classic 2007 Harvard Business Review article, Wharton School professor George Day describes various methods companies can use to ensure the right balance of highrisk, high-reward innovations and safer, targeted ones. (He calls the two types Big I and Little I innovations.) Interestingly, when he surveyed the landscape a decade ago, he reached a conclusion opposite to the one in the new research: that most companies were overinvesting in Little I innovations and needed to pay more attention to potential game changers. Corstjens’ team notes that the different approaches to R&D are not only a function of budget size; they also stem from culture. Among the firms in the study that favor smaller innovations, some have roots in the chemical or pharmaceutical industries, where the R&D function typically enjoys more power and respect than at CPG firms. The researchers believe that in the latter, R&D is often overshadowed by marketing, reducing the likelihood that spending on it will translate to sales. “When R&D has a respected voice and collaborates with marketing, firms have more success with innovation,” they write.

(About the Research: “Newton Versus Lorenz: Which Is the Better Model for Successful Innovation in Consumer Goods Companies?” by Marcel Corstjens, Gregory S. Carpenter and Tushmit M. Hasan, MIT Sloan Management Review, forthcoming.)

Wednesday 26 September 2018

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BUSINESS DAY

In Association with

Understanding imperatives of financial inclusion in economic growth HOPE MOSES-ASHIKE

inancial inclusion is critical to the growth and development of the nation’s economy as evidenced in its contribution to poverty reduction in the country. Financial inclusion is the fifth principle in the Nigerian Sustainable Banking Principle (NSBP) adopted by the bankers committee at a retreat in July 2012. “We will promote financial inclusion, seeking to provide financial services to individuals and communities that traditionally have had limited or no access to the formal financial sector”. This was the agreement made by all deposit money banks and the merchant banks, (then discount houses) during the NSBP agreement. Meanwhile, senior political leaders including Yemi Osinbajo, Vice President have made public statements that emphasise the importance of financial inclusion, most recently during the official visit of the UN Secretary General’s Special Advocate for inclusive finance for development to Nigeria in November 2017. Government officials have also emphasised the need to act swiftly and collaboratively to accelerate progress towards financial inclusion by “propagating digital financial services as simple, flexible and easy alternative channels for reaching the country’s remote areas and rural hinterland”. Past research shows the potential economic benefits of digital financial services (DFS), including greater financial inclusion, which targets to include 46 million new individuals, GDP

boost of 12.4 percent by 2025 (USD 88 billion), new deposits worth USD 36 billion, new credit worth USD 57 billion, three million new jobs, reduction in government leakage annually of USD 2 billion. In 2010, Nigeria made a commitment to reduce the adult financial exclusion rate in the country from 46.3 percent to 20 percent by the year 2020. To achieve this, the Federal Government on October 23, 2012, launched the National Financial Inclusion Strategy (NFIS). Mudashir u O laitan, director development finance, Central Bank of Nigeria (CBN), said while some notable milestones have been achieved, overall financial exclusion rate stands at 41.6 percent based on the biennial access to financial services in Nigeria survey (EFInA 2016). The CBN has been working with various stakeholders to conduct a review and refresh of the strategy. Recently, the CBN, deposit money banks, Licensed Mobile Money Operators and Super Agents reached an agreement to fund the expansion of a shared agent network to deepen financial inclusion in Nigeria. The agreement entails an aggressive rollout of 500,000 agent network within two years to offer basic financial services, such as Cash-in, Cash-out, funds transfer, bill payments, airtime purchase, government disbursements as well as remote enrollment on BMS Infrastructure (BVN) to an estimated 50 million Nigerians that are currently under-banked or unbanked. Commenting on the Shared Agent Network Expansion program, Herbert Wigwe, Chairman of the Body of Bank CEOs/ CEO of Access Bank Plc said; “This agreement reflects

It will create a platform for Nigerian owned financial services companies to grow, whilst empowering and creating jobs for Nigerians our commitment to aggressively pursue the CBN 2020 Financial Inclusion target in an integrated way with minimal systemic risk to the financial system. This initiative will also generate over 500,000 new jobs over the next two years”. The SANEF initiative involves on-boarding 40 million low income and unserved Nigerians into the financial system, increasing financial access points from the current 50,000 to 500,000 by 2020 and deepening access to mobile and

digital financial products and services such as savings accounts, micro loans, insurance, and pensions by Nigerians. Presenting an update of the project to the media recently, Titilola Shogaolu, divisional CEO, Interswitch Financial Inclusion Services, said since the launch of SANEF in March 2018, more people have been empowered, and more have been employed. We have done trainings in different region, including Anambra, Kebbi and Kano among others. We have done market storm in Kaduna, Kano and a few other states, sensitising and creating awareness. Others who addressed the media are Bolaji Lawal, a member of the Technical Committee, SANEF, Stanley Jacob, committee of e-Business industry heads (CeBIH), Victor Etuokwu, executive director, personal banking, Access Bank PLC, and others. They noted the creation of over 70,000 new financial access points, and that nine operators are currently party to SANEF with N4.5 billion disbursed. There are plans to scale up Bank Verification Number (BVN) to 70 million

by 2020 from 33 million currently. Already, 10,000 remote BVN devices have been ordered by NIBSS and currently being deployed to Banks, MMOs and Super Agents. SANEF committee also disclosed that NIBSS and the banks are committed to enroll 40 million new unique BVNs between now and year 2020, of which 10 million would be enrolled in 2018, 15 million in 2019 and 15 million in 2020, adding that NIBSS will pay agents N100 for every unique BVN enrolled. The SANFE project will see new product design that will help deepen financial inclusion such as a savings account bundled with an array of features (insurance, pension, micro credit). This will create a pull factor to attract the financially excluded into the system. The committee will be liaising with regulators (CBN, NAICOM) to secure approval and launch of the product by October 1, 2018. Other products planned include: micro retail loans, micro retail savings, retail insurance, and micro pensions. Etuokwu sees SANEF as a national assignment that requires collective strength to pull resources together to

create a common standard for service delivery. The project seeks to deepen financial inclusion in Nigeria through an integrated ecosystem with strong regulatory oversight, consumer protection and interoperable payment systems with limited concentration risk. It will create a platform for Nigerian owned financial services companies to grow, whilst empowering and creating jobs for Nigerians. So, wherever the SANEF sign is, a customer can perform basic financial services such as account opening, cash deposits, cash withdrawals, funds transfers and bills payments. It will reduce transaction cost, provide convenience, job opportunities and increased adoption of digital financial services. It provides a platform to handle government social disbursements and initiatives. In addition, it promotes Financial Inclusion and empowerment, positive social impact and development. 500,000 new jobs will be created through SANEF by 2020. In his comment on behalf of the mobile money operators, Tayo Oviosu, founder & CEO of Paga, said “To significantly grow financial inclusion in Nigeria we need to offer truly effective digital financial services that operate on all mobile telecom networks and a robust nationwide network of agents for convenient access. The Shared Agent Network Expansion program supports our plans to rapidly scale up the agent network over the next year. With this expansion program, the entire financial industry will reach deeper into even more communities and give millions of Nigerians convenient access to financial services”.

30 BUSINESS DAY

Kewalram-Chanrai plans FCA market comeback

• Alfa Romeo, Maserati under consideration as well

Stories by MIKE OCHONMA

he stage is now set for what is likely to be one of the most remarkable brand resurgences that, the Nigerian auto market has ever witnessed as Fiat and Jeep re-enter the competitive sedan, SUV and Pick-up segment with an array of current models. With this development, both the Fiat and Jeep rated among the two world’s iconic brands will now be making a market comeback on the back of the country’s auto marketing giants, Kewalram Chanrai Group (KCG), which intends to leverage on its customer relationship and nationwide after-sales network to further endear the products to the hearts of the vehicle buying public. But, ahead of a formal take-over announcement and re-launch, KCG is lining up the latest models of the brands’ offerings, in addition to investing hugely in sales and after-sales facilities, in order to en-

sure that customers have pleasant ownership experience henceforth. According to Victor Eburajolo, group deputy managing director while speaking on the impending return of Fiat and Jeep, he disclosed that the KCG, has been meticulously planning towards ensuring that the vehicles have sure-footed penetration into the market when officially launched in the next few weeks. KCG is also preparing vintage spots in its network for Jeep’s sister brand, Dodge, as well as Alfa Romeo and Maserati, from the side of Fiat. Tipo, the 1.6 litre C-segment sedan marking its first 30 years of functionality, simplicity and personality, is the car leading Fiat’s come-back to Nigeria. Boosting Tipo’s confidence is not just its six airbags and six-speed automatic transmission, but also the fact that, it is the car with the highest growth rate in Europe, and the choice of over 180,000 motorists in the Middle East and Africa region.

Tipo will be accompanied by its pick-up sibling, Fiat Fullback which is one of the first pick-ups in the world with an all-aluminium engine, which translates to lightweight and efficiency. The 2.4 litre pick-up will be available in 4x4, 4x2, single cabin and double cabin variants. It has up to 3100Kg towing capacity. The coming of Fullback will certainly give existing competing Pick-up models something to worry about. This is because having been enhanced technologically; the Fullback pick-up has a good price-value reputation and boasts the smallest turning circle in the class at just under 12m. Excitement also awaits lovers of the iconic Jeep brand, as Diamantidis confirmed that the latest models of the luxury SUV brand, including the Jeep Grand Cherokee Limited (3.6 V6) and SRT (6.4 v8); the all-new 3.6-V6 Wrangler Sahara trim levels: and 2.4-liter Compass Limited, are rearing to dare the competitors. As the launch of the new brands beckons, Kewalram is also preparing spaces for the Dodge brand in

land is currently running test-drive campaigns for automobile experts who are interested in having a feel of the vehicles. With effective after-sale services, JAC Motors intends to continue

Nigeria’s NADDC boss engages renewable Energy Experts on Electric vehicles

the new showrooms and service centres, from where the 7-seater Durango driven by a 3.6 V6 engine, and Challenger Hellcat (with a 6.2 litre super-charged power-plant producing 700bhp). Ebuarjolo is upbeat about the success of the brands that KCG is poised to unleash on the market, saying, hinting that Fiat’s Tipo has got more than what it takes to impress the Nigerian market with its beautiful design, safety features and roominess. “Nigerians are very familiar with Jeep brand of unique suvs which are known across the world for their luxury, toughness, and remarkable off-road capability. The Wrangler, for instance, has an enviable reputation of being a go-anywhere do anything vehicle that can conquer any terrain.” With many Italian brands already on board, it will not be a surprise if one more name pops up on the Group’s list: Ferrari. The world’s most powerful brand is currently building an SUV (or Ferrari utility vehicle, FUV).

JAC Motors T6 exportation ranks top 3, as main leaders of Chinese brands ecent industry automobile research shows that the JAC T6 pickup exporting quantity has reached above 2,400 units in 2018 so far, representing 50% growth compared with the previous year. At present, JAC T6 ranks third in all Chinese pickup exportation. This is the third year JAC T6 pickup launched in the international markets growing more than 50% annually in about 50 countries including Nigeria. Elizade Autoland is the major distributor for JAC Motors brand of vehicles in Nigeria. JAC Motors boasts of a host of passenger vehicles which ranges from J4 sedan to the S2, S3, S5 and S7 SUV and Sunray Busses; also available is the best seller Pickup; JAC T6 and Light-Duty Trucks. Elizade Auto-

Wednesday 26 September 2018

C002D5556

serving the Nigerian automobile needs with durable and cost-effective brand of vehicles suitable for the Nigerian roads. Elizade Autoland is an automobile trading and services company

that imports, distributes and retails the JAC brand of vehicles including passenger cars, SUV’s, pickup trucks, buses, and light duty trucks. It would be recalled that prior to commencement of the JAC automotive business in Nigeria, both the Chinese automaker and its Elizade Autoland franchisee embarked on test-run that wer later introduced into the local market. The compatibilitry test began on April 4, 2013. An official ceremony setting the test-run in motion was held and 18 JAC vehicles, which consisted of 10 salon cars made up of the J3 and J5, including 8 light duty trucks of different tonnage capacities were handed over to the participating companies, involving major stakeholders.

elani Aliyu, director general and chief executive of the National Automotive Design & Development Council (NADDC) recently returned from the 10th international investment summit held in Beijing, China. The event tagged COIFAIR is aimed at promoting investment and technological collaboration between China and African continents. The delegation led by the NADDC boss and accompanied by his management staff met on September 15-16, 2018, and discussed with Renewable Energy sectoral experts, including the China New Energy International Alliance, in strategic efforts towards the adoption, support and development of vehicle electrification in Nigeria. The delegation also met with potential investors and technical partners for the NADDC’s planned three automotive industrial parks located at Nnewi, Kaduna, Oshogbo, of which the Nnewi project already has a Master Plan Design (MPD) almost

completed. Discussions involved talks with PowerChina, a multinational infrastructure development company as a potential investor in power generation for the projects. China has taken the bull by the horn: Electric Vehicles are already a major part of their automotive sector, with over 580,000 sold so far. These renewable energy vehicles range from high end vehicles such as Tesla’s models S and X, to BYD models, and all the way to simple cost-effective utilitarian vehicles, in cities, small towns and farms. In April this year, the NADD C expressed hope that, more investments will come into the Nigerian auto industry when the National Automotive Industry Design and Development Bill becomes law. Aliyu, said that the bill which is the brain child of the council when implemented, would guarantee that the automotive businesses in the country are recognized by law, and even if there are changes in administration or government, the policy would remain. According to him, the bill when it becomes law would attract investors into the country’s automotive industry and also put local content at the forefront.

Wednesday 26 September 2018

C002D5556

BUSINESS DAY

Local and global rail news as it breaks

Consortium proposes $10.9bn Melbourne Airport rail link PPP

Study forecasts upturn in global rail market MIKE OCHONMA

he global rail market has grown from €169bn in 2016 to €183bn, and the rate of growth has picked up from a forecast of 2.3% two years ago to 2.8%. These are some of SCI Verkehr’s findings in its latest analysis of the market, as Maria Leenen, CEO, and Andreas Wolf, senior consultant with SCI Verkehr, explain. The worldwide market for Railway Industries study, which will be published by SCI Verkehr in time for InnoTrans 2018, predicts stronger growth than two years ago when the rate was expected to decline from 3.2% to 2.3%. With a current market volume of €183bn compared with €169bn in 2016, an annual growth rate of 2.8% is forecast. Particularly good prospects are expected for new business, as the annual growth rate has increased from 1.3% in 2016 to 2.4%. In addition to the high performance of rail-based transport systems, both environmental protection and decarboni-

sation have developed into significant growth drivers. However, a number of uncertainties cloud the forecast. The current level of high political and economic uncertainty as well as growing protectionism could greatly challenge the market. Industry analysts say these uncertainties particularly affect long-term infrastructure projects, as investment security becomes doubtful in some regions and countries. Important technical market trends include technologies for alternative traction systems to reduce emissions as well as the digitalisation and automation of rail transport in order to achieve the long-term objective of autonomous mainline trains. It is therefore crucial to set the right course for the future in order to continue to withstand the growing competitive pressures from other modes of transport. There are very strong feelers that, the Chinese rail market is losing momentum and will stagnate up to 2022. However, great potential lies in rail freight transport between Asia and Europe, although it

is starting from a modest level. Established markets such as Europe and North America are now performing more strongly, with an annual growth rate of around 4% compared with 2016 cumulative annual growth rates of 3.2% in Europe and just 1.4% in North America. Renewal of existing networks, expansion of rail transport in metropolitan areas and digital modernisation is driving this positive development. It is clear that in highlydeveloped regions such as Europe, the importance of diesel traction has greatly diminished and will disappear in the long term. In Germany, it is expected that no new diesel trains will be required after 2025. Based on the economic as well as technical advantages of the established system, SCI Verkehr expects an increase in electrification of heavily-used lines. Even stronger growth in electrification will reduce the time spent on planning and implementing these projects, which, in combination with additional infrastructure works and noise reduction measures, can become quite

costly and complex. In future, less-heavily-used lines may adopt economically-friendly systems such as hybrid trains in the form of a traditional EMU with a battery or hydrogen- fuel system. Additionally, the importance of dual-power electric/ diesel hybrid trains will continue to grow as it is a practical and low-emission interim solution for partially-electrified networks. Hybrid technology, which combines a diesel generator and battery, is progressively gaining importance for shunting locomotives. Many of these technologies are currently in the testing phase and will take a few years to achieve production maturity and field-proven solutions. However, real alternatives to the traditional mainline diesel locomotive do not exist and will continue to remain in demand. In this segment, alternative fuels can improve the environmental balance. Digitalisation and automation of the market are remains crucial to further developing the railway and are requirements for autonomous transport.

Record-breaking InnoTrans 2018 draws 3000 exhibitors, 160,000 visitors

record-breaking InnoTrans 2018 saw 3062 exhibitors from 61 countries and around 160,000 trade visitors from more than 110 countries take part in the world’s largest mobility trade fair at Messe Berlin between September 18 and 21. The show also saw the launch of more than 400 innovations, 155 world premieres and 145 vehicles on the outdoor display. A representative survey conducted by Messe Berlin found 50% of those polled occupied a senior position in their company and around 89% of exhibitors

said they were satisfied with their results at the trade fair. Around 52% of trade visitors came from abroad, with numbers from Southern, Eastern and Central Asia experiencing the highest growth. A total of 25 business delegations from 18 countries attended the exhibition grounds, including from Abu Dhabi, India and the United States. “This year’s InnoTrans once again impressively showed that it is the ideal platform for presenting forward-looking innovations, combined with an

enormous international appeal” says Messe Berlin CEO, Christian Göke. “No other event offers trade visitors such a comprehensive and global insight into every part of the industry’s

value chain.” The outdoor display was also opened to the public on September 22 and 23, with the latest rail vehicles being displayed on 3500m of track.

n Australian consortium has announce d plans for a long-awaited $A 15bn ($US 10.9bn) rail link to Melbourne Airpor t, promising fast travel times, a premium around-the-clock service and enhanced access to existing suburban and regional networks in Victoria. The AirRail Melbourne consortium comprises IFM Investors and key stakeholders Melbourne Airport, Metro Trains Australia and Southern Cross Station, and would leverage finance from the superannuation sector. AirRail Melbourne is proposing to match the $A 5bn funding commitments previously announced by each of the current Victorian and

Its proposal would see 20 minutes travel time to the city, using a redeveloped Sunshine station super-hub in suburban Melbourne to provide greater access for regional passengers, trains running around the clock, departing every 10 minutes during peak periods, one-way tickets at less than $A 20 at today’s prices, and 27km of new track and twin rail tunnels to deliver a premium airport rail service and open up additional capacity for rail services to Melbourne’s booming west. “The investment proposal represents a significant opportunity for people to invest in a nation-building project through their superannuation funds,” says IFM

Federal governments to build the link. The announcement comes only a few days after the Victorian state government opened a registration of interest (ROI) for the project. Its business case, in partnership with the federal government, is currently underway with construction envisaged to start by 2022. Rail Projects Victoria will lead the ROI process and assess organisations with the experience and capability to help bring the project to fruition, as well as gauging the interest of private sector investors. The AirRail proposal is unsolicited and largely follows the project as put forward in July this year by the Victorian Government, though AirRail says it would be construction-ready in late 2020, two years earlier than planned.

Investors chief executive, Brett Himbury. “A partnership between the Victorian and Commonwealth Governments demonstrates the universal support for this essential project which has transformed talk of a Melbourne Airport Rail Link into a viable project.” He stated. “With Melbourne soon to become Australia’s largest city our infrastructure needs to keep pace. Key to this is the development of the airport with a near doubling of passengers over the next 20 years. As we expand, we will also need world-class linkages between the airport, city and regional Victoria. Our vision is for a seamless passenger experience at the airport, properly integrated between the carriage and the terminal”. says Melbourne Airport CEO, Lyell Strambi’’.

BUSINESS DAY

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Wednesday 26 September 2018

BOOK SERIALISATION Too Good to Die: Third Term and the Myth of the Indispensable Man in Africa Author: By Chidi Odinkalu and Ayisha Osori Publisher: Prestige Continued from Tuesday

From small Gods to the God complex s military Head of State, General Obasanjo publicly committed himself to completing the transition programme enunciated by Murtala Muhammed. In the third quarter of 1979, the regime completed elections into executive and legislative offices ahead of the designated handover date of 1 October, 1979. The ballot for the Presidency was the subject of a legal challenge before the Supreme Court. Under the rules enacted by the military, the winner of the Presidential election was required to win the highest number of votes among the competing candidates and, in addition, to receive at least 25% of the votes cast in a minimum of two-thirds of the States of the country. The leading candidate, Shehu Shagari of the National Party of Nigeria (NPN) received 25% of the votes in 12 States, which was less than two thirds of 19 States. In Kano State, he received just about 19% of the votes cast. A controversy immediately developed over the announcement of Alhaji Shagari as the winner of the election. Three of the five presidential contestants jointly and publicly requested the military to annul the elections. Chief Obafemi Awolowo, the Presidential candidate of the Unity Party of Nigeria (UPN), who trailed Alhaji Shagari in second position in the polls, instituted legal proceedings before the Presidential Election Tribunal seeking to nullify the election. The outcome of the litigation would hinge on the judicial interpretation of the arithmetic of two-thirds of 19 States. In its decision, the Supreme Court ruled that Shagari had attained the lawful arithmetic to be declared winner and affirmed his election as President, enabling him to be sworn in on 1 October, 1979 as Nigeria’s first elected President. A major element of the appeal of Obasanjo’s candidacy for the presidency in 1999 rested on the fact that he had voluntarily relinquished power in 1979. Unknown to Nigerians, however, while the public dispute over the winner of the 1979 election raged before the Supreme Court, General Obasanjo as military Head of State “did crave continuation in power but was dissuaded by General TY Danjuma and others who controlled the battalions.” Celebrated journalist, Mohammed Haruna, narrated that “the trio of his deputy, Major-General ShehuYar’Adua, his powerful army chief, Lt-General TY Danjuma and his police chief, Alhaji M.D. Yusuf; were all determined that, come rain or shine, the soldiers must return to their barracks on 1 October, 1979.” Evidence from interviews with senior regime insiders from that era suggests that while his military peers were mostly determined to leave government, Obasanjo may have been reluctant to do so. The plan hatched to frustrate the transition and extend his tenure had both internal and external dimensions. Internally, the plan was to co-opt the ruling military hierarchy in dismantling the transition using patronage and

self-interest. Although elections into all executive and legislative position had been completed, the regime proposed to scuttle the completion of the transition by appointing military administrators to take over the administration of the states, using as its excuse the uncertainty induced by what appeared to be protracted post-election litigation. In September 1979, Chief of Staff, General Shehu Musa Yar’Adua visited the then Chief of Army Staff, General Danjuma, to sell this plan to him. Yar’Adua presented Danjuma with a list of the proposed military administrators for the States and requested him to nominate the administrator for the then Benue and Plateau States. Danjuma reportedly felt betrayed by what appeared to be conclusive evidence that the regime wanted to succeed itself. Even worse, he felt slighted that the list of military administrators had been drawn up behind his back as the Chief of Army Staff and was unable to comprehend why he was being asked to nominate a military administrator for Benue and Plateau when a military administrator for his own state, Gongola, appeared to have been settled. Determined not to be part of any plan to extend the life of the regime, Danjuma declined to participate in this plan, explaining that to do so would be seen as having betrayed again the promise of transition to civil rule. Additionally, he argued that such a step would further irredeemably erode the institutional reputation of the Army, already badly dented by General Gowon’s decision in 1974 to renege on his commitment to leave office in 1976. The day

after Yar’Adua’s visit, General Danjuma tendered to General Obasanjo a letter indicating his intention to terminate his military service with effect from 1 October, 1979. Without the backing of his influential Army Chief, General Obasanjo realised that any plan to extend his tenure as military ruler was likely to be unworkable. Externally, the regime of General Obasanjo sought diplomatic support for its plans to succeed itself. Mohammed Haruna, who served as spokesman to the regime that handed over to President Obasanjo in 1999, again narrated that as military Head of State, General Obasanjo “wanted to hang onto power by dragging in the Organisation of African Unity (OAU) to issue a statement at its 1979 summit in Monrovia, Liberia, saying the 1979 deadline was not realistic” but “thanks to GuineaConakry’s Sekou Toure and the host William Tolbert, the OAU declined to issue such a statement.” Lacking the support of his popular Army Chief at home and unable to secure regional diplomatic backing for his desire to continue in office, General Obasanjo reluctantly relinquished office on 1 October, 1979 to Alhaji Shehu Shagari. The military, who inaugurated the elected civilian administration of President Shagari, would return to sack it a mere four years later on 31 December, 1983 following popular disaffection with the results of the national elections of September 1983. In his inaugural address to the country, Muhammadu Buhari, a Major-General who emerged after the coup as the new

military ruler, justified the intervention of the military as necessary because, “the last general elections was anything but free and fair.” Reaching back into the language and doctrine of military exceptionalism and the god-complex, he declared that “the intervention of the armed forces was to arrest the imminent catastrophe which would have been the inevitable result of the course being charted by the politicians”. As military governor of the largest state in the country and, later, as petroleum minister, General Buhari himself was a leading member of the military regime of Generals Murtala Muhammed and Olusegun Obasanjo. In these capacities, he fully participated in the decisions of the military regime to hand over to the elected civilians and return to the barracks in October 1979. The return of the military so soon after the installation of the civilian administration suggested that significant elements among the military high command disagreed with or were not prepared for the decision to hand over power to the civilians in 1979. They needed more time to practice the art of playing god. The regime narrative was founded on portraying civilian politicians from the Shagari era as corrupt bandits who plundered the country. The soldiers had returned on a praetorian mission to save Nigeria. Like his predecessors, General Buhari ruled by military decree. The Recovery of Public Property (Special Military Tribunals) Decree empowered military tribunals to go after leading civilian politicians who held office under the Shagari administration. In keeping with the subtext in its nomenclature, the decree required that “each accused person was presumed guilty until he could prove his innocence. An age-old legal norm that an accused be presumed innocent until proven guilty was thus stood on its head.” The decree was initially backdated merely to 31 December 1983, the date on which General Buhari overthrew President Shagari. However, one of the politicians charged under it, Bola Ige, argued that it was inapplicable to him because he had ceased to hold public office by the effective date of the law. To address this, General Buhari enacted another decree backdating his anti-corruption decree to 1 October 1979, which was the date on which the military handed over to President Shagari. The implication of this was far reaching: “in its blind fury, the administration had decreed the Second Republic illegal[…] Everything done under valid and prevailing laws between October 1, 1979, when the military handed over to civilians and 31 December 1983, when the military returned to power were, by implication, declared illegal and, therefore constituted criminal offences where the government so desired.” The Buhari regime failed to announce a programme of transition to civil rule before it was itself overthrown in another military coup. Questioned on two separate occasions in 1984 about whether (and how soon) the regime intended to return government to civilians, General Buhari replied that the

question had not yet been considered by the ruling Supreme Military Council. Interviewed by the government-owned Federal Radio Corporation of Nigeria (FRCN) on 24 July 1985, he claimed that there had been “no agreed policy that one will serve for such and such years”, and announced an intention to remain in power “until the economy of the country has returned to its stable footing and law and order restored in the society.” It sounded like a tenure that would end on the day after eternity. Indeed, “some well informed politicians and traditional rulers recommended a minimum of 50 years for the military.” Two weeks after this declaration, on 8 August 1985, General Buhari announced a six-person judicial inquiry into the defunct Federal Electoral Commission (FEDECO). It was headed by Bolarinwa Babalakin, a senior judge who later served on Nigeria’s Supreme Court and after whom the Commission came to be known as the Babalakin Commission of Inquiry. The terms of reference of the inquiry required it to “[d]etermine the causes of the failings, abuses and shortcomings which characterised the electoral processes.... and to identify the persons responsible for them.” However, General Buhari could not inaugurate the Babalakin Commission of Inquiry before he was overthrown on 27 August by his Army Chief, Major General Ibrahim Babangida. Babangida eventually inaugurated the Babalakin Commission of Inquiry on 28 October, 1985 and received its report on 14 November, 1986. In an early morning broadcast announcing the sack of the Buhari regime, Joshua Dogonyaro, one of the “small gods” from Paul Ogbebor’s pioneer NDA Course 1 cohort and by then an army Brigadier, alleged that “the government had started to drift”, and that “the initial objectives and programmes of action which were meant to be implemented since the ascension to power of the Buhari administration[...] have been betrayed and discarded.” Later on the same day, Major-General Ibrahim Babangida introduced himself to the country as its next military ruler. Unlike his predecessors who were known as Heads of State, General Babangida chose to be addressed as a military “President”. It would be said of him that by the time he took over power, General Babangida “had designed a template for his administration”, and that “his ambitions for Nigeria spanned beyond one generation.” It would have been more accurate to say that his ambitions for the military spanned more than one generation. With unconcealed Bonapartist tendencies, Babangida ascended power with what appeared to be a desire to confer popular legitimacy on his military authoritarianism. More than any of his predecessors, therefore, Babangida treated the country as a plaything of his regime. By this time, treasonable backstabbing had emerged as the key quality for progress in a military career. If it succeeded, it legalized itself. If it failed, the price was death and disgrace. Continues on Thursday 27 Sept. 2018

Wednesday 26 September 2018

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Financial Inclusion

& INNOVATION

BUSINESS DAY

Supported by:

Wunmi is up for grabs for financial service providers

separate unbanked customer profiles with the aim of helping financial service providers better craft suitable products that meet specific needs. One of those group of people are the Vulnerable believers. The vulnerable believers represent 12 percent of the population and include lower-middle class to poor, religious, predominantly rural and with limited education. 67 percent of them live in the North-West and North-East. Vulnerable believers stand out as having the highest religious activity in Nigeria, as measured by

how often they take part in religious activities, and how often they pray or meditate. According to the report, Churches and Mosques may be effective communication channels to reach them. To appeal to the vulnerable believers, financial service providers could focus on more low risk products that do not require the former to assume more debt and could help them better manage their finances. Such products include financial planning tools, debt consolidation and automatic loan repayments products. The segment may also be a target of development actors seeking to support more vulnerable groups. Since 57 percent of these group of people own land while 53 percent own livestock, financial products that support accumulation and leveraging of wealth in the form of assets like livestock and land could also help, according to findings of the report. Only 49 percent of bankable adult Nigerians have a bank account, meaning about 45 million people are without one. Nigeria has one of the lowest financial inclusion rate globally. In West African neighbour,Ghana, the financial inclusion rate is 53 percent while South Africa banks 75 percent of its 55 million population.

This way, they won’t just be providing platform for others to use but will champion it, invest in, effectively market the product and ensure their customers subscribe to it like in other climes. The anxiety over the propriety of telcos performing banking services need not arise. There are precedents Nigeria can learn from. M-PESA in Kenya actually started as a product from a Micro-Finance bank, which was looking for a cheap platform to reach out to its customers spread all over the country. It eventually struck a partnership with Safaricom and that led to the birth of M-PESA which is now widely used across Kenya by both the financially

included and excluded. I n G h a n a a l s o, t h e Bank of Ghana allowed the telecom companies to set up subsidiaries with own boards separate from their parent companies to provide mobile banking services. This has led to the relative success of digital financial services in Ghana. Ability to scale is crucial to the success of mobile money- and clearly the banks cannot achieve this. Therefore, central to CBN’s new strategy should be a central role for the telcos. This is the only way to drive digital financial services and ensure millions of financially excluded Nigerians are financially included.

LOLADE AKINMURELE

unmi is a porter and the sole earner in her household. She has cared for her family since her husband lost his commercial truck driving job eight years ago. Wunmi, 45, is also responsible for her ailing mother. Her burden however became heavier when the family house she had lived in 20 years after getting married was gutted by fire in 2015, destroying assets worth a few thousands of naira. Wunmi, a devout Christian, has held on firmly to God through the storm and was recently offered space, along with her three sons, in the home of a fellow church parishioner. There was no space for her husband and so she meets him daily within the vicinity. The desire to reunite with her husband again has propelled her to start saving towards renting an apartment of her own and possibly going on to even buy a house, she reckons. Wunmi also hopes she can save enough money to buy machiner y and equipments for her three children, each learning vocational skills alongside schooling, so that they have “Freedom” to have a future.

Her eldest child is learning to be a cobbler, the middle child a tailor and the youngest a carpenter. In advanced climes, people like Wunmi would have formal financial products or schemes to choose from that helps her accomplish her desires, whether it is a loan product or a savings scheme. But she’s not banked with any financial institution so it’s a tad difficult, but she relies exclusively on the community she has built through her church for financial support and advice. Few financial services exist to support financial

planning for people with volatile incomes as Wunmi. It means Wunmi has had to settle for a money guard at the church to save. On a monthly basis she sends money through a bus driver to her mother in faraway south-western state, Kwara. She has a mobile phone but has never heard of mobile money. The church has come through for Wunmi time and time again whether in response to her home burning down, her children’s illness or through the provision of savings services. The unreliability of her income and her lack of

effective financial planning tools limits Wunmi’s ambition, as she is barely able to make any savings or investments beyond her children’s formal and vocational education. According to a report by global development advisors, Dalberg, in collaboration with the Lagos Business School, the Bill and Melinda Gates Foundation and Rockefeller Philantrophy, Wunmi belongs to a unique set of unbanked people called the Vulnerable believers. The report, called the Customer Segmentation Framework, identified six

Nigeria not ready to ensure financial inclusion for all CHRISTOPHER AKOR

he Central Bank of Nigeria recently announced that Nigeria cannot reach its target of increasing financial inclusion in Nigeria to 80 percent by 2020. In fact, financial inclusion in Nigeria has gone backwards. Between 2014 and 2017, the percentage of banked adults dropped nearly 4 percentage points to 39 percent, while the sub-Saharan African average increased more than 8 percentage points to 43 percent. The reason for this is clear: the decision of the CBN to block telecom net-

work operators from applying for mobile-money licenses, rather preferring the service to be offered by banks is the main reason for the failure to drive financial inclusion in Nigeria. This went against the current trend in much of Africa that led to the inclusion of the very poor who hitherto could not afford to open bank accounts. Even the success of M-Pesa, a mobile payments app in Kenya with over 17 million active users and conducting more than $50 billion in cashless transactions yearly, did not convince the CBN to take the telco-led approach. The apex bank’s argument was that telcos are not licensed financial institutions and it

was better for the specialists in banking to provide the services so people do not lose their money. Meanwhile, the telecom companies will provide most, if not all, the infrastructure for the scheme. With the decision to go with the banks, the telcos simply stood by and watched as banks floundered, unable to drive the take-off of digital financial services despite the presence of over 21 licensed mobile money operators in the market. Current figures show that less than 6 percent of Nigerians use their handsets for mobile money transaction, compared with 73 percent of Kenyans, where more

than two-thirds of adults have a bank account, according to the World Bank. This need not be so as Nigeria, with more than two phones for every bank account and with a teledensity of over 108% is a potential global market leader for digital financial services. It is well that the CBN is now reviewing the path it took in 2012 with a “refreshed strategy” and has also signed a cooperation agreement with the Nigerian Communications Commission to improve the penetration of financial services using mobile phones. It must however go beyond that by licensing mobile telecommunications operators to champion the drive.

34 BUSINESS DAY Financial Inclusion

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Wednesday 26 September 2018

& INNOVATION Financial inclusion is not just about access but behaviour change Supported by:

Financial inclusion is hard because behaviour change is hard IBUKUN TAIWO & OLAYINKA DAVID-WEST

inancial inclusion is critical to Nigeria’s development because on it rests the development of our human capital. Our nation’s growth requires people to be equipped with the tools and information they need to plan their financial lives and make good decisions which will influence their financial health. A financially healthy population automatically translates into a healthy nation and economy. Since 2012 when the NFIS was launched, the focus has been on the titular “unbanked” and “underbanked” segments of the population. This has been followed over the years by major financial inclusion campaigns albeit with mixed results. The recently released Customer Segmentation Framework (CSF) report pointed to the fact that, even without a bank account, people are running businesses, making purchases, saving for a rainy day and getting on with their day to day activities. That is to say, people have figured out a way to live day to day without a bank. The argument could be made, that financial exclusion is mostly due to lack of

access. Which is true. However, exclusion also persists in urban areas where we have an abundance of financial service points. This suggests that financial exclusion is not solely due to lack of access - there are other factors at play, and if not properly tackled, would frustrate our efforts. Consider the latest Global Findex Report ; while it was revealed that there was an incredible spike in number of bank accounts worldwide between 2014 and 2017, it also reported an uptick in the number of dormant accounts. In other words, we may have gotten people to open bank accounts but they are not using them.

As we approach the universal access deadline of 2020, it is encouraging to see the conversation extend beyond just financial access to account utility. In the financial inclusion discourse, access is critical, yes, but so is utility of these accounts. Otherwise, why bother? We need to ask ourselves - why are people refusing to utilise their bank accounts despite having access and how can we fix it? At its core, financial inclusion is about behaviour change on a massive scale. It involves moving people out of informal and unregulated financial service systems into the formal sector. However, behaviour change is hard, and facilitat-

ing it is time consuming and expensive. Such efforts are also not guaranteed to have the desired effects. We know that for our target market - the unbanked and underbanked - formal financial services are the alternative, not the primary choice. So it is not surprising that attempts to move them away from their already established primary providers may be faced by some resistance and friction. How do we encourage the utility of formal financial services, while mitigating resistance and friction? For one, there must be a strong use case for formal financial services in the lives of our target consumers. This can be achieved by

figuring out ways to adapt formal services into their lives through already existing value chains within the informal economy. For example, take women in rural areas who have very little income and struggle to pay their bills. We need to consider, in what ways can formal financial services be relevant in their lives? If they already have a history of taking loans from informal providers, then the formal sector needs to offer them better rates and limit the hurdles they need to overcome in order to get the loans. Incentivising and rewarding active use of accounts would also lead to increased use of these accounts. Basically, we have to replicate the perceived advantages of the informal sector and layer that on the advantages of the formal sector in order to see the new behaviors we desire. Of course, perceived benefits differ across consumer groups and segments. Different consumer groups have differing pain points and challenges they face. This is why resources such as the recently launched Customer Segmentation Framework are critical in guiding financial inclusion efforts. Although the six personas identified and presented in the report are in no way exhaustive, the report successfully high-

lights the diversity which exists across the Nigerian financial service consumer base. Those six personas revealed the gradient of needs and pain points facing different customer segments across the country. By keeping the consumer at the center of the conversation, product development, delivery mechanism, communication and messaging, everything will be designed to reach and satisfy the target consumer. Conclusion Financial access is good but it is not an end in itself. Losing sight of this can short circuit financial inclusion efforts, leaving us with vanity metrics like number of bank accounts opened, while exclusion persists. Our focus needs to remain on the reason why people need accounts in the first place - to plan their financial lives, and make good decisions while having all the tools to do so in an affordable and sustainable manner. If we can do this, we can begin to see not only adoption but also frequent usage of formal financial services by the underbanked and excluded. Dr Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services initiative of the Lagos Business School

Financial inclusion needs all hands on deck

ccording to the Human Development Index (HDI), of the world’s least developed countries (LDC), 69% are in sub-Saharan Africa. The factors that earn countries the label of ‘developed’ or ‘underdeveloped’ relate to the level at which a nation is contributing to the standard of living and well-being of its citizens – factors like healthcare, schooling, GDP and income distribution. In t h e s e d e ve l o p i ng countries however, the scale and complexity of these issues are often of such great magnitude that solving the problem requires the participation and contributions of multiple groups of people,

organizations, industries, or in some cases, nations. This is not a theoretical proposition; practical applications which have been implemented in developing countries across the world have proven the capability of an ‘all hands on deck’ approach to improve such countries. In ma ny d e ve l op i ng countries, poor populations have difficulty gaining access to clean water, or access to water at all. In India alone, 21% of the nation’s communicable diseases are linked to unsafe water. Since 2005, a partnership of up to 21 organisations in the banking and finance, government, and development industries, have collaborated to supply knowledge,

funding and infrastructure to solve this problem; as a result, there has been increased access to safe water and sanitation for over 7 million of India’s citizens. Another example was implemented in East Africa, where the rate of youth unemployment in 2013 was so high that up to two-thirds of citizens aged between 15 and 24 were either unemployed or in irregular employment. By 2017, a development industry organization, working in partnership with an organization in the professional and technology services industry, had begun to address this. In Uganda, in fact, the partnership extended to include local businesses from a myriad of industries

– together, they provided for these youths, skill-building classes, improved access to financial services, and links to work opportunities. Since then, over 12,000 youths have seen a 621% increase in income. When industries collaborate, innovation is encouraged and accelerated, and the customer benefits from an improved service; this boils down to one thing – differing strengths combined for the greater good. In Nigeria, this approach has been particularly prominent in public and private sector partnerships, with numerous organisations collaborating to leverage each other’s strengths and expertise. Some examples of this can be found in the

Nigerian transportation sector, where multiple road and rail development projects have been implemented across the country, thus reviving a sector that had preciously stalled. The same can certainly be applied to the problem of financial inclusion. Despite policies and commitments to address the problem, according to recent reports by the World Bank’s Global Findex Database, our inclusion rates are dropping – from 44% in 2014 to 40% in 2017 – and are nowhere near the goal of 80% by 2020[1]. Certainly, a new approach to solving the problem needs to be adopted, but even more so, one which leverages the competencies of industries whose expertise,

infrastructure, processes, could play a critical role in increasing inclusion levels in an impactful way. The continued development of nations is extremely essential for their continued growth and sustenance. When diverse groups of industries, organizations, and institutions collaborate to share resources, activities and their capabilities, there is an inevitable increase in the capacity to contribute effectively to solving problems, improving the lives of citizens, and ultimately to bettering the state of a nation. All hands, where willing, should be welcomed and enabled to participate in our continued national development.

Wednesday 26 September 2018

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BUSINESS DAY

INTERVIEW

‘Good films must travel beyond our shores to make real income flow’ Peace Anyiam-Osigwe is the founder of the African Movie Academy Award (AMAA). In this interview with Ifeoma Okeke, she speaks of plans lined up to host 2018 AMAA in Kigali and other burning issues in Nigeria’s film industry.

How has the experience been for you since AMAA commenced 14years ago? MAA is 14years and it has been a long hard road keeping the brand going but there is a reason for keeping it going. I feel a lot of things changed within the industry when AMAA came along especially in quality control. A lot of people always say that AMAA is very choosy about what we pick in our nominations and our reason for that is very simply. Film has one language, so the quality of a product should be able to travel to anybody to understand what you are saying. You can’t just make a film because of the Nigerian audience, there is a world audience. For me, it is important that the language of film is such that anybody can relate to and I think that is one of the reasons that the AMAA jury system is such that I have tried as much as possible to leave where it is. I am totally not involved in the screening process which has had the chairman of the screening committee saying that every film that comes into AMAA must be watched from beginning to the end. We do not compromise on this. A film might have its issues and maybe an actor is very good in it but you only will find that out when you watch a film from beginning till the end. This is one of the major achievements of AMAA, in trying to encapsulate what a quality product is.

Do you still have the same passion to push African cinema as much as possible? Yes we do and you still see that there are a lot of areas that has to be looked upon and one of those main areas is distribution. In some of the nominated films this year, I’m sure some of us has seen some of the Nigerian titles but most of you haven’t seen many of the South African, Algerian or Ghanaian titles and that is the real problem. This is because when people now start to make comments; they will not understand why certain films in the Nigerian film industry don’t make the AMAA nominations. A good film has a long life span; it doesn’t just suddenly come out and die. Why have you chosen to go to Kigali for the next AMAA awards? People keep asking why Kigali? This is because it allows more people to attend because there aren’t the bottlenecks of visas. You must have your paper works to enter the country but it is visa on arrival with documentations. This makes it easy for film makers to be able to gather

Peace Anyiam-Osigwe

to also discuss a way forward for the industry as it is necessary to do. We cannot just be film makers and nobody is watching the film. I was having a discussion with a distributor in the United States and I said we haven’t really started worrying about making films in Africa and Africa has not even started engaging itself. How many people has AMAA been able to train since it commenced in Nigeria? We graduated 250 students last year in Owerri, where I trained film makers. One thing people always forget is that in the last 14years, AMAA has actually trained 10,000 young film makers across the continent, from Nigeria, Liberia, Malawi and even one of the young ladies that I trained was among those nominated this year at the Africa Magic Viewer’s Choice Award (AMVCA). We do that consistently. We trained in South Africa and Gambia and we don’t make noise about it. We are the only people that have trained in proper production design. We bring in good hands from the USA to train people on how they can actually design a production, not just being a costumier or a makeup artiste. We bring in cinematographers from across the world to train our film makers. We train on lightening and sound. A lot of times when we do this workshop we know that capacity building is a major issue under African continent. We realise a lot of people who come into Africa and want to

get funds to make films but they also take 95 percent of the money that is the inflow out because they are bringing the cinematographer, the sound engineer, and others. As much as we want to have the glamorous side of AMAA and everyone dresses up and comes to celebrate the African cinema, I think what people also have to understand is the back end which is the important thing for me. This is the next generation of film makers and the fact that our films must travel beyond our shores and start to make the real income flow for us. By going to Kigali for AMAA this year, we are opening up. We want these films to be seen and be talked about. Will Smith has a new film coming up and he wants to even have a private screening with some of the people coming to AMAA this year. His brother is going to be there because he has a distribution company and the whole idea is for us to bring the synergy between our brothers and sisters in the Diaspora to work with us here at home. So, the platform, AMAA, which celebrates African films and cinemas, is a huge platform for everybody to look at in terms of the celebration of African cinema. Are you appreciated better in Nigeria than you are outside the shores of the country? We in Nigeria do not really appreciate what we have with the AMAAs but outside, we do. I know the reactions I get when I am outside and the reactions I get when I am inside. It is

a very interesting thing when you go away from you country and people say the founder of AMAA is around, it opens doors for you but when you come to your own country, people do not really understand the magnitude of what you have done or appreciate what you have tried to do. It is not about an individual but the whole fact that AMAA is a team with film makers and jury members, amongst others. The jury is made up of the curators of African cinemas across all the major festivals in the world. So, there is no major festival that curates African cinema that doesn’t have a representation on the AMAA academy of Jury. So, if someone comes to me and say, why didn’t a particular film make it for AMAA, I will look at him in the face and say ‘It wasn’t good enough.’ It is as simple as that. There is consistency in that. If you look at the Head of the Jury for this year, you will realise that she has curated African cinema at the Berlin for over 20 years. She was the first person to even bring African cinema like Nollywood into the Berlin. I am the only Nigerian that has sat on the Berlin Jury. In 2004, when we went to the United States of America, almost all the stars got their visas based on what we do. What other benefits does AMAA offer, apart from the trainings and awards? We train in AMAA, we also help push good films as much as we can because there is no country that doesn’t lobby for good films to get

into film festivals. South Africa and Kenya does that. Nigeria is about the only country where maybe a good film will not be lobbied for. Film industry is like politics. There is a way to lobby. You make sure that the film is good enough and you start to speak the language of film to each other to try and push that film to go into the film festivals. Festivals are where the buyers are. At AMAA this year, we will be discussing distribution at the African cinema business round table. When you watch some of the films nominated this year, you will understand where my jury is coming from. If you go to the film festival website, you will find some of the films nominated and this tells you these films are of a particular quality and they will keep travelling. For us to increase the Gross Domestic Product (GDP) of our country, we must ensure that we continue to make quality productions that can travel. I am part of the people celebrating Genevieve Nnaji’s achievement with Lion Heart and the fact that it was bought off by Netflix. That is just part one and the next stage is that it is successful as a Netflix original that is to make sure that increase publicity and ensure everyone loves it and that is depending on what they do. Quality can never run away. We should also learn to celebrate the people that get these achievements. I haven’t seen the film but people who have seen it say it is a normal Nigerian story told in a very nice way and I like the fact that there were all the old stars in it. So, it is like a celebration of core Nollywood. Is DVD really out of existence as people think? There has been a lot of argument about the life of a Digital Optical Disc (DVD) and whether it is still working. I travelled by road from Nigeria to Mali, just because I wanted to be sure I still had that drive as I turned 50 years because I have always loved to travel. This was also to prove a point about DVD and video CD (VCD). We think everything is now digital but there are some places that do not have electricity. There are parts of Burkina Faso, Liberia, and some other countries where people cannot afford the cost of data. I have pictures of people sitting in café watching VCD, not even DVD. These are villages. There are still some places in Nigeria without electricity. They will still put on their generators and watch VCD and DVD. So, when we talk about distribution, we must never forget Africa as a whole. Data cost is still an issue in Africa considering the income of the average African man.

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UN called to action as global peace, justice deteriorate ....Buhari tells world leaders to Imbibe Mandela’s values of peace, human dignity ONYINYE NWACHUKWU, New York

he United Nations has been asked to step up efforts on global peace and equity as close to 100 heads of state and government, ministers, member states and representatives of civil society commit to redoubling efforts to build a just, peaceful, prosperous, inclusive, and fair world. The call was heightened at the ongoing 73rd session of the United Nations (UNGA73) in New York where the leaders eulogized Nelson Mandela, the late South African President’s selfless service to humanity and commitment to peace. The focus of the Summit is on Global Peace in honour of the centenary of the birth of Nelson Mandela and offers the opportunity for world leaders to renew their commitment to global peace, conflict prevention, conflict resolution, peacebuilding, promotion and protection of human rights

and long-term development initiatives as called for by the UN Secretary-General, António Guterres. The Peace Summit also adopted a political declaration to reaffirm Mandela’s values. Speaking one after the other, the leaders raised the concerns that global peace had deteriorated immensely in the last decade and negates the Mandela’s vision of a peaceful world. In his speech, Nigeria’s President Muhammadu Buhari called for a reflection on the legacies of Mandela and his unwavering advocacy for human rights, social justice and peace. Buhari noted that the event provided an avenue to reflect on the legacies of Mandela and his unwavering advocacy for human rights, social justice and peace. He called on fellow world leaders to imbibe Mandela’s values by placing human dignity at the centre of their action to build a just, peaceful, prosperous, inclu-

sive and fair world. Buhari’s told them and others that the event was another opportunity to rededicate themselves to the service of humanity by championing democracy, conflict resolution, disarmament, mutual respect, reconciliation, gender equality and the fight against poverty. He observed that even though the world is facing diverse challenges ranging from conflicts, climate change, terrorism, desertification, poverty, arms trafficking and extremism among others, it is a time of great hope and renaissance if inspiration is drawn from Mandela whose lifestyle he said symbolized uncommon humility, compassion, courage and forgiveness. Quoting a statement that the Centenary celebration of the anti-apartheid icon made during his trial and faced with the death penalty, the president said: ‘During my life time, I have dedicated myself to this struggle of African people.

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Nigeria’s Jelani Aliyu wins 2018 Global Peace International Pathfinder Award HARRISON EDEH, Abuja

elani Aliyu, Africa’s innovative automotive designer and director general of the National Automotive Design and Development Council (NADDC), has been confirmed the winner of the 2018 Global Peace Movement International (UK) International Pathfinder Award. Global Peace Movement International which is the world’s leading organisation focused on good governance, holistic development, human rights and conflicts resolutions. A statement issued in London and obtained by BusinessDay on Tuesday said the Pathfinder Award is in recognition of Jelani Aliyu’s innovative development, creativity and sustainable opportunities for Nigeria and Africa. Mike Uyi, president-general of Global Peace Movement International (UK), said the award is also in recognition of Aliyu’s individual and corporate contributions towards the positive transformation of the Automotive Sector in Nigeria, Africa and the world at large. “Your innovations has created thousands of jobs, created millions of development opportunities and given new

lease of life to industrial development in Nigeria and Africa,” the president general said. Describing Aliyu’ s successes as outstanding and remarkable, he said Nigerians and the international community recognise the exemplary ideals of living for the sake of others which Jelani Aliyu’s life is about. Citing the landmark achievement of the Jelani Ali-

CHANGE OF NAME

I, formerly known and addressed as Popoola Adijat Moriike now wish to be known and addressed as Nasir Adijat Moriike. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss. Idehen Ekinadose Augustina now wish to be known and addressed as Mrs. Obeisun Ekinadose Augustina. All former documents remain valid. General Public please take note.

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I, formerly known and addressed as Benita Ujunwa Chigbo now wish to be known and addressed as Benita Ujunwa Evunde. All former documents remain valid. General Public please take note.

yu’s led NADDC, which saw to the recent signing of a memorandum of understanding with the German government for the production of Volkswagen vehicles in Nigeria, and the commitment to environmental sustainability through the building of emission test facilities around the country, Uyi said Jelani Aliyu’s life has been all about service to God and country.

CORRECTION OF NAME

This is to inform the general public that my name was wrongly written as Obah Kingley Adeyanju instead of my correct name which is Obah Kingsley Ayabowei. All banks and genral public please take note.

CHANGE OF NAME

I, formerly known and addressed as Miss. Ajibola Mary Oluwafunke now wish to be known and addressed as Mrs. Adebeso Mary Oluwafunke. All former documents remain valid. General Public please take note.

CHANGE OF NAME

I, formerly known and addressed as Obiageli Augustina Madiebo now wish to be known and addressed as Obiageli Augustina Arisa. All former documents remain valid. General Public please take note.

38 BUSINESS DAY NEWS

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CBN forecasts subdued growth for rest of... Continued from page 2

breathe easier after Emefiele told the press in a briefing after the monetary policy meeting that the CBN is looking to see how it can protect minority shareholders in Skye bank so that don’t lose all of their investments in the bank. The CBN seems to be more sympathetic towards Skye bank minority investors than they were for Afribank, Spring Bank and Bank PHB investors when these distressed banks were acquired by 3 bridge banks created by CBN in 2011. Shareholders in the legacy banks got no protection and were wiped out completely after the CBN takeover. Perhaps, the apex bank has gotten softer over the years or they feel certain guilt after selling one of the bridge banks, Mainstreet bank to Skye bank in 2015 which may have contributed to the financial woes of Skye. “What we decided to do is that if taxpayers monies will be invested in this bank in this case though as a loan, that there is a need to let shareholders know particularly those considered to be prominent and important shareholders that they have lost their investment. We will

try to just like we have done in the case of depositors to make sure that the small investors remain protected under some arrangement notwithstanding the fact their holdings will be substantially whittled down,” said Godwin Emefiele, CBN Governor. From the foregoing statement, it can be concluded that the majority shareholders won’t be getting any assistance from the apex bank after the bank was allowed to go south under their control. The shares of Skye bank remains suspended indefinitely from trading on the floor of Nigerian Stock Exchange on request by the CBN last Friday after it announced the revocation of the operating licence of Skye Bank. The stock closed last Friday at 77 kobo per share with a market capitalization of N10.6 billion. Investors will now be hoping to sell the stock at a fraction of its last trading price in order to salvage any amount possible. Skye Bank’s assets and liabilities were acquired by Polaris bank, a bridge bank setup by CBN, on Friday after AMCON injected N786 billion into the bank which effectively dilutes the share ownership of current shareholders in Skye Bank.

According to data compiled from the 2015 Skye bank annual report (which is their most recent report), it was observed that the biggest loser in company will be the past chairman of Skye bank, Olatunde Ayeni who owned 100,753,083 shares in the company or 0.73 percent ownership of the business. The top shareholders are made up of past executives who each own between 0.1-0.73 percent of the bank. As at 2015, the following board members were among the largest shareholders in the now defunct bank; Sanni Adebayo (16,953,217), Onwughalu Amaka (11,352,377), Ekong Ibiye Asime (10,771,421), Adeniyi Dotun (9,977,448), Oguntayo Timothy (8,254,878), Idowu Markie (2,453,571), Tuteja Vinay (2,100,000) and Izu Abimbola (1,000,000). These shareholders are now at risk of losing the full value of their shares following CBN’s pronouncement. However, it is worth noting that Idowu Markie, Sanni Adebayo and Izu Abimbola remain on the board of Polaris bank after they were reappointed to the board by CBN in 2016. This will be the first time in history that the apex regulator will structure a soft landing for investors in a defunct bank in Nigeria, and it raises moral hazard issues, analysts say.

L-R: Mahmood Yakub, chairman, INEC; Abdulsalam Abubakar, chairman, National Peace Committee; Ebitu Ukiwe, former Chief of General Staff, and Nicholas Okoh, Archbishop of Abuja Province, during the meeting of the committee with top Security Chiefs, INEC chairman and other stakeholders in Abuja, yesterday. Pic by Tunde Adeniyi

Kanayo Esinulo

s amiable Governor Babatunde Raji Fashola of Lagos State began to round up his tenancy at Lagos House in the later months of 2014, and a search for a suitable successor by stakeholders was in full gear, as in many states in Nigeria, the name Akinwunmi Ambode started propping up on computers and Goggle search. Not long after, the name became a dominant political subject matter among Lagos residents. It didn’t matter too much that politically the name did not immediately ring a bell in sensitive political circles in the Centre of Excellence. All that political actors, political observers and the ever-inquisitive journalists heard and knew was that Akinwunmi Ambode was a respected professional Accountant who singularly outstanding in his profession, respected by his colleagues, rose to become the Accountant-General of Lagos state, a political participant in his own right and a devoted and dedicated loyalist to the political tendency of the former governor of the State, Asiwaju Bola Ahmed Tinubu. The news that the oracle of Lagos politics, Tinubu, preferred Ambode as a suitable replacement to the departing Fashola spread like harmattan fire. There must be something about Ambode, a friend told me in the heat of the 2014 campaigns, that attracts him to the politically sagacious Tinubu, among other contend-

China Mobile eyes Nigeria after MTN... Continued from page 2

operator as a strategic investor could also help MTN in its tussle with Nigerian authorities, Jones said. “China Mobile is over 70% owned by the government, so if Nigeria hurts China Mobile they hurt the government – Nigeria has got to be sensitive to that. It’s not necessarily a perfect solution but it’s an opportunity.” A portfolio of African assets could also “sit pretty nicely for China Mobile”, Jones said. MTN operates mobile networks in 19 African countries and four Middle Eastern state. “They would be able to fund the business, and there would be some sort of political relationship that could help.” After dipping below $4.878 a unit for the first time in 12 years early last week, MTN’s shares recovered

helped matters, at all. In the eyes and perception of close watchers of the politics of development in Lagos state, Governor Ambode is on course, and his focus had the right targets. Then the news began to circulate – first as rumour, and later developed as a disturbing reality. And what was it? The story began to circulate that Bola Ahmed Tinubu, the Head Master of Lagos politics since 1999, had hinted to close associates and through a calculated body language that his protégé and current governor of the state will not get his endorsement, this time around, for a second term in office. There was confusion. There was understandable anxiety and curiosity about what could have happened? Did Ambode fall out of line? Did he cross the oracle’s red line? Did he disobey the orders of the political godfather? Or did their political interests, clash in any way? There were so many questions, but answers were few. No one knew exactly what was going on. Anxiety mounted and we began to hear the name of the new choice, Babajide Sanwo-Olu, a former commissioner of establishment in the state. So, what is really happening? A flurry of interventions commenced: sympathies for the embattled governor began to build up, even from Abuja. President

slightly after authorities in Nigeria said they were working towards an amicable solution to the standoff. The central bank said yesterday at the end of a monetary policy committee (MPC) meeting it was engaging with MTN and its four banking partners there. The parties had provided “additional information, which is currently being reviewed with a view to arriving at an equitable resolution”. MTN has said the central bank’s claims that its repatriations were dividend from illegally converted preference shares were untrue, and that it moved ordinary dividends out of the country. Nigeria fined MTN $5.2bn in 2015 for not disconnecting unregistered SIM cards. After talks, the fine was cut to slightly more than $1bn. Some analysts now ask if Nigeria, MTN’s biggest market, is worth the risk.

NSE demutualisation crosses major hurdle... Continued from page 2

up NSE for more opportunities and invite new investors.” “It also gives NSE the opportunities to implement some plans they previously have which they could not implement due to their current status,” Ebo said. Until the early 90’s, majority of the world’s stock exchanges were non-profit, member-owned, mutual organizations with monopoly power. Since the first demutualization by the Stockholm Stock Exchange in 1993, leading stock exchanges including the Australian,London,NASDAQandNew YorkStockExchangesbegantoundergo demutualization. Also, a number of stock exchanges especially in emerging market jurisdictions have either demutualised or are in the process of demutualising including those of Malaysia and India. In Africa specifically, out of the 27 exchanges who are members of ASEA, seven namely the Johannesburg, Nairobi, Mauritius, Seychelles, Rwandan, Casablanca stock ex-

Ambode: The burden of loyalty ers for the position of the Number One Citizen of Lagos State. Tinubu himself was a damn good governor during his eight years in office as the governor of the state. It was during his tenure that structural and institutional changes took place in the state. So, like Fashola, this new choice by the Oracle, Ambode, will surely deliver. It was the popular assumption. On the election day, despite a stout and spirited campaign and well-appointed political strategies by the Jimi Agbaje Campaign Organisation, Akinwunmi Ambode eventually won. Since May 29 2015, Ambode has been the chief servant of the most cosmopolitan state in the country. And the verdict among many Lagos residents, including serious-minded political observers, is that the young man has been piloting the affairs of Lagos State with dedication, foresight and profit. Lagosians easily fall for any governor that provides critical infrastructures and allows the environment for businesses to thrive and grow. Ambode, in my view, has done comparatively well in this area and in so many others, although there are some complaints about increasing potholes on Lagos inner roads – from Ikeja to Surulere and to Apapa axis. And the stubborn rains of this year have not

Wednesday 26 September 2018

Muhammadu Buhari had audience with Ambode in Aso Rock Villa in an effort, I suppose, to settle what many believed was a minor family feud that Mr. President could easily handle or, at least, put under control. Tinubu remained adamant and diplomatically encouraged his new choice, Sanwo-Olu, and the fiftyseven local government chairmen in the state, and in fact the ruling All Progressives Congress, APC, in the state to continue mobilising in favour of his new choice. Meanwhile, Ambode had shown interest for a second term in office and had, in fact, bought the nomination forms for participation in the contest. He was tacitly advised to discontinue his bid to be re-elected, and to dismantle his Campaign Organisation because the party in the state had decided to field Babajide SanwoOlu. Not a finger was pointed at the exact reason or reasons why a sitting governor and party loyalist had been earmarked for this degree of harassment and humiliation. Governor has not, as I write this, risen in his own defence. The continuing interventions and pleas for a rethink by Tinubu to support the re-election bid of this silent achiever and a calculating new breed politician seem not to be yielding fruits. Instead, Tinubu and his foot soldiers are consolidating

changes and BRVM are demutualized with several others including the NSE are in the process of demutualizing or considering taking on this initiative. In Nigeria, efforts to demutualize the Exchange achieved milestone following the appointment of a consortium of financial, legal and tax advisers on the demutualization initiative. South African bank, FirstRand, and local investment firm, Chapel Hill Denham was appointed to guide the NSE through the process of becoming a listed company. According to data from the World Federation of Exchanges, more than 70 per cent of members have transformed their legal structure from non-profit mutual Exchanges into demutualized organizations. NSE was incorporated as a private company in September 1960 under the name of Lagos Stock Exchange, which was changed to the Nigerian Stock Exchange in December 1977. It was re-incorporated as a company limited by guarantee in December 1990 and has operated as such ever since. their hold on party machine in an effort to sufficiently isolate Ambode and his growing band of loyalists and sympathisers. From Port Harcourt, Governor Nyesom Wike of Rivers State, publicly advised Ambode to call off the Tinubu bluff and seek re-election, if necessary, on a new political platform. Some APC governors are discreetly sympathetic to Ambode and have advised that the party in the state should revisit its handling of the delicate matter, before it spills over. And they readily point fingers at the recent governorship election in Osun State where, the contradictions in the politics of a state considered an APC stronghold, now seems snatched by the opposition Peoples Democratic Party, PDP. Can Tinubu and those who act for him possibly change their minds and allow Governor Ambode to complete two terms in office, as his predecessors did, or are they still bent on humiliating one of their loyal ones out of office? These questions may remain unanswered for now, but there is a danger in destroying a man who, to the best of public knowledge, has not offended the oath of office he swore to, on assumption of office nor have betrayed the social forces that created room for him to emerge as the flag-bearer of his party.

•Continues online at www.businessdayonline.com Esinulo, a journalist, writes from Lagos.

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Wednesday 26 September 2018

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Counsel explains LADOL, Samsung legal dispute over equity holding in SHI MCI Stories by UZOAMAKA ANAGOR-EWUZIE

idelis Oditah, counsel to LADOL and LADOL Free Zone, has explained why Samsung Heavy Industry (SHI) recently took its dispute with the Lagos Deep Offshore Logistics (LADOL) Base, its local content partner in the Egina Floating, Production, Supply and Offloading (FPSO), project for the Total Upstream Nigeria Limited, to the court. BusinessDay understands that there are three aspects to the dispute between Samsung and LADOL. First is the ownership of SHI MCI Free Zone Enterprise (FZE), a joint venture set up by both companies for the execution of Egina FPSO contract. Second is SHI MCI FZE’s sublease agreement with a LADOL affiliate, Global Resources Management Limited (GRML) while third is the SHI MCI’s operating licence as a free zone enterprise within the LADOL free zone. Oditah, who gave insight into the dispute, told newsmen last weekend that LADOL on 5 September 2018, issued proceedings at the Federal High Court Lagos (FHC/L/C S/1459/2018) seeking to set aside a 2014

BBC Naples, the first ever ship to berth at the newly built Dagote Refinery jetty in Lekki, during its arrival in Lagos recently.

settlement agreement it entered into with Samsung over alleged fraud, and to restore the parties to their pre-2014 settlement ownership of SHI MCI FZE, which consist of 80 percent for LADOL and 20 percent for Samsung. He said LADOL issued an interlocutory application for injunction to restrain Samsung from parading itself as the owner of 70 percent of SHI MCI FZE, adding that the injunction also restrain Samsung from selling or disposing of the shares in SHI MCI FZE pending the hearing and determination of the substantive proceedings. According to him, “LAD-

OL and Samsung successfully bided and were awarded the Egina FPSO EPC contract in the sum of over $3.1 billion which, unknown at that time to LADOL, included a sum of $214 million for the construction of the upgrade of the fabrication and integration facilities at LADOL. He alleged: “After winning the contract, Samsung took every step to exclude LADOL from the local content elements of the contract in order to appropriate to itself, the upgrade and ownership of the fabrication and integration facility at LADOL. Samsung unilaterally fixed the EPC costs of upgrading of

the facility at LADOL at $300 million, refused to have the upgrade project financed, insisted on providing corporate finance on its own terms and asked LADOL to provide $240 million as debt and equity to pay for its 80 percent ownership of SHI MCI FZE and the facility.” Oditah claimed that on 23 December 2013, Samsung purported to terminate all its agreements with LADOL for the upgrade of the facilities, and went further to demand that LADOL should pay it $18 million for the design of facility. “To defend local content and itself, on 24 January 2014,

LADOL issued proceedings at the Lagos Federal High Court seeking 19 declaratory and other reliefs against Samsung, Total, Nigerian Content Development and Monitoring Board (NCDMB) and the Minister of Petroleum Resources. Oditah disclosed that both parties reached an agreement that forced LADOL to surrender its 80 percent equity in SHI MCI FZE, gave Samsung 50 percent and accepted 30 percent equity, for which it paid Samsung and SHI MCI FZE $40.5 million, to enable the Egina project push through. “This was on the basis of Samsung’s deliberate misrepresentation and fraud (upon which LADOL relied) that no money was provided in the Egina FPSO contract for the upgrade of the LADOL fabrication and integration facilities. Contrarily, Oditah said that as the Senate Ad Hoc Committee investigated the local content elements of the Egina project, it emerged that the upgrade of the facilities at LADOL was indeed included in the Egina FPSO contract, and that Total had paid Samsung at least $214 million for the upgrade. According to him, Samsung committed at least three frauds and misrepresentations in connection with

the June 2014 Settlement Agreement in order to induce LADOL to surrender its 80 percent equity ownership of SHI MCI FZE. On sublease, he said that LADOL terminated SHI MCI FZE’s sublease on 5 September 2018 for material breaches of sublease covenant; denial of its landlord’s title by asking the Nigerian Ports Authority (NPA), the head lessor, to carve out a portion of GRML’s leased land, and grant a direct lease in favour of SHI MCI FZE, as well as breach of the sublease agreement. On the operating licence, Oditah stated that SHI MCI FZE did not satisfy the condition of regulation 41 of the LADOL Free zone regulations 2016, which stipulates among other things payment of licence fee; provision of all information, document and returns required by zone management; payment of all outstanding amounts and fees due to Zone management. On the contempt charges filed against directors in LADOL by Samsung, the counsel said the affected directors have applied for the contempt proceeding to be set aside from being grossly irregular and consequently invalid. “The position remains that Samsung has no operating licence.

Health Centre project. “This is a local government project but INTELS decided to assist us as part of its CSR. “The management of INTELS has enjoyed a peaceful environment in this community; this is a pointer of success in creating an enabling environment for the advancement of peace and understanding. I urge the community to do their best in maintaining this facility, as I pledge that we shall maintain this facility and the equipment therein.” V.E Otomiewo, head of Ekpan community, urged youths to jealously guard the Health Centre and ensure that the equipment are not vandalised. The Ovie of Uvwie Kingdom, his royal majesty, Emmanuel Sideso, who was represented by U. K. Okowe, also commended INTELS for the gesture. INTELS, which has been

in the forefront of empowering women, youths and communities in the Niger Delta, has won several awards and commendation. Recently, it was honoured by the Nigerian Shippers’ Council (NSC) – an agency under the Federal Ministry of Transportation – for its outstanding contribution to the development of its host communities. John Dennis Osaronu, the Paramount Ruler of Onne Clan in Rivers State, recently commended the company for providing roads, drainages, streetlights, medical services and several other amenities to the community. INTELS, which developed and operates its major base within the Oil and Gas Free Zone, Onne, Rivers State, and is a concessionaire to the Nigerian Ports Authority (NPA); operating dedicated oil and gas terminals at the ports of Onne, Calabar and Warri.

INTELS donates new Health Centre to a community in Delta State

s part of its corporate social responsibility (CSR), INTELS Nigeria Limited, one of the leading port operator/oil and gas logistics service company, has built and handed over a modern, fully equipped Health Centre to the Aruakpor-Umah Community, in Uvwie Local Government Area, Warri of Delta State. The multimillion naira Health Centre, set up to provide quality, primary and preventive medical care, consists of an operating theatre, consulting room, five wards including a labour ward, and is the first of its kind in the community. Silvano Bellinato, general manager of INTELS Nigeria Limited, who was represented at the handover ceremony by Philip Embledon, commended the community for cooperating with the company in the actualisation

of the Health Centre. “It is a great honour building this Health Centre. I would like to thank you for the spirit of cooperation that made it possible. I hope we can continue in this spirit.” Rexford Asaikpuka, manager, Government and Public Affairs of INTELS, said the company embarked on the project after carrying out a need analysis of the Aruakpor-Umah community. “We decided that the best thing to give to this community is a Health Centre as the nearest one is far away. Amenities like this are important in the Niger Delta due to the nature of the environment.” According to him, INTELS has adopted an Integrated Partnership Approach (IPA) to its CSR. The approach, he said, enables it enlist the active participation of its host communities. He said the approach is predicated on three objec-

tive planks of empowering host communities through the provision of employment and welfare to the people; planning and executing integrated community development programmes with full community participation; and adopting best practices

that guarantee community friendly relationship and peaceful co-existence. Napoleon Newyear, vice chairman of Uvwie LGA, who represented the Local Government chairman, Ramsey Onoyake, commended INTELS for embarking on the

Phillip Embledon of INTELS Nigeria Limited formally handing over the new Health Centre built by INTELS to Napoleon Newyear, vice chairman, Uvwie Local Government Area, at the commissioning of an ultramodern Health Centre built by INTELS at the Aruakpor-Umah Community, Warri, Delta State recently.

Wednesday 26 September 2018

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APC’s primaries: Ambode’s fate hangs in the balance JOSHUA BASSEY & INIOBONG IWOK

...governor’s group lobbies LG chairmen, as Sanwo-Olu mobilises support

kinwunmi Ambode and his supporters have their fate hanging loosely, as the All Progressives Congress (APC)’s governorship primary election gets underway this Saturday. Amid swelling rank of support for Babajide SanwoOlu, one of the three aspirants in the party’s primary, and Ambode’s main challenger, a group loyal to the governor was said to have also yesterday reached out to chairmen of the 57 local councils to turn the tide in his favour and sway votes from party men/women who will be participating in the primary election to hold across the 20 local government areas and 37 local council development areas of the state. Meanwhile, the SanwoOlu’s camp, backed by know APC stalwarts in Lagos, is seen mobilising and meet-

ing with various stakeholders across the state, introducing the aspirant and explaining why he is the man for the job, the incumbent governor’s camp has been quite. The Lagos chapter of the APC has insisted on the conduct of a direct primary to pick its candidate for the 2019 governorship election, a position which seems to have received the blessing of the national leadership of the party. The Governor’s Advisory Council (GAC), the highest decision making body for the party in Lagos, has also endorsed the direction primary option, promising to ensure a level playing ground for all aspirants to test their popularity. But in Nigerian politics, popularity is relative. It is even more so when it involves party’s internal elections. In most cases, individuals and groups control the party’s machinery and

structure, and Lagos is not an exception. The incumbent governor, like his predecessor in office, does not seem to control the party’s structure. The structure had been there, built over time. Ambode, like Babatunde Fashola before him, only rode on the structure by the mercy of the owners, to contest and won the 2015 governorship election. This has been proven in the current crisis rocking Ambode’s second term bid. The owners of the party’s structure seem to have resolved to pull the carpet from Ambode. The Mandate Group, a strong political platform within the ruling APC in Lagos, associated with Bola Ahmed Tinubu, national leader of the APC and most influential personality in Lagos politics, has openly endorsed Sanwo-Olu, the current managing director of Lagos State Property Development Corporation (LSPDC), while the third aspirant,

Babafemi Hamzat, a former commissioner for works and infrastructure in the state, is being rumoured not certain to go ahead with the contest. Hamzat has been silent since obtaining the party’s nomination form, fuelling speculations that he has given up on his ambition, fearing impending defeat in the primaries, after failing to get the support of the leader of the party Bola Tinubu and other APC leaders in the state. A source close to Hamzat hinted that he was weighing the option, after it became apparent that Saturday’s primary election has been designed to favour a particular aspirant, stressing that the former commissioner would soon disclose his next line of action. Other independent sources said that Hamzat was not afraid of going into primaries with any aspirant, stressing, however, that he would rather stay away than allow himself to be ridiculed in a charade.

Wednesday 26 September 2018

Bello, Abubakar’s second term tickets threatened …Okorocha, Yari interests jeopardised as APC approves direct primaries JAMES KWEN, Abuja

overnor Mohammed Bello of Niger State and Governor Mohammed Abubakar of Bauchi State stand the risk of losing the second term tickets of their party, the All Progressives Congress (APC) at this Saturday governorship primary elections. Also, Rochas Okorocha, Imo State governor and chairman APC Governors Forum and Abduraziz Yari, governor of Zamfara State and chairman Nigeria Governors’ Forum have their interests of putting in place successors jeopardised. This as the National Working Committee (NWC) of APC Tuesday approved the use of direct mode of governorship primary elections in Niger, Bauchi, Imo, Zamfara and 14 other

States. The direct mode of primaries in which all registered members of the party participate in the nomination process does not give room for the absolute control of governors unlike indirect primaries where the delegates that vote are determined by governors. The issue of direct and indirect primaries have generated a lot of controversies in the APC, creating a sharp division between the governors and NWC with both opting for different modes. Only last week, APC governors met in Abuja and opted mainly for indirect primaries, but their option has not been affirmed by the NWC which foisted direct primaries particularly in states where their governors are vehement on indirect primaries.

Lagos APC postpones screening for Assembly aspirants indefinitely INIOBONG IWOK

L-R: Sola Okikiade, general manager, marketing, Design Union; Chizor Malize, workshop facilitator and chief executive officer, Brandzone LLC; Adeola Azeez, deputy country representative/deputy managing director, Deutsche Bank, and Eugene Uka, senior sales manager, Rack Centre Limited, at the Tea Time With Chizor (TTWC) Personal Branding Workshop in Lagos Recently.

he Lagos State chapter of All Progressives Congress (APC) has announced the indefinite postponement of its screening for aspirants contesting for the State House of Assembly seat earlier scheduled to hold yesterday at the party’s secretariat on ACME Road, Agidingbi, Ikeja. Joe Igbokwe, spokesperson of the party, disclosed the decision to newsmen yesterday, after emerging from an exco meeting, long after contestants, who turned up for the exercise in large number as early as 8am in the morning, armed with their nomination forms and other document,

had left the party secretariat disappointed. Businessday gathered that over 230 aspirants, including seating members of the Lagos State House of Assembly, are jostling for the available 40 seats in the state. According to Igbokwe, the exercise had to be postponed because the screening panel from the APC National Headquarters, Abuja, failed to turn up, saying that in the absence of the team, nothing could be done by the state chapter of the party. The party chieftain, who could not offer any explanation on why the screening panel from the APC National Headquarters failed to turn up for the exercise, said the screening would now hold once the panel was around.

Group commends World Bank’s $611m intervention for BESDA in Nigeria South Africa relaxes visa rules to attract investors, tourists CHUKA UROKO

group under the aegis of Connected Development (CODE) has commended World Bank’s intervention in Nigeria’s education sector with $611 million (about N221 billion support for the federal government’s Better Education Service Delivery for All (BESDA) programme which aims to get out-of-school children into classrooms across the country. The Universal Basic Education Commission (UBEC) says over 1 million children in North-Eastern Nigeria lack basic education due to the Boko Haram conflict,

increasing the total number of out-of-school children from 8.7 million reported by the National Bureau of Statistics (NBS). “It is exciting to know that the World Bank is investing in strengthening Nigeria’s education sector to enable her meet sustainable development goals on universal basic education for all, among other targets, especially in Northern Nigeria where most of the out-of-school children reside,” said Hamzat Lawal, CODE’s CEO. Lawal, however, reiterated the need for institutional strengthening for transparency, “particularly in providing salient information on how these funds

are expended so that citizens can hold government accountable as well as ensure sustainable investment by elected governments to meet Nigeria’s education needs, especially basic education”. Through its ‘Follow the Money’ model, CODE provides marginaliSed and vulnerable communities with resources to amplify their voices with independence and integrity as well as information that ushers social and economic development through online and offline platforms that close the feedback loop between citizens and the government to enhance social contracting and accountability.

MIKE OCHONMA

outh Africa has announced a number of visa reforms aimed at luring investment and tourists to help lift the continent’s most advanced economy out of recession. At the last 19th Annual Steve Biko Memorial Lecture at the University of South Africa (UNISA) in Pretoria on September 14, 2018, South Africa’s President Cyril Ramaphosa announced that the country has relaxed visa rules to attract investors and tourists. Data showing that South Africa had slipped into recession dealt a blow to Ramaphosa who came to

office in February ahead of elections next year. Malusi Gigaba, the country’s Home Affairs minister unveiled a raft of regulations allowing frequent visitors and foreign business travellers to have long-term multiple-entry visas of up to 10 years. The rules will take effect from next month. According to Gigaba, “Changes to our visa architecture have the potential to boost tourism and make business travel more conducive. We are simplifying visa requirements for countries such as China and India.” Prospective entry visa applicants into South Africa from those two countries will be able to have a 10-year

visa processed within five days. He stated that, this arrangement is meant to attract business people and prospective investors. Tourism contributes 10 percent of South Africa’s total Gross Domestic Product (GDP). As part of the measures, anti-trafficking rules requiring parents to travel with birth certificates of their children will be simplified, he added. Visa reforms are part of an economic stimulus plan announced by President Cyril Ramaphosa last week to boost investor confidence after South Africa entered a recession in the second quarter of this year.

Wednesday 26 September 2018

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BUSINESS DAY

News Extra

Ekiti guber tussle: Court grants INEC extension of time to respond to petition Uwensuyi (SAN), informed the court that the electoral body would call 60 witnesses to testify for it in the substantive suit. He, however, moved an application for extension of time to enable the first respondent in the matter respond to the petition filed by the petitioners. The application was granted by the tribunal. Meanwhile, the motion to recount the ballot papers used for the governorship election has been scheduled for Thursday, September 27. The tribunal, chaired by Justice Suleiman Belgore, yesterday fixed Thursday to hear the motion as it began its sitting in Abuja, following its relocation to the Federal Capital Territory (FCT). The change of venue was necessitated by allegation by some PDP members of the Ekiti State House of Assembly that they were attacked by supporters of the APC

FELIX OMOHOMHION, Abuja

he Ekiti State Governorship E le ction Tr ibunal, Tuesday, granted first respondent, the Independent National Electoral Commission (INEC), extension of time to enable it respond to the petition filed by the People’s Democratic Party (PDP) and its candidate in the July 14 governorship election in the state, Professor Olusola Kolapo. In the petition filed before the tribunal, the petitioners are challenging the declaration of Kayode Fayemi of the All Progressives Congress (APC) as the winner of the election. Joined in the petition as respondents, aside INEC, are the APC and the winner of the election, Fayemi. At Tuesday’s sitting, in Abuja, counsel to INEC, Charles Edosan

Kayode Fayemi

Bello, Abubakar’s second term tickets threatened …Okorocha, Yari’s interests jeopardised as APC approves direct primaries in Niger, Bauchi, Imo, Zamfara, 16 others JAMES KWEN, Abuja

overnor Mohammed Bello of Niger State and Governor Mohammed Abubakar of Bauchi State stand the risk of losing the second term tickets of their party, the All Progressives Congress (APC) at the Saturday governorship primary elections. Also, Rochas Okorocha, Imo State governor and chairman APC Governors’ Forum, and Abdulaziz Yari, governor of Zamfara State and chairman Nigeria Governors’ Forum, have their interests of installing successors, jeopardised This is as the National Working Committee (NWC) of APC Tuesday approved the use of direct mode of governorship primary elections in Niger, Bauchi, Imo, Zamfara and 14 other states. The direct mode of primaries in which all registered members of the

party participate in the nomination process does not give room for the absolute control of governors unlike indirect primaries where the delegates that vote are determined by governors. The issue of direct and indirect primaries has generated a lot of controversies in the APC, creating a sharp division between the governors and NWC with both opting for different modes. Only last week, APC governors met in Abuja and opted for indirect primaries, but their option has not been affirmed by the NWC which foisted direct primaries particularly in states where their governors are vehement on indirect primaries. The 17 states for which APC NWC approved direct primaries are, Abia, Akwa Ibom, Anambara, Bauchi, Bayelsa, Cross River, Edo, Ekiti, Imo, Kano, Lagos, Niger, Ogun, Ondo, Osun, Taraba, Zamfara and Federal Capital Territory.

Ogun APC crisis: Osoba cries out over surveillance drone hovering over residence …Two suspects arrested by DSS RAZAQ AYINLA, Abeokuta

ormer governor of Ogun State, Segun Osoba on Tuesday cried out over a suspected surveillance drone hovering on his expansive compound located within Government Reservation Area, Ibara in Abeokuta. The former governor, who suspected foul play and alleged that the surveillance drone which was flown on his mansion Tuesday afternoon was a major security breach and threat to life, declared

that the political climate of the state has taken a dangerous dimension. The suspected drone that hovered on Osoba’s mansion, who is a chieftain of the ruling party in the state, All Progressives Congress (APC), might not be unconnected with internal crisis within the party at the state level. Governor Ibikunle Amosun and the state party hierarchy chaired by Derin Adebiyi were alleged to have sidelined Osoba’s caucus in sharing of available elective posts through consensus and indirect primaries rejected by Osoba’s caucus and some governorship aspirants.

at the tribunal sitting venue. The motion, filed by Yusuf Ali (SAN), counsel to the petitioners, is seeking the leave of the tribunal to recount the papers with a view to determining the actual scores of each candidate in the election. On his part, counsel to the APC, Akin Olujinmi (SAN), said there is need for minor amendment of the documents tendered by the party. Lateef Fagbemi (SAN), who is representing the governorelect, Fayemi, said all documents needed by the third respondent in the petition have been filed. While some motions bordering on jurisdiction were deferred till later date, it was agreed that three days will be for pre-hearing. The petitioners were given 14 days to address the court, while the respondents will be taking 10 days. Hearing on the substantive suit will commence on October 17.

PDP guber aspirants in Kwara pledge to support whoever emerges flag bearer SIKIRAT SHEHU, Ilorin

he Senate President, Bukola Saraki on Monday night met with gubernatorial aspirants on the platform of the People’s Democratic Party (PDP) in Kwara State. It was learnt that the national leader of the PDP enjoined the aspirants to conduct their campaigns in the build up to the primary election in orderly manner. The meeting which was held behind closed doors at Saraki’s private residence in Ilorin, the state capital, started about 10.20pm and lasted till about 11.02pm with nine aspirants present. The aspirants, who attended the meeting include Ali Ahmad, Razak Atunwa, Bolaji Abdullahi, Mohammed Sha’aba Lafiagi, Ladi Hassan, Ahman Pategi, Saka Isau

(SAN), Sulaiman Abubakar and Mohammed Ibrahim Ajia. The only aspirant absent at the meeting was Zakari Mohammed. Also in attendance were former Deputy Governor, Joel Ogundeji, party’s state chairman, Kola Shittu as well as Secretary, Rasaq Lawal joined few minutes to the close of the meeting. Briefing newsmen at the end of the meeting, Senator Sha’aba Lafiagi said the meeting was convened to ensure peace as a family group, adding that contestants agreed to ensure a transparent race during the primaries. The former governor now representing Kwara north in the Senate, said there was no discussion on consensus but that there was no written undertaking among them since it is all within the same political family. “The meeting was all about

bringing the family together. It is only normal that at a time like this the leader of the family meets with us to keep peace and ensure that all went well. “We agree to respect the outcome of the primaries, to ensure that we remain friends after and ensure peace. We will surely accept whoever emerges. The intention is that the contest should be free, fair as much as possible. Whoever emerges we will all line up behind him and we will remain members of the family. “I don’t know about consensus, time will tell but for now everyone is preparing to enter the contest but I don’t rule out possibilities of consensus arrangement. Along the line we may consider that as a family. We don’t need to sign an undertaking because as I told you we are members of the same family,” he said.

Osun poll: Group lauds police performance

he performance of the police in last Saturday’s governorship election in Osun State has been commended by a pro-Buhari group, Re-elect Buhari Movement (RBM), saying that the police carried out its duty professionally during the exercise. The convener of the group, Emmanuel Umohinyang, a lawyer, in a statement said this was unlike what obtained in the past when the police was treated like an appendage of the ruling party. According to him, the police under the Inspector-General of Police (IGP), Ibrahim Idris, has reinvented themselves by keeping to their core values, going by their

performance in recent elections, especially last Saturday’s Osun governorship election. Umohinyang attributed this to the avowed commitment of President Buhari to allow institutions unfettered freedom to perform their roles, and the vision of the IGP, adding that the Osun election has shown that the police can do their job if allowed to do so. “They can also do their job if they are free and operate in an unhindered environment. President Buhari has given institutions the liberty to work without undue interference. We are no longer in an era when the President wakes up and says, I don’t give a damn about the people,” he said.

According to him, “Before now, the police operated like an arm of the ruling party and they did what they wanted with the institution. Today, we have an excellent IGP, in the person of Ibrahim Idris. Under his watch, no policeman will be used for ballot box snatching. He has re-directed his men on the core functions and value system of the police.” “We saw it in Anambra, where the ruling party at the centre lost to APGA. Osun has become a pace setter for every election. My appeal to the Judiciary is that we should rise above sentiments because the President has shown the way,” he further said.

BUSINESS DAY

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Wednesday 26 September 2018

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BUSINESS DAY

FINANCIAL TIMES

The new scramble for business in Africa

Louis Dreyfus rocked by sudden resignation of both CEO and CFO

Page A7

Page A6

World Business Newspaper

European banks seek lighter-touch regulation in the US Loosening of rules for US lenders brings calls for parity LAURA NOONAN, ROBERT ARMSTRONG AND SAM FLEMING

uropean banks and US senators are warning that America’s banks face retaliation overseas if the lighter-touch regime promised to domestic lenders is not extended to foreign competitors. European lenders are seeking a relaxation of rules around stress tests and capital requirements, according to senior bankers working on US policy issues, on the basis that their US operations are of a similar size to the mid-tier US banks which were given relief under legislation signed by President Donald Trump. US lenders with between $50bn and $250bn were granted a significant loosening of the regulations imposed by the Dodd-Frank reforms, subject to the discretion of the Federal Reserve. European banks which fall into that category include Deutsche Bank, which had $188bn of assets in its US holding company as of March 31; Credit Suisse, with $99bn; and Barclays, with assets of $92bn. Société Générale, Natixis, Crédit Agricole and BNP Paribas each have between $60bn and $83bn of assets. Big Japanese and Canadian banks are also affected. Seven Republican senators have weighed in on behalf of the foreign banks. In an August letter to Randal Quarles, the Federal Reserve’s vice-chairman for Supervision, they argued that international bank holding companies “should receive comparable regulatory treatment of US [banks] of similar size and risk profile”. The senators raised the spectre of foreign retaliation for unequal treatment, cautioning that the supervision of foreign banks “has important implications . . . for how other regulators treat the international operations of US banks operating abroad”. A European bank representative said that the possibility of retaliation was “an important talking

point” for both foreign banks and US banks making their case. A second banker pointed out that the EU’s rules requiring foreign banks to set up holding companies was a direct reprisal for earlier US rules requiring foreign banks to do the same thing. Mr Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act — known as the Crapo Bill after is principal architect, Republican Senator Mike Crapo — in May. While the Crapo Bill was working its way through the senate, Democrats claimed that it would have the side-effect of weakening standards for large global banks, if they had less than $250bn in assets in the US. Fed chair Jay Powell responded that this was not the case “according to my reading of the text”. Foreign banks with more than $50bn in US non-branch assets have, since 2014, been required to hold all those assets in a single intermediate holding company (IHC) to make it easier for supervisors to keep an eye on their activities. These IHCs are required to comply with enhanced prudential standards on capital, liquidity, and stress testing. The IHC regime was devised partly in response to the high leverage and short-term funding used by foreign-owned brokerdealers ahead of the financial crisis. The IHC requirements are unaffected by the Crapo bill. Lobbyists complain this potentially leaves big foreign banks’ US subsidiaries working under tight regulatory supervision even as their US-based peers with less than $250bn of global assets receive relief. “Appropriate [regulatory] tailoring is essential for international banks to maintain and grow their businesses in the US and continue to contribute to US economic growth and market liquidity” said Briget Polichene, chief executive of the Institute of International Bankers, a trade association representing foreign banks operating in the US.

Trump trade team draws heavily from one law firm: Skadden

Lighthizer and other company veterans spent years fighting imports to help US steel industry JAMES POLITI

hen Robert Lighthizer was tapped by Donald Trump to be the US’s trade tsar last year, the veteran attorney from Skadden Arps, one of Wall Street’s oldest and most successful law firms, gathered up his troops. He brought along Jeff Gerrish, a longtime partner at Skadden, to be deputy US trade representative, and called on Stephen Vaughn, a partner

at King & Spalding who had worked at Skadden, as USTR general counsel. For years, the trio had fought imports from China and elsewhere on behalf of clients in the US steel industry, but they were about to do so on a much bigger scale for the Trump administration. The influence of the former Skadden lawyers — and their connections to the US steel industry — are drawContinues on page A6

US banks with between $50bn and $250bn in assets were beneficiaries of the Economic Growth, Regulatory Relief, and Consumer Protection Act signed into law by President Donald Trump in May © AFP

The odd couple that will lead the world’s new number one in gold John Thornton and Mark Bristow to run $18bn Barrick Gold and Randgold combination HENRY SANDERSON AND NEIL HUME

he $18bn combination of Canada’s Barrick Gold and London’s Randgold Resources brings together two of the biggest personalities in the mining industry: a former highflying banker from Goldman Sachs and a pugnacious South African miner and geologist. How these two powerful personalities will work together will govern the success of a deal that the two companies say will create a global mining colossus designed to appeal to all investors and not just gold fanatics. However, there are already concerns about how John Thornton, known for his tough management style, will work alongside Mark Bristow, who single-handedly built Randgold into one of the biggest gold companies in the world. Under the deal announced on Monday, the two men will retain their positions as executive chairman and chief executive — the first time Barrick has had a chief executive since 2014. “Mark is viewed as one of the best operators in the industry — they ought

to give him a lot of rein,” said Robert Gill, a portfolio manager at Lincluden Investment Management. The two companies have been discussing a possible combination for three years but talks intensified over the past nine months, leading Africafocused Randgold to recommend a $6bn all-stock offer from Barrick on Monday. The tie-up will create the world’s biggest gold company, with annual production of 6.5m ounces of gold, eclipsing its nearest competitor, US-listed Newmont Mining. The deal comes as investors have been shunning the gold mining sector, which has a well-deserved reputation for overspending, poor capital discipline and, in North America, excessive executive pay. Only last week, New York hedge fund Paulson & Co launched a 16-member Shareholders’ Gold Council, in a bid to push miners to improve their performance. Since 2008, the NYSE Arca Gold Bugs index, which includes Barrick and Randgold as constituents, has more than halved in value as the industry has taken tens of billions of dollars of impairment charges on ill-timed

deals and wildly ambitious projects. By bringing together Barrick’s scale and reach with Randgold’s entrepreneurial management team, Mr Thornton and Mr Bristow say they can create a “new champion for value in the gold mining industry”. “Randgold has the agility and swiftfootedness of a younger and smaller company, much like Barrick in its early years, while Barrick has the infrastructure and global reach of a large corporate company,” Mr Thornton said on Monday. Analysts and bankers say a deal helps both companies address key strategic problems. Since Mr Thornton was appointed executive chairman of Barrick in 2014, the Toronto-based group has sold off assets, slashed debt and focused on generating cash rather than expanding its gold reserves. But that has also seen its output fall, threatening its position as the world’s largest gold producer, which it was in danger of ceding to rival Newmont. Buying Randgold is one way of addressing those concerns as well as hiring one of the industry’s most highly regarded executives in Mr Bristow.

US tech groups’ executives to make case for national privacy law Big players switch approach amid fears state legislation could become default position HANNAH KUCHLER

xecutives from Google, Amazon, Apple and Twitter will ask US lawmakers for greater regulation this week, in a dramatic change to their approach. Until now, the companies have lobbied politicians to leave them alone. But when they make their latest appearance before US senators on Wednesday, tech bosses are expected to argue for a comprehensive national privacy law to supersede state legislation. The executives, who include Keith Enright, Google’s chief privacy officer, and Damien Kieran, Twitter’s global data protection officer, are likely to offer more transparency and more access to data for consumers. The hope is that, by pushing for a national law, they can avoid stricter rules at the state level. California passed sweeping privacy legislation this summer, while Massachusetts passed a bill strengthening protections for con-

sumers suffering data breaches. Legislators in Illinois are proposing a controversial ban on the collection of facial recognition data. Tech companies fear that these state laws could become the default for the entire US, in the same way that California’s legislation regulating auto emissions became the national standard, because companies are often unwilling to leave large states or create different services for different territories. Senators ‘should not fall for the standard line’ The California privacy legislation was signed into law in June after tense negotiations between privacy activists and Silicon Valley companies. The new legislation establishes a broad definition of what constitutes personal information, including aggregated data, and imposes restrictions on when data can be sold to third parties, giving consumers the option to pay more to opt out of the sale of their data. The law is also armed with fines for data breaches, much like

the EU’s General Data Protection Regulation (GDPR), which was introduced in May. The tech companies say that the strict rules adopted in California will hurt businesses and potentially lead to websites closing, as happened in the EU following the introduction of GDPR. They hope that a new federal law would override the state legislation. Alastair MacTaggart, a real estate developer turned privacy activist, said Washington was taking privacy seriously for the first time, but warned against diluting the rules he had helped to create for California. “Senators should push the companies. They should not fall for the standard line, which has been that jobs will be destroyed, the economy will suffer, and you won’t have this great innovation engine,” he said. “That is just not true — all we are doing is offering some pretty basic rights to consumers.” Half of Americans do not trust the government or social media sites to protect their data

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NATIONAL NEWS European tech companies call on EU to toughen regulations

Trump trade team draws heavily... Continued from page A5 ing increasing attention as the US ratchets up its trade confrontation with China. Many trade lobbyists and lawyers at rival firms say the administration is neglecting the broader concerns of US business— notably rising input prices and the risk of retaliation against exports — in favour of one sector’s priorities. Just this year, the US has imposed national security-based tariffs on steel and aluminium imports, announced duties on $250bn of Chinese products and threatened new tariffs on cars. “It’s unusual to have so many people, not just from the same specific place, but from the same background,” says Bill Reinsch, chair in international business at the Center for Strategic and International Studies, a Washington think-tank. “It produces a certain unanimity of point of view: you’re not getting the other side, you’re not getting divergent opinions, and you’d probably be a lot better off if you did.” For three decades at Skadden, Mr Lighthizer helped the US steel industry — and US Steel in particular — win protection from the US government through anti-dumping and countervailing duties and special “safeguard” tariffs. The 70-year-old attorney pursued litigation to defend such measures against foreign exporters and domestic manufacturers who sought to prevent or overturn them. “These guys have fought against the trade mercantilism of China and others so they know how the war is fought. They know what the tactics are,” says Dan DiMicco, chairman emeritus of Nucor , a North Carolinabased steel company that backed US Steel in many cases. “I’m not here to push some narrow agenda,” Mr Vaughn said last year, stressing that USTR was keen to listen to all parts of US industry. Others in Mr Trump’s economic team have similar ties. Wilbur Ross, the commerce secretary, was a renowned investor in the steel sector, and Peter Navarro, Mr Trump’s White House adviser on trade and the author of the book Death by China, has attracted praise from steel producers. Supporters of Mr Lighthizer — whose office did not reply to a request for comment — say the team is simply implementing Mr Trump’s campaign policies. They add that voters wanted a change from previous officials who pushed for open trade and new markets but forgot that trade policy also plays a role in defending industry. They also highlight widespread corporate support for a tougher stance on China, even if there is disagreement over using tariffs as a tool. “Bob does understand the importance of agriculture, services and innovation. But the globalists — they had their 20 years, and it didn’t work,” says one sympathetic trade lawyer in Washington. Supporters also say few people in Washington are as knowledgeable about the intricacies of US trade law as Mr Lighthizer’s team. Skadden has offices in Beijing and Shanghai, as well as Brussels, Paris and Moscow. “This is the most experienced team at USTR that I have seen in the 30 years that I’ve been involved in trade policy,” says Ivan Schlager, head of the national security practice at Skadden’s Washington’s office. “These guys have a terrific framework for understanding the US trade laws, and remedies. They are not wild-eyed protectionists; they are realists.”

Industry groups say draft laws aimed at US tech giants are too weak MEHREEN KHAN

Louis Dreyfus rocked by sudden resignation of both CEO and CFO Departures come after widow of company founder tightens grip on commodity trader NEIL HUME

ouis Dreyfus Company, one of the world’s biggest traders of coffee, sugar and wheat, has been rocked by the sudden resignation of both its chief executive and chief financial officer. The company said Gonzalo Ramírez Martiarena, who took the helm three years ago, had left the company to “pursue other opportunities”, while CFO Armand Lumens, who joined in March 2017 from Royal Dutch Shell, had stepped down for “personal reasons”. LDC named Ian McIntosh, its chief strategy officer, as Mr Ramirez’s replacement and said Federico Cerisoli, deputy chief financial officer, would fill the role vacated by Mr Lumens. The sudden departures of Mr Ramirez and Mr Lumens are likely to fuel speculation of either a large trading loss or a disagreement over strategy with Margarita Louis-Dreyfus, the widow of Robert Louis-Dreyfus, whose family founded the company in 1851.

Ms Louis-Dreyfus has been quietly increasing her grip on the Geneva-based business since the death of her husband in 2009, raising her stake in the holding company that controls the group from 65 per cent to 80 per cent. That will rise to 96 per cent once the buyout of other family shareholders is completed. A spokesperson for LDC said the departures were “not related” or connected to the company’s half year results, which are due to be published in October. “I take the opportunity to thank Gonzalo for his contribution to the company, in particular as CEO”, said Ms Louis-Dreyfus in statement. “Over that three-year cycle, he has successfully fulfilled his mandate of putting the Group in its current solid financial position and creating the conditions for the company’s next phase of growth. After this phase of consolidation, the new team is well positioned to drive future expansion.” “I would also like to welcome Ian to his new position”, she added.

“Ian has worked within the Louis Dreyfus Group since 1986 and brings the experience, expertise and knowledge that ideally position him to take the company to the next level and to continue to reinforce the culture and values of the group.” Under Mr Ramirez, LDC moved to focus on its core operations trading grains and oilseeds. He sold the company’s metals business and was seeking partners to invest in its metals, dairy, fertiliser and orange juice units, which were deemed non-core. He also oversaw a financial bailout of its troubled sugar subsidiary Biosev. Like its peers, LDC has struggled with tough market conditions and slow farmer selling. It reported a 16 per cent drop in core agricultural earnings from continuing operations last year. Apart from a 14-year stint at Nidera, the Dutch grains trader, Mr Ramírez spent his career at Dreyfus. Before being appointed CEO, the Argentine headed LDC’s Asian business.

Derivatives and debt markets face race to end links with Libor Authorities appear to have run out of patience with uncoordinated approaches KATIE MARTIN AND PHILIP STAFFORD

K financial authorities had a clear message for banks and insurers last week: We are not kidding about the death of Libor, and you must be ready. About $170tn of derivative contracts depend on the benchmark rate and traders at one investment bank in Canary Wharf are well aware that Libor’s days may be numbered. The 2021 switch-off “is really big,” said one. Head to another floor at the same bank, however, and inquiries on the matter with senior bondmarket executives are met with blank looks, even though the same benchmark is embedded in almost every outstanding debt instrument. The mismatch is a common sight. Authorities appear to have run out of patience with these uncoordinated approaches. Last week the Prudential Regulation Authority and the Financial Conduct Authority sent letters to the heads of the biggest banks and insurance companies it regulates demanding detailed assessments of the risks related to terminating the outdated and scandal-tainted Libor. To drive the point home, regulators demanded that plans are

board-approved, and that each institution names the senior manager responsible for overseeing it. Serge Gwynne, a partner in corporate and institutional banking at consultancy Oliver Wyman, said this is as far as authorities can go short of regulation, which they are keen to avoid in favour of a “marketled” solution. “There’s a risk Libor doesn’t get the priority it should do, not least because of Brexit preparations,” he said. Regulators’ urgency has been driven not just by the manipulation scandal that has landed traders in prison, but also by the evolution of markets after the financial crisis. Libor measures the cost of unsecured borrowing between banks for a specific period, usually over one, three and six months. It remains embedded in everything from mortgages to banks’ regulatory capital, with more than $370tn of deals tied to it, according to Isda, a trade body. New rules after 2008 have encouraged banks to look at other sources that offer stable, long-term funding. “The market has moved on,” said Shankar Mukherjee, UK Financial Services Partner at EY. But the pretence continues. To aid the daily calculation of Libor, banks have to submit estimates that

rely on “expert judgment” rather than real activity. Faced with a reputational risk, many have quit the process. More of the remaining 20 would like to but have been persuaded to continue until the end of 2021 by the FCA. Beyond that deadline, it’s unclear whether and how the benchmark can continue to operate. The amount of contracts that reference Libor, but mature after 2021, meanwhile, continues to grow. Without Libor, thousands of contracts lose the reference rate that forms the basis of their value. Efforts to get the implications across to a broad range investors and bankers, however, have struggled while brain power has been focused on Brexit and Mifid regulations. “This is a project that will require unprecedented co-ordination across different business functions, from derivatives to loans to mortgages,” said Scott O’Malia, chief executive of Isda. Thousands of existing contracts that reference Libor will need to be changed, a particularly daunting prospect for a bond issue where borrowers may need to seek permission from each individual bondholder for the switch.

potify, Deezer and a host of other European tech companies are pushing EU governments to toughen up draft laws designed to stamp out alleged unfair business practices of US internet giants such as Google, Apple and Amazon. In a joint letter to EU governments on Monday, creative industry leaders, including publishers and game developers, called on lawmakers to “seize the opportunity” to rewrite draft legislation designed to rebalance the relationship between apps and vendors that are increasingly reliant on platforms for their services. The companies say planned new regulations, drawn up earlier this year by the European Commission, do not go far enough to address the “serious harm” and “abuse of privilege” carried out by platforms when they impose unfair conditions on small businesses. The letter, which was cosigned by Daniel Elk, chief executive of Spotify, and Hans-Holger Albrecht, chief executive of Deezer — accused US giants such as Google of becoming “gatekeepers to the digital economy” by using their dominant position to impose unfair terms on game developers and app makers. Examples include Apple requiring downloads from its app store to use Apple’s own payment methods rather than other tools, such as PayPal. EU competition and business ministers will meet in Brussels on Thursday. The EU’s 28 member states will have to agree on a version of the draft legislation, which will then be considered by the European Parliament and the European Commission before it can come into force. Known as the “platform to business” regulation, the rules are one of the commission’s final attempts to address the operations of “intermediation services” such as Google, Amazon and Airbnb before EU-wide elections next May. The commission’s proposal would require platforms to give companies more information about how their ranking algorithms work and offer businesses, app makers and traders with a formal complaint process if they were demoted or de-listed from search results or app stores without sufficient explanation. But the joint letter’s signatories argue the measures do not go far enough to address unfair business practices. Spotify has complained that Apple’s app store gives preferential treatment to its own music service and takes a 30 per cent cut of its premium subscription fees when downloads come from the app store. “Transparency alone will not rebalance the relationship between platforms and the businesses that depend on them,” said the letter, whose signatories also include the European Publishers Council, the head of the European Broadcasting Union, and the European Game Developers Federation.

Wednesday 26 September 2018

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BUSINESS DAY

ANALYSIS

The new scramble for business in Africa

Led by China, countries from Turkey to India are looking for opportunities

Private equity plays risky game of musical chairs Cash-rich firms increasingly buy from each other but debt could threaten some deals JAVIER ESPINOZA

DAVID PILLING

Turkish company is generating part of Ghana’s power supply. Another one just this month finished a flashy new terminal at the country’s international airport. A Philippine utility is about to take over running the Electricity Company of Ghana, the largest distributor in west Africa. Even Ghana’s biggest flyover, named after liberation hero Kwame Nkrumah, was built by Brazilians. Ghana, one of the fastest-growing economies in the world this year, is a tiny microcosm of forces that are radically reshaping Africa’s interaction with the world. A new group of outside powers — from China to Brazil and from Russia to Turkey — is gaining a commercial and strategic foothold across a vast continent that was, until recently, dominated by former European colonial powers and the US. In what some have called a “new scramble for Africa”, these nonwestern nations are sniffing out commercial opportunities and seeking to project themselves in a difficult but dynamic part of the world. While China has been taking the lead over the past decade, a host of other countries has begun to follow its path. Whether it is states from the Gulf and the Middle East jockeying for influence in the Horn of Africa, Chinese companies locking up cobalt assets vital for electric cars in the Democratic Republic of Congo, or India replacing the US as the biggest importer of Nigerian crude, all over Africa new participants are making their presence felt. Africans, understandably, object to the idea of a “scramble”, with its connotations of the 19th century, when European powers squabbled for a slice of what Leopold II of Belgium called this “magnifique gateau Africain”. Instead, many regard wider interest in their continent as a golden opportunity to catalyse a different phase of development by breaking away from what they regard as the paternalistic — or downright extractive — relationships they had with traditional powers. Carlos Lopes, a development economist from Guinea-Bissau, says he has yet to meet an African leader who is not animated by the new possibilities opening up in an era that might be termed “post-post-colonial”. “It gives Africans much more room to manoeuvre,” he says. “The level of ambition from leaders has gone up very much in response to these incentives to do more with infrastructure and financing and to dare defy western pressure. They are finding it very exciting.” The changing patterns of engagement — which have led Washington

and Europe to reassess their stance towards the continent — are reflected in trade. China supplanted the US as Africa’s biggest trading partner back in 2009. Last year, China-Africa trade was $170bn, off its 2014 peak but still nearly 20 times higher than at the start of the millennium. By contrast, US trade with sub-Saharan Africa was just $39bn. Where China has led, others have followed. From a lower base, several countries have seen their exposure to Africa rise dramatically. AfricaIndia trade jumped more than 10fold from $7.2bn in 2001 to $78bn in 2014 — making India Africa’s fourth biggest trading partner, according to the UN Economic Commission for Africa. Between 2006 and 2016, the Brookings Institution calculates, African imports from Russia and Turkey rose 142 per cent and 192 per cent respectively. China has invested about $125bn in African countries in the decade to 2016, according to the China-Africa Research Initiative at Washington’s Johns Hopkins University. This month, some 40 African leaders travelled to Beijing to hear President Xi Jinping pledge $60bn more over the next three years. Washington is watching this growing influence with alarm. Last year, China opened its first overseas military base in the tiny country of Djibouti, adding to the presence of the US and others. Djibouti, now heavily indebted to China, is a prime example of what some US critics have labelled “debt diplomacy”, in which Beijing is said to be parlaying loans into political influence. China has also been accused of using debt to take over entitiesin Zambia, including the national power utility. This August, several US senators wrote to Steven Mnuchin, the Treasury secretary, and Mike Pompeo, secretary of state, accusing Beijing of “weaponising capital” in Africa, as well as Asia, by using debt to create an economic world order in China’s image. The growing sense that the US is losing influence on the continent helps explain President Donald Trump’s decision to back a big expansion of the Overseas Private Investment Corporation, a private sector focused development agency whose lending limit is to be more than doubled to $60bn. Legislation, which has bipartisan support, has already passed the House but is waiting Senate approval.Backers of the so-called Better Utilization of Investments Leading to Development (BUILD) Act explicitly link it to national security and China’s growing influence in Africa. Kwasi Prempeh, executive director of the Center for Democratic Development in Accra, says Washington is still too focused on threats in Africa and not enough on opportunities. “The US

continues to be a player, but it’s caught in the post-Iraq era,” he says. “Its policy is driven by the ‘securocrats’.” Europe, too, has been slow to see Africa’s potential, say critics, and is only now trying to respond to the advances made by other countries. Last month, Theresa May, the British prime minister, danced through a three-nation tour of Africa to drum up post-Brexit business and to assert Britain’s relevance. Because of the historical presence of UK-listed companies on the continent, including large interests in oil and mining, Britain is still the second-biggest investor in Africa in stock terms. It also remains a big aid donor. But what many drew from Mrs May’s visit — which, incredibly, included the first by a British prime minister to Kenya for 30 years — was how diplomatically disengaged London has become.“Poor Mrs May really has a lot of catching up to do,” says Mark Malloch Brown, a British diplomat and former deputy UN secretary-general under Kofi Annan. In the early 2000s, he says, “We started hearing complaints about what China was doing in Africa, grumbling from the British and the Americans. But, my God, they have created a competitive spur to the rest.” There are signs that, belatedly, Europe is waking up to the diplomatic and commercial challenge. Last year, Germany launched what it called a “Marshall Plan with Africa”, pledging public money to companies investing on the continent. “We are going to create more security for ourselves and we will put an end to trafficking,” said German chancellor Angela Merkel, launching a scheme that has been slow to get off the ground. “They are responding to a domestic constituency agitated about the influx of migrants,” says Mr Prempeh. “They’re thinking: ‘If we can get these countries to be economically viable, either through direct investment or aid, then maybe we can stem the flow’.” He points to a commitment by Volkswagen to assemble 5,000 cars in Ghana as an example of such efforts. Emmanuel Macron, France’s president, has also sought to articulate a new vision for the continent. Stressing that he was born after African states had won their independence, he has urged a relationship shorn of colonial baggage. He has also stressed the commercial opportunities for French companies, including small and medium-sized ones, in the English and Portuguese-speaking parts of the continent, as well as in their traditional francophone stamping ground. But, like Ms Merkel, Mr Macron’s motives for greater engagement are tinged with alarm. In a speech last December in Ouagadougou, capital of Burkina Faso, he warned of dangers that, he said, “could irreversibly sweep away Africa’s stability, and also Europe’s stability”.

orraine Kelly has been coming to the Gala bingo hall in Stratford in east London most weekends for the past two decades. Even though the business has changed hands multiple times over that period, she says the place has stayed largely the same. “Sometimes you get free passes to come and play when new owners take over and that encourages you to play more,” says Ms Kelly, who once won £1,000 in the same evening of bingo. While the customers might not have seen much change, the same cannot be said for the business model. Gala, which merged with rival Coral in 2005, was at the epicentre of one of Europe’s least successful and controversial leveraged buyouts as it was passed around private equity firms in a financial game of pass the parcel that lasted over a decade. Successive owners would pay themselves high dividends, aided by easy financing, before selling to the next private equity house. In total, the company was bought and sold five times by different firms. Through the whole process, the levels of debt the business carried, measured as a multiple of its earnings, kept creeping up. Although the business performed well in the decade up to 2008, with strong sales growth and aggressive expansion, Gala’s former private equity owners spent much of the past decade in retreat, cutting back on shops and laying off staff, after they were nearly overwhelmed by a toxic mix of tough market conditions and high levels of borrowing. Chart showing value and number of sales from private equity firm to another Over time, the debt burden became unsustainable. Gala Coral nearly went bust, before the business was eventually acquired by ri-

val Ladbrokes in 2016, which in turn was bought by GVC earlier this year. The Gala Coral story might have proved a salutary experience about the risks of such pass-the-parcel dealmaking. However, the opposite has been the case. Last year, the industry did a record 576 so-called secondary deals, when a company or a stake in a company is sold by one private equity firm to another, according to Preqin, the data provider. That compares with 394 such transactions in the peak of the deal boom in 2007, just before the financial crisis. Private equity advisers are increasingly worried that the sector could see a repeat of Gala Coral’s experience as interest rates start to rise, increasing debt payments and raising the chance of a recession. Secondary deals can often be more vulnerable when conditions change, either because they have higher debt levels or because more money has already been taken out of the business by previous owners. A recent analysis of the performance of 2,137 companies owned by 121 PE firms by Saïd Business School at Oxford university showed that secondary transactions have lower returns than other deals when done by a firm that is under pressure to deploy capital. Some executives liken the situation to a form of private equity “musical chairs”, where firms are exposed when the market turns against them. “Every time a company is sold between private equity funds there is a risk that you are taking off some of the potential upside as the business may have been optimised through acquisitions or operational improvements,” says Neel Sachdev, a leveraged finance partner at the law firm Kirkland & Ellis, which advised Apollo in acquiring the debt of Gala Coral in 2009. “So there may be less potential upside every time you pass it on.”

Access Bank leads on banking security … as Herbert Wigwe meets Microsoft CEO, Satya Nadella

urrent trends have shown that banking has gone beyond the normal brick and mortal venues to digital platforms. As such, Access Bank has not soft pedalled on its commitment to provide innovative, secure and convenient banking services to its customers. The chief executive officer of the Bank, Herbert Wigwe, is set to meet his Microsoft counterpart, Satya Nadella to discuss issues and methods regarding how the bank can further leverage on technology to solidify banking security in the country. The meeting also provides an extensive opportunity for the Bank to further build on its current relationship with Microsoft, with discussion on how both companies can work together to revolutionize digital banking experience and create additional and new forms of value in Nigeria and Africa. Scheduled to hold today, Thursday, September 27, 2018 in the United States, Herbert Wigwe and Satya Nadella will discuss the Bank’s massive efforts to reform banking practices on the conti-

nent, creating easy and secured banking experience for customers, including quick methods to address financial inclusion, especially through Access Bank’s existing structures that promote financial technology such as mobile banking, the African Fintech Foundry, among many others. Speaking on the proposed meeting, Herbert Wigwe said “This meeting is very strategic for Access Bank and could not have come at a better time. Right now, we are much focused on providing innovative solutions and leveraging technology across various platforms in our quest to open Africa to the world which is our five-year goal.” With its track record in innovative products such as the Access Africa, the cross-border transfer service, which is the fastest way to send and receive money across Africa seamlessly, PayDay Loan and the recently-launched Access WhatsApp Banking service, Access Bank has consistently provided customers with seamless banking services that have proven to be fast, affordable, and convenient.

BUSINESS DAY

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Wednesday 26 September 2018

BUSINESS DAY

Opinion

FRANKLIN NNAEMEKA NGWU Dr. Ngwu is a Senior Lecturer in Strategy, Finance and Risk Management, Lagos Business School and a Member, Expert Network, World Economic Forum.

ven as the 2019 elections draw near, it is unfortunate that key governance issues that should be properly examined and discussed especially by the main contenders are ignored. We are still engrossed in blames and counter blames, defections and counter-defections mainly dictated by personal interests of politicians. While APC seems fixated on blaming PDP and unable to provide convincing reasons for the state of the economy, PDP is creating a perception of a party with a kind of amnesia, seemingly yet unprepared and waiting to reap from the failures, actions and inactions of PMB and his government. In about six months from now, we are expected to have elected a government that will govern the giant of Africa, though the poverty capital of the world! An economy catering for about 200 million consumers but which has performed very poorly in all key governance indicators such as ease of doing business, regulatory quality, rule of law, government effectiveness, voice and accountability, control of corruption etc. If the above are the attributes of the country we are required to elect the leaders in less than six months time, I think that more serious discussions and engagements are urgently needed. With such a grim picture of the state of our economy and the unserious discussions we are having about the 2019 elections,

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NEWS YOU CAN TRUST I WEDNESDAY 26 SEPTEMBER 2018

World Economic Forum report & 2019 elections: Key governance issues the question is if we are really interested in and serious about the project called Nigeria? Why are we playing with our future? Retrospectively, it is the same lame debates of APC vs PDP, religion and ethnicity that characterized previous elections that are largely responsible for the present lamentable state of our economy and society. Given our perceived importance especially in Africa and our poor governance outcomes over the years, the World Economic Forum (WEF) in January 2017 issued a report detailing five critical factors or issues for the sustainable development or underdevelopment of Nigeria. The report titled “Nigeria: Dynamic Briefing” is part of WEF Global Transformation Maps through which connections between industries, regional and global issues are properly examined to better understand the forces shaping our global economy. The key factors for Nigeria include good governance, internal security, youth unemployment, human capital and infrastructure development. The abstract of these key issues are as follows: i. Good governance: Even with a democratic government since 1999, good governance remains far from established in Nigeria. Good governance in politics and business is critical especially in times of challenges and economic uncertainty. While President Buhari’s government elected in 2015 has prioritized the fight against corruption and diversification of the economy, it has struggled to deliver the economic reforms required to stimulate investment and growth. As good governance is central to Nigeria’s future economic prosperity and stability, the political and business leadership needs to show clear focus and direction, particularly with regards to the economy. Without resolving the burning

52 years: 60 million: numbers of life expectancy of unemployed Nigerians youth in Nigeria

$300 billion: amount of infrastructure deficit in Nigeria

citizens, youth unemployment remains one of the greatest challenges facing Nigeria. The high rate of unemployment can be attributed to many factors such as high dependence on oil revenue, limited diversification of the economy, corruption and bad leadership. Exacerbating the appalling unemployment level in Nigeria is the inexcusable attitude of the state governors who act as if employment creation is the prerogative of the federal government. iv. Human capital: Human capital, one of the greatest assets of Nigeria, remains underutilized and possibly a liability to the “giant of Africa”. Nigeria’s human capital base, estimated at about 200 million– almost one-sixth of Africa’s population – is largely under 40 years old. On the one hand, Nigeria’s young demography could significantly propel Nigeria’s economic diversification and growth. On the other hand, it might turn out to be greatest risk and liability to Nigeria if urgent and concerted

efforts are not galvanized and sustainably implemented. While inequality remains very high with an income gini-coefficient of 48.8, life expectancy is about 52 years. As there is an urgent need to diversify the Nigeria’s economy away from oil and gas, special attention needs to be devoted to the development of science, technology, engineering and mathematics (STEM) skills of Nigerians v. Infrastructure development: A lack of adequate infrastructure remains a major challenge for Nigeria’s sustainable economic growth and development: With provision of adequate infrastructure, the Nigerian economy could grow at a double-digit rate, putting it close to or among the ten biggest economies in the world. It is a country with immense growth potential: a growing market of over 200 million consumers, abundant human and natural resources, endowed with an immense entrepreneurial spirit. Of the 200,000 kilometers of national road network, over 70% of the roads are in poor condition, especially state and local government ones. Railways, very important for the movement of goods and people in a large country like Nigeria, are only sparingly available. Of the 3,505 kilometers of railway inherited from the British after colonization, only a limited percentage is currently operational. With an infrastructure deficit estimated to be about $300 billion, Nigeria

needs to spend about $14.2 billion every year on infrastructure for the next 10 years. Using the above key factors and others such as health as starting points and as the PMB government cannot be said to have succeeded or even succeeding in any of the five factors, it is expected that key politicians in all the parties should be serious in telling us how they will effectively address the identified socio-economic challenges. As APC and PDP remain the main contenders, the task is more on them. APC as a party and government should get sober and understand that the unending blame of Jonathan’s government is now puerile and unattractive. They should in humility and sincerity appreciate their shortcomings, possibly apologize to Nigerians and then convincingly explain how they will take appropriate corrections to address our mounting socio-economic problems. PDP on the other hand should do more work. As earlier stated, it seems somehow unprepared and mainly waiting to gain from the failures of APC. They also need to further apologize to Nigerians and then clearly convince us through practicable manifestos and pedigree of their numerous aspirants that they have learnt from their mistakes, ready and now capable to provide the highly desired leadership for our dear country. In the executive summary of the 2017 report, the World Economic Forum stated as follows “Nigeria, a country with immense growth potential and resources, is however constrained by many challenges. Even with the challenges, the economic potential of the country remains compelling. With a visionary and committed leadership, the challenges facing the country can be effectively addressed and the potential opportunities exploited to achieve rapid, sustainable and inclusive economic growth”.

exchange for camaraderie. I drove through Apapa recently and experienced deep pain and despair. Forget the trucks on the bridges and all the approaches. I went from Point Road through Wharf Road, Creek, Liverpool, our old Bombay and Pelewura Crescents. I visited what used to be Kingsway. Apapa stinks! Apapa has become a slum and is now no different from Boundary on the Malu Road. There is a population explosion. Then a burst of commercial spots in places not meant for that purpose. The streets are dirty. The roads are woebegone. The neglect of the treasure that Apapa represents started then with the Cement Armada. Then as now going into Apapa was a chore as the place was jam-packed. Apapa speaks to the confusion and wrong priorities in our national planning or lack thereof. It is inconceivable that the place that contributes so much to the nation’s income and resource base would suffer such wanton disregard until all of its infrastructures would collapse. What is wrong with officialdom in this country that allows such egregious errors happen? Is there an elite consensus to enable Nigeria to die? Drawing any other

conclusion is difficult. We similarly neglected the Niger Delta until our brothers and sisters revolted from the stranglehold and choking effects of the deprivation and degradation. Nigeria began to respond only after the agitations. We have not felt the urgency of the need even now. As with Apapa, we are doing the same with the new bride of Lagos, the Lekki Free Trade Zone. Lagos state and the federal government project and position this zone as the new engine room of the Lagos economy. It houses the upcoming Dangote Refinery, LADOL and several other massive projects. Governor Akinwunmi Ambode recently posted a video wherein he showcased the zone and its potentials to investors and entrepreneurs. Drive to the place, however, and you could develop a fit at the state of the road and approaches to the zone. The way is terrible once you enter Ibeju Lekki. At Abijo and Bogije, motorists spend an average of two hours each way, locked in traffic caused by bad portions of roads. Those portions deteriorated gradually over the last two years. The conclusion of the whole matter? We do not care even for the sources of our wellbeing. How very sad!

Figures:

issues of ownership, control and equity in the management of Nigeria’s natural resources, economy, society and polity via clear, focused and determined leadership, the country risks the continued outbreaks and escalation of internal conflicts. ii. Internal security: Boko Haram, Fulani herdsmen, Niger Delta, IPOB and other ethnic militants remain very serious threats to Nigeria’s national unity and development. Even with the curtailment of the deadly Boko Haram terrorist group, the violent activities of other ethnic militant groups and related criminal activities such as kidnapping, armed robbery and marauding Fulani herdsmen continue to pose serious socio-economic and political threats to Nigeria. Not only is the frequency of attacks increasing, it is also spreading to all parts of Nigeria, leading to a wide perception that the government is weak or indifferent to the inherent problems posed by the herdsmen. Unsurprisingly, the persistence of the attacks and the perceived lukewarm attitude of the government are increasingly arousing ethnic sentiments, with calls for the restructuring of the country growing. iii. Youth unemployment: Rapidly increasing youth unemployment is a time bomb waiting to explode if not urgently addressed. With over 60 million unemployed youths in a country of about 200 million

As there is an urgent need to diversify the Nigeria’s economy away from oil and gas, special attention needs to be devoted to the development of science, technology, engineering and mathematics (STEM) skills of Nigerians

Apapa as a metaphor for Nigeria

CHIDO NWAKANMA Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@gmail.com.

he port city of Apapa in Lagos is one of the most precious pieces of real estate not only in Nigeria but Africa. It covers only a land area of 39 square kilometres. In that little space, it generates so much wealth for the coffers of the nation. Officials of the Lagos state government and the military began Monday, September 24, 2018, another attempt to get the ubiquitous trucks off the approaches to and main roads of Apapa. It is the umpteenth effort to control what has become the menace of lorries on Apapa roads. Denizens of Apapa can only hope and pray

that this current effort would yield positives. It looks, though, as a forlorn hope. Apapa lies north of the Lagos lagoon. The main attraction is the ports and terminals it houses for various commodities such as containers and bulk cargo, houses, offices, schools. It also houses a small and disused line for the Nigerian Railway Corporation. Apapa hosts 80 percent and counting of the facilities for Nigeria’s external trade, both import and exports. There are container terminals including the one the federal government handed over in March 2005 to A.P. MollerMaersk Group. There are two main ports, the Port of Lagos, Apapa Ports and the Tin-Can Island Port, launched in 1977 with roll-on, roll-off facilities described then as “ultra-modern”. Apapa also houses refineries such as those of Bua Group, blending plants and the commercial offices of shipping, clearing and transportation companies. Apapa is, of course home to two newspapers, BusinessDay andThisday. A third newspaper, Vanguard, has offices on the way to Apapa through the Tin Can Island port. It observed in a report in June: “Since the beginning of the year 2018, it

It is inconceivable that the place that contributes so much to the nation’s income and resource base would suffer such wanton disregard until all of its infrastructures would collapse has been hell for motorists and other road users in the Mile Two/ Berger/Coconut/Tn Can axis of the Oshodi-Apapa Expressway. This is no thanks to the lingering traffic congestion in the area taking an alarming turn for the worse each successive day. Last week it degenerated into a climax of chaos as over 5, 000 tankers, trucks and other articulated vehicles invaded and seized a whole section of the dual carriageway, completely paralysing traffic from Oshodi to Tin Can, inward Apapa”. The Apapa North terminal of the Nigerian Railway Corporation worked in the period 1975-1980 that I schooled in one of the landmark schools of Apapa, United Christian Secondary School. We

used to board the train occasionally for fun. We also used to board the ferry to cross from Apapa to the Marina. The boat still operates, luckily, but the terminals reek of decay. I have known Apapa for 43 years. It was pristine, clean, livable when I first made contact as an 11-year old who skipped Primary Six to enter the secondary school. Apapa was a beautiful bride, the place we learnt of in various subjects, from Economics through Commerce, as significant because of the ports and their role in transportation, national income etc. The government built the Apapa Amusement Park in this period, and it added to the allure of Apapa for young people. There were two main supermarkets of the era, Leventis and Kingsway Stores. There was the Roxy Cinema and the Leadership and Training Centre, Sea School. During various activities, we would visit the Park Lane residence of the Awolowos. We witnessed the unfolding of the Tin Can Island Port and how it created a new route to and from Apapa, linking to Mile 2 and the new expressway. We occasionally joyfully walked from school then on Bombay Crescent to Mile 2, pocketing our transport fare in

Published by BusinessDAY Media Ltd., The Brook, 6 Point Road, GRA, Apapa, Lagos. Ghana Office: Business Day Ghana Ltd; ABC Junction, near Guinness Ghana Limited, Achimota – Accra, Ghana. Tel: +233243226596: email: mail@businessdayonline.com Advert Hotline: 08034743892. Subscriptions 01-2950687, 07045792677. Newsroom: 08169609331 Editor: Anthony Osae-Brown. All correspondence to BusinessDAY Media Ltd., Box 1002, Festac Lagos. ISSN 1595 - 8590.

WEST AFRICA

ENERGY intelligence oil

gas

power

Wednesday 26 September 2018

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BUSINESS DAY

POWER

Egypt: Egypt inks $352m deal with Siemens to manage power stations Page 4 finance people appointments

L-R: Yann Cottart, CEO NigerStar 7; Olapeju Adenuga, Legal Counsel NigerStar 7; Simbi Wabote, executive secretary, NCDMB; Anwar Jarmakani, Jagal Group executive managing director & Ladi Lawanson, Lagos State Commissioner for Transportation during the naming of NigerStar 7 oil vessel, Adaba, at Snake Island Lagos

Debrief

Energy Institute Nigeria to host Energy Sustainability Conference in Lagos Page 6 OPEC weekly basket price DAY

PRICE

21/9/18

76.71

14/9/18

76.59

7/9/18

75.19

31/8/18

74.96

24/8/18

72.09 Source: OPEC

$100 per barrel may be finally knocking on door FRANK UZUEGBUNAM

il exports are down and will probably continue to fall. The tightening US market came ahead of sanctions that Washington plans to implement against Iran’s petroleum exports from early November. Many analysts expect a drop of more than 1 million bpd of Iranian crude exports, while JP Morgan expects expecting a loss of 1.5 million bpd while economically reeling Venezuela and unstable Libya also present supply risks.

Despite pledges earlier this year to increase production, Saudi Arabia may allow crude prices to rise above $80 per barrel as the market adjusts to the start of US sanctions on Iran. Saudi energy minister Khalid al-Falih on Sunday rejected accusations by US President Donald Trump that OPEC was keeping oil prices elevated through anti-competitive behavior. “I do not influence prices,” Saudi Energy Minister Khalid al-Falih told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost. Oil prices rose with Brent crude futures hitting $79.71 per

barrel, up by 91 cents, or 1.2 percent. US West Texas Intermediate (WTI) crude futures rose by 75 cents, or 1.1 percent, to $71.53 a barrel. JP Morgan said in its latest market outlook that “a spike to $90 per barrel is likely” for oil prices in the coming months due to the Iran sanctions. OPEC has increased production “a good amount” since June, Falih noted, offsetting declines in member countries Iran and Venezuela, as well as non-OPEC Mexico. As a result, “markets are quite balanced today.” But iran seem have its own agenda that might push the oil market to a cliffhanger. “Any country that says it can

make up for the shortfall in the market is siding with the US,” Bijan Zanganeh, Iran Oil Minister told reporters in Tehran. He said he has written letters to some OPEC and non-OPEC oil ministers expressing his concerns and has complained to the group’s secretary-general about “violations” to the original output-cuts agreement, though he would not elaborate. “I think Trump made this decision to bring Iran’s exports to zero without any consultation with any experts, not even in his own government,” he said. “He has realized lately that this is not doable. So, they are looking for a symbolic export of zero, if they can, even for just one month.”

02 BUSINESS DAY WEST AFRICA Outlook Brief Japan: Refiners temporarily suspend Iran oil loadings ahead of US sanctions

apanese refiners have temporarily suspended Iranian oil loadings ahead of US sanctions, while they are also closely monitoring government talks with Washington on securing a waiver to continue their imports, Takashi Tsukioka, Petroleum Association of Japan President said. “I understand that each company’s position over Iranian oil loadings is the same, to have suspended them while monitoring the situation. The companies are also taking a flexible

approach to be prepared to respond, depending on how the situation develops,” Tsukioka said. Tsukioka said that it would be up to individual refiners to take their own decisions on Iranian crude oil imports. But he said that it would be “of great importance” to the Japanese oil industry to maintain its “favorable” relationship with Iran as a major supplier. “From the point of view of stable petroleum supplies, we are still hoping to ask the government to negotiate tenaciously with the US government to achieve an exemption for Japan from its sanctions against Iran,” Tsukioka said. “Currently, refiners are closely monitoring the Japan-US governmental talks, and the best outcome would be to get an exemption,” Tsukioka added. Tsukioka’s comments came as a Japanese buyers loaded what appear to be the last Iranian oil cargo for arrival in early October, ahead of US sanctions, as local importers step up procurements from alternative sources.

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2018

oil

Libya: Crude output highest since Jul 2013 at more than 1m barrels per day

ibya’s crude oil production is currently at its highest in more than five years despite current security challenges, Mustafa Sanalla, chairman of the state-owned National Oil Corporation said. Sanalla, speaking to reporters ahead of an OPEC/non-OPEC monitoring committee meeting, said that production is the “highest since July 2013” without providing the exact figure but he said it was more than “1 million b/d.” Sanalla also would not give more details on the current security situation in the country, which remains volatile. Libyan oil production has seen a rollercoaster ride after production was almost halved earlier due to fighting between rival armed groups at key oil export terminals. Recently, NOC warned that the country’s oil and gas output at the Wafa field could be shut down due to a blockade that was initiated by the Libyan state

guards at the airport connected to the field. Earlier, NOC’s headquarters in Tripoli were attacked with two employees killed and serious damage being done to the office premises. Sanalla was evacuated from the building during the assault, and a number of staff were briefly held hostage before the entire

headquarters was retaken by government security forces. National elections planned for December further add to the unpredictability and uncertainty of Libya’s oil sector. Despite this backdrop, Libyan exports have been very high. Preliminary tanker data shows that exports from

the North African country were more than 1 million b/d for the first half of September, up from just under 900,000 b/d in August, according to S&P Global Platts trade flow software cFlow. The 120,000 b/d Zawiya refinery is shut this month due to power issues, freeing up more barrels for export.

lowed (some ports do not allow usage of open loop scrubber), they will burn high sulphur fuel oil, which is possible due to the scrubber onboard each vessel,” a company spokesman said. The tankers, which will be registered in Singapore, are being built in South Korea and China and will include medium-range tankers, longrange two vessels and

Suezmax tankers, the company said. “The order for the 35 newly built vessels has been placed by a close Asian financial partner and the vessels are being leased on delivery to Trafigura with options to purchase at a later stage,” the company added. The majority of the vessels are being delivered in the first quarter of next year, the company added.

Trafigura leases 35 crude oil, product tankers

ommodity trader Trafigura had leased 35 newly built crude oil and oil product tankers from an undisclosed Asian financial partner with the vessels expected to be delivered soon and all through 2019, the company said. “Until 2020, the vessels will run on regular fuel, and from then onwards, whenever al-

C002D5556

Wednesday 26 September 2018

gas

ENERGY intelligence

Barcelona: Vitol agrees 15-year LNG deal with US exporter Cheniere

WEST AFRICA

Brief

heniere Energy said it had secured a 15-year offtake deal with Switzerland-based global commodity trader Vitol as it looks to boost growth opportunities for its two US export terminals. The transaction, for 700,000 mt/year of LNG from Cheniere’s marketing unit on an FOB basis starting this year, was announced as energy companies gathered at the annual Gastech conference in Spain. Cheniere’s operations allow it to be a one-stop shop in the LNG value chain, from securing feedgas for LNG production, making the LNG, arranging for tankers to pick up the LNG and then shipping LNG overseas. It exports cargoes on both spot and commercial basis under long-term contracts. That flexibility is a selling point Cheniere’s marketing unit has touted as other US players seek supply deals to finance their facilities along the Gulf, Atlantic and Pacific coasts. About a dozen projects are currently being proposed to US regulators, in addition to the handful of terminals already under construction. The purchase price for the LNG offtake deal with Vitol is indexed to the

BUSINESS DAY

monthly Henry Hub price, plus a fee. Cheniere previously secured an offtake deal with global commodity trader Trafigura. In July, it inked a deal with Taiwanese stateowned oil and gas company CPC, which agreed to buy 2 million mt/year of LNG from Cheniere. The exporter’s terminals are at Sabine Pass in Louisiana and Corpus Christi in Texas. On the sidelines of the conference, Vitol’s LNG global head, Pablo Galante Escobar, said his company chose Cheniere for its first long-term LNG offtake deal because of the flexibility Cheniere offered. Up until now, Vitol has been signing short-term LNG offtake deals. “As a trader, we want to give flexibility to our endusers. We want to give flexibility to our clients. The contract we signed with Cheniere, a pioneer with LNG, allows us to do that,” he said. He added: “We know the LNG world is growing. A lot of that growth is coming from China, India, Pakistan. We can take it to wherever the best netback is.” The fact that Cheniere was the first out of the gate in the US among shale LNG exporters also helped its cause with Vitol.

Ghana: Audit reveals $137m procurement irregularities at Ghana Gas

forensic audit conducted by Morrison and Associates has revealed procurement irregularities amounting to $137,861,127.15 at the Ghana National Gas Company during the erstwhile administration of John Mahama. The forensic audit has revealed that the acquisition of helicopters by Ghana National Gas Company (GNGC) caused financial loss to the state because the choppers were never utilized. The helicopters purchased from China National Aero-Technology Import and Export Corporation (CATIC) by Ghana Gas “have never been used for purpose of its purchase.” The four Z-9EH helicopters bought from China for surveillance by Ghana Gas during the previous Mahama administration at the total cost of $100 million ($25m each) was

commissioned by then President John Mahama in September 2015. This incident happened when Kwesi Botchwey was the Board Chairman of the Ghana National Gas Company. The report further stated that the equipment for the helicopters worth $5,958,366.76 “were not delivered even though it was part of the

contract price.” In addition, training cost not fully utilized for its intended purpose” amounts to $300,000, making a total of $61,058,366.756. The report also revealed that procurement breaches worth $34,451,650.22 and $42,351,110.17 in contracts with Memphis Metropolitan Limited and Kingspok Company Limited respectively.

During the transition, the Co-chair of the Ghana Extractive Industry Transparency Initiative (GHEITI), Steve Manteaw, had questioned the whereabouts of the helicopters and said they had not conducted a single surveillance activity although they were procured at a very high cost. Anthony Akoto Osei, Minister for Monitoring and Evaluation, had also insisted that the purchase of the helicopters was a rip-off. He said initially seven helicopters were bought for $100million, but added that they were overpriced since each cost $8 million but the NDC government brought them in for $25 million each. The report of the Cabinet sub-committee which is responsible for coordinating forensic audits and investigations has been submitted to the Economic and Organised Crime Office (EOCO) for further investigations.

Egypt: Egypt, Cyprus commit to new gas pipeline with intergovernmental deal

gypt and Cyprus have agreed to build a subsea pipeline to link the significant gas resources located in Cypriot waters with Egypt’s two LNG export facilities. Tarek el-Molla, Egypt’s energy minister and his Cypriot counterpart Yiorgos Lakkotrypis signed an intergovernmental pact recently, signaling the countries’ desire to cooperate in bringing East Mediterranean gas to international markets, espe-

cially Europe. Cyprus is home to the 4.5Tcf Aphrodite gas field, which is operated by US company Noble Energy, but exploration continues in the country’s offshore. Italy’s Eni earlier this year

said its Calypso-1 discovery could hold more than 8Tcf of gas, adding further support to the pipeline project. While the East Mediterranean has been proven to hold vast gas resources, the complicated political landscape in the region has made monetizing the reserves particularly challenging. The intergovernmental agreement for the pipeline, expected to cost around $1 billion, was therefore described as a

“landmark” deal for the region. “The agreement aims to promote the transportation of gas from Cyprus to Egypt via a direct subsea pipeline across our respective Exclusive Economic Zones,” Lakkotrypis said. “It reinforces the joint efforts by the countries in the East Mediterranean to establish the synergies required for attracting multi-billion infrastructure investment in hydrocarbons,” he said.

04 BUSINESS DAY WEST AFRICA ENERGY intelligence

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Wednesday 26 September 2018

power

Rwanda: Rwanda obtains grant to expand power distribution facilities

he Japan International Cooperation Agency (JICA) has signed a grant agreement with the government of the Republic of Rwanda to provide up to $27 million for phase 3 of the improvement of substations and power distribution network. “After the achievement of Phase I and Phase II, this third phase will strengthen the capacity to avoid the risk of a large-scale power outage by enabling a stable

supply of power,” read a joint statement from JICA and Ministry of Finance. The project is expected to improve and expand the Gasogi substation and incidental transmission and distribution facilities located in Kigali, to stabilise the Kigali power supply with higher efficiency. With the economy growing at a rapid annual rate of approximately 8 percent in recent years, Rwanda is unable to keep up with the demand for power which is growing more than 10 percent each year. The power consumption in Kigali accounts for approximately 64 percent of the total power consumed in Rwanda as a whole, but investment in the power transmission and distribution facilities is inadequate for the level of power consumption.

Uganda: Uganda declares readiness for nuclear energy development

t the International Atomic Energy conference in Vienna, Austria, Simon Giu D’Ujanga, Uganda’s State minister for energy said the east African country is prepared to start the development of nuclear energy. D’Ujanga said the east African country has a strong case for the development of nuclear power as the demand for electricity is increasing. “Uganda continues to prepare for the introduction of nuclear power as part of the diversification strategy for meeting future electricity needs. With nuclear power prospects and the significant rise of atomic energy applications, Uganda reaffirms her commitment towards developing the nuclear power infrastruc-

ture and strengthening national nuclear safety, security and safeguarding the regime. We welcome Agency’s assistance towards this end,” D’Ujanga said. He said as a country, they will work together with the international atomic energy agency to address the security, safety and ensure that such developments do not end up as nuclear terrorism.

Egypt: Egypt inks $352m deal with Siemens to manage power stations

gypt has signed a $352 million contract with Siemens AG and Siemens Technologie to manage three gigantic new power plants built to plug a gap in Egypt’s electricity needs. Abdel Fattah al-Sisi, Egyptian President opened the power stations in July, which were built by Siemens at a total cost of $7 billion. Egypt commissioned the plants at a time when the Arab country was suffering rolling blackouts and industries were forced to closed down for months at a time. The two companies

will manage, operate and maintain the three power stations, billed as the biggest in the world when construction began in 2015, at the new administrative capital east of Cairo, at Burullus in the northern Nile Delta and at Beni Suef south of Cairo. Each plant generates 4.8 gigawatts of power. Egypt’s state Electricity Holding Company said that Siemens would contract experts from the state-run firm to manage, operate and maintain the power stations after they receive training in Germany. Also, Siemens said its boss Joe Kaeser met Iraq’s prime minister to discuss

a proposal by the German company to expand the Middle East nation’s power production. The German engineering group said it was proposing a deal to add 11 gigawatt (GW) of capacity over four years, saying this would boost the country’s capacity by nearly 50 percent. Iraq has a wide gap between electricity consumption and supply. Peak demand in the summer, when people turn on air conditioners due to high temperatures, is about 21 GW, far exceeding the 13 GW the grid is currently provides, experts say. Kaeser said in a state-

ment after meeting Prime Minister Al-Abadi that they had “discussed the comprehensive Siemens roadmap to build a better future for the Iraqi people”. The proposal for Iraq, first pitched in February, would include cutting Iraq’s energy losses, introducing smart grids, expanding transmission grids, upgrading existing plants and adding new capacity. The group would also help the government secure funding from international commercial banks and export credit agencies with German government support, creating thousands of jobs in Iraq.

Wednesday 26 September 2018

C002D5556

REPORT

BUSINESS DAY

WEST AFRICA

ENERGY intelligence

Gastech 2018: Natural gas, LNG utilisation projected to keep rising till 2040 FRANK UZUEGBUNAM

he outlook for gas looks bright. World Energy Outlook 2017 published by the International Energy Agency (IEA) predicts that the consumption of natural gas will keep rising up till 2040. In the case of LNG, trading is growing, driven by the new liquefaction capacity in the US and Australia, regasification growth in new non-OECD markets and a greater proportion of floating solutions. Natural gas is well placed in the future global energy scene and will have a positive contribution to the energy mix, the International Energy Agency said at Gastech. Wood Mackenzie recently upgraded its fore-

cast of the LNG supply-demand gap for new projects. Speakers at Gastech examined the global drive towards the greater adoption of gas and LNG, and the industry’s optimism of further long-term growth. The Gastech plenary began with a keynote address from Jean-Baptiste Dubreil, Senior Natural Gas Analyst, International Energy Agency, who spoke of the growth opportunities in the industry from the US, China and industry demand. Dubreuil highlighted the demand and supply outlook for natural gas and pointed out the advantages and challenges in the path of what he called is a bright future for natural gas. “We have seen a very positive trend and growth over the recent past and looking forward, we assume that this growth is

going to persist in the medium to long-term,” Dubreuil said. Three main factors will drive growth in gas markets in the near-term future. These include China entering the global gas scene as a major source of consumption growth. “We do anticipate that China will become the first natural gas importing country as soon as next year,” he said. The second factor is the US emerging as a major source of production growth and export growth through its LNG liquefaction development growth. Third is the shift in assets consumption moving from a demand growth, which was traditionally driven by power generation to demand growth driven by industry especially in emerging markets. “The future of natural gas seems bright yet not without

(8th left)Tony Attah, MD/CEO NLNG; Tayo Oginni, NLNG’s GM, Production (9th left); Suleiman Umaru, NLNG’s manager, Expansion Coordination (5th Right); Dagogo Buowari, NLNG London Office (1st left); with representatives of B7 JV Consortium and SCD JV Consortium, NLNG’s Train 7 FEED contractors, at the NLNG’s stand during the 2018 GASTECH Conference and Exhibition in Barcelona, Spain…recently.

We have seen a very positive trend and growth over the recent past and looking forward, we assume that this growth is going to persist in the medium to long-term challenges. Those challenges of natural gas will conquer new markets, especially in emerging markets is to remain competitive, not only in terms of price competitive to compete with other sources of energy but also to prove its contribution to a cleaner and more sustainable energy environment, especially with dealing with curbing methane leaks throughout the value chain,” Dubreuil said. Last year, natural gas demand growth doubled, driven by the emerging Asian market, mainly China, on back of strong economic growth and a strong policy push to shift from coal to gas for small industrial boilers and residential appliances in major cities, he said, adding that power generation is another main engine of growth. Aside from China, IEA expects growth

from other regions. Resourcerich regions like the Middle East or North America are being driven not just for domestic but also export purposes, with the growth of petrochemicals and fertiliser industries, he said, adding that he also sees growth in other emerging regions such as India, Africa and Latin America. This growth will be met by additional production. US is expected to account for 40 per cent of additional production in the next five years, according to IEA. “This will come from the second phase of the shale oil and gas boom, being turned out to export fuel out of the LNG liquefaction capacity,” he said. Other significant sources of growth will come from the Middle East, China, Australia and Russia, with Egypt being the main source of growth of production from the African market. In most cases, production is aimed at domestic markets. Climate change will also play an important role in growth for natural gas demand. “This is an ever-growing complex world, marked by environmental challenges. CO2 emissions have been relentlessly growing ever since the beginning of this century. This calls for immediate action for countries to achieve a long-term energy efficiency goal and natural gas can be part of this answer towards a more environment friendly energy mix,” Dubreuil said. Other themes discussed included the new demand centres for gas, the interplay between gas and renewable energy in power generation, project development, managing emissions and project financial risk management.

06 BUSINESS DAY

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WEST AFRICA

ENERGY intelligence Brief Hyde aims to satisfy consumer demands with new retail station

yde Limited, a global oil and commodities trading company and producer of premium lubricants in Nigeria, has launched a new retail station in Egbeda, Lagos. This station is the sixth from the company. Equipped with innovative technology, the station is designed to satisfy consumers through product and service delivery. It will run for 18 hours daily dispensing petrol, diesel and kerosene. Also available for purchase at the station are Hyde Energy’s range of automotive lubricants with various options from synthetic, multi-grade, monograde, specialty oils for tailor-made applications and all types of greases. Oladimeji Edwards, CEO of Hyde Limited, stated that the new station is inspired by the company’s commitment to provide efficient fueling solutions for customers. “The launch of this station in Egbeda comes as part of

our efforts to bring energy closer to our customers. We remain committed to maintaining exceptionally high standards in our product and service offerings and we are certain that our customers will get the best experience at our stations”. “Quality and excellence define our services and we deliver on our promise through exceptional business management. Our customers are assured of high-quality products at the right pump price and quantity at our stations”. Edwards added. On his part, Sani Usman, Head of Retail & Commercial Sales at Hyde Limited, said, “This new station is a step further in the expansion of our retail fuel business. Hyde sources the highest quality products from highly reputable companies which are stored in own and 3rd -party terminals for onward distribution to Hyde Outlets under strict quality control processes and procedures.

Wednesday 26 September 2018

finance people appointments

Energy Institute Nigeria to host Energy Sustainability Conference in Lagos

he Energy Institute Nigeria will host the inaugural Energy Sustainability Conference 2018, with speakers who will set the benchmark for best practices, debate, trends and solutions for the future of energy in Nigeria. The conference will take place on October 11th, 2018 at the Oriental Hotel, Lagos. Under the theme “Energy Dynamics, current issues and policy options” The conference will feature prolific experts who are leaders in government and public policy, industry leaders from the private sector policy makers, regulators, energy consultants and analysts, who will discuss and analyse critical issues on creating an energy sustainable future for Nigeria by promoting the exchange of knowledge, best practices, innovative ideas and past experiences between important stakeholders from across the energy spectrum.

Speakers include Osten Olorunsola, chairman, Energy Institute Nigeria, Louis Kingham, CEO Energy Institute, Abubakar Sani Sambo, Vice Chairman, World Energy Council, Ademola Adeyemi-Bero, managing director/CEO First E&P, among others. The conference will also provide exclusive roundtable networking oppor-

tunities chaired by leading organisations with innovative projects and initiatives within the energy sector. As well as identifying synergies and forging partnerships in off-grid renewable energy. Speaking about the conference, chairman, Energy Institute Nigeria, Osten Olorunshola said “In today’s changing

landscape, Nigeria is reimagining its position as a hub, leveraging its current strength in physical trade and its position of neutral governance to create new control points towards building a smart nation. I am excited to speak at the Inaugural conference and look forward to sharing successful strategies on how the energy sector can fulfill its role in the industrial, technological, economic and social development of the country,” Key highlights include specialist roundtable discussions on oil and gas, power generation and renewable energy. These are designed to deliver a focused approach providing valuable market insight; panel discussions with keynote speakers and policy professionals to discuss best practices, while debating the issues at hand; speed networking sessions for sponsoring companies and participants where guests and participants can network and discuss in a relaxed environment.

Stallion Group sign lubricant supply agreement with Total

T L-R: Adesua Adewole (GM, sales and marketing, Total Nigeria Plc), Bolaji Fajimi (specialties manager, Total Nigeria Plc), Viken Najarian ( specialty project manager, Total Nigeria Plc), Imrane Barry (MD, Total Nigeria Plc), Parvir Singh (MD Stallion Automotive Group), Emmanuel Emeghara (channel development manager (Dist. & OEMs, Total Nigeria Plc), Pankaj Bohra (head service Stallion Automotive), Sagar Shinde (head parts Stallion Automotive), Bunmi Popoola-Mordi (GM, human resources & corporate services and company secretary, Total Nigeria Plc)

otal Nigeria Plc and Stallion Group Automotive members (Stallion NMN and Hyundai Motors Nigeria Ltd) signed a Lubricant supply agreement on September 18, 2018, following their choice of Total Nigeria Plc as the recommended lubricant sales partner for all motor brands assembled and sold by the Stallion Group across all Stallion Group after-sales service networks in Nigeria. The networks will receive access to high performance Total Quartz and Rubia automotive lubricants that will exceedingly suit all Nissan, Hyundai, Volkswagen, IVE-

CO & Ashok Leyland specifications, as well as other brands managed by the Stallion Group. Included in the agreement, is a full program to provide technical training, marketing support tools and lubricant analysis services to Stallion Group network for automobile/equipment monitoring. Stallion Group’s customers will definitely benefit from this partnership by having access to original equipment manufacturer specified lubricant. Imrane Barry, Managing Director, Total Nigeria Plc, was very pleased with the partnership as this provides a channel for OEMs

like Stallion Group brands to have access to genuine Total Lubricants and world class technical and marketing support. In his words, “satisfying our unique customer needs is very important to TOTAL, which is why TOTAL is dedicated to continuous investment in research and innovation in pursuit of developing products and services of the highest quality to best satisfy our clients’ requirements. This has led to the development of a product range for over 400 unique Industry applications that are tailor made to suit a wide range of Industrial Lubrication needs.

07 WEST AFRICA ENERGY intelligence

Wednesday 26 September 2018

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marketinsight

Oil prices rise as markets tighten ahead of Iran sanctions

il prices rose as US markets tightened just weeks ahead of Washington’s plan to impose new sanctions against Iran, with US bank JP Morgan warning of price spikes above $90 per barrel in coming months. Brent crude futures were at $79.71 per barrel, up by 91 cents, or 1.2 percent. US West Texas Intermediate (WTI) crude futures rose by 75 cents, or 1.1 percent, to $71.53 a barrel. The market was “increasingly concerned about dwindling US inventories,” ANZ bank said. US commercial crude oil inventories are at their lowest level since early 2015. While output remains around the record of 11 million barrels per day (bpd), recent subdued US drilling activity points towards a slowdown. The tightening US

market came ahead of sanctions that Washington plans to implement against Iran’s petroleum exports from early November. Many analysts expect a drop of more than 1 million bpd of Iranian crude exports, while JP Morgan expects expecting a loss of 1.5 million bpd. The Middle East dominated Organization of the Petroleum Export-

ing Countries (OPEC), of which Iran is a member, as well as top producer Russia are discussing raising output by 500,000 bpd to counter falling supply from Iran, although no decision has been made public yet. “We expect that those OPEC countries with available spare capacity, led by Saudi Arabia, will increase output but not completely offset the drop

in Iranian barrels,” said Edward Bell, commodity analyst at Emirates NBD bank. JP Morgan said in its latest market outlook that “a spike to $90 per barrel is likely” for oil prices in the coming months due to the Iran sanctions. The bank said it expects Brent and WTI to average $85 and $76 per barrel, respectively, over the next six months.

LNG shipping rates spike with no respite seen through 2019

he price of shipping liquefied natural gas (LNG) has spiked in September and is likely to remain high next year, buoyed by rising production from new plants and concerns that demand for LNG vessels will outpace supply. The rate for vessels ship-

ping LNG from the Atlantic Basin to Asia has jumped to $90,000 to $95,000 a day from $75,000 a day at the end of August, brokers and traders said. Rates, which broadly hovered around $30,000 to $40,000 a day from 2015 to 2017, have risen due to longer distances covered

to transport LNG from new terminals in the United States and Arctic Russia, surging demand in China and a limited number of ships. Shipping firms see little sign of them slipping soon, predicting high rates for 2019 or longer, during their earnings calls this month. Strong LNG demand has helped drive the shipping rate rise. Japanese and South Korean utilities having been stocking up on LNG for winter, driving prices to a seasonal fouryear high. Demand was stronger than usual after a summer heatwave meant reserves were drawn down to power extra air-conditioning.

This increasing demand for LNG has compounded already rising shipping rates, partly driven by the ramping up of exports at Novatek’s Yamal LNG terminal and at US LNG terminals. Deliveries of LNG from the Northern Russian Yamal facilities have created extra demand on ships because Arctic-class vessels lifting cargoes transfer the LNG to conventional carriers in Europe for onward journeys. Deliveries from US terminals to Asia pass through the Panama Canal, taking longer than cargoes from second largest producer in the world, Australia.

BUSINESS DAY

OPEC Flakes OPEC, Russia rebuff Trump’s call for immediate boost to oil output

PEC’s leader Saudi Arabia and its biggest oil-producer ally outside the group, Russia, ruled out any immediate, additional increase in crude output, effectively rebuffing US President Donald Trump’s calls for action to cool the market. “I do not influence prices,” Khalid al-Falih, Saudi Energy Minister told reporters as OPEC and non-OPEC energy ministers gathered in Algiers for a meeting that ended with no formal recommendation for any additional supply boost. Benchmark Brent oil reached $80 a barrel this month, prompting Trump to reiterate his demand that the Organization of the Petroleum Exporting Countries lower prices. The price rally mainly stemmed from a decline in oil exports from OPEC

member Iran due to fresh US sanctions. “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” Trump wrote on Twitter. Falih said Saudi Arabia had spare capacity to increase oil output but no such move was needed at the moment.

Iran warns it will veto OPEC decisions harming its interests

ran said it will veto any OPEC decision that harms the country and warned that some oil producers are trying to create an alternative suppliers’ forum that supports US policies hostile to the government in Tehran. Bijan Namdar Zanganeh, oil minister said the agreement that the Organization of Petroleum Exporting Countries and allied producers reached in 2016 to cut

output is in tatters, and an OPEC committee has no authority to impose a new supply arrangement. “I will block any OPEC decision that poses the slightest threat to Iran,” Zanganeh said, without specifying possible actions he might take. Zanganeh’s comments reflect Iran’s concern at its growing isolation within OPEC and the US-led campaign to throttle its oil exports with sanctions. A flourishing partnership between its arch-rival Saudi Arabia and Russia shows signs of eclipsing OPEC’s preeminence as a global source of crude. Tehran sees Saudi Arabia, the group’s largest member, as conspiring with other producers to steal its market share.

08 BUSINESS DAY WEST AFRICA ENERGY intelligence

C002D5556 Wednesday 26 September

2018

talking points

In association with

Ghana’s forthcoming bid rounds holds lessons for Nigeria ISAAC ANYAOGU

hana is conducting its first licensing bid rounds for nine oil blocks in its Western Basin, in October, though producing about 150,000 bpd which seems quite an insignificant compared to Nigeria’s 1.8m bpd, the rigour involved in planning, the transparent approach to the process holds lessons for Africa’s biggest oil producer. The country has decided on direct negotiation, opening up the process for talks with investors all across the world according to officials of the Ghana energy ministry. In a world where options have become abundant, investors are looking for the best deals with little hassle but capital has to be courted. Out of the nine oil blocks which have been mapped out in the Western Basin in Ghana, only three blocks would be allocated through the open competitive tender. Two would be given through direct negotiations, while one would be reserved for the national oil company, GNPC. GNPC is expected to explore its block in partnership with a chosen strategic partner with the view to develop its technical capacity to become an operator. This brings us to six oil blocks to be given out in the first Licensing round of bidding. The other three are expected to be auctioned in the second round at a date yet to be fixed. The openness in disclosing the rules guiding the process and if backed by action will ensure a level playing field for every investor. This is what is often missing in many of Nigeria’s licensing rounds. While the Nigerian National Petroleum Corporation (NNPC) could announce a competitive bidding process, but preferred candidates could still end up being awarded the block which muddles the process for everyone. The Nigerian government’s cavalier

attitude towards investors and lack of respect for sanctity of contracts has proven to be a major turn-off for investors. This is why in the 2007 licensing round, all the International Oil Companies boycotted the process because they perceive it would not be transparent. The process was marred with accusations of irregularities and till date, many of the blocks awarded have not been developed. Ghana is trying to conduct a better process. The country’s officials were at the Off-

shore North Sea (ONS) conference in Norway recently, and were marketing the bid rounds to more than 70 companies who had booked space to discuss with the delegation. The Petroleum Commission has embarked on a trade mission to Norway with no less than 40 Ghanaian companies to engage global giants in the upstream sector interested in doing business in Ghana or with Ghanaian partners. It is also encouraging local participation by inviting local companies to partner with IOCs to acquire oil blocks

offered for bidding. Egbert Faibille Jnr, chief executive officer of the Petroleum Commission assured companies interested in doing business in Ghana and exploring the upstream sector of the perfect ambiance for business. Faibille also said the main focus was to ensure that Ghanaian companies on the trade mission get the opportunity to leverage and build the needed synergies to attract the necessary investment to Ghana’s upstream sector.