BusinessDay 26 Sep 2019 by BusinessDay

One insurer meets recapitalisation requirement ....as 47 insurers, 2 reinsurers submit plans

Modesus Anaesoronye

ut of the 57 registered insurance and two reinsurance companies, one insurance company has met the recapitalisation requirement, the National Insurance Commission (NAICOM) said in a

statement Wednesday morning. Forty-seven insurers submitted their recapitalisation plans and have all been directed on what to do, NAICOM said. The statement titled ‘Update

on Recapitalisation of Insurers and Reinsurers’ signed by Rasaq Salami, head, Commissioner for Insurance Directorate, said, “Further to the circular issued by NAICOM on May 20, 2019 increas-

ing the paid-up share capital of insurers and reinsurers in Nigeria and the subsequent directives to companies to submit their recapitalisation plans by August 20, 2019, the Commission hereby notifies

all insurance stakeholders that it received plans of 47 insurers and two reinsurers.” He said in keeping with the recapitalisation roadmap, the Commission has concluded review of the submissions and has

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businessday market monitor

Foreign Reserve - $42.35bn Biggest Gainer Biggest Loser Cross Rates - GBP-$:1.24 YUANY-N 50.55 INTBREW DANGCEM N12.60 5.00%pc N152.00 -1.30pc Commodities 27,283.05

Cocoa

US$2,469.00

Gold

$1,509.50

news you can trust I **THURSDAY 26 SEPTEMBER 2019 I vol. 19, no 402

₦3,051,962.98 -7.98pc

$62.46

N300

Foreign Exchange

Buy

Sell

$-N 357.00 360.00 £-N 448.00 455.00 €-N 390.00 400.00

Crude Oil

FMDQ Close

Everdon Bureau De Change

Bitcoin

NSE

www.

Market

Spot ($/N)

I&E FX Window CBN Official Rate Currency Futures

($/N)

fgn bonds

Treasury bills

362.29 306.95

3M 0.14 12.81

NGUS DEC 24 2019 362.68

-0.07

-0.22

12.90

14.07

NGUS MAR 25 2020 363.53

10 Y 0.00

30 Y 0.18

14.40

14.63

NGUS OCT 28 2020 365.50

Despite N171.4bn support to farmers, local rice eludes Nigerians JOSEPHINE OKOJIE

N90bn allegation: I will wave my constitutional immunity to prove my innocence – Osinbajo

espite N171.4 billion spent by the Central Bank of Nigeria (CBN) on farmers under the Anchor Borrowers’ Programme (ABP) over the past three years, local rice is still not available in major markets across Nigeria. Godwin Emefiele, CBN gover-

Tony Ailemen, Abuja

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i c e P r e s i d e n t Ye m i Osinbajo has declared his readiness to waive his constitutional immunity to “enable the most robust adjudication” of several baseless allegations, insinuations and falsehoods against his person and office. Osinbajo made this declaration in a tweet he personally authored Wednesday afternoon. This is coming against the

Inside Buhari submits 2020-2022 MTEF/FSP to NASS P. 2 Florence Otedola, a.k.a DJ Cuppy (in red dress) rings the New York Stock Exchange opening bell alongside Chris Taylor, vice president, NYSE Listings, yesterday.

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Thursday 26 September 2019

BUSINESS DAY

news Buhari submits 20202022 MTEF/FSP to NASS SOLOMON AYADO & JAMES KWEN, Abuja

L-R: Eniola Abosede Obe, group head, education, Sterling Bank; Emmanuel Emefienim, executive director, institutional banking, Sterling Bank; Folasade Adefisayo, Lagos State Commissioner for Education, and Mojibola Niran-Oladunni, business executive, Sterling Bank, during Sterling Bank’s visit to Lagos State Commissioner for Education in Lagos.

Africa may experience 50% upsurge in diaspora remittances with launch of Facebook’s Libra Crypto-currency

…As Libra shows prospects to significantly close financial inclusion gap in Nigeria, Africa Jumoke Akiyode-Lawanson, London

ith over $24.3 billion in diaspora remittances to Nigeria and 43 percent of the country’s population financially excluded, prospects for Facebook’s Libra Crypto-currency to thrive in the market seems doubtless, as it aims to significantly decrease the current seven percent foreign transaction fees, impact speed and safety of money transfers which may in turn spike up numbers of diaspora remittances by up to 50 percent and bridge the financial inclusion gap which abounds in Africa. Financial Technology experts and economists say that digital currencies

and Blockchain technology which ensure maximum security, speed and cost less will create stable financial health for economic growth. Libra is a permissioned Blockchain digital currency proposed by social media giant, Facebook. The project, platform and transactions are managed and securely enthrusted to the Libra Association, a membership organisation founded by Facebook subsidiary, Calibra and 27 others across payment, technology, telecommunication, venture capital, online market place and non-profits. According to a World Bank report published last year, the cost of sending cash in sub-Saharan Africa was at least 20% higher

than any other region in the world. The report revealed that sending $200 to and from the region in the first quarter of 2018 cost a whopping $19. The introduction and use digital currencies will significantly reduce and may in the long run eliminate these high financial transaction charges. Although there has been some pushback from countries such as Nigeria, Zimbabwe, Ethiopia, Kenya and even India, which are said to have created laws prohibiting the use of the highly unregulated cryptocurrencies, the Libra Association has clearly distinguished the coin from the popular Bitcoin and says it is currently in talks with Central Banks in some African countries on granting

of licenses in preparation for the launch of Libra by the second half of 2020. Sp e a k i n g at a p re s s roundtable at the Conduit Hotel in London on Tuesday, Betrand Perez, COO, Libra Association said: “Libra is not an investment or speculative asset, so when you buy a Libra coin, that will not grant you any right on returns. When you want to acquire coins, we would receive your currency e.g. Euros, and put them in the reserve in exchange for the Libra coins. So, the reserve will fill itself from the purchases of the coins, there is no monetary creation. Clarifying thoughts that Libra could destabilise finance and undercut au-

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Military seals off another NGO’s office in Borno

…further clampdown may follow – Source LADI JOSSY, Maiduguri

he Nigerian military on Wednesday morning sealed off the Maiduguri office of Mercy Corps, a humanitarian organisation, following interception of the sum of N29 million in Gwoza Local Government Area of Borno State on Tuesday. It was learnt that staff of the organisation were chased away by a detachment of soldiers who took over the premises. This is coming barely a week after the military blacklisted Action Against Hunger for allegedly providing food and medical assistance to terrorists.

A senior military officer told our correspondent that the clampdown may be extended to more NGOs in weeks to come as he alleged that some of the NGOs operating in the Northeast were working in support of the war by insurgents on the nation. The Economic and Financial Crimes Commission (EFCC) had in March intercepted N54 million at the Maiduguri International Airport allegedly belonging to Mercy Corps. The commission said four persons and two NonGovernmental Organisations (NGOs) were connected to the seized cash and were being investigated. www.businessday.ng

EFCC gave the names of the suspects as Abdullahi Yarima, Francis Bako, Saraya Umaru, and James K. Yadzugwa. The NGOs are Mercy Corps and Development Exchange Centre. The anti-graft agency said it acted on intelligence report to intercept the cash at the airport. According to EFCC, investigation into Mercy Corps’ accounts revealed that it has 15 bank accounts with different Bank Verification Numbers (BVN). Also, a BVN search on Development Exchange Centre showed that it has 40 bank accounts with different BVNs.

A statement by the antigraft agency noted that it was probing alleged “cases of criminal conspiracy, money laundering and terrorist financing initiated following an intelligence report to the commission on the 18th March, 2019 against Mercy Corps and four others”. Edward Kallon, the humanitarian coordinator in Nigeria, in a statement decried “the increasingly dangerous and restrictive operating environment for implementing humanitarian assistance in crisis-affected areas, where humanitarian aid workers continue to face challenges as they strive to deliver urgent, life-saving assistance”.

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resident Muhammadu Buhari on Wednesday submitted the 20202022 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the National Assembly. This was contained in separate letters personally signed by President Buhari, dated 24th September, 2019 and tagged “Submission of 2020-2022 Medium-Term Expenditure Framework and Fiscal Strategy Paper”. The executive communication was addressed to Senate President Ahmad Lawan and House of Representatives Speaker Femi Gbajabiamila, respectively. While Lawan read the letter to senators in the Red Chamber, Gbajabiamila announced the submission of the budget framework to lawmakers in the Green Chamber. Buhari explained in the letter that the MTEF/FSP submitted to the National Assembly was pursuant to provisions of the Fiscal Responsibility Act, 2007. He said the budget framework submission was in preparation towards submission of the 2020 Budget

to the National Assembly which, he noted, is already progressing well. “It is with pleasure that I hereby submit the 20202022 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/ FSP) to the Senate/House of Representatives,” Buhari said in the letter. “Let me use this medium to express my gratitude for the much-improved partnership between the legislative and executive arms of the Federal Government in our goal of making the budget process deliver better outcomes for the Nigerian people. The MTEF/FSP was prepared taking into account key developments in the global and domestic environments,” he said. “We have endeavoured to ensure that forecast revenues are realistic but also reasonably challenging in the face of our significantly constrained fiscal space,” he said further. The letter stated that planned spending has been set at prudent and sustainable levels, consistent with government’s overall developmental objectives as set out in the Economic Recovery and Growth Plan (ERGP).

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Minimising risk of crisis, downturn top priority as Kristalina Georgieva becomes IMF MD HOPE MOSES-ASHIKE

he Executive Board of the International Monetary Fund (IMF) on Wednesday selected Kristalina Georgieva to serve as IMF Managing Director and Chair of the Executive Board for a five-year term starting on October 1, 2019. Georgieva, who succeeds Christine Lagarde, is the first person from an emerging market economy to lead the IMF since its inception in 1944. In a statement after her selection, she said, “I am deeply honored to have been selected as managing director of the IMF and grateful for the trust that the Fund’s global membership and the Executive Board have placed in me. I want to pay tribute to my predecessor, Christine Lagarde, a great leader and a dear friend, whose vision and tireless work have contributed so much to the continued success of the Fund”. The managing director is the chief of the IMF’s operating staff and Chair of the Executive Board. The managing director is assisted by four

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Deputy Managing Directors in the operation of the Fund, which serves its membership through about 2,700 staff. “The IMF is a unique institution with a great history and a world-class staff. I come as a firm believer in its mandate to help ensure the stability of the global economic and financial system through international cooperation. Indeed, in my view, the Fund’s role has never been more important. “It is a huge responsibility to be at the helm of the IMF at a time when global economic growth continues to disappoint, trade tensions persist, and debt is at historically high levels. As I noted in my statement to the Executive Board, our immediate priority is to help countries minimize the risk of crises and be ready to cope with downturns. Yet, we should not lose sight of our long-term objective – to support sound monetary, fiscal and structural policies to build stronger economies and improve people’s lives. This means also dealing with issues like inequalities, climate risks and rapid technological change.

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Thursday 26 September 2019

BUSINESS DAY

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Thursday 26 September 2019

BUSINESS DAY

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FG says loan procurement delaying Ibadan-Kano SGR, Coastal rail projects take-off Stella Enenche, Abuja

h e Fe d e ra l G overnment disclosed that the delay in securing the loan facility would cause a slowdown towards the planned commencement of the coastal rail as well as the Ibadan-Kano standard gauge rail projects. He assured that work would commence as soon as the loan for the take-off was granted. The coastal rail line is expected to connect Port-Harcourt, Warri, Onitsha and other cities within the axis. Already, the government has applied for a loan from China, and will commence work on the first segment once the facility is secured. Minister of Transportation, Rotimi Amaechi, made the disclosure during an inspection tour of the Lagos/Ibadan rail project earlier this week. “I am from Rivers State and it’s important that we do that (coastal rail). We have already applied for a loan. If we get the loan, we will start the segment from

Port Harcourt to Warri and from Benin to Onitsha. The loan will be from China but not China EXIM bank. “The Ibadan-Kano has been awarded. The only thing that is delaying it is the loan. Once we get it, we will start from Kano to Kaduna and see how we will go from Ibadan to Ilorin,” Amaechi said. Meanwhile, the minister has expressed worries over the pace of work on the Lagos - Ibadan railway project, calling on the contractors to increase the pace of work. According to the minister, the contractors have no reason for further slowing down of the job, as the government paid them last Friday, said: “CCECC has not done too well. I used the phrase too well because at a time, they did us proud by trying to push this job. They claim that at the e n d o f t h e l a s t g ov e r n ment, we were owing them some money and we had not given approvals for the extra and additional jobs. But that’s not an excuse because we will still have

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given the approval. “So, they have slowed down so badly. We need to get them to that speed that they were before the last government was dissolved. We paid them on Friday. “The cabinet and president has approved the additional and extra works so they have no excuse. So if we get the loan for Ibadan-Kano, there will not be delays. We can then start quickly from Kano to Kaduna and Ibadan to Ilorin so we can quickly finish He, however, hoped the contractors will consider working day and night, as they were doing in the past. On the challenges within the Apapa area, Amaechi disclosed that there was the problem of “urbanisation”. He, n o n e t h e l e s s, a s sured that the issues of water pipes, gas, and fuel, would be dealt with. When asked about the flour mills, the former Rivers State governor noted that, that w ould not be a problem, as adequate compensation will after demolishing the stretch critical to the project.

Independence Day: FG declares Tuesday public holiday Stella Enenche, Abuja

he Nigerian Government has declared Tuesday, October1, as a public holiday to mark the nation’s 59th Independence Anniversary Celebration. The Minister of Interior, Ogbeni Rauf Aregbesola, who made the declaration on behalf of the Federal Government, congratulated Nigerians on the commemoration of this year’s anniversary, adding that the Government was committed to ending the current spate of insecurity in the country.

According to him, peace and stability are necessary conditions for the development of any nation. He therefore, called on Nigerians to emulate the nation’s founding fathers in their love for the fatherland. According to a statement by the Permanent Secretary Georgina Ehuriah, the minister reminded Nigerians of the immense potentials the country is endowed with, assured further that with commitment, the citizens could move the country to the next level of socio-economic development. “As Nigerians, we should always remember that there

is hope for our country and that we are blessed with both human and natural resources, tourism, cultural diversity, selfless spirit of unity and love for one another, as well as bonded brotherhood, all of which are potentials we must exploit in the years ahead to make Nigeria the nation of our dreams,” he said. Aregbesola therefore, enjoined all Nigerians to support the President Muhammadu Buhari-led Administration in its avowed determination to build a secure, economically viable and corruption-free nation, in line with the dream of the country’s founding fathers.

Reps begin probe of AMCON N5.4 trillion debt portfolio James Kwen, Abuja

he House of Representatives has mandated its Committee on Banking and Currency to investigate the debt portfolio of N5.4 trillion to AMCON and the alleged unwillingness of some of the debtors to pay. The House also resolved to evaluate the status of the debts and the practical, legal and other strategies for the recovery of the debts, including recommending a time

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frame, and other options such as amendment of the AMCON Act, and report back within three (3) weeks for further legislative action. These decisions were taken Wednesday during plenary, sequel to the a motion on, ‘Accumulation of Debts by the Asset Management Corporation of Nigeria (AMCON), Amounting to about N5.4trillion, in Excess of its N800 Billion Debt Ceiling sponsored by Cornelius Nnaji (PDP, Enugu). Nnaji while presenting the

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motion said the House noted that AMCON was established to, among other functions, acquire eligible bank assets from eligible financial institutions and to hold, manage, realise and dispose of eligible bank assets (including the collection of interest, principal and capital due and taking over of collateral securing such assets. According to him, the House also noted that, “AMCON is currently challenged by difficulties in recovery of debts owed by debtors to the tune of 5.4 trillion Naira.

Thursday 26 September 2019

BUSINESS DAY

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Thursday 26 September 2019

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MTN Momo enrols 10,000 agents in one month …embarks on mini-launch in 5 States HOPE MOSES-ASHIKE & SEGUN ADAMS

igeria’s recently launched MTN Mo m o S u p e r Agent on Tuesday said it has enrolled 10,000 agents across the country, after about a month the mobile phone network giant obtained a superagent license from the Central Bank of Nigeria (CBN). The Telco super-agent is targeting a multi-fold expansion in the short and medium terms. “The plan is to scale that number almost by tenfold by the end of the year and aggressively grow it on a year-to-year basis to about 500,000 in the next 4-5 years,” Usoro Usoro, director, Y’ello Digital Financial Services (YDFS), told BusinessDay in an exclusive interview. Formally launched late August, YDFS MoMo Agent is a boutique of financial services targeted at enabling users to carry out transactions like bill payment, bank depository services or withdrawal from one’s bank account. In particular, one product in MoMo allows people without a bank account to be able to send money to each other. “All you have to do is to walk up to any MoMo agent, hand cash to the agent and the money will be transferred

and the recipient picks it up from any other MoMo agent,” Usoro said. “Of all the bouquet of services we offer, that is the one we are really excited about because it speaks to the segment we are passionate about which is the unbanked.” MTN also said it was already carrying out mini launches in at least the other five states in a bid to take the message further down to its customers. Asides Abuja, the Telco announced Owerri, Kano, Port Harcourt, Ibadan and Lagos as states where market and on-thestreet communication and engagement with its customers would hold. “That is not to say the service is not available nationwide,” he said. Usoro said the move was in line with the firm’s vision to accelerate financial inclusion in the country through different ways, including partnerships and collaboration with other financial service providers. However, he said the super-agent license, the first from the CBN, was proof of the evolution of its role in various capacities and it expects a transition “into something bigger” on account of on-going conversations with regulators in the financial space. The 2018 EFINA Access to Financial Services survey

findings showed that 36.8 percent of the adult population in the country are financially excluded. Usoro said people are financially excluded because of issues relating to identity and access to any physical banking infrastructure. “The agent network is one of the critical ways of fixing the issues around access … our efforts towards building the MoMo agent network would substantially address that problem” he said. The Telco hopes to tap into its subscriber base of 65.4 million customers as at July 2019, according to Nigerian Communications Commission (NCC) but the service would not be limited to only MTN customers even though the initial phase of the transfer service on MoMo may be so. Godwin Emefiele, governor of the CBN said the payment services management department in the CBN would work to enable the build-up of a robust and secure payments infrastructure in Nigeria that is reliable and easy to access. “We will reinvigorate our efforts at driving the cashless initiative across the country, due to the immense efficiency gains that will be derived from it, and the impact it could have on our financial inclusion drive,” Emefiele said in his fiver-year policy thrust.

UK Diaspora Nigerian mulls new thinking, empowerment for youths Modestus Anaesoronye

orried about the declining social values and lack of direction for many Nigerian youths, UKbased Diaspora Nigerian and Vice Chairman of the Nigeria Young Professionals Forum (NYPF), Tobi Adeboyega, is pushing for new thinking and abilities that will enable the youths unleash their potentials. Adegboyega who started from nothing to now leading the biggest youth movements in the UK, continues to demonstrate tremendous hard work and commitment to Nigerian youths. At a breakfast forum with Financial Times and notable industry leaders as well as members of NYPF at the Financial Times HQ in the

UK, Adeboyega strengthened conversation on his further steps towards empowerment, creating opportunities and leadership for Nigeria’s youth. “My role is to negotiate between NYPF and political leaders, captains of industry, to create a young people’s movement who not only think differently, but have a structure and platform to execute,” says Adegboyega. He noted that during this critical time in the nation’s history, Nigerian youths have a leading role to play in the socio-economic advancement of Nigeria. The event later climaxed with this year’s 2019 NYPF Summit held in Kensington, London where the audience held a conversation along New Generational Leadership, focusing on the key issues which young Nigerians face, whether

at home or in the Diaspora. At the same time, taking place on the other side of London in the Borough of Croydon was a young persons’ march for the empowerment of young people in the United Kingdom titled “Empower the Young” lead by 200 trained by Adegboyega. The event saw an unprecedented attendance of hundreds of youths marching in unity and speaking up for those in the community to join hands in fighting against poverty and poverty mindsets. Adegboyega however, has continued on the journey to instil hope into the hearts of the youth by providing economic security and social mobility to millions of promising young men and women across Africa, as he has successfully done in the City of London, starting with Nigeria.

US varsities invest $9m on Nigerians as 13,000 seek higher education in US every year Innocent Odoh, Abuja

he United States has said that its universities spend about $9 million on scholarship on Nigerian students as about 13, 000 Nigerian students seek higher education in US every year. Cultural Affairs Officer of the United States Embassy in Nigeria, Malia V Heroux, said this during events organised to mark 20th annual EducationUSA College Fair 2019, with the theme: “Solidifying Connections and Exploring

New Frontiers,” which held in Abuja on Wednesday. She said “the 9 million dollars are from US universities because the US government does not do scholarship but individual US universities do.” She noted that the number of Nigerian students in the US is 13, 000, which is one-third of 39,000 Africans studying in the US each year. She added that there were a very wide variety of programmes that are being offered in both the universities in the US and the ones in Nigeria, adding that there was a lot of linkages between uni-

versities in the US and Nigerian universities. She also said there were a lot of Nigerian graduate students looking to come back to the country after they have completed their undergraduate education in the US. Also speaking, Kathleen Fitzgibbon, US Charge’ D Affairs, said they also support education programme through the USAID and focus on primary schools and high schools and strengthening literacy, adding that a section in the US Embassy also deals with the universities . https://www.facebook.com/businessdayng

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Thursday 26 September 2019

BUSINESS DAY

Funding challenge limiting FG’s ability to fix collapsed roads, says Fashola JOSHUA BASSEY

inister of Wo r k s a n d Housing, Babatunde Fashola says funding stands in the way of the Federal Government’s ability to immediately fix federal roads across the country, most of which are in a state of disrepair. Aside the challenge of funding, Fashola also identified inclement weather condition as another factor, saying, however, that plans were afoot to commence the rehabilitation of some of the roads as soon as the rains are over. He said that the government was striving to meet its financial obligations to the contractors handling the various road projects to ensure that they returned to the sites. The Minister was responding to a concern raised by the

Nigerian National Petroleum Corporation (NNPC) over the conditions of federal roads and the negative impacts this could have on the distribution of petroleum products across the country, especially as the festive period approaches. The NNPC called for an urgent intervention by the Federal Ministry of Works and Housing on some of the roads leading to fuel depots to ease movement of petroleum tankers ahead of the festive season. But speaking on efforts being made, Fashola said that critical roads, particularly those linking fuel depots would be fixed in order to ease high traffic during the ember months. He acknowledged some of the roads had deteriorated as a result of continuing rainfalls. He listed such to include Suleja-Bida-Lapai-Lambata; Oyo– Ogbomosho-Ilorin;JebbaM o k w a -Te g i n a ; B e n i n -

Sapele-Warri; BeninAuchi-Okenne; EnuguOnitsha;Awka-Amansea and Odukpani-Itu roads. Fashola explained that the failed portions of the SulejaLambata-Minna road were slated for emergency repairs during the ember months while work was ongoing on the Bida-Lapai-Lambata roads where contractors have already stabilised a substantial part of the road. Fashola also said that approval had been given for the Engineering Corps of the Nigerian Army to repair the bad portions of the BokaniMakera-Tegina-Birnin Gwari road in Niger and Kaduna States, which is currently under procurement, due to the security situation in that axis. According to him, work on the Oyo-Ogbomosho-Ilorin road was on-going by the contractor handling the project. He

said this was one of the projects that received dedicated funding under SUKUK. According to him, although the project was being challenged by the current weather situation and funding, the old alignment of the Oyo-Ogbomosho route was receiving palliative attention. On the Ilorin –Jebba –Mokwa road, which is under a dualisation contract, Fashola explained that the project had been divided into two sections with Ilorin –Jebba in Kwara State as section1, while Section II comprises Jebba–Mokwa–Bokani Junction in Niger State, adding that it is a new project and mobilization was still being processed. For Okene–Lokoja road, which is in four sections and under SUKUK funding, he explained that all the contractors handling the various sections had been directed to do palliative work on the failed portions of the road.

L-R; President Muhammadu Buhari, Emeka Ihedioha, Imo State governor, Adejoke Orelope-Adefulire, senior special assistant to the President on SDGs, launch the SDG Model during the high-level Side event of the United Nations General Assembly taking place in New York.

MainOne expands data centre footprint in Ghana Segun Adams

ainOne, the network and internet service provider, has announced the expansion of its data centre brand, MDXi, into Accra, Ghana, in line with its ongoing West Africa growth plans. MainOne wants to expand an already robust infrastructure and service profile in Ghana and says it is extending its presence in the country with a new facility through its subsidiary, MDXi, the largest commercial data centre services provider in West Africa. The move shows commitment to a strategy that would increase MainOne’s presence across the West African region where it already operates in countries including Nigeria and Ghana. “As an organisation committed to providing broadband infrastructure solutions across West Africa, we are excited to make this investment to support the digitization journey of our customers with the

new data centre facility,” said Kazeem Oladepo, Regional Executive, MainOne said. The new data centre, which will be based in Appolonia City, 20 kilometres from the centre of Accra, is expected to be ready for service in the fourth quarter of 2020. The facility will cater to the ever-increasing demand for colocation and interconnection services for multinationals and local businesses seeking shared services facilities for their ICT resources in worldclass facilities, MainOne said. It also said the facility would be designed to international standards consistent with the MainOne brand, assuring collocated customers of the highest quality of service to meet their business requirements. The 100-rack facility will offer also customers the opportunity to host infrastructure in a facility guaranteed to provide high levels of availability and rich connectivity with a global network of customers, partners and suppliers thus ensuring 24X7 online delivery

of services for the businesses. MDXi’s world-class infrastructure will feature private data centre suites, enterprisegrade 24x7 multi-level security and video surveillance, precision cooling, safety and fire suppression systems with multiple redundancies built into the power, cooling and security infrastructure. In line with its parent company’s leadership in the telecoms sector, the facility will offer open access connectivity options to all the leading telecom networks in Ghana and direct access to MainOne and other submarine cable systems. The facility will offer access to various Internet Exchanges including the GIX (Ghana), IXPN (Nigeria), LINX (London), DECIX (Frankfurt/ Lisbon), and Cote d’Ivoire Internet Exchange (CIVIX), as well as the West Africa Internet Exchange (WAF-IX). MainOne says lessons learnt from its Nigerian data centre would be of particular relevance to the growing sectors in Ghana.

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news Collateral laws, property ownership reform can unlock Nigeria’s $900bn dead capital, experts say CHUKA UROKO

ollateral laws and a comprehensive property ownership reform have the capacity to unlock the potential in dead capital in the Nigerian real estate market estimated at $900 billion, experts have said. Dead capital is an economic term relating to property that are informally held, and not legally recognised. It is estimated that about 95 percent of property in Nigeria is in this class. Generally, uncertainty of ownership diminishes the value of assets, and the ability to lend or borrow against it. In their recent report titled, ‘Bringing Dead Capital to Life: What Nigeria Should be doing’, PricewaterhouseCoopers (PWC, a consulting and advisory firm), estimates that Nigeria holds, at least, $300 billion or as much as $900 billion worth of dead capital in residential and agricultural real estate. The estimate, according to them, was based on Nigeria’s population figure of 180 million and 36 million households of which 95 percent of household dwellings in the country have no title. In his presentation at BusinessDay Knowledge Sharing (Lecture) Series in Lagos, Chudi Ubosi, an estate surveyor and valuer, affirmed that only 5 percent of real estate assets in Nigeria are in formal mortgage, meaning that 95 percent of the country’s real estate assets are dead assets or capital. The PwC report explains that unlocking $600 billion, half of the estimate, would expand the size of the economy by more than double, from $445 billion (according to IMF) to $1, 045 billion, reasoning that this might be the breakthrough to bridge the country’s wide housing short-

age of over 17 million units. Andrew Nevin, Partner and Chief Economist at PwC, says only land and property ownership reforms can unlock these dead assets whose value is about 81 percent of the country’s GDP. Nevin stresses that Nigeria needs comprehensive reforms in its land and property ownership systems, given that its rigid traditional land tenure system coupled with the current land titling system excludes many people from formal land ownership, hampering full scale economic activities, especially real estate, which happens on land. As a factor of production along with labour, capital and organization, land is so important that the other factors would be redundant without it. It is the bedrock upon which the satisfaction of all human needs is built. Food, clothing and shelter are all human needs met from resources derived from land. Damilola Ijalade, broker at PWAN Homes, is of the view that creating a mechanism that allows asset owners to use their property as collateral to access credit is one big way to unlock dead capital. This is because, in Nigeria, real estate is mostly accepted as collateral by financial institutions to secure loans, implying that owners of properties whose asset have no title cannot access credit. “Collateral laws shape access to funds to a large extent. Dead capital cannot be unlocked if existing collateral laws are not revised to adequately support credit creation,” Ijalade said. Experts observe that, in advanced economies, the major source of capital for business owners is their home. “By representing assets with titles, western nations have comfortably turned their asset to wealth,” they note.

African carriers, Airports advised to collaborate for successful airline business …as Airport charges alone consume 38% of airline revenue IFEOMA OKEKE

arriers and airports across Africa have been advised to begin to collaborate to build sustainable airline business in Africa. This call is coming at a time when African airlines have continued to close shops as a result of multiple taxations, charges and overhead costs they pay, making their profit margins very little to sustain operations. Speaking during the ongoing Akwaaba Travel Market at Eko Hotel, Lagos, on Tuesday, Aaron Munetsi, Director, legal and industry affairs, African Airlines Association (AFRAA) said for every ticket sold by an African airline, 38 percent goes to the airport authorities where such airlines operate from or into. Munetsi said this amount did not include the cost of operating the aircraft, aviation fuel

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cost, crew salary and payment for ground handling companies amongst others, adding that these charges make it extremely difficult for airline operators to make profit. Data obtained from International Air Transport Association, (IATA) show that African airlines have recorded losses of over $ 140 billion in 10 years as a result multiple taxes and charges. Munetsi therefore called on airline operators and airport authorities across Africa to partner in building a network market in order to reduce minimally the costs incurred by airlines. He said airports should give airlines the right frequencies and infrastructures to operate, stressing that African airlines need to merge and code-share to run an efficient and effective business. “Sadly 80 percent of traffic in Africa is carried by non-African carriers. For African airlines @Businessdayng

to fly into African countries, it costs about 45 percent higher than it will cost for African airlines to fly into other continents. Out of 54 countries in Africa, only 16 countries have visa on arrival and this is hurting trade within Africa,” he disclosed. The AFRAA director further explained that African airlines have 817 registered aircraft and 419 airports but have only been able to utilise 19 percent of its airports, while the remaining 81 percent of Africa airports have remained white elephant projects. In a bid to reciprocate air traffic, he called on African airlines to sign up to the African Union’s Single Africa Air Transport Market (SAATM). SAATM promotes intra-regional connectivity between the capital cities of Africa by creating a single unified air transport market in Africa, as an impetus to the continent’s economic integration and growth agenda.

Thursday 26 September 2019

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Towards a cashless society – a common sense cash-back strategy

was taken aback by the turbulent reactions that followed the recent cashless directive by the CBN. My surprise stems from the fact that the cashless agenda, including penalising people for deposits, is not new. So, this is not one of those things done by “this Buhari government”. Eight years ago, and specifically on August 30 and September 6, 2011, I reflected on this matter, when it was still in its infancy. A year later, I also analysed developments on the subject matter. I had also done two academic papers on the matter in 2012 and 2018. I will therefore start with the common sense cash-back strategy, which I recommended to the CBN in 2011 and here it goes. Before delving into the main issue, there are some preliminary observations and clarifications. The first is that I must admit that common sense is no longer common; indeed, it is the scarcest commodity in Nigeria today. This is caused by our attempt to live foreign lives when we have not mastered our traditional values, so that we are neither local nor foreign. We have thrown away everything we have in a bid to emulate what we don’t have and now, we are between and betwixt; we are in

a cultural limbo! That is why common sense is very scarce. Secondly, cashback is a marketing strategy when the strategist is so sure of his offer that he guarantees to refund the customer’s money if/when he/she is not satisfied. Thus, I am sure that the strategy I am about to recommend will work; it is a “sure-banker” as they would say. But since Governor Sanusi is not paying me for this unsolicited consultancy, and I am not even sure he will heed my advice, there can be no cash-back. Thirdly, the concept of cashlessness requires some serious rethinking. We are using the concept in its Nigerian and everyday meaning because its monetary and macroeconomic interpretations and implications are something else. Even then, many Nigerians are already cashless; not because they don’t want to hold cash or for fear of Sanusi, they don’t have the cash to hold. Some will suffer bouts of cashlessness, but others are permanently cashless – due to acute poverty. Furthermore, it is theoretically and practically impossible to have a cashless society. Mike Lee, the CEO of World ATM Association, who is an interested party in this cashless debate has said it all: “the cashless society is about as a real possibility as a paperless office”. We should in effect be talking about less-cash society. Fourthly, banks and bankers are already punishing their customers for doing business with them. My bank charges a penalty for any cash withdrawal of less than N40,000 and one very old generation bank had once refused to give me my balance over the counter, insisting that I must use my ATM for that purpose. Of course,

I applied my Nigerian sense on them. For my bank, I ensure that I don’t withdraw N40,000; rather than leave some amount for them and be punished, I withdraw everything. So, when I need N50,000 and my balance is N80,000, I “clean-up” the account. For the second bank, I quoted the laws and practices of banking from the days of goldsmiths to the Sanusi era (I am a fellow of the Chartered Institute of Bankers) and they hurriedly obliged! Anyway, what the CBN has done is to endorse the oppressive KITA (kick in the arse) strategy which the banks have always deployed against their hapless customers. It is also important to stress that people have used money for centuries, and it will not be easy to just wish money away and this is not just a Nigerian sentiment. Writing on “The new cashless economy” (E-Commerce Times, 24 March 1997) Keith Regan listed “human habits and traditional attachments to the idea of money” as some of the impediments to cashless economy. Finally, I want to state upfront that the CBN is engaging in a war that may be worthwhile but which it cannot win. In an economy where the black-market accounts for 70 percent of activities, pushing for cashlessness is an effort in futility. We have black market forex; black market oil exploration, refining and importing; black market (illegal) universities and black market (Oluwole-minted) degrees, black market court injunctions and judgments, black market subsidies (diverted to the rich) and black market governance all of which make up black market(informal) economy! The simple fact is that cashlessness does not jell with a black market (or

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I must admit that common sense is no longer common; indeed, it is the scarcest commodity in Nigeria today. This is caused by our attempt to live foreign lives when we have not mastered our traditional values, so that we are neither local nor foreign

Note: The rest of this article continues in the online edition of Business Day @ https://businessday.ng Dr Muo is of the Department of Business Administration, OOU, Ago-Iwoye

Socio-economic consequences of illicit trade

he rising growth in international trade and globalisation, in the last few decades, has inadvertently resulted in insignificant growth in illicit trade. The size of illicit trade has assumed an alarming dimension and is now globally estimated to run into hundreds of billions of dollars annually by economic watchers. Illicit trade increases costs undermine legitimate economic activity and deprives governments of the much-needed revenues for investment in vital public services. It is also at variance with the UN’s Sustainable Development Goals (SDGs). At a recent forum, in Switzerland, organised by the United Nations Conference on Trade and Development (UNCTAD) in collaboration with a US-based non-governmental organisation, the Transnational Alliance to Combat Illicit Trade (TRACIT), the threat of illicit trade to positive development and, particularly, its negative impact on the attainment of the Sustainable Development Goals (SDGs) was brought to the fore. Specifically, the impact of illicit trade on the 12 key sectors that participate significantly in international trade came into focus with the launch of TRACIT’s new report, “Mapping the Impact of Illicit Trade on the Sustainable Development Goals, which investigates the impact of illicit trade on these sectors vis-à-vis the 17 United Nations SDGs. The sectors include petroleum, agri-foods, pharmaceuticals, alcohol, fisheries, tobacco, forestry, precious metals and gemstones, pesticides, and wildlife, etc. Findings from the report show that illicit trade activities significantly compromise achievement of the SDGs by crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services, dislocating hundreds of thousands of legitimate jobs and causing irreversible damage to ecosystems and human lives. Nigeria also suffers some economic consequences on account of illicit trade in the country. Some of the most illicitly traded goods in Nigeria are precious stones, tobacco and pharmaceu-

ticals. This situation is further compounded by the rising spate of insecurity and terrorism, especially in the North. The light weight, high value, high durability, and portability of some of these commodities make them especially attractive to launderers and criminal financiers. For example, gold in Zamfara is regularly smuggled out of the country to neighbouring African countries, namely, Niger and Togo. It is one of the mineral deposits, including tin and zinc, that are illegally mined by artisans who account for about 80 percent of the mining activities in the country. According to Bawa Bwari, the immediate past minister of mines and steel development, between 2016 and 2018, Nigeria reportedly lost about N353 billion in gold smuggled out of the country and sold in the international market without any revenue accruing to the government. The consequences for the nation’s security are even dire. In April 2019, following intelligence reports, which Mohammed Adamu, the InspectorGeneral of Police claimed, “established a strong and glaring nexus between the activities of armed bandits and illicit miners,” the federal government had to suspend the mining of the mineral in Zamfara State. Prior to the suspension, the state and neighbouring states in the region had witnessed a breakdown of security, in spite of heavy presence of police, military, and local security forces that were deployed to contain the activities of criminal gangs responsible for a flurry of horrific bloodshed and kidnappings. It is well-documented that cigarettes are the most illicitly traded products worldwide, having higher occurrence in developing economies. Nigeria is not an exception as the commodity is very susceptible to illicit trade. The World Health Organisation (WHO) defines illicit trade in tobacco as, “any practice or conduct prohibited by law which relates to production, shipment, receipt, possession, distribution, sale, or purchase of tobacco products; or any conduct intended to facilitate such activity.”

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AKINREMI SOBOWALE

It is estimated that one in every 10 cigarettes sold worldwide is illicit. This amounts to losses valued at tens of billions of dollars. Due to the nature of the product, illicit tobacco is easily transported and disguised, thereby, making it a high-profit opportunity. Also, a close connection between illegal cigarettes and its funding of criminal activity has also been well established. Illicit cigarette is a choice commodity in transnational organised crime and the illicit tobacco market is increasingly linked to the narcotics trade. The product is often illegally shipped under dubious disguises, including false bills of lading for other commodities. A 2011 US report into illicit tobacco: “The global illicit trade in tobacco: A threat to national security”, notes that traffickers view it as a low-risk, high-reward criminal activity which can fetch millions, with little risk of detection or harsh punishments. The perpetrators and their networks also easily circumvent international borders. The above notion is closely associated with the misguided belief that illicit trade in tobacco is a victimless crime, which tends to allow the crime to fester. Evidently, the lost tax revenue emanating from cigarettes and tobacco products smuggled into a country undermines government’s capability to provide essential services. Besides, the products are usually substandard and do not meet the various health regulations and violate numerous other laws and regulations. Consumers, manufacturers, and retail outlets also suffer consequences of illicit trade in tobacco products. Another reason adduced for the growing black market in tobacco is increasing excise and inadequate law enforcement. The former has the unintended consequence of aggravating illicit trade and thereby erasing any gains intended by the increase in excise. Illicit trade is also rampant in pharmaceuticals and poses a major threat to public health. It involves the manufacture, distribution and sale of substandard, falsified, unregistered and unlicensed drugs as well as their theft, fraud, illicit

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informal) economy! While it is generally believed that the objectives are worthwhile, there have been doubts as to the efficacy of the policy as designed and fears that it may do more harm than good. Indeed, an informed commentator has warned that we may end up with a “bankless” economy rather than a cashless economy! Only about 20 percent of Nigerians have access to bank accounts; there is no trust in the environment and even those who do genuine business rely on cash and given the average level of prices, N150,000 appears grossly inadequate-even for petty traders. Some organisations spend more than N1 million daily on cash and carry labourers and there are those who make unholy transactions who must pay cash. The punishment is also damn draconian; it is twenty times the maximum COT charges in the Nigerian banking industry, and one begins to wonder why a customer should be severely punished for withdrawing his own money! Some Nigerians may comply but those who need the cash for genuine or dirty purposes will adopt several options: split the cheque, under-themattress-banking; multiple accounts and multiple banks (after all, a fraudulent fellow recently opened 30 accounts (yes, THIRTY! despite the KYC); compromise the process, or hold foreign currencies.

diversion, smuggling and trafficking. The trade also applies to generic versions of prescription drugs and over-the-counter (OTC) medicines, including fake medical devices such as syringes, surgical instruments, contact lenses, condoms, among others. The World Health Organization (WHO)estimates the value of illicit trade in pharmaceuticals at between $75 billion to $200 billion annually, in terms of value. WHO’s statistics also shows that the share of counterfeit medicines on the market ranges from over 10 percent of total sales in developing countries to as little as 1 percent in developed countries. Apart from creating economic and social challenges to pharmaceutical companies it also further diminishes already limited healthcare budgets and resources. Lately, NAFDAC has been working assiduously to improve public awareness on the dangers of fake drugs as well as strengthen some control measures such as SMS confirmation of the authenticity of various medicines. However, a lot still needs to be done especially in the area of in-market enforcement by respective regulatory agencies. The recent increase in the sale and distribution of sub-standard cigarettes without standard health warning in major wholesale markets in Aba and Kano necessitates that Standards Organisation of Nigeria (SON) rev up its market surveillance and enforcement action to stem the tide. Low public awareness, in addition to widespread corruption, enables drug counterfeiting rings to thrive. A vast majority of people, especially the poor, are easily deceived to buy seemingly cheaper alternatives, apparently unaware of the danger posed by the counterfeits. This makes them easy targets for the entrepreneurs who profit from this illicit trade in pharmaceutical products. Sobowale is of the Centre for Promotion of Enterprise and Business Best Practices

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Thursday 26 September 2019

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Lagos light rail and the problem of accountability

CHRISTOPHER AKOR

or a city of over 22 million people, it is inconceivable that the predominant means of transportation is road. Every day, more than eight million commuters are cramped into a tiny and often bad network of 9,100 roads. A study, in 2017, rated Lagos the third most stressful city in the world just after Baghdad and Kabul. Lagosians spend an average of seven hours twenty minutes daily in traffic. A journey of less than 50 kilometres from the Murtala International Airport to Ajah could last for eight hours, as a CNN journalist discovered recently, far more than his six-hour flight from Instanbul to Lagos. As at 2006, it was estimated that the city’s transport infrastructure and services were at levels that supported a population of six million some 20 years ago. The absence of a modern transport infrastructure in Lagos and the consequent heavy traffic gridlocks on the roads comes with huge costs to the city and its inhabitants, the state, the country and the economy. The business community alone loses an average of N11 billion monthly to the traffic. In 2015, the former governor of the state, Tunde Fashola, says the state loses N250 billion annually to the traffic while the Apapa traffic alone costs the country about $19 billion annually. The economic as well as health, emotional and relational costs to individuals and families is colossal and incalculable.

In 2006, the government developed a transportation master plan that will integrate road, water, rail, and cable-car transportation to provide one of the most efficient systems of transportation in a megacity. Shortly after, in 2008, the Bus Rapid Transit (BRT) was launched as a stopgap measure while seven train lines were planned to link all parts of the states and even Ogun state with light rail. However, due to paucity of funds, only the contract for the Blue Line (the 27-kilometre Badagry line running from Okokomaiko to Marina via Iddo) was awarded at the colossal cost of $1.2 billion (compared to similar projects in other parts of Africa awarded for just a fraction of that amount) to be completed in 2011. It was projected others will be awarded subsequently and the entire master plan will be completed by 2020. However, since then, the Blue Line is yet to be completed and there is no indication that the state government is still interested or working to meet the timeline of the Master Plan. Meanwhile, in Addis Ababa, Ethiopia, a similar contract was awarded for a 34 kilometre and 39 station electrified light rail network in 2012. By September 2015, Addis Ababa, a city of only 4 million people, made history by becoming the first subSaharan city to have a light rail system. Unlike Lagos, Ethiopia began its own construction in 2012, four years after Lagos and at the cost of $475 million but completed it on record time. However, Lagos is still battling with its $1.2 billion 27-kilometre rail system eleven years now with no completion in sight. There are many questions begging for answers from the Lagos state government. First, why would a 27-kilometre project cost $1.2 billion when a 34-kilometres project cost only $475 million? Second, the China Railway Con-

struction Company (CRCC), contractors of the light rail project, in its 2010 report, put the cost as $182 million. Why is this so? Third, what is responsible for the endless delays in the completion of the project despite reassurances from Fashola in 2010 that funding for the project was guaranteed through a loan by the World Bank? Fourth, by what magic did the Ethiopians complete a 34-kilometres rail project in a record time of 3 years while Lagos has been battling with a 27-kilometre rail project unsuccessfully for 11 years? My search for answers since 2015 has yielded absolutely no result. First, the state government has refused to release the contract papers for the project and have refused to answer any question or queries from any quarters on the project. In 2015, I seized the opportunity of the visit of the then Mayor of London, Alderman Alan Yarrow, with private sector investors, to inspect the project and explore collaboration to ask Dayo Mobereola, then MD of the Lagos Metropolitan Area Transport Authority (LAMATA) about the discrepancies. He flatly denied that a loan was secured for the project. He attributed the delays to funding challenges and the challenge of engaging the right partners to drive the project. He said the state desperately needed private investor partners who could run the system for a period of 30 years and hoped the visit by the Mayor of London will open new vistas of opportunity and attract the right investors. Of course, seeing the miasma associated with the project, nothing came out of the visit and no investor indicated interest. By 2017, the Lagos state government changed tact and abandoned the project, coming up with a non-

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The fraud, that is the Lagos Light Rail project, in many ways reflects the way governance and public projects are undertaken in Nigeria. Contracts are usually over-inflated, awarded to party or client members as rewards for loyalty and are poorly, if at all, executed

Empowering National Housing Fund (NHF) scheme for greater impact

he provision of quality, decent and affordable housing to Nigerian workers remains a major challenge for governments at federal and state levels. This is largely because of the capitalintensive nature of housing delivery, inadequate access to long-term housing finance and longstanding problems with land administration in the country. Over the years, successive governments have created different housing initiatives and programmes in attempts to ensure that Nigerians own their homes. While the gap between what these programmes have achieved and the current housing deficit remains wide, it is important to note that some of them have created significant impact. And if properly empowered could boost the Buhari administration’s plans to stimulate rapid development in the housing sector. One of such programs is the National Housing Fund (NHF) scheme. Recent figures from the Federal Mortgage Bank of Nigeria (FMBN), managers of the scheme, reveal that the housing fund has facilitated the provision of housing loans totalling over N220 billion to over 45,000 Nigerian families so far. At the heart of NHF’s appeal is affordability. The payment terms of the individual housing loans that the mortgage bank provides are convenient and unmatched in the financial market.

As a contributor to the scheme, a worker is qualified to apply and get a housing loan up to N15 million to build or purchase a home after six-months of continuous contribution of 2.5 percent of his monthly salary. The second feature of the housing loan is that beneficiaries have a 35-year period within which to pay back in monthly instalments. Additionally, loans under the scheme attracts a maximum single digit interest rate of 6 percent per annum! The NHF scheme is also remarkable because of its minimal equity requirements for accessing its housing loans. Recently, the Dangiwa-led management of the FMBN of Nigeria further reduced the equity contribution requirements for accessing NHF loans from ten to zero percent for N5 million and below. Also, loans above N5 million up to N15 million only attract 10 percent equity contribution. These terms are remarkable especially when compared with those in the open market. Investigations show that on average commercial banks offer housing loans with maximum tenors of 10 years at interest rates of over 22 percent per annum. Additionally, they require high equity payments of up to 50 percent of the required loan amount before they could process. Another major angle to the argument for the empowerment of the NHF scheme

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is the unrivalled impact that it has created in the development of affordable housing stock in the country. As at June 2019, over N101.1 billion from the scheme has been used by the FMBN to finance the construction of housing projects across the country. The result has been the delivery of over 27,500 affordable housing units. These housing structures consist of one, two and three-bedroom apartments specifically targeting low and mediumincome earners with prices that range from N5 million to a maximum of N15 million. The financing of the construction of these housing units has created thousands of jobs and enable many Nigerians to own their homes. Overall, in terms of scale, impact and depth of financing, no other government housing scheme at the national or local government level has achieved this much. Despite its successes, it is noteworthy that within this period of review, several factors have also been identified as impeding the growth and impact of the NHF scheme. A notable issue has been the scheme’s weak legal framework that makes enforcing of its provisions tough and difficult. While the law clearly states that commercial banks and insurance companies should invest part of their profits to the scheme, there has been little or no inflows

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sensical idea of flooding the city with buses as its solution to transportation and traffic gridlock in the state. One Sunday evening, Ambode, former governor of Lagos state invited senior journalists and editors to his office to sell the new plan to them. He invited questions and by the time I asked him about the project, he not only refused to answer me, but abruptly ended the programme and some of my colleagues blamed me for ruining the event. The current governor, Jide SanwoOlu has also adopted the same strategy by conspicuously refusing to say anything on the Lagos light rail project and the 2006 transport master plan, even as the traffic gridlock in the city continues to worsen. Instead, to excite people, he has introduced another nonsensical idea through the new Eko Innovation Centre, purporting to dedicate $5 million to any innovative idea that can solve the traffic situation in Lagos. The fraud that is the Lagos light rail project in many ways reflects the way governance and public projects are undertaken in Nigeria. Contracts are usually over-inflated, awarded to party or client members as rewards for loyalty and are poorly, if at all, executed. It also demonstrates the bankrupt nature of our political elite who do not even show enlightened self-interest. If Addis-Ababa, with a population of just 4 million could be so pro-active to provide the inhabitants of the city with a fast, efficient, and modern transportation system to move approximately 600,000 people daily and decongest the roads, how much more urgent can the Lagos light rail system be, in a city with a population of over 22 million and which is synonymous with killing traffic jams and hold-ups that sometimes lasts 12 hours at a stretch?

TERUNGWA ISAAC

from these sources to bolster its resources. The federal government on its part has not injected enough funds into the scheme as required. As a result, the scheme has relied mainly on the contributions from workers that have registered with the scheme. This has reduced the extent and scale of the scheme manager’s affordable housing interventions and impact under the NHF scheme. As the Buhari administration unfolds its next level plan for affordable housing delivery, it is important for the government as well as stakeholders in the housing sector to support ongoing efforts to review the NHF bill. A revised housing fund bill with a stronger legal framework will help to increase financial inflows and ramp up efforts to deliver affordable housing to a greater number of Nigerians.

Isaac is a policy analyst based in Abuja

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Thursday 26 September 2019

EDITORIAL PUBLISHER/CEO

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

Bashir Ibrahim Hassan

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

Ahead with the concession of 22 teaching hospitals

here was a predictable response to the news of the a p p ro v a l - i n principle the Infrastructure Concession Regulatory Commission (ICRC) granted the Federal Ministry of Health, to work out public-private sector (PPP) schemes for further rehabilitation and management of 22 teaching hospitals across the country. Nigerian Labour Congress (NLC) kicked against the move. It is time for the NLC to review its predictable routinised response for a more robust engagement aimed at achieving better outcomes for the citizenry. ICRC at a ceremony on August 20, 2019, presented a certificate to the health ministry for the rehabilitation and concession of federal teaching hospitals. Chidi Izuwah, ICRC Director General, said the ministry could now pursue other steps in the process. These include picking partners, obtaining financial closure and signing relevant conces-

sion agreements. However, the NLC would have none of it. Supported by the Medical and Health Workers Union of Nigeria, the sectoral association, the umbrella labour body has stated its objection against any efforts to carry out what it called the privatisation of the hospitals. Labour’s primary opposition is the fear of an increase in rates and charges and concomitant unaffordability to the poor. NLC says rather than a concession; private sector investors should build new facilities. What happens to the existing ones though? Labour has consistently opposed efforts to inject private sector approaches to the management of state-owned enterprises in the country. They similarly kicked against upward review of the electricity tariffs. The evidence is that citizens continue to pay more for the inefficient services of the power firms attributed to poor returns on investment and their inability to generate enough profits to make needed investments. The citizen pays for the cost of using

g enerators and sundr y power sources. We invite NLC and persons so inclined to take a second look at the matter. In the first place, stateowned enterprises such as the teaching hospitals are in the half-way house of free enterprise. They are legal entities that governments create to partake in commercial activities on its behalf. A significant challenge is the weak pricing of services because of a poor reading of their overall purpose. Government management of business in Nigeria has increasingly revolved around fixed and unsustainable pricing supposedly to protect the poor but which ends up punishing them with inefficiency and lack of service. Earning inadequate returns leads to a panoply of other problems. The consequence is the poor returns to all stakeholders, but even more so the citizen who does not get proper services from outfits supposedly priced to assist him. Nigerian histor y with state-owned enterprises

thus far points to the desirability and near imperative of adopting a model that would ensure the enterprises survive. Sustainability is the first rule of businesses, institutions or enterprises. Only those who remain can debate policy options. All stakeholders, including labour, must pay attention more to the baking of sustainable wealth rather than sharing and allocation of what is now an illusion. As presently run, those 22 teaching hospitals cannot sustain their operations; they would, therefore, fail to serve even the poor. Rather than quibbling, the unions should work with the federal ministry of health and ICRC to agree on appropriate technical and financial criteria for the selection and emergence of the partner firms. Similar consideration should feature in the choice of management, protecting the interest of workers as well as patrons of the hospitals. We urge full speed ahead with the planned concessions, working with all stakeholders to achieve a win-win.

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Thursday 26 September 2019

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Onyema, Air Peace and the national carrier POSITIVE GROWTH WITH BABS

BABS OLUGBEMI

he recent xenophobic attack in South Africa is not the first but the most severe in the last decade. The South Africans have shown prejudice against people from other countries, destroying properties and killing fellow Africans in the process. Many Africans have been murdered in Diepsloot, Cape Town, Limpopo, Northern Cape, Pretoria and others. In Gauteng province alone, there have been over 212 attacks between 1994 and 2018. The reasons for these needless attacks have been attributed to the poverty among the people who claimed foreigners had stolen their wealth. But the real reason is that people who attacked others are lazy, unimaginative and have failed to take the opportunities available in the economy of South Africa. Nevertheless, the response of Africans condemning the attacks is commendable this time. South Africa

might have the biggest economy in Africa today, but the fact that she is a baby of all other countries cannot be ignored. Almost all African countries contributed to the end of the apartheid which led to the release of Nelson Mandela and the beginning of the democracy in the country. Among the responses, the action of Allen Ifechukwu Onyema and his team at the Air Peace is noble and commendable, especially given our records when it comes to emergency and disaster recovery in Nigeria. His decision to put lives before profit by airlifting Nigerians caught amid the attacks is a personal and corporate social responsibility action, second to none. At first, Air Peace was said to have been established when Allen got to know that starting such a venture with aa single plane could employ over 150 persons. His vision is to see people engaged, giving them the ability to provide for their families and contribute meaningfully to society. The decision to voluntarily rescue 188 Nigerians without thinking of the implications to the bottom-line, is an indicator that Air Peace and Allen have been able to sustain the foundational intent of creating the company. This is unlike many corporate entities where there has been a drift from the initial concept, due to the increasing greed of the owners to be on the Forbe’s list or the sycophancy of the people engaged as the custodians of the noble idea conceived when the stake and the wealth were low. Let’s imagine there is a need

for our government to take similar action. Would it have been done without unnecessary delays – like waiting for the approval of president or lawmakers? Is it likely that a wholly owned “Nigerian Airways” would be in South Africa to rescue Nigerians without wasting time due to the CEO’s delayed approval? The CEO of the imaginary national carrier will be a political appointee and would rather wait endlessly for orders from the “oga at the top” rather than take an initiative that would jeopardise his office and the perquisites of being in that position. Onyema and Air Peace without any hype have lived up their vision to be dependable connections for Nigerians, especially in time of dare need. I doubt it if a national carrier will be that effective in saving the lives of Nigerians. I wonder if there is any need for any national carrier whose efficiency will be limited by excessive bureaucracy, where employment will be for those with connections and recommendations written on the complimentary cards of politicians. A national carrier that may not allow the private partners to function based on commercial and ethical terms but religious and ethnic sentiments. Do we need to go in search of a new partner when a Nigerian company has shown to be the national carrier we need at this time? I don’t know where the project to start a new national carrier is. It was said at a time that the federal government would be partnering or had agreed with Ethiopian Airlines

‘

Onyema and Air Peace without any hype have lived up their vision to be dependable connections for Nigerians, especially in time of dare need. I doubt it if a national carrier will be that effective in saving the lives of Nigerians

or so. With what Air Peace and its leadership have done, we need not look for any unknown affiliation in forming a national carrier, if one is necessary. We should profile our existing domestic airlines and go into a commercial partnership with them to be on standby in case of a national emergency like the xenophobic attacks. We have many Nigerians who will act like Onyema and put the national interest before their business interests. Our governance and political system have encouraged people who think in terms of what they can get from the commonwealth rather than what they can contribute to the country. The mindset our political structure has created is giving boldness to the greed of some people, including those who are demanding to buy N5.5 billion cars in a recession. It is time we reorient our political belief and what we celebrate as heroism. The heroism of Onyema and Air Peace is an effort that must be imbibed in all Nigerians to change the entitlement mindsets of our leaders and breed people with contribution mindsets at all levels of the society. Without, giving an undue reward, I think we have a national carrier in Nigeria, and that airline is Air Peace, the friends of Nigerians in time of need. Olugbemi FCCA, the Chief Responsibility Officer at Mentoras Leadership Limited and Founder, the Positive Growth Africa. He can be reached on babs@babsolugbemi.org or 08025489396.

Governor Seyi Makinde, let’s establish an innovation and technology agency or ministry in Oyo State

s I sat on my couch over the weekend preparing notes from the Nigerian Bar Association (NBA) conference in Lagos, I thought through the challenges confronting Nigeria and the precarious situation of a young Nigerian in the global “street” with the entire “Invictus and xenophobia saga”. Young Nigerians with so much energy and “native intelligence”, but little “legit” and numerous “illicit” opportunities to harness these endowments. I thought, “What can we do to make life better for Nigerians who are blessed with talents and ‘a rising debt profile’ (an irony!)”. Then it dawned on me, as a policy and innovation enthusiast, “how about we tackle this from a policy angle?” I remembered my research culminating to findings for the need to set up an agency or ministry focused on driving policies, programmes, and partnerships that stimulate and intensify “innovation” in order to improve economic growth and the quality of life. Such an agency, however, is best suited for states. And which state is better suited to achieve this than a state with a governor who has shown a quest for excellence and innovative leadership with his language and appointments (particularly with his appointment of Seun Fakorede as a commissioner, despite the odds) within only 88 days in office. Why an agency of innovation and technology in Oyo state? In an age where there is an increasing demand for skills that are fit for the future of work, an age where problems such as poverty, poor

healthcare, and unemployment persist – there is need to develop robust policy frameworks that exploit innovation and technology for different sectors, for the benefit of Oyo state indigenes and residents. This can start as an agency with Key Performance Indicators (KPIs), from which it grows into a full-fledged ministry serving to identify challenges to innovation within the state, drive policies and programmes, and pursue partnership and opportunities for innovators and innovation in Oyo state. Under the leadership of the governor, the agency can help Oyo state become a conscious catalyst for innovation as well actively bring in investments and partnerships in innovation and technology, which serve national and global needs irrespective of proximity. For example, opportunities, scholarships, and grants for the likes of Akanbi Segun, a teenager in Oyo state who created the feather plucking machine – there are thousands of such persons as Akanbi. The office or agency can pursue partnerships that make this happen for many Akanbis in Oyo state. Also, Adebayo Alonge, a 30-year old indigene of Oyo state with a start-up in Ibadan called RxAll which I advise, recently received a global award for being the first to invent a handheld artificial intelligence nano-scanner that can scan and detect fake drugs in 20 seconds. Therefore, the agency can develop policies that help us celebrate and locally support Adebayo to ensure we produce more of his kind.

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What we promote is what becomes popular. Currently, I have privileged information about some investment interest in setting up an Ibadan Digital City with funding from investors from Canada and China. But we need to show commitment in driving innovation policies and ease of doing business in Oyo state. In fact, with investments like this facilitated by the agency with the private sector, there can be professional programmes that ensure a selected few with digital and tech skills do some weeks of internship with the Oyo state government and ministries after their training, which can help such participants learn how the public sector works and use their skills to improve the governance architecture in Oyo state. The agency, or office, for innovation and technology under the governor’s office can focus on driving policies, programmes, and partnerships that will attract investment in innovation and technology for youths and for harnessing the intellectual resource in Oyo state’s higher institution in solving challenges in rural communities across Oyo state. This agency can create policies that encourage the building of an ecosystem that supports capacity development in specialised technology skills, to achieve accelerated economic prosperity and decent jobs whilst tapping into the potential market that Lagos, Africa, and the world offers for innovators and tech. For example, data science and cyber security are in high demand. Harvard calls data science the sexist job on earth, with a need for

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TIMI OLAGUNJU more than 150,000 data scientists (irrespective of talent location) in US alone. The hustle and bustle in Lagos isn’t encouraging the survival of innovators and tech skills, even though it has the market. Here lies the opportunity, an opportunity for Oyo state to show leadership and commitment to attract talents and start-ups. For example, Law Pavilion is based in Ibadan, and its AI innovation is serving the entire law industry in Nigeria and West Africa. How can we ensure more businesses and start-ups such as Law Pavilion, Interswitch set up technical base in Oyo state whilst serving the Lagos, Nigerian, and global market? These are the kind of challenges the agency will solve through policy. Oyo state is the pacesetter state and can show the way on how Nigeria can do such at the federal level by starting first from within. Thank you for reading and sharing – let the conversation begin from here to the governor’s listening ears. Ire O!!! Olagunju is a lawyer and policy consultant and tweets @ timithelaw

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Thursday 26 September 2019

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

MARKETS

Nigeria Stocks set to extend election year woes as market lags African Peers ISRAEL ODUBOLA & SEGUN ADAMS

ith just about t h r e e months left on the calendar year, there might be little respite for investors who had their hands burnt as Nigeria’s bearish equity market poses to continue a streak of losses in election years since 2011. In the last two election years, the stock market has sustained a bearish trend with investors losing an average of 16.8 percent in both years, data sourced from Bloomberg showed. In 2003 the equity market gained 66 percent and in 2007 it advanced 75 percent. But in 2011 the market slumped by 16 percent and four years after tanked 17 percent. Given the trend in the market, this spell might extend for the third straight election year without much needed support to inspire confidence of investors, analysts say. They also note that the market is unlikely to reverse year’s losses and investors must look beyond short term price movements if they want to position in value stocks. The main equity gauge on the Lagos bourse declined 1.10% Tuesday bringing its performance so far in the year to -12.98 percent.

This means Nigerian stocks are one of worst performers continentally and may continue to be surpassed by African peers in the medium term except fiscal authorities come up with bold policy pronouncements to revive the already-weak investor sentiment. The main equity index at the Nigerian Exchange has declined 12.98 percent since January, underperforming Ghana (-11.27%); Egypt (+1.03%), Kenya (+3.71%)

and even embattled South Africa that have delivered 5.47 percent gain to investors since the start of the year. Nigerian stocks remain extremely cheap compared to peers in frontier and emerging markets which could imply investors are less confident about the growth potentials of Africa’s biggest economy struggling to recover from a recent recession. An average investor is willing to pay seven times

for each naira earnings to buy Nigerian stocks lower than Ghana (15.1x); South Africa (15.1x), Kenya (11x), Egypt (11x), even much below frontier and emerging markets average of 9.2x and 13.6x. Following a tepid performance of the equity market latest week, analysts at Lagos-based investment house, Chapel Hill Denham, noted corporate actions to be the recent main driver of investors demand for Nigerian stock.

The analysts noted that the trend might persist on the back of the country’s weak macroeconomic fundamentals. Nigeria’s Gross Domestic Product (GDP) slowed for the second straight quarter according to latest figures by the National Bureau of Statistics (NBS) as non-oil sector dragged growth which printed 1.94 percent in the second quarter of 2019. While prospect remains uninspiring, Chapel Hill Denham says external fi-

nancing conditions are favourable for foreign portfolio flows and that investors will continue to snap up bargain opportunities for blue-chip stocks when the become available. Shares on the exchange that have outperformed the broad market so far in the year include Dangote Flour (224.09%), MTN Nigeria (40.4%), Lafarge Wapco (20.48%), Sterling Bank (5.79%), Cadbury (4.5%), Custodian Insurance (3.54%).

CONSUMER GOODS

AB InBev raises $5billion in Asian IPO, second largest in 2019 OLUFIKAYO OWOEYE

orld’s largest brewer, A n h e u s e rBusch InBev, has raised $5 billion in Hong Kong through an initial public offering of its Asia business unit. This is far less than what the brewer hopes to raise when

it tried to list earlier two months ago. AB InBev had initially sought to raise closer to $10bn from listing on the Hong Kong stock exchange, but shelved after investors were put off by the price with management citing “prevailing market conditions” as the reason behind it. The company priced

1 . 4 5 b i l l i o n s ha re s at HK$27($3.44), that values the Asia unit at around $45 billion. The IPO had JPMorgan Chase and Morgan Stanley as co-sponsors, while Bank of America Merrill Lynch and Chinese investment bank CICC are the global coordinators for the offering. AB InBev sold off its

Australia business unit to Japan’s Asahi Group Holdings for $11billion, which reduced the value of its AsiaPacific unit. Proceeds from the successful IPO are expected to help the company pay down more than $100 billion in debt from its purchase of SAB Miller in 2016. According to data from Refinitiv, the IPO is the

second-biggest globally so far this year, trailing only the $8.1 billion flotation of Uber Technologies Inc in May. The revival of the listing is a boon for Hong Kong’s stock market, where activity has dwindled this year due to the US-China trade war and the political unrest rattling the territory. Asia is an important

growth market for AB InBev, whose market share has shrunk in the US, where it owns key brands including Bud Light and Budweiser. The company owns about 50 beer brands, among them Stella Artois, Becks and Corona. Shares of AB InBev traded at 86.74 Euros and has risen more than 46percent year to date.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: Samuel Iduh

Thursday 26 September 2019

COMPANIES&MARKETS

BUSINESS DAY

Business Event

BANKING

Keystone Bank, ING, others launch global principles for responsible banking HOPE MOSES-ASHIKE

eystone Bank Limited, has become one of the founding signatories of the Principles for Responsible Banking, committing to strategically align its business with the Sustainable Development Goals and the Paris Agreement on Climate Change. By signing the Principles for Responsible Banking, Keystone Bank joins a coalition of 130 banks worldwide including ING, representing over USD 47 trillion in assets, in committing to taking on a crucial role in helping to achieve a sustainable future. Taking place at the start of the UN General Assembly, the official launch of the Principles for Responsible Banking

marked the beginning of the most significant partnership to date between the global banking industry and the UN. “The UN Principles for Responsible Banking are a guide for the global banking industry to respond to, drive and benefit from a sustainable development economy. The Principles create the accountability that can realize responsibility, and the ambition that can drive action,” said UN secretarygeneral Antonio Guterres at the launch event, attended by the 130 founding signatories and over 45 of their CEOs. Also speaking, Inger Andersen, executive director of the United Nations Environment Programme (UNEP) explained that a banking industry that plans for the risks associated with climate change and

other environmental challenges cannot only drive the transition to low-carbon and climate-resilient economies, it can benefit from it. “When the financial system shifts its capital away from resource-hungry, brown investments to those that back nature as solution, everybody wins in the long-term,” Anderson noted. Commenting on the development, executive director, Keystone Bank Limited, Yemi Odusanya said Keystone Bank is convinced that only in an inclusive society founded on human dignity, equality and the sustainable use of natural resources can our clients, customers and businesses thrive.

L-R: Babatomiwa Adesida, private sector engagement specialist, Sahara Foundation; Kola Adesina, group managing director, Sahara Power Group; Amina Mohammed, deputy secretary general, United Nations; Pearl Uzokwe, director, governance and sustainability, Sahara Group, and Bethel Obioma, head corporate communications, Sahara Group, at the launch of the Africa Renewable Energy Forum in New York, USA at the sideline of the ongoing 74th UNGA

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ENGINEERING

EATECH to save millions of dollars with its ISO/IEC 17025 accreditation IFEOMA OKEKE

ngineering Automation Technology Limited (EATECH) become the first Nigerian firm to bag the International Organisation for Standardization and the International Electrotechnical Commission ISO/IEC 17025:2017 accreditation, which will save the company millions of dollars lost as capital flight. The accreditation came after one year of painstaking and rigorous subjection of the company’s laboratory, personnel, and allied facilities to rigorous tests and audits to ensure they function and align with standards set by the Australian-based International Laboratories Accreditation

Cooperation (ILAC). A statement, by the Nigerian National Accreditation Service (NiNAS) on its website lauded the management of EATECH for making the requisite investment to bag the accreditation, the first in the country, saying it would go a long way in boosting the quality of equipment calibrations in the country. “The Management and staff of NiNAS congratulates Engineering Automation Technology Limited laboratory on the attainment of this enviable feat. This is positive progress for the Nigerian economy and West African quality infrastructure,” NiNAS said. Emmanuel Okon, managing director/CEO of EATECH, at a press conference in Lagos,

said attaining the accreditation would help the country save millions of dollars lost annually as capital flight in shipping critical and sensitive equipment in the aviation, oil and gas, and power sectors abroad for electrical, pressure, and temperature measurements. Okon said: “Before now, there is no laboratory that caliberates aviation equipment in Nigeria, but with this accreditation, we have provided the solution that will enable the aviation industry cut down on capital flight on equipment calibration abroad, and we have also created an opportunity for jobs and human capital development for Nigerians Continue online @www. businessday.ng

L-R: Olufemi Ashipa, vice president, marketing, Lumos Nigeria; Juanjo Gonzalez, co-founder, Mondo For Africa and conveners of “Clean up”; Akshay Gwalani, co-founder, and Chris Papas, vice president, operations, Lumos Nigeria, during the recent Clean-up Makoko Initiative in Lagos.

OIL & GAS

11 Plc rewards customers with SUVs, motorcycles, cash prizes DIPO OLADEHINDE

1 Plc, formerly Mobil Oil Nigeria Plc, has rewarded some of its loyal customers with various gifts, including cars, televisions, generating sets, motorcycle and tricycle popularly called Keke NAPEP, as well as other cash prizes. At a well-attended event which was designed, not only to appreciate loyal customers across Nigeria’s six geopolitical zones, but also to draw attention to its products Mobil Super 1000 (XHP) and Mobil Super 2000 lubricant, the company also drew the attention of the public to the superior quality of Mobil Super 1000 (XHP) and Mobil Super 2000 lubricant, two of 11 Plc’s major lubricants delivered to Nigerians over the years. Speaking to participants

who were drawn from across the country, the Managing Director of 11 Plc, Adetunji Oyebanji, said, “Through this campaign, our customers have restated their commitment to the high-quality products that we offer them. “We are proud of the success of the campaign as it has offered us an opportunity to reward our growing number of customers; hopefully, we will sustain this campaign in the coming years,” Oyebanji said at the event. The Mobil Super Peel and Win 2.0 also produced winners from; Kano, Abuja, Ibadan and Benin where winners carted away various gift items including motorcycles, tricycles, 40-inch TV sets, smartphones and cash prizes. Manager, Lubricant Sales and Marketing at 11 Plc, Umesh Malik said 11plc have

spared no effort at delivering quality products that are based on research and the needs of the market. He added, “The Mobil ‘Peel and Win’ promotion is our way of rewarding those end-users that are loyal to the Mobil brand – end-users who have truly shown their loyalty to the brand.” According to Malik, these categories of end-users include car owners, motorcycle and tricycle owners/riders, generator operators/owners, auto-repairers and mechanics. Malik said the company remained committed to maintaining high standards of integrity, adherence to safety, health and environmental standards in its business processes.

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L-R: Balaji Thiruvenkatam, product head, Bhojsons PowerHub Kirloskar; Sivarama Krishnan, chief executive officer, Bhojsons Plc; Jitendra Jagdale, service engineer, Kirloskar, and Vincent Uwagbai, Sales Manager, Bhojsons PowerHub, during the launch of Kirloskar Remote Monitoring System(KRM) at the Power Nigeria 2019 Expo in Lagos. Pic by Olawale Amoo

L-R: Mai Atafo, Nigerian Bespoke Fashion Designer; Tosin Ogundadegbe, Award Winning Fashion Stylist; Felix Eiremiokhae, founder/CEO, Oracle Experience, and Mfon Bassey, senior brand manager, Heineken Nigeria, at the Design Fashion Africa Exhibition in Lagos.

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Thursday 26 September 2019

BUSINESS DAY

RESEARCH&INSIGHT

In association with

A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

briu@businessday.ng

08098710024

Mobile internet subscription: The winners in the second quarter of 2019 TELIAT SULE

he competition within the telecoms sector manifests in different ways, with particularly reference to the time the national regulator, the Nigerian Communications Commission (NCC) allowed mobile users in the country to port to any network of their choice. The migration by mobile internet users across networks should be seen as a subtle way they express the destinations where they could get value for their money. From another perspective, it could mean that the network providers are not communicating their offering well enough or the rendering of their services has not been done using the appropriate technologies. In effect, internet users could not migrate from a network to another without a valid reason. It is interesting that Nigeria as country has continued to witness growth in mobile internet usage for over a decade, the data sourced from NCC and the nation’s databank, the National Bureau of Statistics (NBS) corroborate this claim. In Nigeria, mobile internet subscription rose by 5 percent from 116.31 million active internet lines in March 2019 to 122.7 million by June 2019. Further analysis shows that MTN Nigeria gained the most as it outshined the national average growth of 5 percent during the period. The rising internet usage is a welcome development for many reasons. First, it is bound to enhance the efficiency of the cashless policy of the Central Bank of Nigeria (CBN).

Source: NBS, BRIU

problem in the sense that a mutually beneficial transaction might not take place because the parties do not have enough information about the transaction. Second, the emergence of e-commerce has made it possible for SMEs to find customers, and third, it expands the market for economic agents. “For many internet-based businesses or services, fixed up-front costs can be high, but once the online platform is in place, each additional customer, user, or transaction incurs very little extra cost. The marginal transaction cost essentially drops to zero because what previously involved routine human labour can now be fully automated”, The World Bank stated in its World Development Report 2016. Going by the available data, Nigeria’s tele-

rate in its subscriber base that rose to 32 million in June, up from 31.2 million in March this year. Globacom Nigeria equally grew its mobile internet subscribers by 2 percent during the period, resulting in 585,963 new internet users. By June, its mobile internet subscribers had grown to 29 million up from 28.4 million in March 2019. 9Mobile network remains the laggard in the sector. Its dismal growth of negative 6 percent resulted in 602,840 subscribers abandoning its network in the second quarter of 2019. Similar trend was observed in the voice subscription as earlier published by BusinessDay Research. On a state by state analysis, MTN Nigeria recorded double digit growth in internet sub-

coms market leader, MTN Nigeria, added 5.62 million new subscribers to its network in the second quarter of 2019. This implies that for every 10 new mobile internet subscribers that joined the mobile internet platform between April and June this year, eight preferred MTN Nigeria data services to others. Airtel Nigeria added 732,076 new mobile internet subscribers in the second quarter of 2019, which resulted in a two percent growth

scription in 30 states in the second quarter of this year. Katsina, Zamfara, Imo, Kano, Sokoto and Jigawa states recorded the highest growth rates in mobile internet subscription between 16 percent and 19 percent. The momentum varied across other states. In Kwara, Ogun, Cross River, Ekiti, Abia, Borno, Taraba and Plateau states, MTN Nigeria grew its internet subscriber base by 10 percent each.

In Osun, Akwa Ibom, Niger, Yobe, Lagos, FCT Abuja, Gombe and Rivers states, MTN Nigeria recorded 11 percent growth each in the aforementioned states while growth rate was 12 percent in Adamawa State. In Kebbi State, the telecoms giant recorded 13 percent growth rate in internet subscription. The least growth rate as recorded by MTN Nigeria took place in Kogi, Ondo, Edo, Oyo, Benue, Enugu, and Ebonyi states where the growth momentum was between 7 percent and 9 percent during the period. Globacom Nigeria could only muster notable growth in internet subscribers in two states. Edo State occupies the first position for Globacom where internet subscribers jumped by 93 percent. Its mobile internet subscriber base rose by 30 percent in Delta State. The second national operator, Globacom, further saw internet subscribers grow by 7 percent each in Sokoto, Yobe and Gombe states. Also, Globacom internet subscribers increased by 5 percent in Zamfara State during the second quarter of 2019. Growth rate was 3 percent in Enugu; 2 percent each in Anambra, Katsina, and Ogun. In states such as Ebonyi, Jigawa, Imo, and Lagos, Globacom managed to increase its subscriber base by just 1 percent each. Globacom could not withstand the competitive landscape in 23 other states where its subscriber base declined by as low as 1 percent and by as much as 8 percent. Airtel Nigeria’s strongest growth was in Sokoto State where it posted 25 percent increase in its subscriber base in the second quarter of 2019. It recorded 11 percent growth

Source: NBS, BRIU

in mobile internet subscriber base in Katsina State also during the reference period. The growth moment for Airtel Nigeria slowed down in other states as it only recorded 6 percent growth rate each in Kano and Zanfara states. It posted 4 percent growth rate in Anambra, Delta, Rivers, Imo, Ogun, Ebonyi and Abia states; 3 percent increase each in Akwa Ibom, Yobe, Lagos and Bauchi states while it remained almost flat in other 12 states. 12734BDN

Second, the coming on board of super agent banks also stands to benefit immensely from the increasing internet usage in the country. Overall, it will boost Nigeria’s economic development. According to the World Bank Report published in 2016, increasing internet usage could help boost economic development through reduction in the costs of transactions. One, internet usage helps reduce information

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Thursday 26 September 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions NSE All Share Index

Market capitalisation

NSE Premium Index

N11.721 trillion

Week open ((13– 09–19)

31,924.51 27,779.00

N13.523 trillion

2,320.41

Week close (20– 09–19)

27,698.69

N13.484 trillion

27,698.69

Year Open

Percentage change (WoW) Percentage change (YTD)

-0.29 -11.87

2,241.37

3.00 5.93

The NSE-Main Board

1,456.29 1,115.30 1,105.74

-0.86 -23.20

NSE ASeM Index

NSE 30 Index

NSE Banking Index

NSE Insurance Index NSE Consumer Goods Index NSE Oil/Gas Index

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

778.95

1,102.33 1,131.21

338.12

105.45

521.99

212.64

1,728.08

1,093.14

2,320.41

344.35

110.56

533.52

213.67

1,755.97

1,093.55

989.72

1.84

4.85

2.21

0.48

1.61

0.04

2.57

-29.30

-21.40

-11.66

-18.03

774.30

-0.60 -2.46

2.62 -20.18

-13.68

-12.59

-28.75

Stock market to still wander within negative territory Iheanyi Nwachukwu

he Nigerian stock market seems to stand far from a near term rebound chiefly due to the absence of policy pronouncements that are capable of eliciting investors buy decision on Custom Street. Equities trading commenced this week on a sluggish note as the market’s performance indicator moved further into the negative region. Neither the decision of the Monetary Policy Committee (MPC) nor developments in the global space impacted positively on investors’ sentiment towards Nigerian equities. Till date, stock investors are caught in the web of negative return of approximately -12percent this year. Notwithstanding the negative outlook that still trails the market, it is worthy to note that most value counters currently priced low still offer attractive entry points for investors e yeing capital appreciation and dividend yields. Analysts still pessimistic in their outlook In its September outlook for equities, analysts at Financial Derivatives Company (FDC) simply said “Stock market will dip again”. While noting that the market will witness sustained weak investor sentiment, FDC sees investors still preferring stocks with strong

fundamentals and competitive dividend yields. “We expect the market to remain pressured given global risk-off sentiments and weak domestic participation. Nonetheless, we note that valuations remain attractive while price deterioration has resulted in expected dividend yields on some stocks rising significantly to levels on par with yields on Treasury bills. Hence, we advise that long-term investors consider appropriately timed investments,” Cordros Research analysts said

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in their September 20 note to investors. “This week, the bearish s e nt i m e nt i n t h e ma rk e t i s expected to continue as there are no major catalysts to boost investor confidence, although we note that there is room for bargain hunting,” Afrinvest Research analysts in their September 23 note. While making reference to the market’s negative start this week, FBNQuest analysts in their September 23 note linked it to cautious sentiment towards risky

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asset underpinned by absence of positive market catalyst. “We expect the market to maintain this trading pattern in the next session”, they added. “The Nigerian equities market has been on a bearish trend for the past 18 months. The market has been plagued by several factors including; uncertainties that surrounded the 2019 elections; lower than anticipated economic growth, fiscal challenges, insecurity concerns in some part of the country and disappointing results from most non-financial companies”, said FSDH Research analysts in their recent report. “Nevertheless, the market has witnessed a recent rally with investors seemingly interested in acquiring Nigerian banking stocks as many of the top banks are able to post decent earnings growth despite the challenging operating environment,” FSDH Research stated. Market in review In the trading week ended Friday September 20, the cumulative value of listed equities on the Nigerian Stock Exchange (NSE) depleted by about N40billion. All sectoral indexes closed in the green zone. The positives seen across the sectoral index is an indication of waning sell pressure that hitherto pervaded the Nigerian Bourse. Stock market which had opened the trading week in review with All

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Share Index (ASI) of 27,779 points and capitalisation of N13.523trillion closed the week at 27,698.69 points and N13.483trillion respectively. Week-on-week (WoW), the NSE ASI decreased by 0.29percent while its year-to-date (YtD) return stood at -11.87percent. Month-to-Date (MtD) the stock market is down by 0.63percent. NSE 30 Index which tracks the top 30 companies in terms of market capitalisation and liquidity stood at 1,131.21 points representing weekon-week increase by 2.62percent and month-to-date increase by 4percent. NSE Banking Index at 344.35 points shows weekly increase of 1.84percent and 7.21percent increase in this month. NSE Consumer Goods Index advanced by 2.21percent in the review trading week and 1.41percent this month to 533.52points. NSE Industrial Goods Index has at 1,093.55points rose by 0.04percent in one week while MtD it increased by 0.22percent; NSE Insurance Index closed the review week at 110.56points representing an increase of 4.85percent and 3.47percent MtD. NSE Oil & Gas Index at 213.67points as at the week ended Friday September 20 indicates 0.48percent increase and 7.69percent rise this month; while NSE Pension Index at 989.72 points on Friday rose by 2.57percent WtD and 6.92percent MtD.

Thursday 26 September 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

United Capital Investment Views

Investor’s Square

Airtel drags NSE-ASI down 0.3% week-on-week

•Have you been shabbily treated by your registrar, stockbroke r or other capital market operators? Let us know and investor will help you investigate and report back. E-mail: iheanyi.nwachukwu@businessdayonline.com

n the prior week, the equity market performance was mixed with a bearish tilt, down on 3 of the 5 trading days. The overall bearish performance was spurred by price declines recorded by the Exchange’s third most capitalised stock – Airtel Africa (-19percent). Accordingly, the Nigerian Stock Exchange (NSE) All Share Index (ASI) was down 0.3percent week-on-week (w/w) to close at 27,698.7 points and year-to-date (YtD) return sank deeper into the negative territory to -11.9percent (previously at -11.6percent). Market capitalisation shed N39.1billion in value, to close at N13.5trillion. Notably, activity levels were strong, as average value and volume traded increased by 33.2percent w/w and 10.9percent w/w to N3.7billion and 254.4million units respectively. On a sector basis, performance across the five sectors under our coverage, was skewed towards the positive zone, as all the

of the MPC to affect investors sentiment towards the equity market, in conjunction with the happenings in the global space. Money Market : CBN sustains liquidity tightening stance Overall system liquidity position remained buoyant in the prior week as naira injections into the system were net out by corresponding outflows. The major inflow for the week was in the form of N TB (N179.7billion) and OMO (N356.4billion) maturity that hit the system on Wednesday and Thursday respectively. Accordingly, the Federal Government (FG) and Central Bank of Nigeria (CBN) floated a respective NTB and OMO auction to mop-up both inflows. In all, average interbank funding rates –open buy back (OBB) and overnight (O/N) rates trended southwards, down 16.6percent w/w to close at 7percent. At the primary market s e gment, whil e the FG successfully rolled over 100percent of NTB maturity

sectors edged upwards. The Insurance (+4.8percent) sector led the gainers camp, with the Consumer goods (+2.2percent), Banking (+1.8percent), Oil & Gas (+0.5percent) and Industrial goods (+4percent) also closing in the positive, w/w. The green party was hosted by the following stocks; CONERST (+30percent), NEM (+20.8percent), DANGSUGAR (+15.1percent), UA C N ( + 1 9 . 7 p e r c e n t ) , STANBIC (+22.4percent), ETI (+11.3percent), OANDO ( + 5 . 3 p e r c e n t ) WA P C O (+2.7percent) and CUTIX (+11.4percent). In the Telcos space, MTNN gained, to close at +0.7percent, while Airtel Africa lost a whopping -19percent. Inv e s t o r s’ s e nt i m e n t remains elevated, as market breadth stayed above the waters to close at 1.4x (previously 3.8x); with 39 stocks advancing, while 27 stocks declined. This week, we expect the decision

(N179.7billion) the CBN mopped up 98.5percent of OMO maturity (N351.1billion). Notably, the total demand at both auctions were skewed to the high yielding 364-day bills (bid to cover: NTB – 2.1x and OMO – 2.5x). Additionally, while stop rates were left unchanged at the OMO window (91-day: 11.59percent, 189-day: 11.79percent and 364day: 13.5percent), stop rate at the NTB auction was mixed, up 1.4basis points (bps) on the 364-day paper to 13.3percent, down 4.9bps on the middated bill to 11.75percent and remained flat on the 3-month paper at 11.1percent. Similarly, stop rate at the OMO auction Elsewhere, activities at the primary money market segment sparked rounds of selling interests at the secondary treasury bills market, as average yield was up 23bps w/w to 13.6percent.

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This week, we expect the CBN to maintain its liquidity tightening stance as N506.6billion worth of OMO is scheduled to mature on Thursday. At the secondary NTB market, we expect to see some buying interest during the early part of the week while sentiments are likely to turn mixed to bearish in the later part of the week ahead of another OMO auction from the CBN. In all, we are of the opinion that the CBN will continue to use OMO to mop-up excess liquidity in the system. Bond Market: Investors looking to the September 25th bond auction Market bulls outweighed the bears in the domestic secondary bond market as yields declined marginally across the curve. Thus, average bond yields trended lower by 7bps w/w to close the week at 14.1percent. The performance was buoyed by coupon inflows from FGN 2024s, 2027s and 2036s. However, market participants remained expectant for new issuances at the September 25th bond auction. Nigerian sovereign Eurobond market also witnessed some buying interest in the previous week, as a more dovish tone from global central banks buoyed sentiments towards Emerging and Frontier market assets. Also, the recovery in crude oil prices, up 7.6percent w/w gave the Nigerian notes some fundamental backing. The average yield on FGN Eurobonds declined by 11bps w/w to 6.23percent as yields declined across the curve. Similarly, interest in Corporate Eurobonds turned positive as we saw some buying interest in banks dollar notes. Accordingly, save for SEPLAT’s 2023 note which saw a massive selling pressure, yields on other corporate dollar notes declined marginally w/w. In all, the sell pressure in SEPLAT erased the marginal gains recorded by the other notes, Consequently, average yield for the segment stayed flat w/w at 5.5percent. This week, we expect activities in the secondary bond market to track the outcome of the Sept-19 bond auction as players look to new issuances at the auction, wherein the DMO plans to raise N150billion via re-opened 5-year (N45billion), 10-year (N50billion) and (N55billion) notes.

Economy & markets

Investors exchanged N1.32trn worth of stocks in 8 months …represents 29.4% decline year-on-year Iheanyi Nwachukwu

nvestors exchanged shares worth N1.32trillion on the Nigerian Bourse in the eight months trading period ended August 30, 2019 summary of transactions showed. This value is still far below N1.87trillion which was recorded in the corresponding period of 2018, representing a decline of about 29.4percent. Not less than N594.4billion or 47.29percent of the total value of stocks exchanged in the review period was done by foreign investors while N728.51billion or 52.71percent of the total was by domestic investors. In corresponding eight months period of 2018, foreign investors accounted for N906.86billion or 48.31percent while their domestic counterparts traded N970.31billion representing 51.69percent. The Nigerian Stock Exchange (NSE) said foreigners brought in N278.27billion in 8 months but took away N316.19billion from the same market. Retail domestic investors accounted for N379.05billion while their institutional counterparts exchanged stocks valued at N349.46billion. On a monthly basis, the Nigerian Stock Exchange polls

trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows. Month-on-month (MoM) data shows that as at 30 August 2019, total transactions at the nation’s bourse increased by 7.51percent from N113.47 billion in July 2019 to N121.99 billion (about $398 million) in August 2019. The performance of the current month (August) when compared to the performance in the same period (August 2018) of the prior year revealed that total transactions decreased by 8.85percent. In August 2019, the total value of transactions executed by foreign investors outperformed transactions executed by domestic investors by 4percent. A further analysis of the total transactions executed between the current and prior month (July 2019) revealed that

total domestic transactions increased by 5.39percent from N55.69 billion in July to N58.69 billion in August 2019. Similarly, total foreign transactions also increased by 10.59percent from N57.78 billion to N63.90 billion between July and August 2019. The value of domestic transactions executed by institutional investors outperformed retail investors by 8percent in August. A comparison of domestic transactions in the review month and prior month (July 2019) revealed that retail transactions decreased by 5.97percent from N25.44 billion in July 2019 to N23.92 billion in August 2019. However, the institutional composition of the domestic market increased by 12.95percent from N30.25 billion in July 2019 to N34.17 billion in August 2019.

CIS explains its Executive Conversion Programme

he Chartered Institute of Stockbrokers (CIS) has ascribed its introduction of Executive Conversion Programme (ECP) to academia as the compelling need to attract top notch professionals to deepen research base of Nigeria’s capital market operations. Besides, the strategic move is to leverage the ECP, a temporary window, to attract some of the Institute’s leading examiners into securities market to upscale the quality of human capital. Addressing the second batch of the senior lecturers, mostly professors of accounting and finance at the brainstorming session in Lagos, the President, CIS, Adedapo Adekoje, explained that one of the strategic initiatives of

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the Institute was to advance professionalism in order to cope with the challenges of global competitiveness. Adekoje who congratulated the participants noted that Nigeria’s capital market had become a member of the global financial market and the finance related senior lecturers had an enormous task of marrying theories with practice in other to improve the quality of research that would enhance investment decision by both indigenous and foreign investors. Corroborating him, the Institute’s first vice Olatunde Amolegbe, expressed satisfaction at the level of the participants’ discussion which reflected their deep knowledge of the financial market. “The fact that you all @Businessdayng

have significant pedigree in finance related discipline and research, we urge you to view this training as a practical approach to your theoretical background. This will further integrate you into the business of securities market and also impose on you the necessity to conduct research that will bring about an array of investment opportunities in the capital market, said Amolegbe The Institute’s Registrar and Chief Executive, Adedeji Ajadi, stated that the whole idea was to raise the bar for professional Securities Dealers in the area of research and development as the Institute would continually collaborate with the tertiary institutions to attract students into the market as part of the strategy to grow its membership base.

Thursday 26 September 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Analysis

AG Leventis (Nigeria): Before you delist from NSE Iheanyi Nwachukwu

wo days ago, A G Leventis (Nigeria) Plc berthed with a surprising notice to the Nigerian Stock Exchange (NSE) that Boval S.A acting on behalf of itself, Leventis Holding S.A., and Leventis Overseas Limited (together, the “Core Shareholders”) approached the Board of Directors of the Company with an intention to acquire the shares held by other shareholders of the Company at an offer price of 53 kobo per share, and subsequently delist the Company from the Nigerian Stock Exchange. The company, listed on the diversified industries subsector of NSE Conglomerates Sector has shares outstanding of 2,647,290,305 units valued at N688.295million. The offer price of 53 kobo represents a premium of 85 percent to the 60-day volume weighted average share price and 104 percent to the Company’s closing share price of 26kobo on September 23, 2019. The proposed transaction will be implemented under a Scheme of Arrangement in line with section 539 of the Companies and Allied Matters Act, Cap C.20 Laws of the Federation of Nigeria, 2004. Proposed transactions still subject to NSE, SEC approvals The proposed transaction is still subject to the review and clearance of The Nigerian Stock Exchange and the Securities and Exchange Commission (SEC) as well as the approval of the shareholders of the Company. The terms and conditions of the Proposed Transaction will be provided in the Scheme Document which will be dispatched to all shareholders following the receipt of the “no-objection” of the regulators and an order from the Federal High Court to convene a Court-Ordered Meeting. “Further developments will be communicated to shareholders in due course. A G Leventis (Nigeria) Plc shareholders are advised to exercise caution in dealing in the company’s shares until further information is provided”, the company said in a letter to the NSE signed by Bola Adebisi, Company Secretary/Legal Adviser. Equity ownership structure of 5percent and above as at June 30, 2019 Leventis Holding S A owns 1,510,616,882 units in AG Leventis (Nigeria) Plc, which represents 57.06 percent of the company’s

share capital. Also, Boval S A holds 640,537,970 units or 24.2percent while Leventis Overseas Limited holds 177,198,452 units or 6.69percent. The ultimate holding company is Leventis Holding SA, a company registered in Luxembourg. The company has no ultimate controlling party as the ownership of the holding company is spread across a number of trusts, with a variety of appointed trustees. A Below Listing Standard company A G Leventis (Nigeria) Plc carries the NSE stigma of ‘Below Listing Standard’ assigned to listed companies that default in their post listing rules. Deficient in free float As a Main Board listed company, A G Leventis (Nigeria) Plc falls short of required minimum freefloat of 20percent of its issued and fully paid up shares. Companies listed on the Exchange are required to maintain a minimum free float for the set standards under which they are listed in order to ensure that there is an orderly and liquid market for their securities. The free float requirement for companies on the Main Board is a minimum of 20percent of the issued and fully paid up shares. The company only has 11.80percent www.businessday.ng

free float and was given till October 19, 2020 to meet up with the post listing requirement. Free float represents the portion of shares of a company that are in the hands of public investors as opposed to locked-in shares held by core shareholders. This implies that reasonable number of the company’s shares have since been locked-in the hand of its promoters. About the company The history of A.G. Leventis (Nigeria) Plc started when Chief A. G. Leventis himself formed a trading company known as A.G. Leventis & Company Limited in Ghana in 1937. Originally, the main activities of the Company were produce

“

The company only has 11.80percent free float and was given till October 19, 2020 to meet up with the post listing requirement

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buying, importing and wholesaling of textile goods. Over the years, the Company expanded into various parts of Nigeria investing in properties and also in general trade and the sales and service of motor vehicles. The Company later devolved into Leventis Motors Limited (established in 1958), Leventis Stores Limited (1965), Leventis Technical Limited (1972) whilst it retained ownership of valuable freehold and leasehold property throughout the country. Under and by virtue of a series of Mergers and Schemes of Arrangement, the afore-mentioned companies merged with A. G. Leventis (Nigeria) Plc. and they were dissolved and the Group acquired its current name. Today, the A.G. Leventis group is the world`s leading manufacturing and distribution corporation in Nigeria and West Africa. It provides its customers with a variety of products and services, in several various industries, such as power and gas products, consumer food pastry and bakery products, real estate properties, hotel accommodation services, commercial vehicle, sales and after sales services, and Printer ink supplies. The company operates through numerous subsidiaries and affiliated @Businessdayng

companies, including Leventis Foods Ltd, Leventis Motors, Abuja (Capital Motors) Limited, Mainland hotel, Leventis Real Estate, Druckfarben Nigeria Limited, and Chrisstahl Nigeria Limited. Defaulted in filing financials A. G. Leventis (Nigeria) Plc had defaulted in filings its audited accounts for the period ended December 2017. After submitting the result in April 2018, the company was fined N2.7million, according to the NSE X-Compliance report which is a transparency initiative of the Nigerian Stock Exchange designed to maintain market integrity and protect investors by providing compliance related information on all listed companies. Going concern status The Group has been making losses in the last three years. The Directors however, believe that there is no intention or threat from any source to curtail significantly its line of business in the foreseeable future. Thus, the secondquarter (Q2) and half-year (H1) financial statements were prepared on a going concern basis. Financial scorecards (H1’19 and Full Year 2018) The group’s unaudited consolidated and separate statement of comprehensive income for the half year (H1) ended June 30, 2019 shows its revenue decreased to N3.96billion from a high of N6.91billion in the corresponding half year period of 2018. Gross profit also moderated to N926.703million from N1.495billion in H1’18. The group reported H1’19 loss before tax (LBT) of N415.136million down from N802.800million LBT in the corresponding H1’18 period. It closed the H1’19 period with Loss After Tax (LAT) N282.292million as against N545.904million Loss After Tax in H1’18. The group’s loss per share stood at 10.40kobo against 20.44kobo loss per share in corresponding H1’18 period. In the financial year ended December 31, 2018, A.G. Leventis (Nigeria) Plc reported 7percent increase in group revenue to N12.26billion as against N11.48billion in 2017 financial year. Its gross profit grew by 821 percent to N2.74billion against N298.244million in 2017. The Group’s profit before tax (PBT) in 2018 financial year stood at N620.54million as against loss before tax (LBT) of N3.83billion in 2017; while profit after tax (PAT) of N876.188million was recorded in 2018 against loss after tax (LAT) of N3.47billion.

Thursday 26 September 2019

BUSINESS DAY

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Thursday 26 September 2019

BUSINESS DAY

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Thursday 26 September 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

company

Consumer goods firms may face cash crunch BALA AUGIE

“

ash is king” and a company that does not generate cash over the long term is on its deathbed. That means it could be placed on a life support machine, and the doctor may have to pull the plunge, which means the company has seized to exist in the foreseeable future. A company uses cash to honour obligations, pay dividend, and fund future expansion. The sharp decline in the purchasing power of consumer is undermining the revenues and cash flow flows of consumer goods firms, raising concerns about the working capital position of companies that need cash to run their business. Nigerian consumer goods firm are not generating enough cash compared to net income, as their cash conversion ratio (CCR) are in the negative territory, which means they have liquidity challenges. For instance, the average

The resulting ratio from this calculation can be either a positive value or a negative value. This can be summarized as: if the ratio is anything above 1, it means that the company possesses excellent liquidity, while anything below 1 implies it’s a weak CCR. Anything negative suggests

industry CCR is -1.80, with major laggards being Unilever, Honeywell, and Nascon Allied Industries. The Cash Conversion Ratio (CCR), also known as cash conversion rate, is a financial management tool used to determine the ratio of the cash flows of a company to its net profit

the company is incurring losses. “Cadbury had some challenges with its intermediate Cocoa product, snd that would have flowed into its cash flows. Dangote Sugar had disappointing results this quarter, which would have also flowed into its cash flows,” said Omotola Abimbola, Macro and Fixed Income analyst with Chapel Hill Denham Limited. A breakdown of the figures showed some firms bucked the trend, Nestle Nigeria, Flour Mills, and Nigerian Breweries, recorded CRR of 1.26, 1.63, and 2.0. Companies are operating in harsh operating environment, while a hike in fuel price, devaluation of the currency, and inflationary pressures have squeezed consumer wallets. Nigeria’s economy has been growing sluggishly since the country exited a recession in 2016, while over 50 percent of a population of 200 million live on less than $1.29 a day. According to a recent report by the National Bureau of Statistics (NBS), Nigeria’s gross domestic product

(GDP) expanded by 1.94 percent in the second quarter of (Q2-2019), from the revised first quarter (Q1-2019) print of 2.10 percent. The trade sector which comprises of whole and retail trade contracted by 0.25 percent in the second quarter (Q2) of 2019, after recording three positive growth rates since the third quarter of (Q3 2018). More worrying, manufacturing sector contracted by 0.13 percent from the 0.81 percent expansion in Q1-2019. The contraction contradicts evidence from manufacturing PMI data published by the CBN in the period which suggested that activities continued to expand, albeit at a weaker pace. Companies are not utilizing cash in generating enough profit and revenue, raising concerns about their ability to breakeven. The cumulative operating cash flow from operations for the 10 largest firms quoted on the floor of the bourse fell by 24.63 percent to N82.43 billion in June 2019 from N109.38 billion the previous year.

The major laggards are: Unilever with negative cash flow from activity of 11.79 billion; Honeywell (1.09 billion); and Nascon Allied, -N309.12 million. Companies are struggling with deteriorating margins, which hinders them from delivering higher returns on shareholders return in form of higher dividend and share appreciation. Analysts see an improvement in economic activities if Federal Government implements structural reforms, but the Buhari led administration seems not to be nimble enough to break the shackle of poverty. During economic boom, people open their purse spring, while manufacturers and retail record increased sales and cash flow, paving the way for them to acquire more assets to fund future expansion plans. Consumer goods firms will continue to be ensnared in a dungeon, so long as the country is bedevilled with infrastructure deficit. The Apapa grid lock has been a tsunami, disrupting production as raw materials are trapped at the ports.

CONSUMER SPENDING

Beer makers shift to Can & PET packs as consumers seek convenience, cheaper brands OLUFIKAYO OWOEYE

he sharp decline in the purchasing power of consumers in Africa’s most populous economy is forcing beer makers to re-strategize on their product packaging and sizes by churning out smaller packaged drinks in PET bottles and cans. A drink Can or beverage Can is a metal container designed to hold a fixed portion of the liquid such as carbonated soft drinks, alcoholic drinks, fruit juices, This new shift seems to have won the heart of consumers and has also seen makers double down on their effort to capture more market in both the mainstream segment of the market and value brands. Diageo owned Guinness in its 2019 full-year result for

the period ended 30th June noted that the bottle format drinks is losing market share to lower margin Can and PET formats in both beer and malt category “The bottle format in returnable glass tends to be higher margin in our

business and in the total business actually in the categories in which we operate, however, we saw that overall non-returnable glass-like PET and Cans grow much faster than the returnable glass format and as you know from various

conversations we’ve had cans and PET tend to attract a much lower growth margin than we have in returnable glass,” the management noted. Nigerian Breweries Plc, Nigeria’s the largest brewer by market size, during its

annual capital market forum revealed plans to introduce new 33cl sleek packages in Can to aid volume growth. It had earlier introduced 33cl Cans for Heineken and Tiger brands to support sales. International breweries’ Trophy brand is also enjoy-

Source: Guinness Investor Presentation www.businessday.ng

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ing massive patronage by consumers with the introduction of 500ml Trophy drink. Adekemi Ayoola, owner of a retail outlet in Ikeja said there has been a surge in the demand for Can drinks by consumers. “It is selling fast now because some people want drinks they can keep in their hand or even in their pockets and drink at their convenient time,” According to Ayoola, the new Can introduction has solved the problems associated with glass bottles as many consumers damage their glass bottles while drinking with some not returning the glass bottles. Onyeka Obi, a Lagosbased manufacturer said the paradigm shift by beer makers to can packaging opens a new business opportunity for willing investors in the country.

Thursday 26 September 2019

BUSINESS DAY

Retail &

consumer business

COMPANY

Unilever, Pepsico revive partnership, introduce new ready to drink Lipton Tea Drink …to challenge Coca-Cola-owned Chi’s Ice Tea drink OLUFIKAYO OWOEYE

oft drink giant Pepsico and Fast Moving Consumer Goods (FMCG) giant, Unilever, are resuscitating their joint partnership with the introduction of Lipton Ice Tea into the Nigerian market. The Lipton Ice Tea was launched in 2003, however, it turned out that the product was ahead of its time as consumer insights revealed there was a gap between intent and action when it comes to consumption of healthy beverages.

acquisition of Chi Ltd, three years after buying 40percent stake in the juice and snack company. Chi also has Chivita Ice Tea Lemon brand in the Ice Tea segment of the market. CHI Ltd has continued to dominate ready to drink ice tea segment, the company leverages on its strong brand equity in juice, with consumers seeing its ice tea brand as an extension of the portfolio. In 2003, PepsiCo and Unilever formed a global 50:50 joint venture - Pepsi Lipton International - to manufacture and market Lipton Ice Tea variants in 67 countries.

It was reintroduced with increasing health awareness particular, young urban adults looking at healthier options such as ice tea among beverage consumers. The Lipton Ice Tea drink comes in a PET bottle with variants such as Peach, Lemon, Mango, and Green Tea and Orange. The joint venture company will use PepsiCo’s bottling facilities and distribution networks and Unilever’s famous tea brand and recipe. The decision to relaunch the Lipton Ice Tea comes at a time when rival CocaCola completed the full

consumer spending

Border closure brings untold hardship on Nigerians as food prices soar BUNMI BAILEY

igerians paid more on food commodities last month on account of President Muhammadu Buhari’s directive to have the country’s borders partially closed which consequently stoked food prices. Average prices of most consumed food items by the country’s populace rose by 1.64 percent to N591.15 in August from a 30-month low of N585.71 in July, even as 31 of 43 food items recorded uptick last month, according to data by National Bureau of Statistics. “The border closure has made people hoard food items thereby causing food scarcity,” said Mogaji Afri-

can Farmer, Head of Agriculture & Agro-Allied Group at Lagos Chamber of Commerce & Industry. “S i n c e t h e c u s t o m s closed the border, people have taken laws into their hands by increasing their prices of food items because there is no association that regulates food prices.” he noted. About 80 percent of analysts polled by BusinessDay cited border closure, not seasonlity, as the chief cause of higher food prices in August. On a month on month basis, the average price of an agric egg medium-sized rose by 5.7 percent to N40.6 in August from N38.4 in the previous month, the average price of a bottle of groundnut oil rose by 2.3 percent to N557.4 from N545.3, chicken

wings and feet rose by 1.68 percent and 3.34 percent respectively. The cost of gari yellow, sold loose increased by 8.62, ripped plantain increase by 3.60, and yam tuber increased by 11.2 percent. Furthermore, the aver-

age price of a dried fish sardine increases by 0.47 to N1, 373.1 in August. For onion bulb, it rose by 6.5 to N206.0 from N193.5 and tomato (1kg) increase month-onmonth by 9.9 percent. “The restriction from the borders has pushed

prices up. Food items like apples, tomatoes, chicken, fish, pineapples, turkey, rice, palm oil, etc are imported through the Benin border,” Aboidun Olorundenro, Operations Manager, Aquashoots Nigeria said. Earlier last month, President Muhammadu Buhari had announced the closure of the border, saying that it would avert Nigeria from being a dumping ground for imported products, and would also boost patronage of locally made products. The directive was announced towards the end of August, making it somehow ineffectual to affect commodities prices as Nigeria’s annual inflation decelerated for the third consecutive month to print at 11.02

Team Lead: Bala Augie, Olufikayo Owoeye; Analyst: Bunmi Bailey; Graphics: Fifen Eyemisanre Famous www.businessday.ng

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percent in August compared with 11.02 percent in July. Food inflation hit a 12-month low of 13.17 percent in August. The country’s statistics office said moderation in inflation was driven by favourable harvest and weak consumer demand but analysts say inflationary expectation is relatively high given the border closure and foreign exchange restriction on food item and headline inflation might climb higher in September. “The government has done their part but the associations should come in and control the prices that they can be consistent and get more local investors to play in that space if not consumers will continue to be taken advantage off,” Mogaji said.

Thursday 26 September 2019

BUSINESS DAY

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Thursday 26 September 2019

BUSINESS DAY

Corporate Social Impact

How Tiwatope Savage helped bring down polio Stories by ONUWA LUCKY JOSEPH

he former first lady of Mavin Records, Tiwa Savage, is also a hardworking Rotary Polio Ambassador, amongst her many other social responsibility commitments. Her role requires that she be on the road sometimes with the crew for vaccinations and on-the-spot assessment of project updates. Of course, this is usually done with the media crew in tow. That’s her job, and she takes it seriously. She can be heard in one of the

promotional videos expressing her belief in “our collective strength” as

a people. It is that strength and resilience, despite the setbacks, that’s seen Nigeria been free of any new incidence of the wild polio virus for the past three years. That’s a whole lot to be grateful for. Before the polio vaccine was introduced, polio killed thousands every year. However, it’s most obvious debilitating feature is the permanent disability that’s usually the aftermath of its viral strike. Aside individuals like Tiwa Savage, the country has to especially thank the Rotary Club which has been unrelenting in

its battle against the scourge. The Bill & Melinda Gates Foundation have also been steadfast, not to forget UNICEF, CDC and their strong local ally, The Dangote

Foundation. These have been the bulwark that saw Nigeria triumphing over the disease and which we believe will stand firm against its resurgence.

CLIMATE CHANGE

Why the youths want to wrest the future from the elders….

onald Trump is not a spring chicken. And he clearly feels no need to be chicken-hearted about climate change. If the science happens to be true, maybe it’s still some way off in the future. However, he has said time and again that the whole thing is a hoax, (and might we add), of mega proportions. Mr. Trump is of the view that such stories are fabricated by socialists to keep hard working capitalists and industrialists from their cherished dollars. But he is not the only one. There are many more people who say there’s nothing abnormal about the phenomenon of global warming. They say it’s a cycle the world goes through every now and then, getting into the warm tunnel at some point only to reemerge into the fresh and balmy climactic conditions under which most of life on earth feels and thrives better. Big Oil does not like the findings about climate change. Neither does the manufacturing sector. Even corporate agriculture does not fancy its chances under a new regime that’s stridently anti greenhouse gasses. There are numerous well-heeled opponents arrayed against the rapidly growing proponents of the climate change theory. There’s also an age divide. The older folks would rather leave things as they are while the younger generation, idealistic as every younger generation tends to be,

son. She wants the elders to sit up and take notice. None of that helpless childish mewing for her. And none of that ‘she’s just a child’ comments by the elders. Greta is such a force of nature, whether you agree with everything she says or not, that you cannot but listen to what she has to say. Why is she such a fiery activist? Hear her from “No One is too Small to Make a Difference”, a collection of her speeches: “Some say we should not engage in activism.

even India and China that are big players in the new direction of renewable energy are still all fired up by coal? What do they do when the United States, one of the countries most responsible for climate change registers its intention not to show up at the UN Climate Summit? And this alongside fellow absentees like Jair Bolsonaro of Brazil and Scott Morrison, the Australian Prime Minister who is aggressively pro-coal? Although Donald Trump even-

Greta Thunberg addressing youth activists

Antonio Guteres United Nations Sec Gen

wants to disrupt the flow and stem what they believe is a malevolent tide. And they are done talking. Now they are taking matters into their own hands seeing as the old may not budge unless they see a movement massed against the old ways. Last week, Greta Thunberg, the 16 year old Swedish climate change activist, sailed into New York, after two weeks on the high seas; without leaving any carbon footprint, (aboard the Malizia II,

Youth Activists on climate change www.businessday.ng

a yacht that has its own solar panels and hydro generators), to join thousands of other young people to protest the deleterious state of the world’s climate and how the older generation is further pushing humanity to stare down the fiery abyss. So the youths declared Friday September 20th, 2019, mega Climate Strike day. In more than 160 countries of the world, they skipped classes to register their angst. The Friday strike had been going on before now, but this one was intended to be global. Greta, meanwhile, has taken a one year sabbatical, so to speak, to concentrate on the protest, as it would be difficult to combine her activism with school work. The 20th September edition was seen as key in view of its closeness to the United Nations Climate Summit. The strikes are also supposed to happen all through between 20th to 27th September in what has been dubbed the Earth Strike in more than 150 locations worldwide. Greta’s Twitter post on the day was rather upbeat: “Over 4 million on #ClimateStrike today. In 163 countries. And counting... If you belong to the small number of people who feel threatened by us, then we have some very bad news for you: This is just the beginning. Change is coming - like it or not. #FridaysForFuture.” Greta’s language is decidedly militant. And this she, and her supporters think, for good rea-

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Oladosu Adenike 2nd from right and other Nigerian climate strikers

Instead we should leave everything to our politicians and just vote for change instead. But what do we do when there is no political will? What do we do when the politics needed are nowhere in sight?” What do they do when Donald Trump attends the Climate Change Conference for 15minutes without saying anything? What do they do with Bolsonaro at the helm in Brazil while the Amazon is up in flames? What do they do when @Businessdayng

tually made a 15minute impromptu appearance, it was more for face saving or is it ‘face-showing’ than for anything more substantial. Don’t forget that he pulled the US out of the Paris Accord upon taking power and has since stayed focused on slashing environmental regulations that predated his time in office. Understandably, the movement has its many opponents, as Continues on Page 26

Thursday 26 September 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

That MTN Drug Abuse Campaign –

‘Drug Abuse is a One Chance Bus’ ONUWA LUCKY JOSEPH

t used to be that drug abuse was a fringe problem amongst Nigeria’s young people. While it was always there, as it does exist in every other society, Nigerians were generally considered low consumers and more of couriers who ferried from production centres to areas of high drug consumption. However, in recent years, the narrative has changed drastically. Owing in no small measure to peer influence, parental neglect, joblessness, and a growing sense of frustration, amongst other factors, young Nigerians now make up the bulk of the ever swelling ranks of Nigerian drug abusers. Only last year, some pharmaceutical companies were closed down briefly, government having identified them as manufacturers of some of the drugs which, though legitimate, had become the major sources of drug abuse. High on this list are Codeine and Tramadol. There are stories told, from all over the country, of young people who live life in a funk owing to the consumption of copious amounts of codeinebased cough mixtures as well as tramadol. However, as with many Nigerian problems, it has recessed somewhat (in the public consciousness) even though in reality the issue is exacerbating rather than abating. It has so become so bad that even children in secondary school are high on cheap and not so cheap drugs. It’s very bad in the Niger Delta area but also in the Northern part of the country, Kano being a prime centre in view of its population and the social dislocation occasioned by unemployment and an army of young people, male and female who have nothing worthwhile to do with their lives. While not a single celebrity

Michael Jackson

death in Nigeria has been attributed to drug abuse, the reason that is so is in large part our tendency to not speak ill of the dead. If there’s the likelihood of causing any embarrassment to the memory of the dead or to his family that’s still alive, every effort is made to shield the truth from the public. However, in the West, with its celebrity culture and corresponding culture of openness and transparency, it’s on record that lots of celebrities have had their lives and promising careers cut short by succumbing to the lure of drug

Jimi Hendrix

abuse. That trend has been on for quite a while. Below is a very short list that captures nowhere near 5% of deaths from drugs. Dinah Washington, died in 1963, Secobarbital and Amobarbital (39years old), Jimi Hendrix, 1970, Barbiturate (27) Janis Joplin, 1970, Heroin (27) Sid Vicious, 1979, Heroin (21) John Belushi, 1982, Unknown (33) Kurt Kobain, 1994, Suicide, while high on heroin (27)

Ike Turner, 2007, Cocaine (76) Michael Jackson, 2009, Propofol and Benzodiazepine (50) Whitney Houston, 2012, Cocaine (48) Prince, 2016, Fentanyl (57) Truman Capote, 1984, multiple drugs (59) Rodney King, 2012, drowned under the influence of alcohol, cocaine, marijuana, (47) Gerald Levert, 2006, multiple drugs (40) Even though thousands of

Whitney-Houston

ordinary citizens also die of drug abuse, the fact that celebrities routinely make the news as a result of death caused by drugs is explanatory of one major cause of the drug epidemic. The very folks that our young people look up to, that they want to be like live high and flashy. They get the best girls and the best guys. They wear the best clothes, own the best homes, and at least from the characters they depict onscreen and online own some lovely yachts and vacation in glamorous locations.

Kurt Cobain

It’s the life our young folks want to live. And why not? What is interesting about the daily misery that they encounter at home and outside their homes? Tackling the menace would definitely require the combined efforts of players at different strata of society, including government, civil society and the general citizenry. One group however that needs to up its game in this regard is the organised private sector. Even though Nigeria is bursting at the seams with young people, they need to stay healthy mentally and physically in order to be able to contribute to any sector. Seeing therefore as the demand for young workers is bound to rise, the corporate sector share of voice in the war against drugs needs be much higher. That’s why at Corporate Social Impact CSI, we cannot but commend MTN for its wellcrafted video against drug abuse. It is very creatively executed and captures the demographic in a strong way. We expect more corporates to get involved in this fight, because with drugs come a raft of other vices that societies can’t cope with should they be allowed to expand. We expect especially the pharmaceutical sector to be stronger in this campaign. In the same way that the alcoholic beverages have the Don’t Drive and Drink Campaigns, it is important that the pharmaceuticals acting either jointly or as separate entities reach out via media and other advocacy campaigns to the demographic with compelling reasons why they must not abuse drugs. Advertising and other communication agencies are on standby to help play a big role by ensuring that creative and compelling messages are crafted which address the issue and which ultimately help Nigeria bring down the numbers through prevention rather than high cost cure.

Robert F. Smith’s expands his Morehouse Pledge…Now $34m

our months ago, in the course of his commencement speech at Morehouse College, a historically black college in the United States, Billionaire Robert F. Smith pledged to pay off the education loans of the institution’s 2019 graduates. It was a gesture celebrated worldwide especially in the black community where such gestures aren’t known to come every day. But now Mr. Smith is taking it further. Beyond settling the loans incurred by the students, he has now also stated his readiness to offset the educational loans taken out by the parents of the students. His gift, in view of this new addi-

who understands the financial and emotional toll that loans take on students and parents. Morehouse President, David A. Thomas, quoted in Washington Post, put it succinctly: “It says a lot about how Robert came to understand the issues of affordability and student debt. Our parents take out loans, often to the tune of $50,000 or more. And potential default on those loans affects the ability to finance other family needs. We know there is a wealth gap for African American families, so this gift is very significant.” Robert F.Smith

tion, now adds up to $34million. The hurrah is resounding evwww.businessday.ng

erywhere as parents and students celebrate this thoughtful man

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(For feedback, contact us at csr momentum@gmail.com/ 08023314782) @Businessdayng

Why the youths want to wrest the future... Continued from Page 25 was stated earlier in this piece. The evidence for climate change, however, is near overwhelming. According to Wikipedia, based on statistics from NASA, NOAA and the Met Office in the UK, the last 18 warmest years on record, have occurred since 2000 with 2016 being the warmest year ever. Top 10 warmest years (NOAA) (1880–2018) Rank Year Anomaly °C Anomaly °F 1 2016 0.94 1.69 2 2015 0.90 1.62 3 2017 0.84 1.51 4 2018 0.77 1.39 5 2014 0.74 1.33 6 2010 0.70 1.26 7 2013 0.66 1.19 8 2005 0.65 1.17 9 2009 0.64 1.15 10 1998 0.63 1.13 The United in Science report claims that accelerating climate impacts from melting ice caps to sea-level rises and extreme weather were to blame for the record as the global average temperature increased by 1.1°C above pre-industrial (1850-1900) times and 0.2°C warmer than 2011-2015. The report, which will be presented to world leaders who attend the climate summit states that “For the four year period, average temperatures were the

highest on record for large areas of the United States, eastern parts of South American, most of Europe and the Middle East, northern Eurasia, Australia, and areas of Africa south of the Sahara.” Naming July 2019 as the hottest month on record globally, the United in Science report also noted that greenhouse gas concentrations in the atmosphere have increased to record levels and will lead to catastrophic global warming if nothing is done to stop it. “Climate change causes and impacts are increasing rather than slowing down,” said WMO Secretary-General Petteri Taalas, who is co-chair of the Science Advisory Group of the UN Climate Summit. That is why the kids are restive. They want and need more done in quick time. No more shifting on the same spot. Progress must be recorded on every front. It’s the only way to give the younger generation and their progeny any chance of living in the same world that they believe is being despoiled by their elders. “Undeniably, climate change is a human-induced phenomenon.” –President Muhammadu Buhari

Thursday 26 September 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

Taxtech, AO2 Law’s first data protection session takes on proposed NDPR Stories By FRANK ELEANYA

he Nigeria Data Protection Regime (NDPR) which is the countr y’s version of the EU’s General Data Protection Regulation (GDPR) was the highlight at an interactive forum organised by Taxtech in partnership with AO2 Law, on Wednesday. The NDPR 2019 was designed by the National Information Technology Development Agency (NITDA) with the aim of safeguarding the rights of people to data privacy, foster safe conduct for transactions involving the exchange of personal data, to prevent manipulation of personal, and to ensure that Nigerian businesses remain competitive in international trade through the safe-guards afforded by a just and equitable legal regulatory framework on data protection and which is in tune with best practice. It was released 25 January. At the time, NITDA projected that the regulation will not only stem the wanton abuse of data, but also improve the global image of the Nigerian business environment as well as lead to the creation of 300,000 jobs. While the NDPR is yet to become a legislation, having not passed through the legislative process, NITDA has set an October deadline for data audit of

L - R: Bidemi Daniel Olumide, Partner & CEO Taxaide/Taxtech, Olufemi Daniel, NDPR Desk Officer, NITDA, Gbeminyi Shoda, company secretary, VFD Group, Abiola Sanni, chairman board of directors, Taxtech, Edward Popoola, CTO Cowrywise, Nkem Isiozor, legal manager, Intellectual Property & Technology, Nigerian Stock Exchange, Chinedu Anaje, managing partner, A02 Law, and Joseph Udonsak, tech associate, Taxtech

companies that control data and March 15, 2020 for annual data audit filing. During his presentation, Olufemi Daniel, desk officer, NDPR, said data protection is beyond obeying the law but about individuals feeling secured. The NDPR therefore applies to all transactions intended for the processing of personal data, to the processing of personal data notwithstanding the means by which the data process-

ing is being conducted or intended to be conducted in respect of natural persons in Nigeria. The NDPR is related to the EU GDPR in many ways. First, it makes provision for the individual’s permission to be obtained before the data is put to use. Also like the GDPR, the NDPR provides that the individual or subject has the right to receive the personal data concerning him or her which he or she

has provided to a controller, in a structured, commonly used and machinereadable format and have the right to transmit those data to another controller without hindrance from the controller to which the personal data have been provided. This is known as data portability. Other areas of similarity between NDPR and the GDPR include the privacy by design, right to be forgotten, definitive consent,

information in clear readable language and limits on the use of profiling. There are clear differences between the NDPR and the GDPR. For instance, where the punishment for non compliance was 4 percent of global revenue in the GDPR, it is only 2 percent in the NDPR. It should also be noted that the NDPR also allows conflict resolution through NITDA before resort to the court.

“We are baby steps ; learning as we go along,” Daniel said. “The GDPR has had over 30 years to get to where it is and we are just starting. If we take everything in GDPR, we will be coming across as too hard on companies.” He also disclosed that NITDA has plans to inaugurate a data breach team that will ensure that the appropriate punishment are meted out to organisations who do not comply. Despite Daniel’s assertion of “baby steps”, some leaders in the private sector who participated in the session said the NDPR needs a closer interrogation. “We need to critically look at how we apportion blame in terms of data breaches,” said Edward Popoola, chief technology officer at Cowrywise, a fintech company. Big Fintech companies, notable hospitals, NIMC, and stock brokers fall under the ‘red’ (high risk) category. Banks, telcos, CBN, PFC/PFA, and Big Insurance companies are under the ‘black’ (highly risky) category. “NITDA gives organisations an opportunity to redress in a court of law, there are numerous cases of that nature in Europe and North America,” Chinedu Anaje, managing partner, AO2 Law said. “We expect there will be an increase in data breach cases in the future.”

Ogombo community school get facelift from broadband infrastructure firm

tudents in Akinlade Primary School, O ku n M o p o c a n look forward to improved learning experiences with the upgrade of facilities in the school, including the renovation of 10 classroom blocks, provision of 80 new classroom furniture and educational materials, installation of iron windows and doors. MainOne, one of the biggest broadband infrastructure companies in West Africa, noted in a statement that the gesture was part of its contributions to uplifting the standard of education in its

local communities. The company has also been supporting the school since 2011. “It is a school that has a special place in our hearts as, over the years we have been invested in identifying their various needs, exploring their required provisions and witnessed the academic growth of the pupils,” Tinuola Ipadeola, head of Corporate Services, MainOne said. The initiative is also part of the company’s corporate social responsibility (CSR) goals, which aims at building a stronger connection with the

Ogombo. The renovation of the school follows previous years of investment into the school such as; the replacement of the school gate, donations of over 1000 library books and several teaching materials. “This shows that we are committed to nurturing younger generations of innovators and technology giants through the provision of basic educational materials and conducive learning environment, one community at a time,” Gbenga Adegbiji, general manager, MDXi (MainOne Subsidiary).

In his response, Gabriel Aborisade, Head Teacher of Akinlade Primary School, expressed his appreciation by stating “We commend MainOne on this laudable transformation. They have been consistent in their support of our school over the years and we appreciate that our pupils have been inspired to study harder and allowed to learn in a school they are proud of.” MainOne’s commitment to the community schools was commended by SUBEB representatives, who urged the company to continue its good

work while encouraging other organizations to emulate MainOne by adopting more community schools. Also, in attendance were the leaders and members of the community. Since 2011, MainOne has been involved in the development of Primary Schools in Ogombo, Okun Ajah and Okun Mopo with yearly donations of study materials including school bags, text and exercise books, and renovation of critical infrastructure facilities. The company’s contribution to the development of

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these schools forms a part of its Corporate Social Responsibility focus on Education and Information and Communications Technology. MainOne is also a leading sponsor of the annual Software Competition organized by the Institute of Software Practitioners of Nigeria; the T.E.N.T gathering of Paradigm Initiative Nigeria, the Girls-InICT Day, W-TEC Girls, as well as ideation and innovation initiatives, such as Demo Africa, the Co-Creation Hub, and L5Lab, Edo Innovation Hub among others.

Thursday 26 September 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

‘There should be engagement between government and IOCs over PSC review’ Rethinking energy sector reforms OLA ALOKOLARO is a partner and head of the energy and infrastructure group at Advocaat Law Practice. He advises clients in the oil, gas and power industries. In this interview with OLUSOLA BELLO, he spoke on various issues shaping the sectors. Excerpts

hat is your nam e an d what do you do? My name is Ola Alokolaro and a partner with Advocaat Law Practice How long have you been in practice, focusing on oil and gas related issues? I have been practicing law for over two decades working with participants in Nigeria’s energy sector for roughly the same number of years. What are your thoughts about the Petroleum Industry Bill and how do you think we can get out of the logjam? It is quite unfortunate that we find ourselves where we are, given that most oil producing countries have implemented their oil and sector reforms. That said however, it is my firm belief that with the 9th assembly, the reform bills should scale through and receive presidential assent. My understanding is that Mr. President has made the reasons why he did not assent to the Petroleum Industry Governance Bill (PIGB) known to the lawmakers and the necessary amendments have been made to the Bill. We have also been assured by the Senate President that the Bill will be passed under his leadership. The key factors that have caused the delay are the fiscal regime and the host community issues. How do you think the stakeholders can go round these issues? Well, first and foremost, I think we have come a long way in terms of resolution of the Host Community issues and you will probably observe and agree that there has been minimal disruption to crude oil production activities in the oil-producing communities due to host community issue. Whatever disruptions there has been, has been through vandalism as opposed to community agitation. That said, it is still important that the reform bills are passed to

provide some legal backing to the various structures that the government wants to put in place for the a harmonious relationship between host communities and oil companies. In terms of the fiscal bill, the key objective of any resource rich nation is the maximization of revenue from its natural wealth and that is no different for Nigeria. The government’s key objective is to derive as much revenue from its natural resources for its people. There has been engagement with the international oil companies who have expressed concerns with the proposed fiscal regime as this would limit their returns on investment but ultimately this will be resolved. Considering that PSC has been very contentious, how do you think it can be resolved? I think technolog y and knowledge has come a long way since the negotiation and execution of the PSCs particularly those related to the deep offshore acreages. There has to be engagement between the government and the IOCs in respect of the proposed review of the PSC’s and I am sure there would be a resolution of any differences. I understand you are also

active in the legal aspects of electricity; can you tell us more about the (recent) review of electricity tariff? I am sure you are aware of the liquidity challenges of the electricity value chain. For the industry to work seamlessly, consumers have to pay electricity real price of electricity which is not what we currently have hence the liquidity challenges. What we have presently is subsidized electricity prices, and I am not too sure how sustainable it is for us to continue to subside the entire energy industry. Subsidies ultimately affect the bottom-line of governance and the ability of government to invest in other sectors such as schools and hospitals. So there is need for better enlightenment of the populace about electricity not being a free service but one which attracts a fee just like the GSM phones we are now all accustomed to using. Once the populace is enlightened as to the need to pay the appropriate tariffs then we would be able to see a functional and effective power sector. One based on enforceable bilateral contracts. What are your views on eligible customers and embedded power policies? Let’s take a look at the two policies that were introduced.

The electricity value chain consists mainly of generation, transmission and then distribution. In terms of generation, the country has generating capacity of about 7000megawatts (MW) and of this what we are able to wheel is about 3,000mw or slightly higher at the maximum. For a population of close to 200m people, if you do the mathematics this is not good enough for a nation that wants to industrialise. The inability to wheel more of the electricity generated is down to old worn out transmission wires that need to be repaired and replaced after decades of neglect and no investment. This is evident in the frequent system collapse and total blackouts we have in the country. You then have the distribution companies that are having their own challenges in terms of paucity of funds for investment in new technology and equipment for better billings and collections challenges in terms of being able to get revenue. So let us take the embedded power generation policy. This was designed to localize generation near distribution infrastructure given the state of the transmission infrastructure. The electricity generated can be injected into the sub-stations and power localities so that those localities can have power on regular basis which should increase economic activities in these areas. For this to work, an appropriate pricing framework that would support private sector investment in embedded generation is key. Now, to the Eligible Customer Regime, which for all intent and purposes it is looking at large scale industries that use a lot of power like the steel and other manufacturing industries. This regime is yet to take off given the unresolved issue of competition transition charges due to Distcos for the Eligible Customers leaving their network.

in a power-hungry world (1)

very country aspires to provide reliable, affordable, and sustainable electricity to its citizens. Yet during the past 25 years, some countries made huge strides, while others saw little progress. What accounts for this difference? A new World Bank report—Rethinking Power Sector Reform in the Developing World—looks at the evidence on the ways in which developing countries have attempted to improve power sector performance and on what the outcomes have been. Since 1990, many countries embarked on market-oriented power sector reforms that ranged from establishing independent regulators and privatizing parts of the power industry, to restructuring utilities and introducing competition. Each of these reforms has a story to tell. • Regulation: Regulation proved to be the most popular of the reforms, with about 70 percent of developing countries creating quasi-independent regulatory entities to oversee the task of setting prices and monitoring the quality of service. Although many countries enacted solid legal frameworks, the practice of regulation continues to lag far behind. For example, while almost all countries give the regulators legal au-

thority on the critical issue of determining tariffs, this authority is routinely overruled by the governments in one out of three countries. While three out of four countries have adopted suitable regulations for quality-of-service, these regulations are only enforced in half of the cases. • Privatization: Thanks to the widespread adoption of Independent Power Projects, the private sector has—remarkably—contributed as much as 40 percent of new generation capacity in the developing world since 1990, even in low-income countries. However, the privatization of distribution utilities has proved much more challenging. Latin American markets drove an initial surge in the late 1990s, but there has been relatively little impetus to continue subsequently. Where distribution utilities were privatized, countries were much more likely to adhere to cost-recovery tariffs. Many privatized utilities also operate at high levels of efficiency; and their performance is matched by the better half of the public utilities. Irrespective of ownership, more efficient utilities have adopted better governance and management practices, including: transparent financial reporting, meritocratic staff selection, and modern IT systems.

AITEO chairman appointed to advisory board of U.S-Africa Business Centre

he U.S. Chamber of Commerce has announced that Benedict Peters, Chairman and CEO of AITEO, will serve on the Board of Advisors for the U.S.-Africa Business Center. The mission of the U.S.-Africa Business Center is to build lasting prosperity for Africans and Americans through job creation and entrepreneurial spirit, something that Peters has been active in on the continent for many years. Welcoming Peters to the Board of Advisors, Chairman of

the U.S.-Africa Business Centre, Scott Eisner remarks: “We value and appreciate the insights from companies such as yours as they not only benefit the Center, but also play a pivotal role in strengthening the ties between the United States and countries throughout Africa.” Peters will join CEO’s from many Fortune 500 companies who have a strong presence in Africa, including Banco Prestigío, BP, Caterpillar, Chevron, IBM, MasterCard, Microsoft, and many others.

said: “People are at the center of everything we do. The NNPC/SEPLAT joint venture takes delight whenever we have opportunity to deploy these two key programmes specially designed for the wellbeing of our community members and for other indigenes of the state who wish to access the benefits of these health progrommes.” Through the Eye Can See and Safe Motherhood initiatives, Seplat has provided premium health care in line with

its commitment to ensuring the wellbeing of people living in its host communities. The company began in 2017 to run these programmes annually in these communities. The Eye Can See initiative has brought community dwellers face to face with specialist optometrists . Within the two year period, a total of 7,343 patients have benefitted from the initiative, 2,200 reading glasses have been given to patients while over 233 successful eye surgeries have been conducted.

NNPC/Seplat JV supports SDGs with community interventions

eplat Petroleum Development Company Plc (SEPLAT), operator of the NNPC/SEPLAT Joint Venture, says its intentions in host communities and other communities in the areas of health, education and economic empowerment, among others, are in line with its mandate to support the Sustainable Development Goals (SDGs) of the United Nations. To this end, the joint venture, last week, brought succor to community members of its Olusola Bello, Team lead,

areas of operation and to other indigenes of Imo State, as it holds the 2019 edition of its Eye Can See and Safe Motherhood programmes, the company’s signature Corporate Social Responsibility (CSR) health programmes. Speaking at the opening ceremony which took place on September 19th at the Medical Health Centre at Izombe, Imo State, the wife of the Imo state governor, Lady Ebere Ihedioha who flagged the medical outreach open said: “If all the

Graphics: Joel Samson.

corporate organisations were to tow this route of SEPLAT petroleum today, the burden of underdevelopment and social restlessness particularly in the oil producing areas in the state would be greatly reduced. This programme therefore places SEPLAT Petroleum at the top of the Corporate Social Responsibility in the state, and by extension has won the hearts of our people.” The Eye Can See and Safe Motherhood Programmes are Seplats CSR initiatives executed annually across the Company’s

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host communities, with focus on providing comprehensive, quality and free healthcare to members of the host communities and states. These programmes align with the Sustainable Development Goals 3, Health for All and the respective state governments’ aspirations of providing good health for their people. In the company’s response, Chioma Nwachuku, general manager, external affairs & Communications, representing Austin Avuru, the Chief Executive Officer of Seplat,

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Thursday 26 September 2019

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

GREYMATTER

Tax appeal tribunal rules in favour of taxpayers in two successive landmark judgments

he Tax Appeal Tribunal, South East Zone, sitting in Enugu (“TAT” or the “Tribunal”), recently held that tax audits conducted by relevant tax authorities in violation of statutorily laid down procedures are not binding on taxpayers. The decision was reached in the case of Polaris Bank Plc v Abia State Board of Internal Revenue (unreported judgment of the TAT delivered on August 20, 2019 in Appeal No: TAT/SEZ/001/17) (“Polaris”). The Tribunal also held that interests and penalties are not payable on tax assessments raised outside the statutory 6-year limitation period prescribed for tax audits. Furthermore, where evidence shows that the substance and effect of an exercise conducted by a tax authority after the limita-

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tion period is indeed a tax audit, it will make no difference even if such exercise is styled “tax investigation”. Hence, any interest or penalty arising therefrom will be invalid and unenforceable against the targeted taxpayer. Besides, the Tribunal also held that a State tax authority in Nigeria does not possess the statutory power to assess or collect any of the taxes listed in the Taxes and Levies (Approved List for Collection) Act (“Approved Taxes Act”); where there is no primary legislation in the State specifically im-

posing the tax. Examples of such taxes are Business Premises Levy and Economic Development Levy. This comes on the heels of the decision of the TAT in Nigerian Breweries Plc v Abia State Board of Internal Revenue (unreported judgment of the TAT delivered on June 20, 2019 in Appeal No. TAT/ SEZ/002/17) (“Nigerian Breweries”), where the Tribunal held that: Where an appeal is filed against an assessed tax liability, payment of penalty and interest on the assessed tax will abate until such appeal is determined, in accordance

with section 68(2) of the Personal Income Tax Act (“PITA”), and Gratuities paid by an employer to an employee are wholly exempt from tax, within the meaning of section 3(1)(b) of the Personal Income Tax (Amendment) Act, 2011. The Polaris case In Polaris, a demand notice was issued by the Abia State Board of Internal Revenue (ASBIR) to Polaris Bank Plc (the “Bank”) for alleged unpaid tax liabilities, covering the period of 2006 – 2011 accounting years. The Bank challenged the demand notice on several grounds but admitted a portion of the demand which it subsequently paid. Attempts to reach an amicable resolution of the dispute between the parties failed following which another demand notice was issued by ASBIR, demanding for payment of the unpaid portion of the original assess-

ment. Aggrieved, the Bank lodged an appeal at the TAT challenging the validity of the subsequent assessment for unpaid portions of the original assessment. The key points distilled from the decision of the Tribunal in this case include the following: When tax audits do not comply with statutorily laid down procedures, any tax assessment, interest or penalty based thereupon is invalid and unenforceable. A tax audit is statute-barred after six (6) years from the year of assessment and same will not automatically be deemed as a “tax investigation” even if it is so tagged by a tax authority; Where agreements are reached, during tax reconciliation exercises, between taxpayers and tax authorities with respect to Continues on page 31

RIGHTSWATCH

Sowore’s release a victory for the rule of law - SERAP

ocio-Economic Rights and Accountability Project (SERAP) has welcomed decision by Justice Taiwo Taiwo of the Federal High Court in Abuja ordering the immediate release of the convener of #RevolutionNow protest, Omoyele Sowore, from the custody of the Department of State Service as “a victory for the rule of law, human rights and judicial independence.” In a statement, SERAP deputy director Kolawole Oluwadare said: “It’s a huge relief that Sowore will be freed and can finally return to his family and journalism work. He should never have been detained in the first place. The Nigerian authorities should now withdraw all the charges against him and allow freedom of expression and media freedom to flourish. It’s good for everyone.” SERAP said: “The Nigerian authorities now have to fully comply with this ruling by immediately releasing Sowore. The decision is a timely reminder of Nigeria’s constitutional and international obligations to protect journalists, activists and Nigerians in general, and to put a stop to its current practice of restricting the civic www.businessday.ng

Sowore

space.” The statement read in part: “We hope this decision will make the Nigerian authorities and state governors stop and reflect on their ongoing crackdown on freedom of expression and media freedom including online, and also help to

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put an end to other human rights violations of journalists and citizens in general. Other journalists like Agba Jalingo and Ekanem Ekpo currently being detained, must be immediately and unconditionally released.” “If a court found it possible to @Businessdayng

release Sowore, we are sure that all the circumstances were studied, and an objective decision was made.” It would be recalled that SERAP had on Saturday has sent an open letter toAbukabar Malami, SAN, Attorney General of the Federation and Minister of Justice, urging him to use his position “to without delay enter a nolle prosequi and discontinue the prosecution of the Convener of ‘RevolutionNow’ protest and publisher of Sahara Reporters, Mr Omoyele Sowore, and Olawale Bakare, also known as Mandate for apparently politically motivated charges of treason, fraud and ‘insulting President Muhammadu Buhari’.” SERAP said: “We urge you to use your role as a trustee of the public interest under section 174 of the Nigerian Constitution of 1999 (as amended) to end several of similar trumped-up cases going on in several states.” SERAP’s letter read in part: “Sowore’s case and several similar cases instigated/brought by state governors make a hideous mockery of Nigeria’s criminal justice Continues on page 31

Thursday 26 September 2019

BUSINESS DAY

INDUSTRYFILE

LegalBusiness

Templars gets second senior NBA President to new“ Senior Advocates: advocate in less than two years

nother Templars Partner, Godwin Omoaka was on Monday September 23, 2019 sworn in as Senior Advocate of Nigeria (SAN). Godwin who was selected as an senior advocate by the Legal Practitioners Privileges Committee (LPPC) on July 5th, 2019 is the head of the firm’s Dispute Resolution and Tax Group, as well as its Real Estate Practice Group is highly skilled in commercial Dispute Resolution which encompasses commercial litigation including Oil and Gas Litigation, Arbitration and Conciliation and Shipping/Maritime law. His appointment comes on the heels of the appointment in July 2018 of another Templars disputes partner to the same coveted rank. This is believed to be the first time in the history of the rank that two lawyers from the same firm will be so honoured in two consecutive years. According to Managing Partner Oghogho Akpata, “I congratulate Godwin on this enormous achievement. He is a seasoned and unrelenting advocate, and we are extremely proud of him and the rest of our Disputes Practice for continuously breaking new grounds

Godwin Omoaka, SAN

on behalf of the rest of us and the clients that we serve.” Godwin and 35 other senior

advocates were sworn-in at a twofold ceremony to mark the opening of the 2019/2020 Legal Year of the Supreme Court of Nigeria and the swearing-in of newly elevated Senior Advocates of Nigeria (SANs) The rank of Senior Advocate of Nigeria is awarded by the LPPC as a mark of excellence to members of the legal profession who have distinguished themselves as advocates and academics. The Legal Practitioners’ Privileges Committee (LPPC) of the Nigerian Bar today selected Templars’ disputes partner, Godwin Omoaka for appointment as a Senior Advocate of Nigeria, which is equivalent to the English rank of Queen’s Counsel. Lagos lawyer and human rights activist, Ebun-Olu Adegboruwa, the Solicitor-General of the Federation and Permanent Secretary of the Federal Ministry of Justice, Adedayo Apata, Echezona Etiaba were amongst those sworn-in on the same day. The event, which took place at the supreme court of Nigeria, FCT Abuja was graced by the presence of the vice President of Nigeria, Professor Yemi Osinbajo, SAN.

QUOTE OF THE WEEK

“

I congratulate these new leaders of the Bar who have been found worthy by their superiors and peers of wearing the coveted rank of SAN. You were obviously chosen from the large number of applicants based on your outstanding qualities of, inter alia, intellectual fecundity, hard work, diligence, unparalleled advocacy skills, sense of purpose, consistency, integrity and not least, humility. As I mentioned during the elevation of your colleagues last year, I include “humility” amongst the qualifying attributes because, sometimes, our colleagues of the Inner Bar tend to forget that the rank of SAN is best worn with and in humility. Humility, in general terms, exalts the person. In specific terms, humility stands out and elevates a Senior Advocate of Nigeria – to wit, humility to the Courts, humility towards your colleagues of the Inner and Outer Bars, humility towards your clients and indeed humility towards members of the public. It is the humility in you that would oil your words and speeches in a way that makes them soothing and respectful to everyone, not least, the courts; it is the humility in you that would persuade you to share your deserved front-row seats with members of the Outer Bar who are not entitled to the front-row seats as of right when you are in court but who are unfortunately consigned to stand in a crowded and sometimes, stuffy courtroom and wait while you conduct your case because all the seats to which they are entitled are occupied. Humility is actually the hallmark of great men and you must not forget that fact while adorning your SAN rank. Your elevation comes at a time that the profession – both the Bar and the Bench – is under siege, mostly at the instance of agencies that ordinarily should be our partners in law enforcement. It is no longer news that some law enforcement agencies seem to derive sadistic pleasure in locking up lawyers and imposing impossible bail conditions for their release, mostly in the course of investigating the professional functions of these lawyers. Indeed, the practice of law is now being criminalized by these agencies all in an effort to demonize and humiliate lawyers and the legal profession. The practice of law has consequently become very dangerous and risky. To illustrate, it used to be the practice that lawyers under investigation by law enforcement agencies were routinely granted administrative bail based on self-recognizance; the NBA has no record that any of those lawyers subsequently refused to honor the invitation of those

Continues on page 31

Paul Usoro, SAN

B&I holds creative industry stakeholder event

Today, at Supreme Court in Abuja, the Chief Justice will swear-in another set of Senior Advocates of #Nigeria (SANs). It is supposed to be a mark of excellence. Instead, as former Attorney-General Adoke tells in his memoirs, it could also be an induction into a world of intrigues.

op commercial law firm, Banwo & Igholdalo (B&I) will today, Thursday September 26th, 2019 hold a creative industry stakeholders event themed, ‘An evening with creatives, investors and regulators: Unlocking the Capital in the Creative Industry’ at its new office in Ikoyi, Lagos. It is expected that the event, which is organised by the firm’s

--CHIDI ODINKALU On elevation and swearing of new , Senior Advocates of Nigeria (SAN) on Monday September 23, 2019 www.businessday.ng

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@Businessdayng

Intellectual Property (IP) Entertainment and Media Law Team, will facilitate stakeholder engagement between creatives, investors and regulators, with a view to re-positioning the industry as an important vehicle for economic growth and social transformation. Creative industries, include advertising, architecture, arts and

Continues on page 31

Thursday 26 September 2019

BUSINESS DAY

GREYMATTER

LegalBusiness

Tax appeal tribunal rules in favour of taxpayers in two successive landmark... Continued from page 29

undisputed tax payments; such agreements must be in writing, be acknowledged by both parties and must be presented in evidence by the party seeking to rely on same; Where a taxpayer objects to a tax assessment or appeals against it within the time allowed by law; such a tax assessment will not become final and conclusive until the issues are fairly and judiciously determined; and The Approved Taxes Act does not have a charging provision. Consequently, reliance cannot be placed upon the Approved Taxes Act by a State of the Federation as the basis for assessing and collecting taxes. In the overall, where any tax assessment, audit or related documentary evidence sought to be tendered by a tax authority against a taxpayer is proven to have been issued in violation of any of the above principles as decided in Polaris; the assessment, audit or related documentary evidence will be held to be incompetent and void, and liable to be set aside by the Tribunal. Besides the above key points, another issue raised for determination in Polaris was whether Abia State Board of Internal Revenue (“ASBIR”) or the Abia State Internal Revenue Service (“ASIRS”) is the juristic person, with the powers to sue and be sued in its own name. This issue had been raised in Nigerian Breweries, an earlier case decided by the TAT. On this point, the Tribunal followed its earlier decision as analysed below. The Nigerian Breweries case In Nigerian Breweries, a tax audit exercise was initiated and conducted for the years 2014 – 2015 on the business operations of Nigerian Breweries Plc (the “Company”). After the conclusion of the exercise, ASBIR issued an assessment for alleged outstand-

ing tax liabilities; which included accrued penalties and interests for the stated period to the Company. The Company challenged the assessment on the following grounds: That the assessment did not consider statutory reliefs available to the Company, such as interest on mortgage loans, pensions, and life insurance; and That consolidated tax reliefs were not properly computed in the assessment. In its response, ASBIR called for further information and documents which the Company provided. After this, a revised assessment on the business operations of the Company for the period was issued. In arriving at the figure in the revised assessment, ASBIR subjected the gratuities that were paid by the Company to its retired employees to tax. The revised assessment was further challenged by the Company on the basis that gratuities are not taxable under the PITA. In spite of this objection, ASBIR refused to amend the revised assessment and issued a notice of the refusal to the Company. Aggrieved by this action, the Company lodged an appeal at the TAT seeking orders to discharge the revised assessment and declare that gratuities are exempt from tax under the PITA. ASBIR replied by challenging the competence of the appeal and asked for a strike-out order on the basis that Abia State Internal Revenue Service (“ASIRS”) is the juristic person with the capacity to sue and be sued under the laws of Abia State, and not ASBIR.

In determining the appeal, the Tribunal arrived at the following conclusions: The ASBIR is a juristic person, being a State Board of Internal Revenue created pursuant to section 87(1) of the PITA. Explaining further, the TATheld that the same section 87(1) of the PITA established the State Internal Revenue Service as the operational arm of a State Board. Hence, by the doctrine of covering the field in concurrent legislative matters; section 87(1) of the PITA has already prescribed the name of a tax authority in any State of the Federation and, consequently, section 3(1) of the Abia State Board of Internal Revenue Law No. 7 of 2008 (as amended) (the “Abia Law”) that established ASIRS is only a “surplussage”; In dealing with members of the public, States in Nigeria are at liberty to choose the style to adopt in naming their tax authorities. As such, a State may either adopt the “State Board of Internal Revenue” prescribed in section 87(1) of the PITA or the “State Internal Revenue Service” which the same section of PITA established as the operational arm of the State Board. In essence, both ASBIR and ASIRS can be used interchangeably; Payment of penalty and interest accruing on an assessed tax liability should be in abeyance until the determination of the appeal within the meaning of section 68(2) of the PITA; Gratuities do not constitute part of the chargeable earnings listed in the charging section of the PITA and are therefore wholly

B&I holds creative industry stakeholder... Continued from page 30

crafts, design, fashion, film, video, photography, music, performing arts, publishing, research & development, software, computer games, electronic publishing, and TV/radio. These are deemed to be the lifeblood of the creative economy. They are also considered an important source of commercial and cultural value. The creative economy is an evolving concept, which builds on the interplay between human creativity and ideas and intellectual property, knowledge and technology. Essentially it is the knowledge-based economic activities upon which the ‘creative industries’ are based.

Continued from page 29

audit period, is statute-barred from raising additional tax assessments by labelling a tax audit as a “tax investigation”. We also note that in reaching its decision in Nigerian Breweries, the Tribunal applied the purposive and mischief rules of construction and interpretation of statutes and therefore considered the history of the PITA to note that gratuities, which were part of the charging provision in the original enactment (PITA, 1993) was at some point deleted by legislative amendment. On this premise, the Tribunal reached the conclusion that the deletion was done to cure the mischief of taxing compensation for loss of employment, which is ordinarily exempt from tax and therefore held that gratuities are not taxable under the PITA. These two landmark judgements of the TAT have paved the way for purposeful interpretation of tax statutes and implementation of tax policies and administration in Nigeria. We note that except tax authorities strictly adhere to the principles enunciated in Polaris and Nigerian Breweries, more taxpayers are likely to seek judicial redress against tax assessments which are computed in violation of applicable legislation, going forward. It will be interesting to see how tax authorities will react to the two decisions in the future.

The Grey Matter Concept is an initiative of the law firm, Banwo & Ighodalo DISCLAIMER: This article is only intended to provide general information on the subject matter and does not by itself create a client/attorney relationship between readers and our Law Firm or serve as legal advice. Specialist legal advice should be sought about the readers’ specific circumstances when they arise.

NBA President to new Senior... Continued from page 30

The new Banwo & Ighodalo office in Ikoyi, Lagos

Sowore’s release a victory for... systems, rule of law, freedom of expression and media freedom. These cases are persecution and not prosecution. As guardian of the public interest, you have a role

exempt from taxes under the PITA. In arriving at this point, the provisions of section 3 of the PITA were considered vis-à-vis section 3(1) (b) of the Personal Income Tax [Amendment] Act, 2011); and Where an income is not a taxable income pursuant to the charging provision of the applicable tax statute but taxed in a schedule to the statute, the charging provisions of the tax statute will prevail. Hence, the Tribunal will hold the relevant item taxed in the schedule as statutorily exempt from tax under the applicable tax statute. Consequently, section 18(b) of the Third Schedule to the PITA (which subjects gratuities paid to employees in excess of N100,000 to tax) was held to be inferior to section 3(1)(b) of the Personal Income Tax (Amendment) Act, 2011 which makes no mention of gratuities in the list of chargeable earnings. Remarks The decisions in the two cases of Polaris and Nigerian Breweries have both further developed our jurisprudence on the limits of the powers of tax authorities. The cases have also elevated the debates around the validity of the often self-initiated tax audits and investigations conducted by the tax authorities. Notably, the distinction made between tax audit and tax investigation, even where the tax audit is tagged as a tax investigation by tax authorities in order to circumvent the law (in cases where an alleged tax offence has become statutebarred) has now become judicially noticed. This point clearly makes a separation between the legal consequences of tax avoidance and tax evasion. In essence, unless a prima facie case of a tax offence which necessarily triggers a tax investigation has been established, a tax authority that has failed to conduct a tax audit within the statutorily prescribed

to end this travesty now, and to maintain the sanctity and integrity of Nigeria’s justice system.” “These cases set a dangerous precedent for the misuse and subversion of the justice system, www.businessday.ng

which may lead to the politicization of judiciary. This will be bad for everyone—ordinary citizens, journalists and even the politicians in power, as they may themselves become targets of these repressive and abusive tactics when they are out of power/in opposition.”

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agencies or absconded in the course of any such investigation. So, what justification is there, other than abuse of powers and egotistic humiliation and degradation of lawyers and the legal profession by some law enforcement agencies, for the now commonplace imposition of horrendous bail conditions including the depositing of travel passports consequent upon the investigation of lawyers by these agencies? Do these agencies truly believe that these lawyers, some of whom are Senior Counsel, will jump self-recognizance bail? No, they do not so believe but they are sworn to humiliate and desecrate our profession. In a number of these cases, the lawyers are investigated and so humiliated for carrying out their professional duties and nothing more. I underscore these issues because you all, by your elevation today, are leaders of the Bar and have a sworn duty to safeguard and promote the rule of law, an indubitable component of which is the independence of the legal profession. That independence is eroded when lawyers have to be choosy in accepting briefs and/or instructions solely because they do not want to incur the wrath of any law enforcement agency for performing their professional duties. The society suffers when we descend into that abyss. Access to justice and fair hearing suffers and this is because persons in need of legal services are not permitted and/or enabled to engage the lawyers of their choice. That is the pathway to self-help and anarchy not to mention the deleterious effect such a descent has on our economy. It behooves us therefore as lawyers and leaders of the Bar to stand up for the independence of our profession and, by so doing, push back on authoritarianism and malevolent abuse of power. We must, as members of the Bar, speak with one voice in this regard and you, as members of the Inner Bar, must join the NBA in taking the lead. @Businessdayng

”

Thursday 26 September 2019

BUSINESS DAY

GLOBALREPORT IBA 2019: Hong Kong ‘now at a very critical stage

Hong Kong barrister who is leading protests against threats from Beijing says she has not given up hope that the rule of law can be preserved despite increasingly violent responses by the authorities. Margaret Ng (pictured above), of Sir Oswald Cheung’s Chambers, was in Seoul this week to receive an award for her outstanding contribution to human rights - and to call for continuing support from the global legal profession. Ng, a leading figure in Hong Kong’s democracy movement over several decades, told the International Bar Association’s annual conference: ‘I have never seen Hong Kong so united. This is not about Hong Kong it is about the world, about universal values. We are now at a very critical stage.

But I haven’t given up hope. The Hong Kong people have stood up for themselves.’ Hong Kong has experienced five months of protests since the special administrative region’s government announced plans for a law to allow extraditions to mainland China. Explaining the controversy, Ng said that freedom from rendition without trial had long been recognised as an essential element of the ’one country, two systems’ model under which the former British colony reverted to Hong Kong in 1997. ’If you remove this firewall, you will change the status of Hong Kong,’ she told a session on ’Are human rights in retreat?’. While the measure has been withdrawn for now, Ng said the city’s government remains in thrall to Beijing, even if that puts Hong Kong’s prosperity at risk.

Earlier this month Amnesty International accused Hong Kong’s police force of behaviour amounting to torture in quelling protests. Ng echoed the concern, saying that police behaviour was now indistinguishable from that of hired thugs. Detainees were being held at a special centre close to the border and denied access to their lawyers, she said. Ng will this week receive the IBA’s award for outstanding contribution by a legal practitioner to human rights along with fellow campaigner Maritn Lee. The award is conferred on a legal practitioner deemed to have made an outstanding contribution to the promotion, protection and advancement of the human rights of any group of people, particularly with respect to their right to live in a fair and just society under the rule of law.

London law firm advertises for black applicants to fill demographic gap

high profile London firm has advertised specifically for black apprentices to address what it believes is an imbalance in its workforce. Leigh Day says it is looking for six students of Afro-Caribbean or African heritage to begin the five-and-ahalf-year programme in 2020. Applicants must have completed A-levels in London, to a good grade level, and must want to train as solicitors without taking the university route. Managing partner Frances Swaine said the firm decided earlier this year it would take positive action to tackle the particular issue of a disproportion of black lawyers. ‘Looking at the group of qualified staff we have many fewer AfroCaribbean and African qualified staff than we ought to have for our geographical area,’ she said. ‘We made a decision with our BAME committee that one of our aims was to increase the number of Afro-Caribbean and African staff. Because we are all in agreement the demographic is not what we would want it to be then we want to do something positive.’ Swaine said the firm has not had a sufficient number of AfroCaribbean or African heritage

IBA 2019: Ex-PM urges profession to expose its ‘brilliant jerks’

Julia Gillard

aw firms should expect an increase in the number of reports about workplace bullying and sexual harassment as a change in culture in the profession takes effect, the International Bar Association heard yesterday. ‘Things are likely to appear worse in the short- to medium-term before they get better,’ Julia Gillard, former prime minister of Australia, told a session on bullying and sexual harassment in the legal profession. It followed the IBA’s landmark survey earlier this year, which, among other disturbing findings, showed that half of female respondents and one third of male respondents had been bullied in connection with their employment. A particular problem in the legal profession is that of the serial offender whose ‘eccentricities’ are brushed over because they are a high-earning partner or a ‘courtroom magician’. New reporting methods are needed to expose such ‘brilliant jerks’, Gillard said. She cited one US approach which created three options for reporters: to create a secure, encrypted, log of evidence; to trigger a formal process or, third, enter details into a ‘repeat perpetrator matching system’. Experience suggests that this last

Leigh Day, managing partner, Frances Swaine

graduates applying to become trainees. By casting the net wider, and taking on people out of sixth form, it is hoped more potential solicitors will be encouraged to come forward. Existing staff have also been given unconscious bias training to ensure the recruitment and retention policies encourage staff from all backgrounds. The initiative has drawn some criticism online, but the firm has consulted with employment specialists to ensure that advertising specifically for black applicants www.businessday.ng

is lawful. The Equality Act 2010 introduced positive action provisions, under which it is not unlawful discrimination to take special measures aimed at alleviating disadvantage or under-representation experienced by those with protected characteristics such as age or race. Positive action in recruitment and promotion can be used where an employer reasonably thinks that certain groups of people are under-represented.

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LegalBusiness

Simon Davis @Businessdayng

option could have the most impact, Gillard said. ‘It allows those who have been harassed to contact each other and to report as part of a group.’ A panel discussion heard other suggestions for changing the culture in the profession. Simon Davis, president of the Law Society of England and Wales, said that firms should create a culture in which lawyers treat their ‘non-lawyer’ colleagues with respect. Hanim Hamzah of ZICO Law in Singapore proposed reforming reward mechanisms. Pip England, of Auckland firm Chapman Tripp, urged firms to share good practice. Clients could also be a force for change: for example the New Zealand government had already raised the issue of corporate culture at firms handling government work. ‘The major firms are basically on notice,’ England said. Davis called on lawyers to examine their own conduct in the light of the Us Too report. While ‘anyone would be shocked’ at its findings, he said that he read it with ‘almost a sense of relief… This report actually explains what is bullying and sexual harassment’. Such understanding ‘might help us to raise a mirror to ourselves’, he said. -LAW SOCIETY GAZETTE

Thursday 26 September 2019

BUSINESS DAY

BUSINESS TRAVEL AIB, NCAA advised to collaborate in implementation of air safety recommendations Stories by IFEOMA OKEKE

he Accident Investigation Bureau (AIB) and the Nigeria Civil Aviation Authority, (NCAA) have been advised to work together to achieve proper implementation of air safety recommendation. This call is coming at a time when the NCAA has been accused of not carrying out safety recommendations issued by AIB, on the other hand, AIB has also been accused of issuing recommendations which seems impossible to be implemented. Experts have however called on both agencies to build a strong communication network and collaborate to ensure safety is not compromised. Speaking on Thursday at the quarterly Business Breakfast Meeting of the Aviation Safety Round Table Initiative (ASRTI), Harold Demuren, former Director General, NCAA said AIB does not have the authority to enforce recommendations but effective communication with NCAA is important. Demuren said NCAA must evaluate the safety recommendations issued by AIB using risk-based approach with consideration of cost and time of implementation. He hinted that the American aviation regulators and airlines have implemented about 82 percent of safety recommendations issued by

L-R: Al Ihekwuaba customer relationship manager, nahco aviance; Saheed Lasisi, group business director, nahco aviance; Toyin Olajide, chief operating officer, Air Peace; Allen Onyema, chairman/CEO, Air Peace; Olatokunbo Fagbemi, group managing/CEO, nahco aviance; Chioma Offor, head, marketing, nahco aviance; and Alan Bandele, chief Pilot, Air Peace, during the Humanitarian Award presented to the Air Peace Chairman/CEO in recognition of his selfless act in facilitating the relocation of distressed citizens from a foreign country, in Lagos .

the National Transportation Safety Board (NTSB), an independent U.S. government investigative agency responsible for civil transportation accident investigation. He further disclosed that six percent are about to be implanted and the remaining 12 percent may not be carried out, adding that regulators in

other climes will always implement safety recommendations as long as they are the right recommendations and they can save lives. He said, “It is not the amount of recommendations we make that matters but the quality of recommendations. A risk-based approach to implementing safety recommen-

dations require good leadership, competence, capability to do it, robust insurance systems and more importantly, effective communication between NCAA and AIB.” Also speaking at the event, Nnamdi Udoh, former managing director and CEO of NAMA said implementing accident investigation recom-

mendations requires good leadership. According to him, aviation security is the greatest challenge that needs to be addressed in the sector. “Nobody benefits when an airline goes down, so we must do everything to protect the airlines. When you are not sure of the airspace, shut it down. Accident Investigation is a learning process and if Annex 13 wasn’t necessary, it wouldn’t have been written in such a robust manner,” Udoh added. Tunji Oketunbi, Corporate Communications Manager of AIB accused NCAA of keeping serious incidences to itself instead of informing the AIB. Oketunbi reiterated that accident investigations by AIB will help prevent future occurrence, adding that AIB is currently the only agency that write things about the industry the way they are. “AIB does not have the power to implement recommendations but NCAA does but sadly we have seen deficiencies with NCAA and the airlines. AIB and NCAA should know their responsibilities and act accordingly. Safety recommendations must be timely,” he said. Muhtar Usman, the director general, NCAA who was represented at the event said the accusations that NCAA does not implement safety recommendations was unfounded. He said when a draft report is sent to the NCAA, the NCAA develops safety action with respect to all the safety recommendations by AIB.

Akwaaba 2019 boosts Nigeria’s tourism, travel business

igeria’s travel and tourism industry is again receiving a major boost with the 2019 Akwaaba Travel

Market. The three days event, which held from 22nd to 24th of September, 2019 hosted several travel, aviation and tourism events, some of which included food fairs, (Jollof Rice contest between Nigeria, Ghana, Gambia); exhibitions, networking, Africa Youth Tourism session (Paper and panel discussions), Aviation day (paper and panel discussion), boat cruise on the Five Cowrie Creek and the city tour of Lagos including Nike Art Gallery and Eko Atlantic amongst others. With colourful display by Carnival Calabar dancers, Lagos State dance troupe and Eyo dancers and the Jollof Rice war, among others, exhibitors and visitors were thrilled to fun at the only travel market in Nigeria. The Expo, which witnessed more exhibitors from Africa, Asia and the Caribbean, was declared open at about 3.pm by the man popularly known as the father of Tourism in Nigeria, Chief Mike Amachree. Speaking during the event, Firiehiwot Mekonnen, the general manager, Ethiopian Airlines in Nigeria said Akwaaba helps promote Africa and Nigeria as a destination.

“There are a lot of activities going on here, a lot of cultural exchange which is very interesting and important because we need that cultural exchange to boost our economy. So these are the kind of things that we need to promote Africa. “Akwaaba is one of the platforms we always use to promote Ethiopia as a destination and as an airline. We are one of the major sponsors and on the aviation day, Ethiopian airline will host the dinner. So people will enjoy the Ethiopian food and coffee ceremony,” Mekonnen said. “Addis Ababa has taken over from Dubai as a transit for African airlines which is a very good thing for Africa and makes Africa proud. We are doing everything we can to sustain this tempo but it is not one airline that can do this. All African carriers will have to come together, stand together and support each other to sustain this achievement for Africa. So, all Africans and stakeholders will work together to sustain this,” she said. On traffic increase to Addis as a result of the xenophobic attack, she said there is an increase in traffic to Addis now but it may not be related to the xenophobic attack. “The transit traffic has been increasing drastically not just in the last three weeks,” she added. The Expo, which witnessed more exhibitors from Africa, Asia and the www.businessday.ng

Caribbean, was declared opened on Sunday at about 3.pm by Mike Amachree, the man popularly known as the father of Tourism in Nigeria. While charging Africans on Unity, he called all to support an initiative such as Akwaaba to foster good relationship among Africans and other nationals. Ikechi Uko, organiser of the event spoke on how it took him 15 years to convince the Caribbeans to attend the programme. “You know this Expo started 15 years ago and we have been trying bring the Caribbeans back to their route but we are happy they are here to participate in this edition “, he said. He also expressed appreciation to Lagos State for its support for tourism initiatives in the state, both from private and government stance. Other tourism personalities who witnessed the opening ceremonies are Otunba Olusegun Runsewe, Florence Ita-Giwa, among others. A large number of exhibitors came from Dubai under the auspices of Dubai Tourism, the Gambia tourism, Ethiopian airlines, Lagos State tourism board, Federal Airports Authority of Nigeria, (FAAN), Accident Investigation Bureau, (AIB), We Sabi travel, Ghana tourism, Carnival Calabar troupe, among others were on ground to exhibit their products and services.

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Egypt Air announces 50% discount in Business Class, extends codeshare with United

gypt Air has announced the launch of up to 50percent discount on the Business class fares between Cairo and most of the airline’s international destinations. This is in line with the carrier’s plan to provide the optimum service for the best and competitive fares. The airline offers premium business class product such as the Super Diamond Full Flat Bed seats on the Boeing Dreamliner B787-9 aircraft and Full Flat Bed on both the Boeing 777-300ER and Airbus A330-300 aircraft. Furthermore, as a way of identifying with Nigeria’s 59th Independence Anniversary, Muharram Abdulrahman, the airline’s Country Manager in Nigeria, noted that the airline would offer its Nigerian customers 50percent discount in Business Class for tickets issued between September 30 till October 7, 2019. In another development, Egypt @Businessdayng

Air has announced an extension of its Codeshare with United Airlines in an effort to extend its network in North America. “Subject to the agreement, Egypt Air customers can now book their flights to Boston, San Francesco, Los Angeles and Chicago through Washington starting from September 12th 3122. Egypt Air is keen on expanding its network in North America especially after inaugurating the new non-stop service to Washington in June, providing integration for Egypt Air network,” Ahmed Adel, Egypt Air Chairman and CEO said. “Egypt Air customers can fly to the new destinations through Cairo to Washington flight on Egypt Air’s newest Dreamliner B787-9 equipped with Super Diamond Full Flat Bed Seats in Business Class and personal screens in all classes. The aircraft also provides Wi-Fi internet, roaming services and Live TV for a seamless travel experience,” Adel said.

Thursday 26 September 2019

BUSINESS DAY

cityfile PLWD to undergo ICT, vocational training in Oyo REMI FEYISIPO, Ibadan

Governor Nyesom Wike: Flood devastated community of Ase-Azaga in Ogba/Egbema/Ndoni LGA, the village cried out to the state government and federal government to come to their aid.

Medical doctor on trial over death of pregnant woman

ascal Okoye, a medical doctor with t h e Fe d e ral Medical Centre, Asaba, Delta State, is standing trial before the Medical and Dental Council of Nig er ia Tr ibunal, over the death of a pregnant woman. Okoye, who is being tried in Abuja, is charged with gross professional negligence which allegedly led to the death of a patient in his care. The prosecuting counsel, Nasiru Aliyu,

told the tr ibunal on Tuesday, that the defendant, while on duty on March 7, 2017, “negligently handled one o f h i s p at i e nt s, R i t a Uchebuego, a pregnant w o ma n , w h o i s n ow late”. According to the prosecutor, Okoye allegedly failed to attend to her appropriately as required for the management of her condition. The prosecutor said that Okoye’s conduct was “thoroughly unprofessional” and contrary to rules 24 and 31

of the Code of Medical Ethics in Nigeria, 2018. The offence, Aliyu added, was punishable under section 16 of the Me d i c a l a n d D e nt a l Practitioners Act 2014, as amended. O k o y e , h o w e v e r, pleaded not guilty to t h e c h a r g e. T h e a ccused claimed that the patient was not properly handed over to him when he resumed duty. “I dis covered that the patient was induced to labour while on call. No one handed her over to him. I did my best while on call

duty and later handed over the patient to the consultant who took over from me. There was no emergency as at the time I handed over the patient.” Chairman of the tribunal, Abba Hassan, after listening to both sides, adjourned the case. The tribunal was established to try offences under the medical and dental practitioners act. The current session is the third this year. NAN

Lagos shuts 20 illegal health facilities JOSHUA BASSEY

o fewer than 20 health facilities were shut down by Lagos State government through its enforcement agency, Health Facility Monitoring and Accreditation Agency (HEFAMAA) in August. The facilities were shut for non-compliance with regulatory standards.

The executive secretary, HEFAMAA, Abiola Idowu provided the figure after an inspection exercise carried out by the agency, saying the ugly trend of having unqualified personnel work in health facilities must stop. She also insisted that the environment for the dispensation of medical care must be suitable and hygienic for the promotion and maintenance of www.businessday.ng

good health across the state. The government, she said, was committed to ridding the system of quackery and illegal facilities. Part of the strategies to achieve this, she explained, would be consistent surveillance and monitoring of health facilities while also soliciting the support of members of the public in the task.

She explained that eHEFAMAA offers a robust complaint mechanism whereby members of the public could channel their grievances directly to the agency for prompt actions and solutions. She further assured that the agency would continue to leverage the platform with a view to improving on its mandate and broaden access to its various services by the public.

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eople Living With Disability (PLWD) in Oyo State are to undergo Information Communication Technology (ICT) and vocational skill training as part of measures to empower them economically. The state commissioner for commissioner for women affairs and social inclusion, Faosat Sanni, made this known when she visited some Juvenile Correctional Homes, Child Care Units and Rehabilitation Center for Disabled Persons in Ibadan, the state capital. According to Sanni, already, 35 of the PLWD at the Juvenile Correctional Institution have been enrolled in public and private schools, sponsored by individuals and various non-governmental organisations. “As long as many of them are stable health wise, they would be enrolled in schools,” she said. She disclosed that the rehabilitation centre for the disabled persons, Temidire, Moniya, in Akinyele local government, Ibadan has 65 inmates, who are currently undergoing various training skills on bead making, hairdressing, tailoring, shoe making, and animal husbandry. The commissioner applauded donors, corporate bodies, non-governmental organisations and individuals for extending support to the less privileged. “Government is interested and would continue to support them. As humans, we are all equal, those of us without one disability or

the other should see this as a privilege, and treat those with disabilities with utmost respect. “Some of the children need immediate healthcare; we will work with the health sector to ensure that they are taken care of by sending them for proper treatment in our various hospitals,” said Sanni. The commissioner described the act of abandoning newborn babies by their mothers as ungodly and criminal saying God created everybody for a particular purpose that must be fulfilled. “ Nig e r ia f row n e d at th e a ct o f aba n d o n i ng newb orn children and adopted the Child Rights Act for domestication in 2003 which forbids separation of a child from the parents, except for the interest of the child”. She said no condition would warrant any mother to abandon her ow n c h i l d b e cau s e a l l children were given by God as blessing to their parents and mankind. She warned that the government would not hesitate to make any mother caught abandoning her baby face the law. “No child comes to this world on his/ her own volition. We brought them here and we must be ready to take care of them. “It is ungodly and criminal therefore for any mother to give birth and abandon the baby. The state government will not allow the trend to continue. Everybody will have to be responsible for his or her actions.”

Woman charged with beating mother-in-law into coma

30-year woman, Adenike Olowookere, has been arraigned in an Ado-Ekiti Chief Magistrate Court for allegedly beating her morther-in-law into coma. O low o okere faces a charge of an attempted murder. The prosecutor, Bankole Olasunkanmi, told the court on Tuesday that, the defendant committed the offence on September 9 at Ado-Ekiti. Olasunkanmi said that the defendant attacked 63-year-old mother-in-law, @Businessdayng

Comfort Olowookere. He said that the victim was still in coma. Olasunkanmi said the offence contravened the provisions of Section 320 of the Criminal Law of Ekiti State, 2012. He urged the Court to remand the defendant in prison pending legal advice from the office of Director of Public Prosecutions. The plea of the defendant was not taken. The chief magistrate, Abdulhamid Lawal, remanded the defendant and adjourned the case until October 17 for mention.

Thursday 26 September 2019

BUSINESS DAY

FEATURE

Creating shared value with host communities helps Seplat compete Indigenous oil companies who aim for shared value have proven better at managing relations with host communities as this analysis of Seplat’s strategy suggests, writes ISAAC ANYAOGU.

or many indigenous oil and gas companies operating in Nigeria, the key to sustainable operations is often how efficient you are at drilling below the ground and managing relationships above it. But how does a company navigate through volatile oil prices, a tough legal and regulatory system and often hostile reception from host communities whose memories have been seared by previous engagements that went awry and wrought on abuse and neglect? For Seplat Petroleum Development Company, a leading independent upstream oil and gas company in Nigeria, its starts with creating a strategic framework to engage with its host communities. To manage relations effectively, the committee responsible for this at Seplat reports to the board. This structure ensures that the company’s CSR activities reach the grassroots of the communities where it operates. And there are indications that Seplat is on the right track. On September 19, 2019 at Izombe, Imo State, two women were attending Safe Motherhood, a medical CSR initiative of Seplat when they went into labour. Few hours later they were delivered of two heathy babies. Some members of the community at the event jokingly remarked that Austin is an appropriate name for one of the babies. A subtle reference to Mr. Austin Avuru, the Chief Executive Officer/Executive Director of Seplat. That is the extent to which Seplat is knit into its host communities. In 2014, the company signed a Global Memorandum of Understanding (GMoU) with the local communities that host its operations within OMLs 4, 38 and 41. The GMoU sets the standard for subsequent engagements with stakeholders and was updated two years later. This strategic framework is useful in managing expectations. It also provides a basis to evaluate shared value – an operational practice that enhances a company’s competitiveness at the same time advancing the economic and social value in its host community. Seplat invests in areas that align her business objectives with local priorities whilst addressing broader developmental objectives. If expectations are badly managed, CSR activities can make people feel entitled and the company resentful. Shared value, which results in the best outcomes, is not about redistribution, but expanding the pool of economic and social value. Companies that achieve the best results think in terms of shared value, maintain transparent communication with all stakeholders and ensure multi-party engagement with the community, civil-society groups and the government. In 2018, Seplat held 298 com-

L-R: Ayodele Olatunde, general manager, Eastern Assets, Seplat Petroleum Development Company Plc, Vivian Ironna, wife of Deputy Governor, Imo State; Ebere Ihedioha Wife of the Governor of Imo State; General Manager, , Chioma Nwachuku external Affairs and Communications, SEPLAT; Nkeiru Ibekwe, Commissioner of Gender and Vulnerable Persons, Imo; and Mirian Kachikwu, General Counsel, SEPLAT, during the opening ceremony of SEPLAT’s 2019 Eye Can See and Safe Motherhood CSR Programmes in Izombe, Imo State, on Sep 19.

munity meetings, 19 meetings with traditional rulers and four town hall events while it continued to invest in community projects, supporting infrastructure development, education and health programmes in the areas around her assets. These engagements coupled with proactive efforts and fast response to issues have given an edge to local companies in managing community relations in Nigeria. Different approach The key pillars underpinning Seplat’s CSR activities are maintaining high health and safety standards, driving sustainable supply chain, local content and a positive social impact. Health, Safety and Environment. Seplat closely aligns its HSE Policy with guidelines issued by the International Association of Oil & Gas Producers (IOGP), further supplemented by the Company’s own policies. Most of the world’s leading publicly traded, private and state-owned oil & gas companies, oil & gas associations and major upstream service companies are members of IOGP and collectively produce 40% of the world’s oil and gas. To abide by these standards, Seplat has cut gas flaring significantly between 2011 and 2017 by using the gas internally and now plans to cut out gas flaring completely soon. In a world where global emissions threaten the earth, it is in the company’s enlightened selfinterest to contribute to mitigating the effects of climate change. For Nigeria which is responsible for 11% of global gas flares, it is critical. In the company’s audited report for 2018, it said it had consistently www.businessday.ng

improved its Lost Time Injury Frequency Rate (LTIF) towards zero and in 2018, its LTIF was 0.14, a significant improvement on the prior year LTIF of 0.31. The company has also successfully avoided any employee or contractor fatalities. Supply chains Shared value creates outcomes that benefit all parties. When companies source supplies locally it has positive multiplier effect on the local economy and contributes to a thriving and competitive local market. Seplat reports that it is using local business partners which can simultaneously reduce operating costs and project risks by developing a mutually-beneficial relationship with the Company’s local partners. Recruiting talent locally is smart policy as it helps to mitigate risks. People are less inclined to blow up their livelihoods. An inclusive approach lessens operational disruptions, reduces costs and increases value for shareholders. Local content Local content is statutory obligation for oil companies operating in Nigeria. Seplat was one of the first indigenous Nigerian companies to directly acquire blocks from the major IOCs so its operations align with the vision of the government. Seplat is estimated to operate over 20% of Nigerian indigenous oil production and supplies processed gas that underpins up to 1/3 of on grid Nigerian power generation. “Seplat’s success is perhaps because of their local knowledge and proactive engagements with their host communities,” says Ayodele Oni, an energy lawyer and partner at Bloomfield law firm.

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Local content is critical for Nigeria rich in natural resources but unable to translate much value for its people because the oil sector is operated in isolation from the rest of the economy, thereby allowing minimal participation from local citizens in its development. For example, prior to 2010, nearly US$380 billion and 2 million jobs were estimated to have been lost as the majority of construction, engineering and procurement undertaken by the IOCs was carried out overseas. But since 2010, more than 30,000 direct and indirect jobs have been created for local Nigerians in the oil and gas sector. “Indigenous companies such as Seplat have been instrumental in maximizing opportunities for local content development at their operations. In 2018, 99% of the Company’s entire workforce was Nigerian and Nigerians account for nearly 80% of the Company’s top management positions.” says Adeola Adenikinju, an oil and gas expert. Social impact Seplat has instituted social investment programmes targeting immediate impact projects at the community level, identified after the completion of all Environmental and Social Impact Assessment studies. These include healthcare, education, economic empowerment/capacity building, infrastructure development and environmental stewardship initiatives For the company’s flagship health initiative, ‘Eye Can See Programme’, beneficiaries have their eyes tested; receive prescribed glasses and some had surgeries for cataract related visual impairments. @Businessdayng

The ‘Safe Motherhood Programme’ has seen beneficiaries including pregnant women and nursing mothers, receive lectures on danger signs of pregnancy and nutrition in pregnancy. They are also presented with Safe Motherhood kits made up of a maternity bag, vitamin supplements, treated mosquito nets and all medical items required for safe delivery. At the recently concluded intervention which took place at Izombe, in Imo state, Ebere Ihedioha, wife of the state governor, who flagged the medical outreach open said: “If all the corporate organisations were to tow this route of SEPLAT petroleum today, the burden of underdevelopment and social restlessness particularly in the oil producing areas in the state would be greatly reduced. This programme therefore places SEPLAT Petroleum at the top of the Corporate Social Responsibility in the state, and by extension has won the hearts of our people.” In the company’s response, Chioma Nwachuku, general manager, External Affairs & Communications, representing Austin Avuru, CEO Seplat, said: “People are at the center of everything we do. The NNPC/ SEPLAT joint venture takes delight whenever we have opportunity to deploy these two key programmes specially designed for the wellbeing of our community members and for other indigenes of the state who wish to access the benefits of these health progrommes.” To better equip children within the local communities with the cognitive capabilities and skills to become catalysts for social and economic growth, Seplat has invested in post-primary education in the Niger Delta since 2010. A total of 847 post-primary school placements have been sponsored to date. In its 2018 audited accounts, the company reported $64million investments in social investment programmes. It will commence this year’s ‘Eye Can See’ and ‘Safe Motherhood’ programmes at 13 centres to cater for numerous communities close to its operations in Imo and Rivers states. Both programmes are provided in collaboration with seasoned health practitioners. So far, 3,586 expectant mothers have been impacted by Safe Motherhood in the Eastern Asset over the last 2 editions and the company has treated 7,343 patients in the Eye Can See programme, dispensed 2,200 reading glasses and successfully performed 233 eye surgeries in two years. These activities have improved the quality of life in host communities, smoothened relations between host communities and the company and ensured a safer working environment for Seplat and its partners.

36 BUSINESS DAY

Thursday 26 September 2019

NEWS

US Mission calls for strong intellectual property rights in Nigeria …it’s essential for job creation, investment inflow MICHAEL ANI

he United State Mission in Nigeria has tasked the Federal Government to develop a strong legal framework that would protect the intellectual rights of citizens and businesses, saying this was essential for creating the needed employment and boosting economic growth. In a two-day Intellectual Property (IP) Symposium on “the bane of counterfeit pharmaceuticals and piracy,” held in partnership with the Nigerian government and members of the private sector, recently, the US noted that there was a positive correlation between strong intellectual property rights and economic development. “As Nigeria moves ahead with goals of diversifying and shifting to a knowledge-based economy, a strong intellectual property rights regime will help attract investment and protect Nigerian ideas and businesses,” Kathleen FitzGibbon, U.S. Embassy Chargé d’affaires said. FitzGibbon urged stakeholders- government, consumers, and businesses to join forces in ensuring the protection and enforcement of intellectual property rights. Over time, Nigeria has become a target destination and transit route for counterfeit and pirated goods, according to a report by global consulting firm, PricewaterhouseCoopers on “the impact of intellectual property infringement on business and the Nigerian economy”. Both foreign and local traders flood the market with cheap sub-standard fakes, while local manufacturers illegally imitate products of established brands.

The reasons for this widespread proliferation, PWC noted, include the informal structure of the economy, corruption, out-dated legislation, weak policy and enforcement mechanisms, and lack of proper awareness on the dangers of consuming substandard and counterfeit products. Stakeholders at the symposium explained that strong IP rights create an enabling environment for the innovation necessary for economic development. Unfortunately, Nigeria is home to one of the weakest intellectual-property protection regimes, which hampers growth prospects of its economy, they noted. They noted that IP violation hinders economic growth by discouraging investment, decreasing innovation, discouraging research and development, diminish financial benefits from creation and may pose harm to consumers. “A weak IP protection regime hinders foreign direct investment (FDI), innovation, R&D and technology transfer, which robs entrepreneurs of profits and could harm consumers,” PWC noted in the report. Ad e b a m b o Ad e w o p o (SAN), a leading intellectual property rights scholar and the IP Chair at the Nigerian Institute of Advanced Legal Studies, said building strategic alliances within and outside the country was, therefore, critical, considering the global nature of digital technologies that are readily available to this formidable industry. “In these alliances, Nigeria must seek to strengthen key institutions responsible for protecting IPRs and combating counterfeiting and piracy,” he said.

L-R: Leke Alder, chief executive officer, Alder Consulting; Gary Maxey, founder and director, West Africa Theological Seminary; Seyi Oladimeji, president, CASON - Church Administrators Society of Nigeria, and Sam Adeyemi, senior pastor, Daystar Christian Centre, at 2019 CASON Conference tagged “The Future of the Church and Church of the Future” held in Lagos September 25, 2019.

FEC approves N311.47bn contracts as 2nd Niger Bridge gets link roads TONY AILEMEN, Abuja

ederal Executive Council (FEC) on We d n e s d a y a p proved contracts totalling N311.47

billion. The contracts are for road construction in parts of the country and provision of educational infrastructures at the University of Abuja. Minister of Works and Housing, Babatunde Fashola, and Minister of State for Education, Emeka Nwajiuba, disclosed this while briefing State House correspondents after the FEC meeting presided over by Vice President Yemi Osinbajo at the Council Chambers of the Presidential Villa, Abuja.

Fashola announced that FEC approved the sum of N200.17 billion for construction of access link roads for the 2nd Niger Bridge. The Ministry of Works and Housing had presented three memoranda and they were approved by the council: construction of Ibadan-Ilesha-Ife Dual Carriage Way connected to Oyo and Osun States at the cost of N79.829 billion. Fashola disclosed that FEC approved link-road that connects the second Niger Bridge to Asaba and Onitsha. The roads include Asaba link-road awarded to Julius Berger and the Onitsha linkroad awarded to Reynold Construction at the total cost of N200.176 billion. “This completes essen-

tially the access road that will link the bridge in the short time. You might recall that these roads were under-designed when the bridge was awarded. So it is this administration that completed the design and we now awarded them so that you can have a bridge that has link-roads. The contract was awarded initially under a Public Private Partnership (PPP) in 2010. “The third approval was for phase two of the KanoKatsina High Way from the point known as GidanMutum Daya all the way to where Katsina Steel Rolling Mill is. This is a 78KM stretch approved at the sum of N29.654 billion. The road is a 172KM road linking Kano

and Katsina road from Kano, as single length Highway until it was awarded in 2013 by the previous administration in phase 1. “So we inherited it and we have continued to execute it. The award was to then expand the road into a dual carriage highway way. That means we are constructing the existing one and building another new one. It was awarded for the first 70KM plus for the phase 1 we have now done is to complete the award to the same contractor so that there is a uniformity of construction,” he said. Nwajiuba disclosed that one memorandum approved was in respect of TETFund intervention programme in respect of University of Abuja.

Beneficiaries hail AbdulRazaq, partners over Kwara’s free surgeries

At UNGA Sanwo-Olu tells investors Lagos requires 9,000MW to unlock potential

...100 free cataract, 300 other surgeries ongoing

JOSHUA BASSEY

t least 70 percent of the ongoing free eye surgeries and 50 percent of the overall medical interventions in Ilorin General Hospital have been carried out, with beneficiaries commending the Kwara State Government and other sponsors of the exercise for the gesture. The beneficiaries singled out Governor AbdulRahman AbdulRazaq for commendation for the corrective surgeries and other interventions which they said were made possible with multimillion naira equipment the government newly supplied to the hospital, especially in the intensive care unit (ICU). The interventions, which began on Monday, are sponsored by the state government in partnership with the Kwara State Association of Nigeria, North America (KSANG) and Sakinah Medical Outreach .

As at Wednesday, nearly 70 of the 100 cataract surgeries have been done while 250 glasses have been given to patients suffering from various eye disorders, according to the Chief Medical Director (CMD) of the hospital Prof. Abdulfatai Olokoba. He said additional 300 surgeries were being carried out across specialities of obstetrics and gynaecology, general surgery, orthopaedic surgery and neurosurgical interventions within the week. Olokoba added that the surgical interventions have led to impressive capacity building within the General Hospital with the supply of more equipment, the opening of new wards and the ICU, which he said would be useful to the state. Dr Salman Yusuf, chairman of the Sakinah Medical Outreach and head of the Volunteer Doctors, said they www.businessday.ng

partook in the programme to support AbdulRazaq’s efforts to improve basic healthcare delivery in the state. “We are volunteers medical practitioners — Doctors, Nurses, Pharmacists, laboratory scientists and other supporting staff —decided to support the government to change the fortune of the state in basic healthcare,” he said. Oloyede Lamidi, an hernia patent who benefited from the intervention, said the surgery carried out elsewhere last year was not successful and he could not bear the cost of carrying out another operation for lack of funds. He commended AbdulRazaq for the interventions which he said were beneficial to indigent patients. Miss Aderemi Olabisi, who had her breast lump removed, admitted that lack of funds had led to the delay in carrying out her surgery.

t the United Nations General Assembly (UNGA) in New York, United States, governor of Lagos State, Babajide Sanwo-Olu, has told global investors that Lagos, Nigeria’s commercial hub, requires 9,000 megawatts of electricity to unlock its economic potential. Sanwo-Olu, who addressed a corporate forum on Africa at the 74th session of the UNGA ongoing in New York, also being attended by top business moguls from Nigeria, said meeting the Lagos’ power requirement would instantly open caged opportunities in the industrial sector, bolster small and medium-scale enterprises and increase of lives of the over 21 million population. He wooed investors at the forum, assuring his administration’s readiness to partner the private sector for investment in clean energy to enable Lagos transform to a 21st century econ-

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omy that is technology-driven. Sanwo-Olu said his administration was already reviewing the state’s Public-Private Partnership (PPP) policy, with the objectives to boost investors’ confidence, maximise returns on investment and drive investments in critical sectors of the state’s economy. “Lagos is a peculiar city among megacities in the world. It is the smallest state in Nigeria in terms of land size, but the most populous in terms of demography. One- third of Lagos land is covered by water, while the large population of humans is left to occupy about 4,000 square metres of dry land size. “As the fifth largest economy in Africa, Lagos accounts for the 60 per cent of Nigeria’s GDP, in which manufacturing sector accounts for about 30 per cent. Despite this potential, we have energy deficiency of about 9,000 megawatts, which is required to give the economy the needed support for more growth. We are open to invest@Businessdayng

ment in independent power generation to address energy deficit, which would help to fully unlock opportunities in tourism sector, infrastructure and technology business.” Sanwo-Olu at the event presented his administration’s six pillars of development, under the acronym project ‘T.H.E.M.E.S,’ to the international audience, saying this had been designed to readily expose critical areas and the opportunities in each of them. Sanwo-Olu also spoke about how technology and innovation had been changing the face of land transportation in Lagos, especially with the introduction of flexible services in commercial motorcycle operations and cab business to support rapid movement of people. He disclosed that the state government would also be introducing policies to guide the innovation in its transport sector, with the aim to further promote safety of the users and protect investment of the investors.

Thursday 26 September 2019

BUSINESS DAY

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38 BUSINESS DAY

Thursday 26 September 2019

NEWS

Senate seeks more donor fund for aid effectiveness OLOMON AYADO, Abuja

L-R: Godwin Obaseki, governor, Edo State; Dapo Abiodun, governor, Ogun State; President Muhammadu Buhari; Babajide SanwoOlu, governor, Lagos State; Adejoke Orelope-Adefulire, senior special assistant to the president on sustainable development goals; Abdulrahman Abdulrazaq, Kwara State governor; Abdullahi Sule, Nasarawa state governor; Pauline Tallen, minister of women affairs and special development; Akinwunmi Adesina, president of the African Development Bank (AfDB); Sadiya UmarFarouk, minister of humanitarian affairs and disaster management, and others during the official launch of the Nigeria Integrated SGDs Model Report titled: Achieving the SDGs in Nigeria: Pathways & Policy Options, held at the United Nations building, New York on Tuesday, 24th September, 2019.

Nigeria loses $25 billion annually due to irregular power supply-Dangote’s head of energy OLUSOLA BELLO & DIPO OLADEHINDE

ig e r ia i s l o sing $25 billion (N7.5 trillion at the current exchange rate of N305 per dollar) yearly due to irregular electricity supply, Damola Omole, Head of Energy Strategy at Dangote Industries, has said. Speaking at a panel session at the West Africa power and renewable energy trade exhibition called Power Nigeria in Lagos on Wednesday, Omole said one of the major challenges facing the sector was the problem of misaligned interest. “There is no alignment; you can’t trace the huge investment going on in the sector.” “Nigeria loses over $25 billion, just by not being able to meet the energy demand of the manufacturing sector,” Omole said at the event. He said the loss was noteworthy and a major challenge

to Nigeria’s economy, as the loss formed a huge chunk of the country’s exported capital which could have add value to the local economy. “Nigeria is a very low-productivity economy consuming just 1.4Kwh per capital on annual bases. That is less than what Ghana, who is not a significantly manufacturing country, consumes,” Omole said. He noted that Nigeria had not really made any significant progress in the sector despite huge investments from the Federal government. Also at the event, Deep Karani, Exhibition Director for Power Nigeria, said Nigeria was facing a rapidly increasing population which clearly results in much higher demand for energy needs although infrastructural investments, regulatory and policy limitations were a major challenge hampering the growth of the power sector. “While there are off-grid

sustainable solutions available, Nigeria also needs good governance, proper regulations, and policies that need to be set and enforced for the sector to experience growth,” Karani said at the event in Lagos. Karani noted that both grid extension and off-grid solutions would be needed to provide quality services to the unserved and underserved households and businesses in a timely manner. “My personal prediction is that renewables will play a very important role in Nigeria’s power generation model. It is only a matter of time before we see more clarity in policy and regulations. However, given the size of the market, Nigeria will continue to be a strong energy market in the next 10 years,” Karani said. Other stakeholders at the panel said the current revenue shortfall would adversely impact the ability of the Discos to make capital

investments in metering, network expansion, equipment rehabilitation and replacement that are critical to service delivery. Over the years, while many nations in the world have been able to adequately fix their electricity supply, Nigeria has been an exception. In spite of her rich human and natural resources, the country has struggled to maintain a stable and efficient power sector. Despite an array of technocrats, Nigeria is still unable to produce sufficient megawatts for more than half of its increasing population. For example, some other African countries including Ghana, have celebrated no less than three years of uninterrupted power supply. South Africa, with a population of about 60 million, produces 51,309MW, while Nigeria, with a population of about 190 million, produces just 4,000MW.

he Senate on Wednesday urged the National Planning Commission (NPC) to develop a policy framework that will create financial mechanisms for development cooperation and aid effectiveness in Nigeria. The upper chamber counselled its relevant standing committees to monitor and oversee Ministries, Departments and Agencies (MDAs) that are beneficiaries of developmental aid and grants across Nigeria. The Senate further asked States’ Planning Commissions and Houses of Assembly to domesticate and implement federal policies and laws to enable states achieve aid effectiveness. The resolutions were reached at Wednesday’s plenary following a consideration of a motion titled: “The need to make development aid more effective to work for Nigerians.” The motion was sponsored by Senator Yahaya Ibrahim

Oloriegbe (APC, Kwara Central) and co-sponsored by 52 other Senators. Senator Oloriegbe said “Nigeria as a developing country receives aid from bilateral countries and multilateral organisations, despite not being an aid dependent-country, as the support to it is about five percent of the national budget.” He bemoaned the failure of the National Planning Commission to effectively perform its role of ensuring the monitoring of donor assistance with national priorities in all sectors of the economy. In his remarks, the President of the Senate, Ahmad Lawan, said the true application of aid for the benefit of Nigerians will form part of the legislative agenda of the ninth Senate. “Giving aid to Nigeria should not be treated like it is treated in other countries that are lesser than Nigeria. We must be able to know exactly what the aid is for, and then streamline the aid with our national developmental objectives.

After 10 years of neglect, Akeredolu replaces judges’ rickety vehicles

n continuation of his administration’s promise to create a conducive atmosphere for the workforce, Ondo State Governor, Arakunrin Oluwarotimi Akeredolu, SAN, has procured twenty brand new 2019 model Toyota Land Cruiser and Prado jeeps for the State Chief Judge as well as Judges of the state. Sixteen of the vehicles were received by the Chief Judge of the state, Hon. Justice Oluwatoyin Akeredolu, on behalf of the judges at the Government House, Alagbaka, Akure on Wednesday. Earlier in the year, Governor Akeredolu had presented similar brands to four newly sworn in High Court Judges. The Chief Judge, who appreciated the Governor for the gesture, said Judges in the state,including herself,

have been using ten year-old rickety vehicles before the Governor’s intervention. She said she and her colleagues have various expriences of disappointments arising from the use of rickety old vehicles which they have hitherto been riding. She said:”My colleagues and I have been riding ten year-old vehicles hitherto. We have had various experiences of disappointments in the use of our vehicles. “I recall once I was on the way to Abuja, my vehicle broke down around Obajana. And you know the security situation in that axis. Before long, the boys were gathering. Fortunately for me, I had the pilot vehicle with me. I had to enter the pilot vehicle to get away from that environment.”

Reps urges FG to implement national malaria treatment policy Africa emerges 2nd fastest growing tourism region in the world - Jumia OBINNA EMELIKE

...Asks NCDC to contain outbreak of Lassa fever James Kwen, Abuja

he House of Representatives has urged the Federal Ministry of Health to implement the National Malaria Treatment Policy and ensure that treatment of malaria in all public hospitals is free across the country. The Green Chamber mandated its Committee on Health Care Services to liaise with the Federal Ministry of Health, relevant International Organisations and Donor Agencies to ensure that malaria treatment is free in all public hospitals in Nigeria. These resolutions were reached Wednesday during plenary, following a motion on the Review of the National Anti-Malaria Treatment Policy in Nigeria moved by Benjamin Mzondu (PDP, Benue). Presenting the motion, Mzondu said the House noted that Nigeria was identified as

one of the countries targeted by the President’s Malaria Initiative (PMI) in 2005 to reduce malariarelated mortality by 50% across 15 high-burden countries in sub-Saharan Africa. He also said the House noted that the initiative revolved around four proven and highly effective malaria prevention and treatment measures: InsecticideTreated Mosquito Nets (ITNs); Indoor Residual Spraying (IRS); Accurate Diagnosis and prompt treatment with ArtemisininBased Combination Therapies (ACTs); and Intermittent Preventive Treatment of Pregnant Women. The House “further notes that there are over 100 million people at risk of malaria every year in Nigeria and indeed, it was estimated that about 50% of the adult population in Nigeria experienced at least one malaria attack yearly, while the under five years children have up to

2 - 4 attacks of malaria annually. “Recalls that during the 2005 African Summit on Roll Back Malaria in Abuja, the Heads of Governments and International Agencies signed the Abuja Declaration committing themselves to the Abuja target, one of which stipulated that concerted efforts would be made to ensure that by the end of 2005, at least 60% of those at risk of malaria attacks should have access to good, quality, affordable and efficacious anti-malarial drugs. “Aware that the PMI Strategy for 2015-2020 takes into account the progress over the past decades and the new challenges that have arisen, including the yearly economic losses due to malaria attack in Nigeria which have been put at 132 Billion Naira due to costs of treatment, transport to sources of treatment, loss of man-hours, absenteeism from schools and other indirect costs.

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ith 8.5 percent contribution to Africa’s GDP in 2018, travel and tourism has made Africa the second fastest growing tourism region in the worlds, according to the 2019 Jumia Hospitality Report Africa. The report released recently, which is now in its the 3rd edition, showed that travel and tourism remained one of the key growth drivers of Africa’s economy, contributing 8.5 percent of the GDP in 2018, equivalent to $194.2 billion. According to the report, the growth record placed the continent as the second-fastest growing tourism region in the world, with a growth rate of 5.6 percent, after Asia Pacific and against a 3.9 percent global average growth rate. “Our focus is to continue showcasing Africa as

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a continent full of beauty and opportunity. Through this report, we want to help draw attention to the vast potential of the tourism industry, that we believe is an untapped lever of economic growth,” said Estelle Verdier, Jumia’s head of Travel (Travel.Jumia.com). She was speaking during the official release of the annual report at the Africa Hotel Investment Forum (AHIF) in Addis Ababa, ahead of the 2019 World Tourism Day. Africa received 67 million international tourist arrivals in 2018, to record a +7 percent increase from 63 million arrivals in 2017 and 58 million in 2016. The gradual increase is attributed to the affordability and ease of travel especially within the continent, with spending among domestic travellers accounting for 56 percent as compared to 44 percent international expenditure. Additionally, leisure @Businessdayng

travel remains an important component of Africa’s tourism industry, taking up a majority 71 percent of the tourist expenditure in 2018. Verdier noted that the implementation of the African Continental Free Trade Area (ACFTA) is expected to further boost domestic travel. “To realize the full potential gains will require cooperation from all industry players. Governments have to be willing to eliminate visa requirements for African nationals traveling to their countries. Ministries and other responsible partner organizations should create campaigns that will promote their local travel destinations and tourism offerings to attract more regional travellers. At Jumia, we will continue to offer diversified products at affordable prices including resident rates for regional travellers booking through our platform.”

Thursday 26 September 2019

BUSINESS DAY

news N90bn allegation: I will wave... Continued from page 1

backdrop of allegation of N90 billion fraud involving the vice president. In a tweet on Wednesday, Osinbajo described the allegations as “falsehood”. “In the past few days, a spate of reckless and malicious falsehoods have been peddled in the media against me by a group of malicious individuals,” Osinbajo tweeted. “The defamatory and misleading assertions invented by this clique had mostly been making the social media rounds anonymously,” he said in the tweet. Osinbajo said he has “instructed the commencement of legal action against two individuals, one Timi Frank and another Katch Ononuju, who have put their names to these odious falsehoods”. “I will waive my constitutional immunity to enable the most robust adjudication of these claims of libel and malicious falsehood,” he said. The Federal Inland Revenue Service (FIRS) had in a recent statement denied the allegations made by Timi Frank, former deputy national publicity secretary of the All Progressives Congress (APC), who claimed that the FIRS supported the APC through the Vice President Osinbajo with N90 billion. In the statement by Wahab Gbadamosi, its head of Communications and

Servicom Department, FIRS described the allegation as malicious and a calculated attempt to smear the image of the service and the vice president. “This campaign of calumny and vilifying false claims are entirely libellous, unfounded, in fact, irresponsible and a brazen assault on the integrity of the Service as a responsible and accountable organisation and demonstrates an abysmal ignorance of the budgetary and expenditure process of the FIRS,” the testament said. “In the last four years since Mr. Tunde Fowler has supervised operations at the FIRS, the agency had not received up to N100 billion per annum as cost of collection from the Federation Accounts Allocation Committee (FAAC). FAAC is a public institution, whose records are open to the public,” it said. The statement said it is from the remittances from FAAC , which had never grossed up to N100 billion per annum, that FIRS pays the salary and emoluments and trains its over 8,000 staff, runs over 150 offices and provides for other needs of the Service. It said it is neither plausible nor does it make any sense “that FIRS will commit its resources to a phantom campaign of N90 billion as suggested by Mr. Timi Frank and FIRS does not fund political associations”.

One insurer meets recapitalisation ... Continued from page 1

communicated individual companies on their positions.

Giving the details, he said 26 companies have been granted “No Objection” to proceed with their plans, while the plans of 17 companies were corrected and the companies were advised to resubmit their new plans using paid-up capital and not shareholders fund. Four companies did not have the requisite 2018 financial statements and were thus advised to review their plans of using IPO.

Also, one company has litigation issues and was advised to resolve them as soon as possible to enable its progress. Furthermore, one company’s submission was noted to have met the necessary requirements. The review of submissions from two companies was ongoing while three companies were yet to submit their recapitalisation plans. Salami said NAICOM was resolved to adhere to the recapitalisation roadmap towards achieving its desired objectives in the best interest of all stakeholders.

Africa may experience 50% upsurge... Continued from page 1

thority of central banks, Perez explained that “Libra also relies on all the currencies in its Fiat basket, in the sense that we are going to rely on monetary policies of those Central Banks, whether it’s the European Central Bank or the central banks of the other currencies, so basically, whatever they do on their side in terms of monetary policies would be reflected instantly

in the basket and the price of the Libra coin. So the coin would be an image of the monetary policies of those Central Banks. We see it as a payment system.” Fifty percent of Facebook Libra’s basket will be on the us dollar, the remaining portion will consist of Euro with 18 percent, Yen with 14 percent, British Pound, 11 percent and the Singapore dollar with 7 percent. Surprisingly, the basket will not include the Chinese Yuan, www.businessday.ng

L-R: Martin Ejidike, senior human rights adviser, United Nations; Omobolanle Victor-Laniyan, head sustainability, Access Bank plc; Herbert Wigwe, GMD/CEO, Access Bank plc; Joanne McNally, COO, Mark Eddo Media; Edward Kallon, UN resident & humanitarian coordinator; and Mark Eddo, CEO, Mark Eddo Media, at the Humanitarian High Level Meeting held during the United Nations General Assembly in New York.

Despite N171.4bn support to farmers, local... nor, recently said that the apex bank as at March 2019 has committed N171.35 billion to 920,788 farmers under the ABP initiative with rice growers accounting for the highest percentage of recipients of the money. Emefiele said Nigeria has saved over $600 million from rice imports in 2016 alone owing to the gains of the government’s ABP initiative which, he said, has translated Nigeria from a net importer to a major producer of the crop. Data from the Thailand’s Rice Exporters Association also show that the country imported only 6,537MT of rice in 2018, a staggering drop from 1,239,810MT in 2014 before the commencement of the ABP initiative in 2015. Despite this tremendous decline in imports data and recent increase in local production, foreign varieties of the crop still dominate the Nigerian markets. During BusinessDay’s recent visits to Daleko, Oshodi, Mile 12, Ketu, Oyinbo and Oja Oba markets in Lagos, only few local brands were found on the shelves of traders as foreign brands were largely present in these markets despite

the recent border closure policy and increased local production. The same situation was observed by BusinessDay reporters in Port Harcourt, Anambra, Abuja and Ilorin. B os e Bakare, a r ice trader at Mile 12 market, said that traders hardly get supply of local rice from distributors. “We constantly get supply of foreign brands of rice and rarely get for local brands. Customers still prefer imported rice to locally-produced ones,” Bakare told BusinessDay. The United States Department of Agriculture (USDA) forecast Nigeria’s milled rice 2018/2019 production at 4.78 million MT, up over 2.5 percent from the revised marketing 2017/18 figure of 4.66 million MT. The Federal Ministry of Agriculture puts Nigeria domestic demand for rice at 7 million MT per annum, leaving a gap of 2.22 MMT. Despite domestic efforts made in boosting rice production, perennial problems like insufficient supply chain integration, lack of capacity for farmers, consumers’ high preference for foreign rice varieties and smuggling of the produce are still threats to

local production. But since the border closure over a month ago, volumes of imported rice smuggled through the land borders have reduced, leading to a spike in prices. “Before the Federal Government began the border closure exercise, I used to go to Cotonou market almost on daily basis to bring at least 60 bags of 50kg parboiled rice,” said a rice dealer in one of the notable markets in Lagos, who gave her name as Iya Bola. Experts in the rice value chain said that some of the rice in the markets now are local varieties but rebranded as foreign varieties since the recent border closure policy of the government. They attributed the rebagging of the local rice to sharp practices of traders and Nigerians’ high preference for foreign brands. “Since the border closure policy, traders buy between N14,500 and N15,000 for 50kg bag of local brands and repackage with sacks of foreign varieties to sell between N20,000 and N22,000,” said Rotimi Fashola, general manager, Elephant Group plc. “There are very good mills in Nigeria today that you cannot spot the difference between local and foreign varieties anymore,”

Fashola said. Similarly, Muhammed Augie, state chairman, Kebbi State Rice Farmers Association, said that lots of traders from the south have been going to the state to buy rice in large volumes of rice and larger percentage of it is repackaged. “As a result of traders’ desire to make higher profits on their investments and Nigerians’ high preference for foreign rice, most of the local rice bought from Kebbi and other key rice producing states are being rebagged into foreign brands and sold,” Augie said. “This is why you will not find local brands in markets across major cities in the country,” he added. To validate the statements by the stakeholders, BusinessDay visited some markets to examine some of the rice samples to see if they can be easily differentiated. For some of the rice milled locally or with a semi milling machine, one can easily differentiate between the locally produced varieties and the imported ones. However, for the ones milled by integrated rice millers such as Olam, Elephant Group and Stallion, among others, they cannot be differentiated from foreign varieties, BusinessDay investigation finds.

the currency of the world’s second largest economy. Responding to questions from BusinessDay on the proposed success rate of Libra currency in Africa, Betrand Perez said: “We see that there is a demand from customers in countries in Africa to use mobile money services because they bring a lot of value to them in terms of the ability to not only send and receive money but to store money in a much more secure way than using cash. And that’s really what we want to achieve with Libra is

to have at scale (worldwide) a way for people to send, receive and save money securely simply with a mobile phone subscription. “This is something that we feel is really important to bring because there are too many financially excluded people in this world and Libra can achieve the goal of solving a significant part of that gap. From the security perspective, some African countries including Nigeria are actively taking steps to enforce cashless policy because it is dangerous to

carry huge amounts of cash around. This will also eliminate the cost of paying bank charges to save money,” he added. Christina Smedley, VP, brand and marketing for Calibra, one of the 28 members of the association told BusinessDay that: “From what we have seen in Africa, a lot of money is being sent across border, which can’t be done using the Mpesa type model in Kenya, so we know that we would be able to adapt and help people transfer across borders particularly.”

Founding members need to invest a minimum of US $10 million in the Libra association. Wallets would be available on WhatsApp, Facebook messenger, all Facebook products and would be interruptible with other wallets so that other people building on the Blockchain would be linked. The Association guarantees that data shared with Libra will not be shared with Facebook, and has already started sorting out regulator y processes in Switzerland.

Continued from page 1

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Thursday 26 September 2019

BUSINESS DAY

Garden City Business Digest BUA versus NPA in PH:

Dockworkers join the frail but House of Reps force rapprochement • NPA says it decommissioned BUA berths on safety ground Ignatius Chukwu

ockworkers numbering over 100 serving berths five, six, seven and eight (under BUA Ports and Terminal Limited) in Port Harcourt blocked the gates of the Nigerian Ports Authority (NPA) in the Garden City demanding reopening of BUA section of the port. The NPA said they had decommissioned berths five, six, and seven because BUA said they were unsafe, but BUA sources said they merely wrote asking for approval to repair the affected berths after some hoodlums vandalized them. The situation had led to ships not berthing in BUA section in Port Harcourt and the workers not earning any income anymore. The about 78 regular BUA workers are said to face redundancy consequences including possibility of being turned into ‘contract staff’. The protest was led by the national trustee, Tony Nwokocha, and the Rivers State chairman, Waite Harry, who shared leaflets detailing their grievances. They granted to interview to newsmen in which they threatened to shut down the ports in Nigeria if the NPA does not take a second look at their action. The leaflets said: “We are dockworkers and we want to work; injury to one is injury to all dockworkers. We do not have any business other than ship work, and BUA Terminal is our source of livelihood. The disagreement between NPA and BUA should not affect dockworkers. “NPA should please allow ships to discharge while resolving their issues with BUA at London Arbitration. BUA is creating jobs for youths and so BUA factories must be allowed to function. Over 14 ships are waiting to berth. Only four berths are working right now and cannot manage all the waiting ships. “Don’t cause tension and crisis in Port Harcourt Port; BUA Terminal is very safe for us to work. NPA should obey 2018 court order asking

Abdulsamad Rabiu, BUA CEO

Hadiza Bala Usman, managing director, NPA

them to allow BUA to operate, else, the entire Port Harcourt will not work. Do not frustrate Nigerian businessmen and investors. NIMASA and Shippers Council should please intervene and save dockworkers, agents and importers. We will shut down all Nigerian ports if the NPA decision is not reversed.’ Some of the workers however gave newsmen deeper understanding of the crisis. BUA is at the London Arbitration with the NPA. A court ruled in 2018 that BUA should continue to operate while adjudication is ongoing. It is not clear if BUA thus is paying all the dues but a BUA source said NPA submits bills which BUA still pays. The leaders said dockworkers have been badly hit, thus they embarked on protests. It was gathered that on June 17, 2019, NPA wrote to BUA decommissioning the berths, since then, there have been no vessels calling our berths (5, 6, 7). The chairman added that dock workers are paid by tonnage; so if they do not have vessels to attend to, they do not have income. They would simply be out of action and would naturally become restless in the port area. “We want the NPA

to allow ships to berth here.” BusinessDay investigations within the dockworkers revealed that in 2014, it was observed that some hoodlums went underground to cut the pipes. This was reported to the landlords, the NPA, before making some arrests, though nothing came out of it. Soon, they did it again, this time cutting the steel beam at the middle of berths. This can make the berth not to be very stable, though the beams are not the main pillars carrying the berths. BUA sources said the hoodlums were not after them (BUA). It was gathered that later, arrests were made at nearby Abonnema. The suspects were prosecuted but BUA allegedly lost the case in February 2019 because they did not have the status of ‘owners’ since they were mere tenants and the owners (NPA) did not show any interest. The dockworkers said BUA wrote the NPA requesting for approval to repair the berths but the next thing they saw was that NPA decommissioned the berths that they were not safe for operations.

Port sources said under normal circumstances, the NPA should write to request details such as cost, scope of work, and time needed. They would either approve or not approve. In this case, they simply decommissioned the berths and thus stopped BUA from working. A workers said; “It appeared as if stopping BUA was the main objective instead of getting the berths repaired. The decommissioning did not state what next or how long.” The chairman said: “Vessels are waiting at sea with demurrage. We have 14 ships waiting with gypsum, wheat, bulk malt, POP, Caustic Soda, Tallow, PET Coke, PMS, Fish, AGO, Bitumen, and Containers. This is cost to consumers because everything eventually would pass to consumers. Port charges cause high costs to imported goods. All we need is to allow repairs and work to go on” On the relationship between BUA and the NPA, a source said it is cordial, except a break in transmission has occurred. It was gathered that the only other terminal operator in PH, PTOL, is now under pressure to handle all vessels which have queued up. This is at a time Port Harcourt ought to relieve Lagos. Sources in BUA said the company did a lot to convince the shipping lines to move their vessels to deliver in PH port only for them to experience such ugly situation. All stakeholders have thus appealed to BUA and the NPA to move quickly and resolve the issues to allow free flow of port operations nationwide. Meanwhile, the House of Representatives Ad-Hoc Committee on Ports & Habours led by Yusuf Buba Yacub, which was in the eastern region to on fact finding mission on why eastern ports are not working well, paid huge attention to the BUA/NPA matter and protests and threats of dockworkers. Sources said the objective was to resolve the matter and allow free flow of port operations in Nigeria. Sources in both the NPA and BUA expressed optimism that lasting solution seemed around the corner.

Akpabio’s bad signal for a bad start Port Harcourt by Boat

IGNATIUS CHUKWU

op politician, Godswill Akpabio, the former governor of Akwa Ibom State, seems to start on wrong foot. He began by writing off the feats of the NDDC as frittered funds and also kept the Commission and VIPs waiting for two days when he paid a visit last week. Last weekend, he praised the N24Bn OgbiaNembe Road project executed by NDDC and Shell, and said the Commission has done well in some instances. Many whistled over this. Did he judge unheard, as an adage said? Did he pass a verdict too hurriedly? When he became minister, his first salvo was to write castigate the entire effort of the 18 years of the Niger Delta Development Commission (NDDC), accusing the CEOs of frittering away the funds of the Commission. In doing so, he shot at his former deputy and last substantive CEO of the NDDC, Nsima Ekere,

as the worst in this offence. This seemed to raise eyebrows especially as many felt Akpabio should remember the glass house he left behind in Akwa Ibom. This seemed to bring back calls Few years back by some editors who called for a rethink in choice of NDDC CEOs. They had argued that appointing politicians appointing the CEOs only on political consideration was faulty. This could be true. Many have admitted that when certain persons not eaten up by politics take over, the Commission seems to run in fast pace and in right focus; but that when pure politicians take over, they think nothing more than the next election. Some are already pointing at what the current Ag CEO, Akwagaga L.Enyia (PhD) is doing on her very interim mandate. They think this is as example of what the NDDC may witness should pure technocrats take over on a permanent basis. Now, imagine if both minister and NDDC boss are to be pure politicians. Now, Akpabio is Minister of Niger Delta Minister and the ministry has been firmly placed on the head of the NDDC by PMB. Journalists covering the Commission have witnessed a huge difference now that the Commission is to be a parastatal of the Ministry instead of reporting directly to the Presidency. It would mean that if any director in the Ministry coughs, the NDDC CEO would catch cold. This is because no parastatall reports directly to a Minister, but through a director. This would mean that an NDDC CEO would no longer be a

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real CEO because he/she would have to report to a director in a ministry. This never happened before as far as the NDDC was concerned. How would water and oil play in this new marriage? Ministers are known to want the head of the cow in the pot, always. The first bad signal not withstanding, Akpabio followed up when he paid his first official visit to this vassal entity, the NDDC. He kept the Commission on hold for two consecutive days. He was scheduled to arrive PH on Wednesday last week to inspect key projects.

Godswill Akpabio

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As the new boss, all paraphernalia was laid out; vehicles, security, protocol, press, personnel, etc. Everyone waited idly from 12 noon to 4pm and dispersed because minister did not make it from Abuja. Youths from various states who said they came to welcome him drummed till night. The next day, the waiting resumed; staff sat at the hall waiting for him, till it was late again and everyone dispersed. He was said to have eventually come. This gave tongues room to wag. Does a minister not know the sensitivity of a state visit when all protocol would be rolled out to the detriment of all else? Is NDDC in new bureaucratic trouble? What did Akpabio actually come to PH to accomplish? Since he made it to PH on Wednesday, what task was he performing that took all day again before stepping to the NDDC headquarters? Could be the task of bringing the senator in APC back to the fold? In his remarks, “Mr. President has placed the supervision of the NDDC under the palms of the Minister of Niger Delta Affairs.” Indeed! The looming danger is that bureaucracy could stretch further, and more broth could spoil the soup. It is not clear if the NDDC would still have to submit through the office of the SFG, a situation that would make the CEO (or is it now General Manager) of the Commission to be at the beck-and-call of too many masters. Whatever the case, the two days waiting to which the NDDC was sentenced just to receive a minister seems to send dangerous signals for a bad time; but Akpabio can say it will not be so.

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Thursday 26 September 2019

BUSINESS DAY

Investing in Rivers State NNPC GMD leads top team to reopen 35,000bpd Kula flow-station Ignatius Chukwu

he shadow-fighting over right to operate the 35,000bpd Kula oilfield known as Oil Mining Lease (OML) 25 is over. Now, the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, is to flag off the shutdown flow station located at Belema town. OML 25 is located 50 km (of water travel) southwest of Port Harcourt in the onshore eastern delta and is part of the NNPC/Shell Joint Venture (JV). SPDC and Belemaoil reached deals on September 17, 2019, in Abuja at the instance of the new Petroleum Minister (Timipre Sylva) after the groundwork had been done by Kyari, all to resolve the dispute and plug the daily loss of about $1.9m. Shell got reaffirmation of their license which was renewed in November 2018 while Belemaoil got the right to maintain the oil field including right to jobs and contracts; and the communities got huge payouts and community

Mele Kyari, NNPC GMD

development projects. This has led to jubilation in all quarters especially in the communities. The founder of Belemaoil, JackRich Tein Jr, has paid a visit to Kula to

report to the monarchs and the people and make way for the visit of the top industry leaders from Abuja. Belemaoil is to facilitate safe operations in the oceanic field.

A statement from Belemaoil said the GMD is to lead a high powered delegation to Kula on September 28, 2019, with a view to the re-opening of OML 25 Flow Station in the area which was shutdown over two years ago due to a protracted dispute between Shell and its host communities, but with Belemaoil at the background. The Belemaoil statement said; “The move followed a peace agreement brokered by the Group Managing Director of NNPC and the new Minister of State for Petroleum Timipre Sylva between Shell and Belemaoil Producing Limited. The statement by the Belema Founder said under the peace agreement, while Shell retains the ‘Operatorship License’ of the oil facility, Belemaoil will control Maintenance, Operation, Employment, Contracts and Surveillance jobs. Jack-Rich further explained that both companies will jointly handle the developmental needs of the host communities. According to the engineer, “The agreement enables Belemaoil and Shell to work together. Shell remains the ‘License Owner’, remains the License Operator’; but Belemaoil will be

responsible for ‘Operation and Maintenance’, Belemaoil will employ the personnel in the entire field, Belemaoil will ensure that all the ‘Surveillance and Patrol Services’ are carried out in the field. Belemaoil and Shell will jointly work with the host communities to understand their developmental programmes and needs and ensure that they are carried out to the satisfaction of the communities. “It is a critical deal and it is a winwin deal where everybody is happy”, he said. The founder said at thanksgiving in Kula that the peaceful resolution calls for unity among all sons and daughters of Kula Kingdom, and an end to all forms of hostility in Kula. For his part, the king of Belema people, Bourdillon Allen Ekine, the Oko XXVIII, described the Tein Jr as the Moses of the people sent by God to liberate them from enslavement and backwardness. Also speaking, the spokesperson of Belema Community, a chief, Fiala Okoye-Davies, described the founder as eminent ambassador of Kula Kingdom, a trail blazer, a pathfinder, a high flier, and a pacesetter. Other leaders also spoke in same vein.

NEPC begins training of over 100 exporters from South-South Ignatius Chukwu & Kelechi Esogwa

ver 100 budding exporters in the South-South region began training in Port Harcourt, Rivers State, on Thursday, September 19, 2019, to grasp the critical steps needed to survive the international market. The Nigerian Export Promotion Council (NEPC) said it was in a bid to lead the oil region away to non-oil products and to boost export. Insiders said the lure of oil revenue has made it difficult for business operators in the region to believe there is any meaningful source of livelihood outside oil. They said easy money creates a nonchalant populace. The event which is taking place at Aldgate Hotels on Abacha Road in Port Harcourt is said to be organized for newly registered exporters. The south-south zonal coordinator of NEPC, Joe Itah, said in an opening address that the exercise came at a right time when the federal government is keen on diversification away from oil. He said exporters must find a way to interact and share ideas and encourage each other to reduce decline syndrome when learning the ropes of the export business. He talked about deepening knowledge base in the export business where much information is needed. He said; “If potential exporters must effectively take advantage of the opportunities in the international market, they must be well mentored to acquire basic knowledge needed to withstand the challenges associated with international trade. ‘Today’s forum is another in the series of our programmes designed for mentoring newly registered but potential exporters. This clinic is one

Joe Itah, zonal coodinator, South-South

of our flagship programmes established to build the capacity of young exporters. It has added tremendous value and impact to the Council’s effort at enhancing the contribution of the non-oil exports to our economy, particularly in the area of job creation, entrepreneurship development and inclusiveness in trade”. He said the ‘Zero-to-Export’ scheme of the FG (grooming persons from zero base to export base) which lasts for six weeks is targeted at intensive coaching of budding entrepreneurs. Resource persons were said to be carefully selected in tandem with the overall purpose of the programme as Itah took them in the technical

session on how to be ready to be an exporter. The executive secretary, Institute of Export Management, Ufon Udofia, handled the intricacies in international trade (export business), while export procedures and documentation was handled by Kobo Evelyn, NEPC’s Assistant Chief Trade Promotion Officer for the zone. Eric Alalibo, a seasoned exporter, shared experience with the mentees. In the technical session, Itah delivered a paper titled: “Being Export Ready: What You Need to Know”, in which he gave what it takes to be ready for the export market. He said: “Getting ready entails having clear and achievable objectives, having export plan, knowledgeable management team, available products, doing research on its supply base, and knowing the procedures and documentation. In his own technical submission on ‘Intricacies in international trade, Udofia said the intricacies include brand building, export strategy, and building strong/lasting relationships. According to him, the intricacies include: brand building, export strategy, building strong and lasting relationships.

L-R:Ofon Udofia of the Institute of Export Operation & Management; Joe Itah of NEPC; Eric Alalibo of Sololia Ltd at the training www.businessday.ng

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Football:

Real Madrid Academy in PH excites Wike Ignatius Chukwu

ivers State Governor, Nyesom Ezenwo Wike, has expressed happiness that the Real Madrid Football Academy has become a reality, saying that major international football stars would be groomed at the facility. Addressing journalists, Gov Wike who commissioned the facility last week Saturady said that all the facilities were in place for the successful take off of the Academy. “When we promised that we will set up a Real Madrid Football Academy that will help groom international stars in the area of football, @Businessdayng

so many people played politics and said that it was fake. “We are happy that it has come to fruition. We have sent people to Madrid and they have been trained as instructors and coaches. We also sent the players of Banham Model Primary School, winners of Channels Television Kids Cup to Madrid for training. They will form the first set of students “, he said. The Governor said the development of the Real Madrid Football Academy is a confirmation that his Administration is serious with keeping promises made to Rivers people. He said Nigerians would regularly watch live on television the excellent facility and the football that goes with it.

Thursday 26 September 2019

BUSINESS DAY

ECONOMIC MONITOR

A WEEKLY PUBLICATION OF BUSINESSDAY RESEARCH & INTELLIGENCE UNIT(BRIU)

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Appraising students’ performance in recent WASSC Examinations ADEMOLA ASUNLOYE

he council responsible for the West African Senior School Certificate Examination (WASSCE) released the May/June 2019 results in July 2019. The results of the examination taken in the five countries that formed the West Africa Examination Council (WAEC) showed that a total 1,596,161 candidates registered for the May/June WASSCE in 18,639 recognised secondary schools in Nigeria in 2019. A total of 1,309,570 candidates representing 82.04 per cent of the candidates who sat for the exam obtained a minimum of 5 credit passes with or without English Language and/ or mathematics. Of this number, 507,862 representing 49.77 per cent were male candidates while the remaining 512,657 (50.23 per cent) were female candidates. However, 5,988 registered candidates did not sit for the exam. From the analysis, 64.18 per cent of the 1,590,173 candidates (822,098 males and 768,075 females) who sat for the examination obtained 5 credits including mathematics and English Language in 2019. This is a 16.97 percentage improvement in the candidates’ performance in comparison to 2018 performance. On the contrary, 180,205 candidates representing 11.33 per cent of the total number of candidates who sat for the WASSC Examination have their results withheld for

Source: NBS, BRIU

further investigation by the council owing to reported cases of examination malpractices. Female candidates outperformed their male counterparts in obtaining a minimum of five credit passes including English Language and Mathematics— this is, 512,657 female candidates and 507,862 male candidates. Also, 1,918 candidates with varying special needs are among the 1,596,161 candidates who registered for the May/ June WASSC Examination. Out of the 1,918 candidates, 299 candidates were visually challenged; 842 candidates have impaired hearing; 85 candidates were physically challenged; 158 candidates had low vision while

75 candidates were spasticcum mentally challenged. Data from the National Bureau of Statistics (NBS) revealed declining trends in the number of those who sat for the examination as well as the minimum credits passed including English Language; minimum credits passed including mathematics and minimum credits passed including mathematics and English Language within the last three consecutive years. The per for mance trend showed that the total number of candidates who sat for the examination dropped by 1.4 per cent from 1.72 million candidates in 2016 to 1.69 million candidates in 2017; it further declined by

Source: NBS, BRIU www.businessday.ng

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0.60 percent from 1.69 million candidates in 2017 to 1.68 million candidates in 2018. The total number of candidates who had minimum of 5 credit passes including English Language represented in the chart by “C* English” reduced by 3.09 per cent to 1.01 million candidates in 2017 and a further significant decline of 11.64 per cent to 896,191 candidates in 2018. Although, the total number of candidates who had minimum of 5 credit passes including mathematics represented in the chart by “C*Mathematics” increased by a whooping 12.21 per cent to 1.15 million candidates in 2017. However, the total number of “C*Mathematics” declined by 3.79 per cent in 2018 which is higher than “C*Mathematics” in 2016 by 81,491 results. The analysis revealed further that the total number of candidates who had minimum of 5 credit passes including mathematics and English Language represented in the chart by “C*Maths & Eng” increased from 870,857 candidates in the year 2016 to 913,039 candidates in 2017. However, this figure took a negative turn as the “C*Maths & Eng” reduced significantly by 13.05 per cent to 793,910 candidates in 2018. Overall, the performance of candidates who sat for the examination and who obtained @Businessdayng

a minimum of 5 credit passes with: English Language; with mathematics, and with mathematics and English Language, from 2017 to 2018 dropped by 0.60 per cent, 11.64 per cent. 3.79 per cent and 13.05 per cent respectively. In 2018, over 1.57 million candidates comprising 822,941 males and 748,595 females sat for WASSCE in public schools as against 1.56 million candidates in the previous year. From the lot, 849,069 of the candidates had 5 credits and above including English Language; 1.06 million candidates had 5 credits and above including Mathematics while 756,726 candidates representing 48.15 per cent of the total candidates who sat for the examination had 5 credits and above including Mathematics & English Language. Similarly in 2018, 109,798 candidates representing a decline of 17.60 per cent sat for the WASSCE in private schools compared with the number of candidates who sat for the examination in 2017. Also, 54,417 of these candidates were males while the remaining 55,561 candidates were females. The result released by WAEC showed that 47,122 of the candidates had 5 credits and above including English Language; 47,434 had 5 credits and above including Mathematics while 37,184 of the candidates representing 33.81 per cent of the total candidates who sat for the examination had 5 credits and above including Mathematics & English Language. Regionally, the South West region generally recorded the highest influx of candidates that sat for the WASSC examination as well as those who are represented in “C*English”, “C*Mathematics” and “C*Maths & Eng” in 2018. On a state by state basis, among the top 5 states with the highest number of people who sat for WASSC Examination in 2018, Lagos State had the highest, 210,717 number of candidates in public and private schools. It was followed by Ogun State with 113,833 candidates; Kaduna, 82, 168 candidates; Oyo, 74,386 candidates and Rivers State recorded 71,192 candidates who sat for the examination.

Thursday 26 September 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

DEMETRI SEVASTOPULO IN NEW YORK

resident Donald Trump asked his Ukrainian counterpart to investigate former vice-president Joe Biden and his son, according to a White House memorandum of a call between the leaders. Mr Trump had said a transcript of the call, which has sparked an impeachment inquiry, would prove he did not try to pressure Volodymyr Zelensky by threatening to withhold nearly $400m in military aid. While the memorandum provided by note takers in the White House Situation Room contained no direct evidence that Mr Trump said he would withhold the money, it revealed that he asked the Ukrainian president to talk to William Barr, his attorney-general, and Rudy Giuliani, his personal lawyer, about Hunter Biden and his father. “There’s a lot of talk about Biden’s son, that Biden stopped the prosecution and a lot of people want to find out about that so whatever you can do with the attorneygeneral would be great,” Mr Trump said, according to the notes, which continued: “Biden went around bragging that he stopped the prosecution so if you can look into it . . . It sounds horrible to me.” In the call, Mr Trump asked Mr Zelensky to speak with Mr Giuliani, saying his personal lawyer was a “very capable guy”. “Rudy very much knows what’s happening, and he is a very capable guy. If you could speak to him that would be great,” Mr Trump said. Mr Zelensky acknowledged the

Trump asked Ukrainian leader to investigate Bidens White House releases memorandum of call at the centre of impeachment inquiry

request by Mr Trump — which the US president described as a “favour” — and said that one of his assistants had already spoken with Mr Giuliani. “We are hoping very much that Mr Giuliani will be able to travel to Ukraine and we will meet once he

Departure comes as growth in ecommerce group’s core marketplace business flags

Vietnam exports to US jumped 33% while China’s fell 12% yearon-year in first half

sia’s emerging economies have been the big winners from the US-China trade war and they will gain even more if it escalates, according to the latest outlook from the Manila-based Asian Development Bank. Exports from developing Asian countries to the US rose by 10 per cent over the previous year in the first half of 2019, even as exports from China fell by 12 per cent. Exports from Vietnam to the US jumped by 33 per cent and from Bangladesh by 13 per cent. The report shows how the huge trade diversion effects caused by the US-China tariff war are creating winners and losers as they reshape global supply chains, with Bangladesh seizing market share in textiles and Vietnam in electronics. “Chinese products are encountering tariff measures so exports and production are slowing down. Naturally, suppliers connected to these Chinese exports are also slowing down,” said Yasuyuki Sawada, chief economist at the ADB, which lends to developing countries in the region.

“But at the same time we see this rather positive channel through trade redirection,” he said, at the launch of an update to the bank’s flagship Asian Development Outlook. The more serious trade tensions get, the bigger the trade redirection effect will become. In a worst-case scenario, with 30 per cent tariffs on all US-China trade plus an extension of the trade war to automobiles, the ADB expects a drag on overall growth in developing Asia of 0.7 per cent over the next few years. Within that, however, Vietnam’s economy would grow by an additional 2.3 per cent, with Malaysia, Thailand, Bangladesh and the Philippines all coming out as winners too. The analysis does not include the impact of uncertainty over trade hurting investment, which could lead to a worse outcome in reality, Mr Sawada noted. For the region as a whole, the ADB trimmed its growth outlook for 2019 from 5.7 per cent to 5.4 per cent, reflecting the global slowdown, trade tensions and a “sharp contraction” in the global electronics cycle — especially for semiconductors. www.businessday.ng

on the board. While the then US vice-president called for the prosecutor’s dismissal and threatened to withhold $1bn in US loan guarantees if he was not fired, his calls were part of a wider effort involving US officials in Kiev, Western allies and organisations such as the IMF

Ebay chief Devin Wenig steps down amid strategic review

Asia’s emerging economies are winning US-China trade war ROBIN HARDING IN TOKYO

comes to Ukraine,” Mr Zelensky said. Mr Trump has repeatedly alleged that Joe Biden improperly pressured the Ukrainian government in 2016 to fire a top prosecutor who was investigating Burisma, a company where Hunter Biden was

and the World Bank to crack down on corruption in the country. Mr Trump had pledged on Tuesday to release a transcript of the call at the heart of a scandal that has rapidly engulfed his presidency. But his effort to blunt the growing uproar from Democrats did not stop Nancy Pelosi, the Democratic House speaker, from announcing that she would launch an impeachment inquiry because his actions had amounted to a “betrayal of his oath of office [and] betrayal of our national security”. Mr Trump fired a barrage of tweets on Wednesday morning lambasting the Democrats for pursuing a “witch hunt”, in language echoing his response to the now-concluded Russia investigation overseen by Robert Mueller. “There has been no President in the history of our Country who has been treated so badly as I have. The Democrats are frozen with hatred and fear. They get nothing done. This should never be allowed to happen to another President. Witch Hunt!” Mr Trump tweeted from New York. “Will the Democrats apologise after seeing what was said on the call with the Ukrainian President? They should, a perfect call — got them by surprise!”

MAMTA BADKAR IN NEW YORK AND RICHARD WATERS IN SAN FRANCISCO

bay’s president and chief executive Devin Wenig has stepped down after disagreements with the online retailer’s new board, as the company pushes ahead with a strategic review of its business. The departure comes six months after the ecommerce company bowed to investor pressure and appointed representatives from two activist shareholders, Elliott Management and Starboard Value, to its board. Since then, growth in its core marketplace business has flagged, adding to tensions that resulted in Tuesday’s departure, according to a person familiar with the company. Mr Wenig admitted to the disagreements in a farewell post on Twitter. “In the past few weeks it became clear that I was not on the same page as my new Board. Whenever that happens, it’s best for everyone to turn that page over.” A former Reuters executive, he took the helm at eBay four years ago as it tried to a sort through a series of earlier acquisitions and

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revive its original ecommerce operations. The company had spun off both Skype and PayPal, but under Mr Wenig hung on to its classified advertising and the StubHub ticket sales operations, drawing fire from Wall Street critics. The activist investors did not immediately push to oust Mr Wenig after joining eBay’s board this year. But his departure now is not a “complete surprise, given the relative underperformance of core marketplace over the years and the ongoing activist involvement”, said Youssef Squali, an internet analyst at SunTrust Robinson Humphrey. The total value of goods sold through eBay’s marketplace fell 5 per cent in the first half of this year, adding to investor frustrations. Under Mr Wenig, the company has looked for growth through adding payments and advertising options for its sellers, but attempts to improve the experience for buyers and sellers have failed to prevent a further erosion of its share of online commerce. The ecommerce pioneer, which had its beginnings as an auction site, said its strategic review of its asset portfolio, includ@Businessdayng

ing StubHub and eBay Classifieds Group, is continuing to move forward with Goldman Sachs advising. Ebay said it would carry out an internal and external search for a new chief. Scott Schenkel, who most recently served as the company’s finance chief, will serve as eBay’s interim chief. Meanwhile, Andy Cring, currently vice-president of global financial planning and analysis, will serve as interim chief financial officer. The California-based company also reaffirmed its full-year guidance for organic revenue growth of between 2 and 3 per cent, and adjusted earnings of $2.70 to $2.75 per share. eBay shares, which are up nearly 39 per cent year-to-date, fell 1.5 per cent to $38.96 in morning trade. In a statement, Thomas Tierney, chairman, said Mr Wenig had been “a tireless advocate for driving improvement in the business, particularly in leading the company forward after the PayPal spin-off”. He added: “Notwithstanding this progress, given a number of considerations, both Devin and the board believe that a new CEO is best for the company at this time.”

Thursday 26 September 2019

BUSINESS DAY

NATIONAL NEWS

Venezuela leader Maduro hopes Putin will offer more than words Caracas needs fresh loans amid economic crisis but Kremlin is non-committal MICHAEL STOTT IN LONDON AND HENRY FOY IN MOSCOW

hreats of military invasion, sweeping economic sanctions, people power, recognition of a rival government, even an attempted uprising — the US has tried almost everything to topple Nicolás Maduro. But Venezuela’s revolutionary socialist president is still clinging to power after six years, despite a ruined economy, widespread shortages of food, power, fuel and medicine, serious human rights abuses and the exodus of more than four million refugees. Mr Maduro now hopes that an official visit to Moscow this week will give him a fresh opportunity to remind the world that he remains in charge in Caracas and enjoys a powerful ally in the form of Russian president Vladimir Putin. The Venezuelan leader, ever mindful of the risk of coup attempts, announced his departure for Moscow in a tweet shortly before taking off on Monday evening. “We will seek new paths which deepen co-operation and exchange between our peoples within the framework of building a multipolar world,” he said. The two presidents will hold a one-on-one meeting on Wednesday, the Kremlin said, but no agreements are planned to be signed, dampening Caracas’s hopes of badly needed financial support. Moscow is Mr Maduro’s most prominent foreign supporter, as a critical energy supplier, defence partner, creditor and international cheerleader. But although state-controlled oil firm Rosneft has extended more than $6bn in loans to its Venezuelan counterpart PDVSA in recent years, no fresh credits have been advanced in the past two years and the Russians have been steadily extracting repayment. “The most diverse aspects of bilateral co-operation will be discussed. Of course, they will exchange views on regional affairs, primarily Latin American affairs, on the topic of direct interference in Latin American affairs by third parties and states,” Mr Putin’s spokesman Dmitry Peskov told reporters. “Signing of documents is not planned.” Russian officials have sought to paint Venezeula’s crisis as the fault of tight US economic sanctions imposed under the Trump administration and have condemned what they describe as unfair unilateral decisionmaking by Washington. Venezuela’s opposition, how-

ever, believes Moscow’s patience with Mr Maduro is wearing thin. “What we’re hearing from the Russians is that Putin thinks Maduro is an idiot and doesn’t really like him but wants to be repaid,” said Vanessa Neumann, the official representative of opposition leader Juan Guaidó in London. “Maduro is in trouble . . . but the Russians are not inclined to put more money behind him.” President Donald Trump at the start of this year recognised Mr Guaidó as Venezuela’s interim president, declaring that Mr Maduro’s win in last year’s presidential election was illegitimate. More than 50 European and Latin American nations followed the US lead but Mr Guaidó has been unable so far to dislodge Mr Maduro despite mass protests and an attempted uprising at the end of April. The firing this month of Mr Trump’s national security adviser John Bolton, a leading advocate of military action against Venezuela, deprives Mr Guaidó of one of his most pugnacious supporters. Mr Maduro has now outlasted five US national security advisers, leading to questions in Washington about the direction of US policy. Mr Maduro’s visit, which was not confirmed by Moscow until a few hours before his plane landed in the city, comes after a steady flow of meetings between Venezuelan and Russian officials this year. Past meetings have elicited varying levels of tangible support. While Moscow agreed in November to restructure $3.15bn worth of debt owed by Caracas, Mr Maduro’s last visit in December 2018 brought vague promises of investments in the oil sector that Russian officials privately talked down. Mr Putin told the FT in June that Moscow “has nothing to do with what is happening in Venezuela”, but that “Russian specialists and instructors” were working there as part of military supply agreements. Moscow has made several weapons deals with Caracas and flew two nuclear-capable bombers there last year in a show of support. The FT revealed last month that Rosneft was Venezuela’s sole supplier of petrol in June. “In the past few years, Russia has become a crucial support for us in various spheres. In the first instance; in the sphere of military-technical co-operation,” Mr Maduro said in an interview with Russian state TV this week. “Co-operation in the sphere of Russian-Venezuelan trade is flourishing too.” www.businessday.ng

Body of Danske Bank’s former Estonian chief found

Aivar Rehe was at the heart of a €200bn money-laundering scandal RICHARD MILNE, NORDIC AND BALTIC CORRESPONDENT

former Danske Bank executive at the heart of a €200bn moneylaundering scandal in Estonia has been found dead in an apparent suicide, according to local police. Police said on Wednesday that after two days of searching for Aivar Rehe, who led Danske Bank in Estonia from 2006 until 2015, they had found his body at his home in the capital of Tallinn. D a n s k e B a n k ’s E s t o n i a n branch is at the centre of one of the largest-ever money-laundering scandals, with €200bn of suspicious money flowing through it from countries including Russia, Moldova and Azerbaijan for more than a decade. The scandal has led to criminal probes against the bank and senior executives in the US, Den-

mark, Estonia and France. Estonian prosecutors said on Tuesday that Rehe was not a suspect in their investigation. Currently, 10 former employees, mostly lower-ranking ones, are suspects in the Estonian investigation while Danish prosecutors have charged several senior managers in Copenhagen including the bank’s former chief executive and chief financial officer, Thomas Borgen and Henrik Ramlau-Hansen. Police declined to give further details, but people familiar with the investigation said there were no doubts that the 56-year-old had taken his own life. Rehe had told local media that Danske’s anti-money laundering measures and customer checks were sufficient but that he felt responsible for the scandal. “I’ve run the bank for 10 years and these were my people,” he told Postimees newspaper in March. Rehe had worked as director-

general of the tax and customs authority before joining an Estonian bank that after several takeovers became Danske’s local branch in 2007. Estonian financial regulators first forced Danske to close its business serving non-resident customers in 2015, before shutting the entire operations of Denmark’s largest bank in the country. The scandal has cost Danske more than 60 per cent of its market capitalisation and led to the ousting of both its chief executive and chairman. Danske has admitted that most of the €200bn in non-resident money that flowed through its Estonian branch between 2007 and 2015 was “suspicious” but that it cannot calculate how much was down to actual money laundering. The US Securities and Exchange Commission and Department of Justice are both investigating Danske in probes expected to last several years.

Vox Media acquires New York Magazine Deal aimed at building scale and breadth of revenue streams ALEX BARKER, MEDIA EDITOR

ox Media has bought New York Magazine in an all-share deal that brings the storied US publication, whose previous owners include Rupert Murdoch and the late banker Bruce Wasserstein, under the wing of a digital publisher. Vox, which runs websites such as Recode and The Verge, and New York Media, the company behind the flagship magazine as well as sites including Vulture and Intelligencer, declined to disclose the terms of the transaction. Pam Wasserstein, chief executive of the struggling New York Media group, said that during discussions with Vox’s Jim Bankoff

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it “quickly became clear that our companies pair incredibly well”. The deal will make Vox, which emerged from a group of sports fan sites in 2005, one of the leaders of a generation of digital media companies that expanded rapidly but have lately struggled to generate advertising revenue to match their ambitions. Vox’s stable of websites specialise in subjects from gaming (Polygon) and interior design (Curbed) to the explanatory journalism of Ezra Klein’s Vox.com. Under Mr Bankoff, the group has grown its podcast, conferencing and video streaming businesses to help it reduce its reliance on advertising. Vox, which made revenues of $185m last year, has raised more than $300m of funding, including @Businessdayng

a $200m investment from NBCUniversal in 2015 that valued the group at roughly $1bn. Rather than seeing the merger as an opportunity for reducing costs, Vox and New York Media said the tie-up was aimed at building scale and breadth of revenue streams. Launched in 1968, New York Magazine became a home for writers such as Jimmy Breslin and Tom Wolfe, who charted the human drama of America’s biggest city. Wasserstein bought it from Mr Murdoch in 2004 and placed it in a family trust. Ms Wasserstein, his daughter, will remain at the combined group with responsibility for the New York Media publications.

Thursday 26 September 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

PMI and Altria abandon deal talks as Juul chief steps down Tobacco giants walk away from $200bn merger plan amid regulator backlash on e-cigarettes JAMES FONTANELLA-KHAN, ANDREW EDGECLIFFE-JOHNSON AND ALISTAIR GRAY IN NEW YORK

he regulatory crackdown on e-cigarettes has prompted Philip Morris International to call off talks about a $200bn merger with Altria and sparked a shake-up at vaping company Juul, which sacked its chief executive and suspended US advertising. Juul Labs, in which Altria took a 35 per cent stake in December 2018 for $12.8bn, announced on Tuesday an abrupt change of leadership and alterations to its marketing and lobbying policies. A person familiar with the situation said PMI decided to walk away after it became apparent the US government crackdown on vaping could have a negative impact given Altria’s stake in Juul. André Calantzopoulos, PMI’s chief executive, said the two companies had decided to focus on the US launch of Iqos, PMI’s heated tobacco product, which, the companies noted, had been authorised by the US Food and Drug Administration following a “rigorous science-based review” and was not an e-vapour product. Speaking to the Financial Times on the sidelines of a tobacco conference in Washington soon after the collapse of the deal was announced, Howard Willard, Altria’s chief executive, said his company was “always evaluating opportunities. These discussions with PMI just reflect-

ed that. Ultimately we’ve ceased negotiations and we’ll move on.” Juul said Kevin Burns had decided to step down as chief executive. KC Crosthwaite, Altria’s chief growth officer, will replace him. The company added it would suspend all its broadcast, print and digital product advertising in the US and refrain from lobbying the Trump administration on its moves to tighten regulation in the wake of an outbreak of vaping-related lung illnesses tied to several deaths. The changes at Juul were intended to reassure PMI that Altria was in control of Juul and would have guided the start-up through the regulatory backlash, said a person informed about the negotiations. PMI had been informed in advance of the moves, and the selection of an executive with greater tobacco industry experience coming from Altria was appreciated, the person added. Up until late last week the two sides were determined to go ahead with a deal. Over the weekend, however, the board of PMI determined that the risks outweighed the benefits of a merger, said people close to the companies. Both people said that PMI is likely to pursue a deal with Altria at a later stage once the regulatory environment settles. Mr Willard told the FT that Juul had “taken a number of leadership actions — they’ve done more than any of the other vapour companies — but it’s still not enough”.

KKR weighs pivot towards tech with $300m Asia fund US private equity group long known for buyouts eyes move into early-stage investing HENNY SENDER IN HONG KONG

KR, the alternative investment company whose name has long been synonymous with buyouts, is taking concrete steps into the world of early stage investing. It is considering plans to raise a $300m Technology, Media and Telecommunications fund for Asia, according to people familiar with the matter, supplementing its $9.3bn Asia buyout fund — one of the region’s largest. Paul Yang, who spearheads KKR’s transactions in Greater China, will oversee the fund. Early recruits include Karen Zhang, who was responsible for General Atlantic’s tech investments in mainland China and before that managed some of Baidu’s investments out of Beijing, the people add. Among Ms Zhang’s recent deals was the acquisition of a stake for GA in ByteDance, China’s biggest unlisted start-up, which is now valued at $70bn-$80bn and is

expected to go public next year. Joji Philip, founder of Deal Street Asia in Singapore, said that in recent years, “many of the largest international private equity firms have had venture capital envy” as they see their far smaller counterparts make fortunes investing in young tech companies on both sides of the Pacific. David Rubenstein, co-founder of Carlyle, has publicly mulled over buying a venture capital company in Silicon Valley. Warburg Pincus has put its two heads of tech investing in China in charge of the PE group’s overall business there, in large part because of how lucrative their transactions have proved. KKR’s diversification into tech comes at a time when many executives see a new receptivity to selling control to financial investors, given the economic slowdown in Asia, stock markets that are losing momentum, weakening currencies and company founders who are nearing retirement. www.businessday.ng

Christian Sewing has emerged as a leading critic of central bank policy and politicians’ failure to implement structural reforms in Europe © EPA-EFE

Deutsche chief Christian Sewing warns ‘sky has darkened’ for Europe Attack on central bankers and politicians comes as lender retreats from global ambitions STEPHEN MORRIS IN LONDON

eutscheBankchiefexecutive Christian Sewing has deepened his criticism of Europeanpoliticiansand central bankers for strangling growth in the region and making it an increasingly unattractive place for international investment. “Especially for Europe, the sky has darkened,” Mr Sewing said in a speech at the Sibos payments and technology conference in London on Wednesday. “During my meetings and sessions in Asia last week, America and China were the hot topics of conversation. Europe was much less of an issue. We simply aren’t that interesting any more for many investors and companies.” The recent decision of Norway’s sovereign wealth fund to switch a significant proportion of its funds into US equities from Europe was “alarming,” and reinforced the need for leaders to “act fast and decisively” so the continent does not “lose its relevance”, he said.

This year, Mr Sewing has emerged as a leading critic of central bank policy and politicians’ failure to implement structural reforms in Europe. In July, he unveiled a radical restructuring that will see 18,000 jobs cut and relinquish its ambitions to be a global investment bank. This means the lender is far more reliant on its home market of Europe — and especially Germany, which might slip into recession — to revive growth. Recently, chief financial officer James von Moltke downgraded the bank’s 2022 revenue target by as much as €1bn from €25bn, blaming the worsening macro environment. Privately, executives admit making a return on tangible equity of 8 per cent may no longer achievable in that timeframe. Mr Sewing also took aim at other European institutions. Specifically, he questioned the decision by Margrethe Vestager, EU competition commissioner, to block the merger between the German and French train manufacturers Siemens and Alstom earlier this year, a move they

said was needed to compete with state-backed rivals from China. “Is it really in Europe’s best interest to ban the merger between two leading train manufacturers?” he said. “Becoming more competitive includes encouraging our competition authorities to widen their perspective beyond the European market.” In the wide-ranging speech, Mr Sewing also sharpened his criticism of the European Central Bank after Mario Draghi cut interest rates further into negative territory, a move that will further depress banks’ profits and punish savers in the region. “What is really worrying is that the central banks have used their tools to a large extent already, so there are no conventional measures left to effectively cushion a real economic crisis,” he said. Mr Sewing called for reforms and initiatives including installing more unified policies and regulations across the single EU market, lowering corporate taxes in step with other countries such as the US and UK, encouraging more big mergers and boosting technological investment.

Amazon rolls out new health technology for employees Move is latest example of company experimenting on how to improve service and cut costs HANNAH KUCHLER IN NEW

mazon has launched app-based medical services for its employees in Seattle, as the technology company experiments with new ways to cut the costs and improve the experience of healthcare. The new service — Amazon Care — combines an app for video calls and text chats with doctors or nurses with visits from “mobile care nurses” to employees’ homes and offices. Amazon, which bought on-

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line pharmacy PillPack last year, will also deliver prescriptions to patients. It is working with Oasis Medical, a Washington statebased medical service, to provide the clinicians. Amazon Care is being launched after the company established Haven, a joint venture in healthcare with bank JPMorgan Chase and Warren Buffett’s investment firm Berkshire Hathaway, last year — spooking investors in various sectors of the healthcare industry, which fear disruption by the tech giant. Led by Atul Gawande, the surgeon and bestselling author, @Businessdayng

Haven aims to find new ways to lower high healthcare costs in the US, first for the three companies’ 1.2m employees and then for other potential customers. Amazon Care is separate from Haven and PillPack. An Amazon spokesperson said it was piloting the healthcare benefit for employees to help them get fast access to healthcare without an appointment. The launch was first reported by CNBC. For Amazon, the model could be cloud provider Amazon Web Services, which started as an internal product and has become a huge growth driver.

Thursday 26 September 2019

BUSINESS DAY

ANALYSIS

Rivals rubbish Google’s claim of quantum supremacy Researchers take aim at tech company for declaring computing milestone RICHARD WATERS IN SAN FRANCISCO

significant scientific breakthrough that represents the dawn of computing’s second era? Or a head-turning piece of research with little practical application? Researchers at Google say they have built the first quantum computer that can perform a calculation far beyond the reach of even the most powerful machine built along traditional, or “classical”, lines — a long-awaited feat known as “quantum supremacy”. The company’s researchers call it a “milestone” that “heralds the advent of a much-anticipated computing paradigm”. By harnessing the quantum effects exhibited by subatomic particles, such systems have the potential — at least in theory — to leap far ahead of today’s supercomputers. But not everyone is ready to call this a turning point for computer science. Google’s claim is “indefensible — it’s just plain wrong”, said Dario Gil, head of research at IBM, one of the competitors in the race to achieve quantum computing. While crediting some of the internet company’s technical advances, he dismisses the claim that this is a seminal moment for computing as “grandiosity”. The research is just “a laboratory experiment designed to essentially — and almost certainly exclusively — implement one very specific quantum sampling

procedure with no practical applications,” he said. Others working in the field, however, are more willing to back Google’s claims. Its research is “profound”, said Chad Rigetti, a former IBM executive who now heads a quantum computing start-up. “It’s very important for the industry to hit this milestone. It’s a big moment for humans and for science.” Google claimed its breakthrough in a research paper headlined “Quantum supremacy using a programmable superconducting processor”. First reported by the FT, it was briefly posted on a Nasa website last week before being removed, and the company has not said when it will be formally published. Unlike the bits in a digital computer, which register either a 1 or 0, quantum bits — known as qubits — can be both at the same time. Along with another quantum phenomenon known as entanglement, through which qubits can influence others they are not even connected to, this opens the way to systems that can handle massively more complex problems. Part of the controversy in the computing world lies in the term quantum supremacy. Coined in 2012 by theoretical physicist John Preskill, it denotes the moment when a system built using the new technology can solve a problem that is, for all practical purposes, impossible for even the most powerful supercomputers to handle.

New York Fed rejects Wall St criticism of response to repo turmoil Willingness and preparedness in responding to situation called into question JOE RENNISON AND BRENDAN GREELEY IN NEW YORK

arket confidence in the Federal Reserve Bank of New York and its leader, John Williams, remains on shaky ground, after its initial response to the breakdown of a vital short-term lending market last week compounded simmering tensions. The cost of borrowing cash overnight in exchange for US Treasuries in the repo market — crucial for banks and investors seeking to cover short-term funding needs — quadrupled to a high of 10 per cent on Tuesday, prompting the New York Fed to inject cash into the financial system to calm the turmoil. Mr Williams and Lorie Logan, senior vice-president in the markets group, told the Financial Times that the decision to step in on Tuesday was planned and had the desired effect, with repo rates falling back down to more normal levels by the end of the week. The main criticism from several bankers, traders and analysts, though, is that the New York Fed should have stepped in to support the market sooner, as repo rates rose on Monday. This was especially so given some stress was expected, due to corporate tax payments and

Treasury settlements draining cash from the market, even if the extent of the turmoil was not. “I think they were slow in reacting,” said Seth Carpenter, chief US economist at UBS. “They knew this could be an issue and they should have had everything lined up ready to go on Monday.” The people added that the New York Fed had gone some way to restoring confidence by the end of the week, following further daily cash injections. This was capped by a sweeping announcement on Friday to lend billions of dollars over the end of the quarter, when banks typically step back from the market. “Lorie and her team came up with an analysis and strategy quickly,” said Mr Williams. “We did things quickly, decisively and it worked . . . This was a significant disruption. Markets did not see this impact coming. In a short period of time we have gone back to markets functioning well.” Ms Logan, along with three other senior markets officials, were in Washington DC for the Federal Open Market Committee meeting. Having watched funding pressure build on Friday, she said they monitored the sharp rise in repo rates at the start of the week from a temporary office upstairs from Mr Williams’s office in the Eccles Building, where the board of governors meets. www.businessday.ng

The limits of the pursuit of profit FT Series: Many companies are trying to define a broader purpose for their business but the exercise is fraught with risks ANDREW HILL IN LONDON

n February 2016, Emmanuel Faber, chief executive of Danone, put a radical proposal to the French food multinational’s senior US executives at a meeting in White Plains, New York. Against the grain of agricultural production in the US, where the vast majority is genetically modified, Mr Faber proposed shifting about half Danone’s products — representing some $1bn of yoghurt sales — to non-GMO ingredients. He argued that this was an important change that would improve soil health and biodiversity. The reaction from Mr Faber’s lieutenants was immediate: impossible. One said it could only happen if the group imported the non-GMO feed for dairy cattle from Russia. As they went to work, though, the executives started to change their gloomy prognosis about how long such a shift would take. “Three weeks later, it was 10 years. Two months later, it was five years. Finally, it was two years — and we did it in two years,” says Mr Faber, in an interview at the group’s Paris headquarters. The pledge triggered vocal protests from some US farm and dairy groups. It did not harm sales. Despite a price rise, the children’s yoghurt brand Danimals, now certified as containing only nonGMO ingredients, has increased its US market share from 30 to 40 per cent. Danone’s shift on GMO might be dismissed by some as a marketing gimmick and criticised by others as an exercise in managerial self-indulgence. But it is one sign of a powerful shift in the way that large companies think about their purpose and their responsibilities — and an example of the challenges companies face in managing that shift.

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For 40 or more years, corporate boardrooms latched on to the doctrine that economist Milton Friedman had laid out in a 1970 article with the blunt title “The Social Responsibility of Business is to Increase its Profits”. That approach was supercharged in the 1980s and 1990s by the ratcheting up of share-based executive rewards. But the tide is beginning to change. In August, the Business Roundtable, the influential US business group, amended its two decade-old declaration that “corporations exist principally to serve their shareholders”. The Roundtable said: “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders” — customers, employees, suppliers, communities and — last in the list — shareholders. Advocates for the idea that companies should adopt a broader purpose argue that the global financial crisis laid bare the limits of pursuit of profit for its own sake. What was once a nice-to-have addition — often tidied away and kept in a box labelled “corporate social responsibility” — is now a must-have, they say. Businesses that combine profit with a wider purpose will benefit from the reinforced commitment of employees and customers. Those that fail to do so will not survive to become the companies of the future. Sarah Kaplan of Toronto’s Rotman School of Management says: “Companies are increasingly a positive force for society and, as people see their governments let them down, [they] see companies replacing that role.” As for “the idea that shareholder value is the only way”, she says it “is just a consensus”, in the same way the more socially responsible postwar model was once a consensus. Mr Faber, 55, exudes enthusiasm for the wider purpose of his company. He has set an objective to turn Danone into a “B Corp”, a @Businessdayng

business which voluntarily adopts broader societal goals but submits its social and environmental performance, transparency and accountability to third-party certification. Mr Faber says from the 1980s the economy, “instead of serving people, started to really serve finance and all the processes — the governance, the incentives, the stock options, the compensation committees, the independent boards — went in the same direction”. But catering to multiple stakeholders is a “super-delicate balance”, he adds. “What keeps me awake at night is the pace of change. Are we changing too fast? Or not fast enough? And where?” Not everyone believes he is getting that balance correct. One of the main criticisms of the stakeholder approach is that it can allow executives to set their own criteria for success and let them off the hook for poor financial performance. Danone already faces investor scrutiny for distracting itself from more profitable business. Jefferies’ sector analyst Martin Deboo summed up the doubts in a note about the French company published last October. “We worry that a too-obsessive pursuit of purpose-driven benefits and brand-as-social-advocate might blind Danone to the value of more mundane, but potentially broader, consumer appeals,” he wrote. “It is shareholders, not other stakeholders, who are most in need of convincing with regard to Danone’s good intentions.” A variety of factors is driving companies towards asserting a broader purpose. One is a desire to offset a lack of trust in business that has lingered well beyond the end of the financial crisis. Another is the realisation that job hunters — particularly younger candidates — will shun employers that cannot prove they have a positive, and sincerely held, purpose.

Thursday 26 September 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Wednesday 27 Sept. 2019

Top Gainers/Losers as at Wednesday 27 September 2019 LOSERS

GAINERS Company INTBREW

Opening

Closing

Change

Company

Opening

Closing

Change

N12

N12.6

0.6

DANGCEM

N154

N152

-2

N52

N52.5

0.5

GUINNESS

N35.5

N34.45

-1.05

CUSTODIAN

N5.85

N6.3

0.45

MTNN

N139

N138

-1

DANGSUGAR

N10.35

N10.7

0.35

SKYAVN

N4.65

N4.19

-0.46

N6.85

N7.2

0.35

ZENITHBANK

N18.55

N18.3

-0.25

ACCESS

Stocks shed N33bn as interest continues to wane Stories by Iheanyi Nwachukwu

he Nigerian Bourse closed further in the red zone on Wednesday September 25 as investors continued to show less interest in listed equities. The stock market has witnessed increased selloff lately in the wake of positive news that could drive buy decisions on Custom Street. At the sound of trade closing gong, Dangote Cement Plc recorded the highest loss after its share price decreased from N154 to N152, losing N2 or 1.30percent. Guinness Nigeria Plc followed after it share price dropped from N35.5 to N34.45, losing N1.05 or 2.96percent, while MTNN Plc also dipped by N1, from N139 to N138, down by

0.72percent. On the gainer table, International Breweries Plc rallied most from N12 to N12.6, adding 60kobo or 5percent. Nigerian Breweries Plc advanced from N52 to N52.5, adding 50kobo or 0.96percent, while Custodian Investment Plc rose from N5.85 to N6.3, adding 45kobo or 7.69percent. The Nigerian Stock Exchange (NSE) All Share Index (ASI) decreased by 0.25percent on Wednesday pushing the month to date (MtD) negative return further to -1.50percent and year-to-date (Ytd) negative return was also down by -13.20percent. The NSE ASI closed lower at 27,283.05 points as against preceding trading day high of 27,352.24 points. The value of listed stocks

decreased by N33billion to N13.281trillion as against N13.314trillion recorded the preceding day. In 2,895 deals, stocks dealers exchanged 462,314,616 units valued at N7.924billion. Access Bank Plc, Custodian Investment Plc, Nigerian Breweries Plc, FBN Holdings Plc, and Union Bank of Nigeria Plc were actively traded stocks on the Bourse. With most indicators coming in stronger in the day’s trading session as evidenced by most sectors closing higher, improved market breadth and increased transaction size, research analysts at Lagosbased Vetiva expect the market to witness renewed interest on Thursday “as investors take position in fundamentally sound stocks that have declined in recent sessions.”

L-R: Ahaneku Ikechukwu, principal manager, Investor Education Division Securities and Exchange Commission; Archibong Bassey, divisional head, Financial Inclusion Division and Thomas Ayim, accounting lecturer, Aduvie Pre-University College Abuja during an educational visit of Aduvie PreUniversity College to SEC in Abuja.

NSE lifts suspension placed on shares of Guinea Insurance, Niger Insurance

he Nigerian Stock Exchange (NSE) has notified the investing public of the lifting of suspension earlier placed on trading in the shares of Guinea Insurance Plc and Niger Insurance Plc. The suspension placed on trading on the shares of Guinea Insurance Plc and Niger Insurance Plc was lifted on Wednesday September 25, 2019

The NSE had in its Market Bulletin dated July 2, 2019, with Reference Number: NSE/RD/LRD/ MB34/19/07/02 notified Dealing Members of the suspension of eleven (11) listed companies for noncompliance with Rule 3.1, Rules for Filing of Accounts and Treatment of Default Filing, Rulebook of The Exchange (Issuers’ Rules). The rules provide that: “If www.businessday.ng

an Issuer fails to file the relevant accounts by the expiration of the Cure Period, the Exchange will: send to the Issuer a “Second Filing Deficiency Notification” within two business days after the end of the Cure Period; suspend trading in the Issuer’s securities; and notify the Securities and Exchange Commission (SEC) and the Market within twenty- four (24) hours of the suspension.”

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

27,283.05 2,895.00 462,314,616.00 7.924

Global market indicators FTSE 100 Index 7,289.99GBP -1.44-0.02%

Nikkei 225 22,020.15JPY -78.69-0.36%

Generic 1st ‘DM’ Future 26,919.00USD +101.00+0.38%

Deutsche Boerse AG German Stock Index DAX 12,234.18EUR -72.97-0.59%

S&P 500 Index 2,972.69USD +6.09+0.21%

Shanghai Stock Exchange Composite Index 2,955.43CNY -29.91-1.00%

13.281

SEC says new products will deepen capital market

eyond the conventional capital market products of equities and bonds as well as manual regulatory processes, the players and regulators in the Nigerian capital market are introducing new and innovative processes and products. This was stated by Acting Director General of the Securities and Exchange Commission (SEC) Mary Uduk during an excursion visit by students of Aduvie Pre University College, Modibbo Adama University, Yola and University of Abuja to the Commission, Wednesday. Uduk said capital markets across the world have products and mechanisms to stimulate economic growth and development. Although many of such products are available in Nigeria, there are aspects that are still untapped, thereby limiting the realization of our potential. She said it is for this reason that some of the processes of the SEC that were previously manual and inefficient are now being automated to make the market more attractive to investors. “For instance, with the dematerialisation process completed, investors no longer need to not worry about the loss or damage to their physical share certificates as they are now electronically stored. “Further, the current eDividend system enables shareholders’ dividend to be paid directly into their bank account without the stress of dealing with physical dividend warrants. Also, the Direct Cash Settlement protects investors from funds mismanagement by ensuring that the proceeds of their shares sales are credited directly into their own account as against that of the stockbroker. “We are equally working on ensuring that companies’ annual reports are distributed electronically thereby ensuring timeliness of information to shareholders and cost reduction to public companies” she stated. The Acting DG told the students that through the Commodities Trading Implementation Committee, the

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Mary Uduk, acting director general, SEC

Commission has engaged the Standards Organizations of Nigeria to publicise the relevant standards issued for Agricultural products, while warehouses have also been mapped to provide information on its availability and location. She stated that the SEC is working towards a future where the capital market would be used to solve challenges of misprizing and nonstandardization of commodity products, as well as low foreign exchange earnings bedeviling the country’s agricultural sector. The Acting DG also disclosed that the SEC has helped in coordinating the introduction of Capital Market Studies into curriculum of basic and senior secondary schools in Nigeria and further plans are ahead to do same for higher institutions. “Literacy plays a significant role in financial inclusion which itself is a major component of economic development. Financial literacy and inclusion help people become financially independent and economically self-sufficient by aiding the underserved population, while raising their productivity and incomes” she added. In his remarks, Head of Faculty (Social Sciences) Aduvie Pre University College, Abuja, Sixtus Onyekwere said Aduvie Pre University College is making a difference in the lives of the students adding that by bringing them to places like the SEC, the school wants to educate them about operations of @Businessdayng

the capital market, so that they can understand from a young age how to engage in investment activities and the opportunities that many are ignorant about. He said, “To be rich in life, you need to start up your own business, invest in financial markets and learn about how money works. No amount of Schooling will teach you about money or what it takes to recognize opportunities for investment and become rich. “To get these educations, you need to leave your school environment once a while to visit places like the Securities and Exchange Commission, learn about its operations, get advice from accomplished entrepreneurs and interact with the real money makers. This will teach you how money works and how you can take advantage of the opportunities around you”. By this, they can become the world’s richest people of tomorrow and make positive contributions to communities, which will guarantee a better tomorrow for Nigeria. We want our students to actually succeed in life, and stand out among their peers. Onyekwere said in addition to producing good academic results, there is need to pursue reduction in youth unemployment rate, community mindedness, pursuing entrepreneurship mindset, great personality, personal branding, as well as building global leaders.

Thursday 26 September 2019

BUSINESS DAY

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Thursday 26 September 2019

BUSINESS DAY

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industry Insight

BUSINESS DAY Thursday 26 September 2019 www.businessday.ng

Increasing Nigeria’s non-oil exports to U.S. market ODINAKA ANUDU, MICHAEL ANI & GBEMI FAMINU

he United States of America’s economy is almost $20 trillion in terms of size. It has over 300 million consumers who are educated and sensitive to price, quality, standards and value. China understood the dynamics of the American market and consumers, and grabbed the market opportunity with both hands. Data show that U.S. exports to the China were $179.3 billion in 2018, but China’s exports to the U.S. amounted to $557.9 billion. The U.S. goods and services trade deficit with China was $378.6 billion in 2018. Though this is the biggest reason for U.S.- China trade war, it underscores China’s preparedness and deliberate plan to export its products to a thriving market. “The U.S. has run large deficits with China for years and in some cases no longer produces certain goods such as consumer electronics that are popular with Americans. It won’t be easy, and it might even be impossible, to reduce the gap much any time soon,”Jeffry Bartash of marketwatch.com said recently. Can Nigeria’s non-oil exporters attempt at taking a small chunk of the U.S market? Experts say they can. In 2000, the United States of America opened its market for subSaharan African (SSA) countries through the African Growth and Opportunity Act (AGOA). The idea was that countries like Nigeria would export up to 7,000 products to the U.S. without paying any duty or tariff. The arrangement was supposed to end in 2015 but was extended to 2025 to enable SSA countries, which did not take full advantage of the first trache, to do so. The legislation significantly enhances market access to the U.S. for qualified countries. Some of the products/commodities that qualify for export to the U.S. market are poultry, bees, meat of goats, fresh, chilled or frozen, turkeys, live ornamental fish, other than freshwater, mackerel and sardines. Others are fresh or chilled swordfish other than fillets, milk and cream, yoghurt in dry form, butter, cocoa powder (sweetened or not), guava, apples, ginger, juice and pine apple, among many others. Unfortunately, despite the opportunity to export 7,000 goods listed under the Act, Nigeria has not taken advantage of the market opening to ship its local products to the U.S. market. The country has only benefitted from the petroleum products. The U.S. goods and services trade with Nigeria amounted to an estimated $12.1 billion in 2017. U.S. exports to Nigeria were $4.6 billion, while Nigeria’s exports to the U.S. were $7.5 billion, according

to the Office of the United States Representative. In other words, the U.S. goods and services trade deficit with Nigeria was $2.9 billion in 2017. This may look good on the face value until one understands that oil and minerals were basically what Nigeria offers the U.S. “Nigeria is currently our 49th largest goods trading partner with $8.3 billion in total (two way) goods trade during 2018. Goods exports totaled $2.7 billion; goods imports totaled $5.6 billion. The U.S. goods trade deficit with Nigeria was $3.0 billion in 2018,” the office wrote on its website. In 2014, Nigeria non-oil exports to the U.S. were $2.6 million while South Africa exported in excess of $1.2 billion Experts say this is not good enough, especially when AGOA ordinarily should present opportunities for non-oil exporters. They admit that lack of competitiveness of non-oil export firms contributes to this situation. Manufacturers and exporters spend billions of naira sourcing alternative energy to keep their factories alive.

Expenditure on alternative energy sources by members of the Manufacturers Association of Nigeria (MAN) in 2018 was N93.1 billion, according to the association’s economic review. The country’s poor infrastructural facilities, which include transport system, hurt exporters. Logistics is also a critical issue. Importing inputs and taking them to factories is a big issue, given the state of Apapa and Tin Can ports in Lagos. Delays and gridlocks in Apapa increase companies’ production costs, thereby lowering their productivity. Taxes paid by businesses in Nigeria today are up to 54, according to experts. Some of these taxes and levies are multiple and need harmonisation, say analysts. Funding is also a crucial issue. Nigeria’s benchmark interest rate is among the highest in Africa at 13.5 percent. Ethiopia’s is 7 percent; Kenya is 9 percent; South Africa is 6.75 percent; Zambia is 10.25 percent, and Cameroon is 4.25 percent. Similarly, Rwanda is 5 percent; Mauritius, 3.5 percent; Algeria is 8 percent, and Senegal is 4.5

percent. Manufacturers are asking the Federal Government to recapitalise especially the Bank of Industry, which provides singledigit funding to them. Doing this, they say, will increase lending to the real sector. Today, product packaging among SME exporters is relatively average, say experts. Again, some small-scale Nigerian exporters compromise standards, making product penetration to advanced markets like the U.S. nearly impossible, say analysts. Muda Yusuf, directorgeneral of the Lagos Chamber of Commerce and Industry (LCCI), said the major issue is lack of competitiveness. He said efforts must be made to remove business environment-related challenges to spur export firms. John Isemede, former directorgeneral, Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA), once said that Nigeria needs to address its challenges inwardly before thinking of how to benefit from AGOA initiative. “Failure to do that, whether AGOA is extended for 20 years, we will continue to work for other people,” Isemede said. Experts say the country must support exporters with incentives. Up till now, Nigeria is yet to start providing incentives in the form of export grant to genuine exporters. Export Expansion Grant existed until 2013 when the immediate past government suspended it on the grounds of abuse. But it is yet to start, despite that the current Federal Government has been compiling names of qualified exporters and waiting for legislative approval since 2016. Brent Omdahl, commercial counsellor, US Consulate, Lagos,

told BusinessDay in an exclusive interview that participating countries, including Nigeria, need to understand the concept of AGOA. He said being a participating country and enjoying tax free do not mean not following due processes. Omdahl said products exported to the U.S. would still undergo and pass through necessary regulatory tests, among which are phytosanitary regulations. “There are some minimum standards that countries have to adhere,” he said. “Zero duty access does not mean you have to just start exporting. You have to organise yourself. “In exporting agricultural products, for example, such products would have to be subjected to all of the Food and Drug Administration (FDA) regulations and comply with sanitary and phytosanitary regulations.” Omdahl said the U.S. government, through the US Agency for International Development, has some small resources available to help companies locally to develop their expertise in order to take the advantage of AGOA. Omdahl said it is unfortunate that crude oil that has benefitted from the AGOA initiative most, which is against the original intent of the act. He said the intention of AGOA is to create the pathway for a country like Nigeria to move up the value chain. “It is the Nigerian industry that needs to organise itself,” he said. Recounting lessons US-Vietnamese bilateral agreement, which is similar to AGOA, Omdahl said Vietnam does a very good job by adding value to their products in order to meet up with the U.S. standards. In doing this, Vietnam attracted investments from Taiwan in the textile sector in order to develop their textile industry as well so as to take advantage of exporting it to the U.S., he explained. The country equally developed its furniture sector and even started importing some hard woods from the U.S. to augment existing local woods, turning them into furniture and sending them to the US to sell in big outlets, he added. “With this arrangement, Vietnam created wealth and employment,” he said. Omdahl said Nigeria has a lot of products that can make it to the U.S. markets if properly harnessed and improved upon. “Nigeria needs to look inwards to find those products, develop them, increase their value addition, export them, and through that, create wealth and employment for the country.” “So, the question for Nigeria is, what are the products that are going to do that? I can think of some. Talk about the shoes. There is a history of making shoes here. The sky is really the limit,” he concluded.

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