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BUK professor joins growing list of high-profile deaths in Kano … as Ganduje approves purchase of 1m face masks to fight COVID-19 ADEOLA AJAKAIYE, Kano

professor in the Department of Mass Communication, Bayero University Kano (BUK), Balarabe Maikaba, on Sunday joined the growing list of high-profile deaths in the ancient city of Kano. Maikaba’s death was announced by the management of BUK on Sunday. Before his death, the former head of Department of Mass Continues on page 29

Inside L-R: Zainab Ahmed, minister of finance, budget and national planning; Godwin Emefiele, governor, Central Bank of Nigeria (CBN), and Vice President Yemi Osinbajo, at the meeting of the Economic Sustainability Committee chaired by Osinbajo, at the Presidential Villa in Abuja.

In spite of business upsets, UBA records impressive N32.7bn profit in Q1 2020 P. 2

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What the next chapter of The Oil Crisis will mean for Nigeria

Titi Omobude, Senior Analyst

prolonged collapse in oil prices, ships dillydallying at sea with unwanted oil cargoes, and traders getting creative about where to stash oil will become the new face of the global oil market and they are set to leave indelible mark on oil dependent countries like Nigeria. Put on your seat belt. The next chapter in the oil crisis is now about to unfold: great swathes of the global petroleum industry are about to start shutting down, government treasury management will be challenged and revenues for Nigeria’s government will be squeezed to levels not before imagined. The economic impact of the coronavirus has ripped through the oil industry in dramatic phases according to Bloomberg. First it destroyed demand as lockdowns shut factories as well as aviation and kept drivers at home. Then storage started filling up as OPEC nations resorted to under-cutting one another and traders resorted to oceangoing tankers to store crude. Now shipping as well as tank storage prices are surging to stratosphericlevelsastheindustry runs out of tankers -- a sign of just how distorted the market has become and why it will be long before relief can come the way of producing countries. The price of Bonny Light is well below cost of production at $15 a barrel and the specter of the collapse in the revenues of federal, state and local governments in Nigeria and its impact on jobs and dislocation in social services should spur fast thinking in Abuja and across state capitals in Africa’s most populous nation. The scale of the coming crisis dwarfs government capacity in Nigeria which has perennially suffered from bad government on account of failing to put its best foot forward and thus limiting the level of thinking deployable. So far, government efforts in Nigeria are failing to stop the decent of the continent’s largest economy into the abyss, with the associated Coronavirus challenge showing up all the old cracks that have held back the rise of an African giant. Little Ghana, which for almost half a decade has attracted moreFDIthanNigeriaannually, is now also rated the number one country when it comes to the number of Covid-19 tests done per million population. Oil prices were diving below zero last week, shut-downs of oil wells are now a reality in Nigeria. It’s the worst-case scenario for Nigeria. “We are moving into the end-game,” Torbjorn Tornqvist, head of commodity trading gi-

ant Gunvor Group Ltd., said in an interview with Bloomberg. “Early-to-mid May could be the peak. We are weeks, not months, away from it.” The impact of the oil price shock will be particularly intense for Nigeria which among the OPEC countries has one of the lowest investment rates. This has been made worse by the socialist inclination of the government of President Muhammadu Buhari which has failed to save and leverage private capital to develop the country. The result is that today the country’s fiscal buffers are at their weakest in decades – fast depleting foreign exchange reserve, an unimpressive size of the sovereign wealth fund and an empty excess crude oil account! When then President Goodluck Jonathan sought to put cash aside in the sovereign wealth fund, some state governors fought back, saying, “it is already the rainy day.” Now the rain is truly pouring and Nigeria is absolutely helpless because of this lack of foresight, according to economist Ken Biachi. There is, some say, the lack of good fortune which means the nation will be afflicted by two devastating economic contractions in five years. On the back of poor management, Nigeria’s oil sector has been contracting even in the good times when other nations grew theirs to amass huge cash in their reserve and sovereign wealth funds. The erudite governor Kayode Fayemi of Ekiti who chairs the Nigerian governors’ forum has already said he expects cash available for the monthly FAAC allocation to thin out in a month. No one is going to be able to dodge this bullet. Saudi Arabia can afford to cut state spending by just 5% as it raises more $100bn from the debt market while other OPEC peers Qatar and Abu Dhabi have already raised $10bn and $7bn respectively from the debt market. Three years ago, oil producer Algeria had $96bn in its foreign reserves while war-ravaged raq had a reserve level of $68bn by last year. Nigeria’s is half that. “Our economy is in crisis”, finance minister Zainab Ahmed told local television two weeks ago, estimating that Nigeria’s economy could shrink by as much as 3.4% this year without massive stimulus. This crisis is only likely to deepen now that the price of Bonny Light is in free fall, said Nonso Obiliki, BusinessDay’s Chief Economist in an interview with the Financial Times. According to him, “the big difference between $20 oil and $30 oil is that we might actu-

Continues on page 29 www.businessday.ng

L-R: Jordi Borrut Bel, managing director, Nigerian Breweries plc; Kola Jamodu, chairman; Sade Morgan, corporate affairs director; Rabiu Olowo, commissioner for finance, Lagos State, and Babajide Sanwo-Olu, governor, Lagos State, after the presentation of N100 million donation and other relief materials as part of the company’s N600m support to the FG and 7 state governments to fight COVID -19, at the State House, Marina, Lagos.

Africa and the twin crises of the coronavirus pandemic TAYO FAGBULE

xperts, economists and epidemiologists, at the heart of the novel coronavirus, COVID-19, pandemic which caught the entire world unprepared unleashing a public health and economic crisis in its wake have one thing in common: curves. Epidemiologists are concerned with containing the rate at which the virus spreads in order not to overwhelm the healthcare system while economists worry about the unusual consequence of the pandemic: a standstill of global economic activity which has led to a downward sloping curve. The pace at which either curve climbs or descends is topmost on the minds of epidemiologists and economists. Since the outbreak of the

Analysis novel coronavirus pandemic, these experts have had to collaborate like never before. They are comparing notes and exchanging ideas. In a virtual meeting recorded during the IMF/World Bank Spring meetings last week Kristalina Georgieva, IMF managing director, Neil Ferguson and Azra Ghani, two epidemiologists from Imperial College, London, discussed how economists and epidemiologists can collaborate to find the best measures for tackling the pandemic. Economists and epidemiologists estimate the impact of the virus on the healthcare and economies of Africa will be different. The pandemic is playing out differently in densely populated low-income countries with fragile, highly informal economies

and a weak healthcare system. The twin crises the pandemic has caused differs by country, economy, geography and demography. In Africa, it has exposed an already fragile healthcare system and weak economic structure. Copying measures used in some Asian and Western countries, African countries have tried to buy some time to contain the spread of the virus. In countries where such measures have worked they have been used to increase testing and contact tracing. African economies can’t afford to shut down for long, it comes at a huge economic cost and assumes the capacity (staff and equipment) to conduct thousands of tests daily and track as many contacts are available. Testing in African countries has come nowhere near the number conducted in the US, Europe and Asia, but the

number of deaths in Africa have not been as staggering. “Try to do all you can mindful of the capacity of your health system” is the advice Kristalina Georgieva offers countries that lack the healthcare infrastructure to contain the virus. Without the manpower and infrastructure to contain the virus, African countries will have to resort to a cocktail of low cost public health measures while they go about earning their income daily. Most African central banks can’t risk the burden of debt and inflationary pressure of pumping money (borrowed or printed) into their economies. After a month of restricting movement within some cities several African countries, including Nigeria, have started to ease their restrictions on movement while keeping social distancing measures.

In spite of business upsets, UBA records impressive N32.7bn profit in Q1 2020 SEGUN ADAMS

nited Bank for Africa Group (UBA) plc has released its unaudited results for the first quarter ended March 31, 2020, showing double-digit improvement across all its major income lines. The pan-African financial institution leveraged on modest growth in both interest and non-interest income as well as increased efficiency to deliver an impressive 8.5 percent year-on-year growth in profit before tax in the first three months of 2020 to N32.7 billion, compared with N30.2 billion recorded in the first quarter of 2019. Again, UBA

sustained its strong profitability recording an annualised 20 percent Return on Average Equity (RoAE). Driven by a year-on-year growth in interest income, UBA Group recorded an 11.8 percent year-on-year growth in gross earnings to close at N147.2 billion for the threemonth period ending March 2020, compared to N131.7 billion recorded in the first three months of the year 2019. The bank’s total assets also rose by 13.4 percent to N6.4 trillion in the period under review, compared to N5.6 trillion recorded at the end of the 2019 financial, while shareholders’ funds grew to N612.6bn from N597.9 billion

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in the same period. Kennedy Uzoka, GMD/ CEO, United Bank for Africa (UBA) plc, expressed satisfaction with the bank’s performance in the first quarter of 2020 which, according to him, remains encouraging despite the challenging business environment. “We are pleased with our top and bottom lines in the first quarter of 2020, delivering N147.2 billion in gross earnings and profit before tax of N32.7 billion. The doubledigit growth in the topline testifies to the resilience of our business model as a group, even as the 17 percent growth in our fees and commission income underscores our di@Businessdayng

versified business model, enabling us to deliver best value to our stakeholders, even in tough macroeconomic scenarios,” Uzoka said. “I am very excited about recent successes we have recorded in all our business segments, especially our retail and electronic banking businesses within the period, with retail deposits accounting for 72 percent of customer deposits even as cost-of-funds moderates to 3.3 percent. We will continue to grow market share in all our markets, whilst maintaining cost discipline across our businesses, driving efficiency in our processes using best-rated technology,” he said.

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COVID-19: Farmers lament drop in demand for eggs, poultry products IDRIS MOMOH & CHURCHILL OKORO

takeholders in the poultry sub-sector in Edo State have lamented drop in the demand for poultry products in the state. The stakeholders that spoke with BusinessDay in Benin City include Agharese Osifo, a poultry farmer, and consultant, agricultural finance, Kingsley Imasuen, chairman, Edo State Poultry Association of Nigeria (PAN), and Ogbes Gabriel, manager, Elect Agric Limited. The trio, who attributed the drop in the demand to the closure of neighbouring state borders such as Delta and Lagos, said post COVID-19 recovery period would not be the same as the pre- COVID-19 era for the industry, saying the big farmers were going to dominate the market. Osifo, who says the Coronavirus has dealt a devastating blow to Nigeria’s poultry industry, notes that farmers now find it difficult to get feed for their poultry. According to Osifo, the poultry farmers are now facing logistic challenges in getting poultry inputs as well as significant drop in

demand for eggs and increase in feed demand. “The increase demand is due to the lockdown in the three locations for feed production: Abuja, Lagos and Ogun states. Small scale poultry farmers are badly affected by the COVID-19 pandemic; they also have cash flow problem as the increased price of feed and other inputs have made the business unprofitable to them. “Lockdown has affected businesses; hotels and restaurants are now operating skeletal services in compliance with the social distance instructions to prevent spread of COVID-19. As of April 21, the 25kg bag of Layers Marsh sells for N3,600 against N3, 200 prior to COVID-19 outbreak while Broiler Finisher Marsh is N4,200 up from N3, 750 pre - COVID-19. “We will then have an oligopoly rather than the perfect market with numerous atomistic farmers,” he states. Osifo, who is also a member of PAN, however, urges the Federal Government to release maize, guinea corn and groundnut from its silos strategic grains reserves to the poultry industry in the country.

He further pleads with the government to grant Value Added Tax (VAT) exemption for the poultry industry as well as exempt poultry feed manufacturing companies truck like the petroleum products from the lockdown orders. On his part, Kingsley Imasuen, chairman, Edo State Poultry Association of Nigeria (PAN), notes that the stay-at-home directive by the government has affected many industries, of which agricultural produce like eggs and chicken are not exempted. Imasuen, who says they are witnessing shortage in poultry feed, adds that distributors are finding it difficult to convey eggs to other state due to the lockdown “The feed takes time to come to Edo, and these days the price of a crate of egg has dropped; it is between N700 and N900, depending on the size.” Also speaking, Ogbes Gabriel, manager of Elect Agric, appeals to government at all levels and philanthropists to include eggs as part of palliatives they are currently distributing to vulnerable and indigent persons in the country.

South Africa, Egypt universities shade Nigerian counterparts in latest impact rankings KELECHI EWUZIE

eyond the global health crisis the Coronavirus pandemic poses, management of Nigerian universities can learn lessons from South Africa and North Africa country like Egypt in their style of university management that propel them to top in Africa when it comes to global ranking of universities across every indicator. The 2020 Times Higher Education University Impact Rankings shows. The Times Higher Education Impact Rankings are the only global performance tables that assess universities against the United Nations’ Sustainable Development Goals (SDGs). This ranking is a crucial resource for students choosing a university, because it moves away from assessing universities on their research output, and focuses instead on the impact that

universities are having on some of the world’s most pressing issues. South African and Egyptian universities have in the last decade provided increased competition to Nigerian universities in international outlook, knowledge transfer and research. In the latest Times Higher Education University Impact Rankings released, South African and Egyptian universities were top performers based on countries’ average overall score among institutions in the top 200. While South Africa achieved an average score of 85.5 out of 100, Egypt achieved 75.4–83.3 out of 200. This latest Times Higher Education Impact Rankings shows South African and Egyptian universities outperforming Nigeria, a situation traced to the countries universities recognising and working hard to tackle global issues such as gender inequality, quality education for all, climate change, achieving peaceful soci-

eties and economic growth. While South African university like University of Johannesburg ranked 75th among the top 100, Egyptian universities like Alexandria University and Benha University ranked 101200, respectively, while University of Pretoria, South Africa ranked 101-200. Nigeria is feeling the squeeze as only University of Ibadan ranked 201-300 among the world’s 300 best University Impact Rankings in 2020. A breakdown of the ranking figure released shows that University of Ibadan was the highest-ranked university in Africa most populous black nation, while Covenant University, Ota, Ogun State, secured the 401-600 ranking spot with University of Lagos and Lagos State University recording 601 spots out of the more than 700 universities ranked this year across the SDGs.

WAEC Nigeria disowns report of purported cancellation of WASSCE 2020 KELECHI EWUZIE

he West Africa Examination Council (WAEC) Nigeria has dissociated itself from any fake publication circulating in the social media, to the effect that the examination body had cancelled the conduct of the WASSCE for school candidates, 2020, as a result of the Coronavirus pandemic and was, therefore, set to refund N22,500.00 to candidates who had enrolled for the examination. WAEC states that the publication is patently false and deceitful, observing that it is nothing but the handiwork of mischief makers who are out to defraud innocent and unsuspecting candidates and their parents/guardians. The West African examination body while reacting to this in a statement obtained by BusinessDay explains that this piece of news

is certainly not from it, adding that it falls short of the Council’s style, language and factual details. Patrick Areghan, head of National Office, WAEC, Nigeria, explains that WAEC as an examining body in the sub-region, has not announced the cancellation of the examination; it only announced a postponement until normalcy is restored. He further states that the examination was supposed to start in Nigeria on April 6, 2020 and not April 15, 2020, as stated by the authors. According to Areghan, “The examination fee is N13,950.00 only, NOT N22,500.00. It is, therefore, not reasonable to refund candidates an amount higher than what they had paid to register for the examination. “WAEC couldn’t have made a mistake in the full meaning of its acronym!ItwillberecalledthatWAEC, Nigeria issued a press release on the postponement of the examination www.businessday.ng

on March 20, 2020, in appreciation of the stark realities of the moment and in complete deference to the Federal government, regarding its various control measures against the spread of the disease”. The head of National office of WAEC, reassures all registered candidates, schools and other stakeholders that once the situation returns to normal, the Council will come up with a new International Timetable for the conduct of the examination in the West African sub-region, after due consultations with relevant stakeholders. Advising candidates to disregard the publication and concentrate on studying hard for the examination. “Meanwhile, The West African Examinations Council shall continue to respect all the protocols being rolled out by the Federal and the various State governments aimed at containing the pandemic,” Areghan states. https://www.facebook.com/businessdayng

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FirstBank mourns staff at Kano main branch, commits to staff health, safety

bdullahi Lawal, who worked at the main branch of FirstBank in Kano has died, the bank announced at the weekend. Accordingtoapressstatement by Folake Ani-Mumuney, group head, marketing and corporate communications,attheweekend, “Our thoughts and prayers are with his family at this time as we do all that is necessary to support them. We ask that all necessary courtesies be extended to the familysotheycangrieveprivately.” As a responsible corporate organisation, the bank has been at the fore-front of the concerted efforts against the coronavirus pandemic alongside others. “We have robust protocols in place including practicing social distancing, frequently disinfecting our buildings and locations even while ensuring services are

available through our alternative channels such as our ATMs and other digital platforms. “We have immediately therefore, shut down access to the premises as we disinfect the entire location and ask all staff and customers who may have been in contact with our late colleague to follow the NCDC guidelines and self-isolate. We will, as a matter of course, extend all possible support to staff and customers at this difficult time. “Our thoughts are with the family he left behind and indeed with the wider FirstBank family who mourn this loss deeply at this time. “We remain committed to protecting the health and safety of all staff, customers and host communities, as together the fight against coronavirus will be won,” the release stated.

Sanwo-Olu commended over handling of COVID-19 challenge in Lagos Iniobong Iwok

ational president of Movement for a Better Lagos, Ibrahim Ekundina, has commended the Lagos State governor, Babajide Olusola Sanwo-Olu, over his handling of the COVID-19 pandemic in the state, describing him as Godsent. Ekundina, who is a human rights activist, in a statement in Lagos at the weekend, said: “Having critically studied his approach towards handling the deadly disease code-named COVID-19, we are convinced that his method of handling the dreaded monster has saved the state as well as the whole nation from recording more fatalities than what we are having now.” According to Ekundina, “The alien disease is, to be precise, an unconventional war unleashed

on the whole world and the way Sanwo-Olu is tackling it with unconventional methods is a testimony of preparedness for eventuality by a well organised administrator.” Ekundina, who notes that anything that affects Lagos will also have a negative implication on the whole country and beyond, said, “This is so because of its location as a major entry point to the country”, adding that, “against this background, the governor deserves more support to fight and win the monster for the benefit of all.” Sanwo-Olu’s emergency plans beforehand, according to him, prevented the migrant disease from travelling fast into the hinterland, wondering, what could have happened to the country if he had not weakened its movement from the point of entry.

Covid-19: Rosabon Financial promises businesses in Rivers up to N200m loan packages Daniel Obi

anaging director of RosabonFinancialServices, Chukwuma Ochonogor, has restated the firm’s commitment to ensuring that businesses remain afloat throughout thisuncertainCoronavirusperiod, through continuous availability of various loan packages. Ochonogor, in a statement made available to BusinessDay, saidaspartofthemeasuresforthis period, eligible business owners and corporate organisations can access loans of up to N200 million with their vehicles as collateral. This offer, he said, is available to both new and existing clients, corporate organisations and business owners. Rosabon’s measures come amid the lockdown announced in Rivers State, which has seen many businesses and corporate organizations struggling to stay afloat and raise enough money to meet their business demands. According to Ochonogor, “As Nigerian businesses battle with the growing health and economic challenges of COVID-19, our priority is to ensure that essential service providers and other corporations have access to funds

required to meet their rising business demands. “The lifeline offered by Rosabonisexpectedtohelpbusinesses improve cash flow and increase business efficiency, especially for essential service providers in various sectors. “With our Asset Cash Loans, Corporate entities and SMEs can make use of their vehicles as collateral to access loans up to N200 million within 48 hours at an affordable interest rate and a flexible repayment tenor of up to 24 months. Also, access to top-up is available from as early as the sixth repayment. “The goal is to deploy our loan offerings and expertise needed by the business community to help navigate the burdens they are faced with while ensuring essential service providers have the funds they need to meet their rising demands.” Speaking further, Ochonogor said: “We have worked handin-hand with Entrepreneurs, Corporate heads in Rivers State and other States in the Federation to support the growth of their businesses for over two decades, recognizing that they are essential to the continued success of our economy. www.businessday.ng

Obafemi Amzat (r), deputy governor, Lagos State, presenting a cheque to a beneficiary, in fulfillment of the state government’s promise to bring succour to families of the 23 deceased victims of the Soba Explosion in Abule-Ado.

Polaris Bank celebrates first year of operation with N27.8bn profit • Capital Adequacy and Liquidity Ratios above regulatory requirements • To reap benefits of IT investment in 2020

olaris Bank released its first Audited IFRS 2019 compliant financial result at the weekend showing a handsome profit-before tax of N27.8billion. The result which suggests a compelling narrative of Nigeria’s banking industry followed from the turn-around initiatives undertaken by the leadership of the Bank led by the Chief Executive Adetokunbo Abiru. According to the Bank’s first full year financial result, Polaris Bank Limited posted a gross earnings figure of N150.8bilion and a Profit Before Tax (PBT) of N27.8billion within the first full year of operation. The achievements coming in the first year of operations of the institution is a clear validation of regulatory induced interventions in the bank. The Bank also closed the 2019 financial year with total assets of N1.1trillion and Shareholders Fund of N83billion. A review of the results shows positive performance across most major key prudential ratios: capital adequacy, liquidity, Non-Performing Loans which is now significantly in com-

pliance with stipulated regulatory requirements. This result is coming amidst the highly challenging business environment which forced many businesses to cut down on their operating expenses. Thepublishedresultshowsthat Polaris Bank’s Capital Adequacy (14%) and liquidity (81%) ratios are well above regulatory requirements demonstrating strong prudential compliance and assuring a strong capital buffer, careful liquidity management and resilience. The Bank’s customer deposits stood at N857.9billion even as the Bank continues to focus on stable, low-cost deposits and well-diversified portfolio devoid of high concentration. Likewise, the loan book stood at N261billion in December 2019 providing the Bank with the desired headroom to accommodate the required growth in risk assets to support the nation’s economic growth. The Bank equally recorded a Return on Equity (ROE) and Return on Assets (ROA) of 33.0% and 2.4% for the year-end December 2019 respectively. Commenting on the Bank’s

performance, the Managing Director/Chief Executive Officer (MD/ CEO) of Polaris Bank Limited, Mr. Adetokunbo Abiru said that: “the emergence of Polaris Bank on September 21, 2018, has heralded a new dawn as it laid the foundation for institutional competitiveness and service innovation in Nigeria’s challenging banking space.” He further noted that “Our strategy which anchors on rebuilding the franchise and strengthening the balance sheet position provide enablers for ongoing initiatives towards lean operations and efficient balance sheet management devoid of capital erosion risks. Expressing satisfaction with the Bank’s new corporate governance regime, the Chief Executive Officer noted that “We shall continue to run an ethically governed Bank upholding sound risk management practices and proactively taking measures to mitigate the impact of the adverse business environment while the Board and Management continue to guide the Bank towards a path of sustainable growth. Polaris Bank’s performance

has assured a strong positive outlook for earnings, margins, and profitability improvement in its cautious pursuit of loan growth, a sustained strategy for operational efficiency, funding cost optimization, and efficient deposit mix. The headroom for loan creation no doubt presents an opportunity for improved margins. Going into the year 2020 and despite the challenging macroeconomic environment, The Bank says it is poised to reap the benefits of its investment in both the capacity of its employees to improve service experience as well as in critical infrastructures that will support the digitization of its operations. Polaris Bank is a future-determining Bank committed to the delivery of industry-defining products, services, and digital platforms across all the sectors of the Nigerian economy. The Bank is a member of the United Nations Environment Programme Finance Initiative (UNEP FI), which seeks to engage the private sector and the global financial sector to help create a financial sector that serves people and the planet while delivering positive impact.

COVID-19: FCCPC to penalise false advertorial violators HARRISON EDEH, Abuja

ederal Competition and Consumer Protection Commission (FCCPC) has warned that COVID-19 related violations such as scams and misleading advertisement about vaccines, therapies or cures for the virus will be met with stiff penalties. The Commission says it is already pursuing criminal charges against some flagrant violators, and is expanding investigation

into other players and industries following complaints and aggravation form against consumers on issues related to and arising from the COVID-19 pandemic. It notes that the most prevalent are failed electronic banking transactions and associated delays in restoration, reconciliation or resolution; slow speed/throttling of internet connectivity/speed as well arbitrary and inexplicable charges for data; restricted access or delayed signal release after pay-

ment for pay-TV services. Others are continuing irrational and excessive increases in prices of certainmedicaldevices(infraredthermometers), basic relevant hygiene products (sanitizers, facemasks) and certainmedications(chloroquineand vitamin C); and food items; continuinginsufficientsupplyofelectricityand arbitrary billing. Babatunde Irukera, CEO, FCCPC, in a statement in Abuja, however, informed that the Commission had created a dedicated

platform for the pandemic related complaints, more particularly the ones related to the prevalent issues identified above. “Indeed, the Commission is operating with limited capacity to address the mirage of complaints and recognizes that many industry players are experiencing similar limitations, it still encourages producers and providers to prioritize compliance with consumer protection laws and responsiveness to their customers,” Irukera said.

COVID -19: Insurance industry offers FG N11bn cover for 5,000 frontline health workers Modestus Anaesoronye

igerian insurance industry has given to the Federal Government an N11 billion cover for 5,000 frontline healthcare workers involved in managing victims of COVID-19 across Nigeria. The offering is the industry’s assistance in providing life insur-

ance cover for a maximum of 5,000 frontline health workers on COVID-19. The benefit is payable to the families or named beneficiary of any of the workers that dies in the line of duty including medical doctors N3 million; pharmacists/ nurses N2 million, and others N1 million. The estimated liability of the insuring companies is

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N11,000,000,000, and premium in the sum of N112,500,000 for the cover has been fully paid by the industry in line with the principle of ‘No Premium No Cover.’ A total of 19 life insurance companies have been accredited to provide the cover with FBNInsurance Limited as lead underwriter, to whom all claims will be referred to. The cover is for @Businessdayng

a period of 12 months effective April 14, 2020, Sunday Thomas, acting commissioner for insurance, said at the weekend. Meanwhile, the life insurance policy document that is the evidence of the contract has been presented to the chairman, Presidential Task Force on COVID-19 through the minister of finance, budget and national planning.

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Monday 06 Monday 06 April April 2020 2020 DAY BUSINESS

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comment Giving and misgivings

(Nineth in the series of an address delivered at the Rotary Foundation dinner/dance at the MUSON Centre, Marina, Lagos on 8th February 2020)

Bashorun J.K Randle

Putting regulators on their toes here have been claims of non-remittance of taxes by lottery operators in the past few years just as there are insinuations that some officials of the NLRC are in league with the operators thus resulting in noncompliance. Responding to these allegations, Ekechukwu, Assistant Director, Public Affairs, NLRC, said, “If you seek to confirm the said insinuations you talked about, no one will hesitate to tell you out rightly that the alleged insinuation is a complete falsehood.” The task before us is to evaluate the impact of philanthropy and the ideals of Rotary on a society that is crumbling from serious bombardment by sheer brutality and primitive wickedness. Front page of “The Vanguard” newspaper of January 31, 2020; Headline: Man conspires with friends to kill, burn, bury girlfriend in Taraba. “Taraba state police command has arrested the principal suspect of a conspiracy that led to the killing and burning of a lady, Imbajuri Ambisi, in Taraba State. The principal suspect, Munda Bala, was yesterday paraded with other suspects for various criminal offences at the

Police headquarters in Jalingo. Spokesman of the police command, DSP David Misal said the principal suspect conspired with two of his friends to kill, burn and bury Ambisi, who he was cohabiting with. He further explained that efforts are on to arrest Bala’s accomplices, who are currently at large. According to him, “investigations revealed that Munda Ahmed Bala is a boyfriend to the deceased. “He with is two friends now at large conspired and kill the girl, burnt her to ashes and buried her remains in the bush. “Efforts are on to arrest the fleeing culprits, while the principal suspect will be charged to court.” He further urged members of the public to supply the police with reliable information that would enhance internal security in the state.” I would urge all Rotarian to read Karl Maier’s book: “This house has fallen – Nigeria in crisis” Although it was published by Penguin Books in 2000, you would think the book was written last week (to quote the inimitable Eric Teniola). The only items missing are Boko Haram and kidnapping as a low-risk commercial enterprise. From “Vanguard” Newspaper of January 14, 2020 we are provided with evidence that even the Church is not immune to pervasive evil. Headline: “Church accountant get 18 years in jail for stealing N15.5 million tithes, offerings.” A Federal High Court in Yola, Adamawa State, has sentenced Ibrahim Aku, accountant of the Church of Brethren in Nigeria, to 18 years in prison for fraud. Nathan Musa, the judge, gave the order while ruling on a six-count charge

riled against the accused yesterday. The Economic and Financial Crimes Commission, EFCC, had accused Aku of defrauding the church of N15.5 million between 2016 and 2018. According to the anti-graft agency, the money was generated by the church members through offerings, donations and tithes. Delivering the judgement, Musa convicted Aku on charges of forgery and obtaining money by false pretence. The church accountant, who pleaded guilty to the charges, was sentenced to 18 years in prison without an option of fine. The judge also ordered Aku to pay back the money as restitution to the church, adding that the proceeds of the crime recovered in the course of the investigation should be sold and the funds should be remitted to the church. Reacting to the judgement, Bello Bajoga, an EFCC official, said: “The convict was entrusted with church money and ended up diverting same and forged tellers, which he presented as genuine, to serve as evidence of remmitance.” Neither are the oceans/high seas safe from the wickedness that has engulfed the land. Headline: “Four naval ratings killed by pirates in Ondo.” “Four naval ratings have been killed in Gbagira village, Ilaje Local Government Area of Ondo State, while rescuing three foreigners from pirates. The suspected killers also went away with four military rifles and seven magazines. Vanguard gathered that the victims were deployed to rescue three foreigners that were kidnapped by the pirates in the community. The community and its neighbours have been under tension following the

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I would urge all Rotarian to read Karl Maier’s book: This house has fallen – Nigeria in crisis

Randle is Chairman/Chief Executive JK Randle Professional Services Chartered Accountants

Nigeria’s secondary licensing market “

o you know a Nigerian holder of petroleum acreage who is interested in funding partnership for field development?” It’s a question I have been asked, quite routinely, in the last 10 years. The geography is very specific and so is the nationality of the preferred licensee: Nigeria and Nigerian. The follow up statement to that query hardly varies; “I have people who have money to invest”. These enquiries are always about the marginal fields, awarded 17 years ago, that haven’t been developed, as well as over 20 oil prospecting leases; exploratory tracts which have been granted to Nigerian companies, as far back as 29 years ago, but never experienced an active work programme. “What do you know about them?”, the inquiries always state. Nigeria has not conducted a bid round since 2007. And discretionary awards by the government have been few and far between. So, a semi-official secondary market has grown to fill the gap. One recurring challenge in consummating the transactions in the secondary lease market is the ministerial consent, a condition that stipulates that any transfer of asset, either in whole or in part, has to have the nod of the political head of the Ministry of Petroleum Resources. The hurdles as well as transparency concerns around the Ministerial consent are identified in a recent report published by the Nigerian Natural Resource Charter NNRC. But I am getting ahead of myself.

The secondary lease market has in the past 12 years, had a turnover of close to $15 billion, if not more. Shell started the contemporary round of divestments of Nigerian assets in 2008 when it sold 15 percent of the total equity in Oil Mining Leases (OMLs) 125 and 134 to Oando. It upped the game in 2010, when it began what has now become its recurring “bid round” of sale of onshore assets, leading its co-venturers TOTAL and ENI to collectively divest their 45 percent in eight acreages for a sum of around $7 billion. Between 2013 and 2015, ConocoPhillips, the world’s largest independent, received close to $1.5 billion for its sale of, mainly, 20 percent equity in four leases in the country, from Oando, a transaction that marked its exit from Nigeria. Chevron has, quietly earned over $800 million from the sale of its stakes in six acreages (three onshore and three shallow offshore) since 2014. Last year witnessed the $520 million purchase, by the Canadian junior Africa Oil Corp., of 50 percent stake in POGBV a vehicle which holds 8 percent and 16 percent stakes in Oil Mining Leases (OMLs) 127 (Agbami) and 130 (Akpo & Egina fields), with combined output in excess of 475,000BOPD, in crude oil volume only. But these are the big-ticket items, in which the cost of buying stakes in each acreage has ranged from $50 million to $2.5 million, as most of the assets involved are producing properties. Far less expensive have been the deals involving farm ins into and operatorships of marginal fields and exploratory tracts. One company that thrived in this segment of the market was Afren. Between its founding in www.businessday.ng

invasion by security operatives. Confirming the incident ; Commanding Officer, Forward Operating Base in Igbokoda, Commodore Danjuma Ndanusa, said he had directed community leaders (baales) to produce the weapons or face dire consequences. One of the pirates was reportedly apprehended in a suburb of Awoye community after the naval ratings were shot dead. The suspected kidnappers reportedly came from Bayelsa State via the high seas, through which some escaped with gunshot injuries, following a gun battle with the naval ratings. Commodore Ndanusa said one of the pirates that was apprehended confessed that the missing rifles are in the community, adding that the rescued foreigners corroborated his claim. His words: “We intimated them on what is at stake. It is like sleeping on a time bomb. I told all the baales to get all their youths and speak with them. “That was why we did a total search and we found four telephones and one walkie-talkie belonging to the foreigners. I made this known to the four baales from the community. “We also made a search on the boat they came with from Bayelsa and recovered empty magazines from guns on the floor of their boat. “We placed a curfew in the four communities and on the activities on the waterway by putting pressure on them to produce the arms, because it is a threat to the innocents in the community.” Meanwhile, the communities have cried out that they were under siege and that both economic and social activities have been paralysed.”

Toyin Akinosho 2004 and its demise in 2015, the London headquartered independent signed MoUs with seven Nigerian marginal field acreage holders. In the end it consummated a deal with one; Oriental Resources, on the Ebok field, which it brought into production. It also farmed into Amni Petroleum’s Okoro field, which it took to first oil. At the height of its powers, Afren was producing over 52,000BOPD gross from these two fields. It was convenient for the company not to quote the gross figures, since its equity volume from these two assets, at over 30,000BOPD, was not exactly marginal. So Afren had taken advantage of Nigeria’s informal secondary lease market. In spite of the access of some of the company’s principals to the upper reaches of Nigerian political power structure, Afren never won an acreage from the Nigerian government, either in an open lease sale or a discretionary award. Indeed, the largest producing Nigerian independents: AITEO ~80,000BOPD, Shoreline ~70,000BOPD, Seplat ~60,000BOPD, Neconde ~50,000BOPD, Eroton ~45,000BOPD, came in to being through the secondary market. The only licencing round focused on marginal fields was conducted in 2001-2002. Out of the 24 such fields awarded to 31 Nigerian independents in 2003, 11 fields were either not developed, nor worked up to sustained production. For most of the last 10 years, these fields were the hottest candidates around, for investors keen on having a piece of the Nigerian marginal field basket. They were Bicta Energy’s Ogedeh field, which has never really had an operationalised work programme; Sogenal’s Akepo field, which has faced serious operational challenges

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in the journey to development; Goland’s Oriri field has experienced failed re-entries; Movido’s Ekeh field has had intermittent production, with expensive, short term production facilities and the field had been shut in for upwards of five years; Dansaki/Associated’s Tom Shot Bank field has not had the benefit of a robust development partner. Finally, Del Sigma’s Ke Field needed a working up. There were also Guarantee/Owena held Ororo marginal field and Sahara’s Tsekelewu Field. Licenses to all these 11 marginal fields have now been revoked by the government. But that is another story. Outside of the marginal fields league are a number of Oil Prospecting Licenced acreages that would seem, on the surface, available. There are over 15 of them, mostly onshore Niger Delta, some in shallow water. But holders of these assets are not in a hurry to do deals. The fact that they escape even paying signature bonus after being awarded these assets, in cases for over 20 years, says something about state/ regulatory capture in the Nigerian petroleum industry. The Nigerian government has been severally criticised for infrequent petroleum licencing rounds. I am not one of those critics. I have been more concerned about routine, day to day management of licences and in the ministerial consent.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Akinosho is the Publisher of Africa Oil+Gas report.

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Monday 27 April 2020

BUSINESS DAY

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Securing the future of Nigeria’s indigenous oil firms is a win-win for all

Patrick Atuanya

ndigenous Nigerian oil producers currently pump about 10 percent of national output and have invested billions of dollars in the past 10 years to position themselves for growth, and to play a bigger role in the sector dominated by International Oil Companies (IOCs). There are at least 50 small to midsized Nigerian producers pumping between 1,000 and 100,000 barrels each day. However, firms like Aiteo E & P Ltd, Seplat Petroleum Development Company, Shoreline Group and others who operate in the difficult terrain and environment that is the onshore Niger-Delta, have now been hit by an unprecedented global pandemic that has led to demand destruction and supply shock (from the Saudi-Russia price war) which has led to a massive glut. Today oil prices have collapsed some 70 percent since January 2020 alone, amid a worldwide shortage of storage space for crude. Dated Brent benchmark, a global reference for nearly two thirds of the world’s physical flows, plunged to $13.24 a barrel last week, its lowest since 1999, according to price reporting agency S&P Global Platt’s. That means that Nigerian Bonny Light, would now sell under $10 a barrel, as it trades at a discount to the Dated Brent benchmark. For indigenous Nigerian oil and gas producers this is an existential threat. First of all majority of them have

costs of production in the $30 - $40 per barrel range, largely as a result of the high costs of operation and security related expenses in the onshore shallow water fields of the Niger Delta, where militant attacks on oil and other energy infrastructure is rampant. The indigenous producers mostly export their oil through the Bonny terminal fed by the Nembe Creek trunkline or the Trans Forcados pipeline. Both pipelines are regular targets for attacks and sabotage which often leads to force majeure, (a measure that allows companies to delay or skip supply obligations) due to inability to evacuate crude. Background Leading up to the current global coronavirus crises and oil slump, indigenous Nigerian firms had just begun to recover from the 2015/2016 slump in global oil prices, domestic recession and militant attacks. In a 15 months period, between February 2015 and April 2016 for instance, the Trans Forcados Pipeline (TFP) went offline, ensuring that revenues for most of the indigenous firms were hit. To get around the militant attacks on pipelines, Seplat and other firms invested huge sums of money on acquiring marine vessels for alternative export routes for their crude. At the same time these firms were coming off a period where they had to restructure loans with banks (due to the 2015/2016 slump), at not too favourable terms. The 2010 – 2014 period were boom years for the oil sector both globally and domestically, and a lot of Nigeria firms were taking on assets (sometimes encouraged by the Government), being divested by the IOCs who were mostly retrenching from the onshore Niger Delta, due to security concerns. A lot of the firms bought these IOC assets using loans from banks which were structured based on the oil reserves in the wells being acquired and

assumed oil prices close to $80 - $100 per barrel. Also the loan agreements were often structured in a manner that ignored force majeure. So it is no surprise that when oil prices peaked in mid-2014 and began to fall soon thereafter, interest on the loans continued to mount (between 2015 and 2017), despite an increase in militant attacks and slump in oil revenues. Current state of affairs The key issues facing indigenous oil firms today are the unexpected decline in crude oil prices and the coronavirus pandemic which has taken out demand for crude. The Saudi-Russian oil price war also made the situation worse because it led to a surge in oil production amid demand destruction, leading to elevated supply and lack of storage space for crude globally. Indigenous oil firms who typically borrow to finance operations are now caught in the middle of all these. BusinessDay estimates that Banks’ exposure to the oil and gas sector was equivalent to N3.4 trillion, as at the end of 2019. The problem now is that the current down cycle in the oil sector is a mismatch to the loans exposure as indigenous firms were just beginning to repair their balance sheets before the black swan event in the form of the coronavirus hit the globe. Because the firms largely operate in the shallow onshore fields of the Niger Delta, security issues are a major addition to the cost of production, which is much higher than the current market price of oil. A lot of the loans were taken based on oil prices being above $100 per barrel. However today prices are 90 percent down from 2014 levels, bunkering and attacks continue to cut output and feed into costs, meanwhile the largely dollar denominated loans continue to grow.

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In a 15 months period, between February 2015 and April 2016 for instance, the Trans Forcados Pipeline (TFP) went offline, ensuring that revenues for most of the indigenous firms were hit

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

Thinking about the post-COVID future

s we continue to battle the pandemic, questions on what we should or should not be doing continue to be discussed. Should we continue the lock-downs? Should we stop interstate travel? Are we testing enough people? Is there hope for a vaccine soon? So many questions with very few answers. There is so much uncertainty over many things that anyone claiming to have precise answers should be given a babalawo certificate. This is not to say that every decision on the pandemic should be accepted without question. It must be tough being a decision maker right now. Still, one thing we know for sure is that we will be here after the pandemic is gone. By “we” I mean the country. But the post pandemic country is going to have a lot of questions to answer because it looks like the post-pandemic world will not look the same as the pre-pandemic one. The first evidence of this is with oil prices. At this point I should remind you that oil prices are one of those things that are largely unpredictable. Still it will take a very optimistic person to expect oil prices to return to anywhere near their pre-pandemic highs. Ignoring the anomaly that

saw us witness negative oil prices, a near future with $50 oil looks very unlikely. The Nigerian story does not need re-hashing but just in case you forgot: we still, despite all the talk of diversification, have crude oil as our only major export accounting for over 90 percent of all exports. The government is also still dependent on crude oil exports for its revenue. Somewhere around 65 percent last year by my calculations. The collapse of oil therefore has the government and the CBN running around looking for revenue and foreign exchange. But if oil is not going back to what it used to be then what next? The answer is actually very straightforward. We are going to have to find something else besides oil to do for the world. Preferably more than one something else. Something else that is less volatile than oil and that can be scaled up a lot more easily than oil. I know some people at one banking regulator have been shouting about how we need to “produce what we consume” and other protectionist mumbo jumbo. The truth however is that we are always going to want some things from the rest of the world. Someone in Ghana or New Zealand or Cuba is always going to www.businessday.ng

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produce something that we would like to have. The only way to survive with a lifestyle that is different from those in Pyongyang will be to reciprocate, and do some things that the rest of the world wants. What kinds of things? For example, one of the side-effects of the pandemic is that many businesses are figuring out that many jobs can actually be done remotely, or can be done from home. But if they can be done from home then does home have to be where the business is located? Can people in maybe Ekiti be employed by a company in Toronto and still get the job done? As people are finding out now, many jobs can be done anywhere. And given that the costs of employing people in Ekiti is likely to be way cheaper than employing people in Toronto to do the same work, then the opportunity for winwins are there. While thinking about this I did some small calculations using Ekiti as an example. For Ekiti to get a billion US dollars’ worth of foreign exchange inflows each year, the state would need to have just 40,000 people working remotely from Ekiti and earning a relatively modest 25,000 USD a year. Modest by global standards. Those

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Way Forward Governments globally have rolled out measures to protect companies deemed critical to national security. The Federal Government should probably do the same. To be fair the Central Bank of Nigeria has announced some palliatives including a N50bn facility to be disbursed at single digits through the NIRSAL Microfinance Bank for households and small- and medium-sized enterprises (SMEs) that are particularly hard hit by the coronavirus, including hoteliers, airline service providers and health care merchants. The CBN also suggested that banks give forbearance on loans during this period. A lot more would however need to be done especially due to the systemic nature of the current crises and danger it poses to the indigenous firms, the banks and the Federal Government. The CBN working with the Department of Petroleum Resources (DPR), the oil regulator should bring the Banks and the indigenous players together to agree to a moratorium on loans and forbearance for up to a 1 year time period. There should be some form of interest waiver and reduction, to allow the firms recover as the oil market rebalances and global economies re-open. Loan contracts should be re-worded to reflect the impact of force majeure or attacks. There can also be discussions on moratorium on principal repayments for a longer time period of say 2 to 3 years. The DPR on its part should continue to provide support for these indigenous companies so that once the crises passes they are strong enough to be able to pay all due fees and taxes, ensuring a winwin situation for Nigeria.

NONSO OBIKILI inflows would also generate twice the tax revenue from PAYE than Ekiti got from the oil drenched FAAC last year. Is it unimaginable for Ekiti, a state with over 3.5 million residents to have 40,000 people working remotely for international companies? It is not. But it is hard work. For that kind of thing we can’t do via a meeting in Abuja to allocate 40,000 jobs to Ekiti. We can’t schmooze our richest man in Africa to give us those 40,000 jobs. We can’t carry gun and force company X to give us the jobs. We are just going to have to be competitive enough to earn those jobs. This is just an example but in fact, most of the options for engaging with the world either through exports or through services will require us to be competitive. Are we ready for that? Are we ready for a post-oil Nigeria? Dr. Obikili is the chief economist at BusinessDay

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Monday 27 April 2020

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Abba Kyari: The high-profile casualty of Nigeria’s theatre of misrule global Perspectives

OLU FASAN

irst, my condolences to the family of Mallam Abba Kyari, President Muhammadu Buhari’s chief of staff, who died on 17 April 2020, aged 67, after a coronavirus illness. His death is particularly sad because contracting the coronavirus is not an automatic death sentence. As of 24 April, last week, there were 2, 753,627 Covid-19 infectees worldwide, according to the global statistical organisation, “Worldometer”, and only 192,326 (about 7 percent) deaths. Sadly, Kyari was one of the unlucky few. Tragic! But while, on a human level, one mourns Kyari’s death, no individual is greater than a nation. So, it is right to examine Kyari’s legacy, given the dominant role he played in the running of this country. The truth is, Abba Kyari was, for five years, Nigeria’s shadow leader. Officially, he was President Buhari’s chief of staff, but, in practice, he was not only the president’s gate-keeper, determining who had access to him, he was also the gate-keeper over the policy process. No policy idea reached Buhari without Kyari’s imprimatur. Recently, in a face-off with Kyari, Major-General Babagana Munguno, the national security adviser, accused him of usurping presidential powers. Some have argued, in Kyari’s defence, that a presidential aide can only be as powerful as the president wants him to be, suggesting that Buhari facultatively supported his power-grab. But when a president is intellectually weak, a power-hungry aide, who is well-educated – Kyari had degrees from Warwick and Cambridge universities – could run rings around the president and turn him into a pawn in his power game. Take one example. In 2017, President

Buhari was going on medical vacation and sent a letter of transfer of power to the National Assembly. But the letter referred to the vice president as “Coordinator” instead of “Acting President”, and described his role as “coordinating the activities of the government” instead of “performing the duties of the office” of the president, in accordance with S.145 of the Constitution. This was a deliberate attempt to undermine Vice President Yemi Osinbajo, who received local and international kudos when he was acting president during Buhari’s previous absence. But who drafted the letter for the president and who got him to sign it? Or did he knowingly relegate Osinbajo’s role from “Acting President” to “Coordinator”? The truth is, Buhari signed the letter, but the content was Kyari’s idea. A president can be so dependent on an aide who professes to be protecting his interests! Indeed, Buhari was dependent on Kyari. His gushing tribute to the late chief of staff betrays it. In the tribute, Buhari described Kyari as “the very best of us”, adding that “he was made of the stuff that makes Nigeria great.” He said that Kyari derived satisfaction “solely and only from improvement of the governance of this great country”. But if Kyari was that good, the question is: what has happened to the governance of Nigeria since 2015? Where is the robust economic growth? Where are the jobs? Where is the reduction in poverty and inequality? Where is the security of life and property? Where is the political stability and social cohesion? Indeed, where are the badly needed structural economic and political reforms? How exactly did Kyari improve governance in Nigeria? Last week, somebody wrote a piece – in fact, a hagiography – on Kyari. The writer said that when Kyari first heard about the outbreak of the coronavirus overseas, he expressed concerns about Nigeria’s preparedness, and posed the following questions: “How many intensive care units do we have ready to admit acute cases? How quickly can we increase the numbers if the virus spreads? How many nurses do we have to deploy immediately and how quickly can we increase the numbers? How many ventilators do we have and

how many should we ideally have and how quickly can we increase the numbers?” Really? How could someone who had shaped Nigeria’s policies for five years ask those questions? President Buhari said Kyari’s “true focus was the development of infrastructure.” Clearly, that did not include health infrastructure. In fact, it was speculated that Kyari’s interference in the Federal Ministry of Health under the then health minister, Professor Isaac Adewole, prevented critical procurements for the health sector. When Bill Gates, the US billionaire and philanthropist, criticised Nigeria in 2018 for not investing in human capital, including healthcare, he was lambasted by Buhari’s henchmen like Kyari. Of course, we know why, despite his professed passion for infrastructure, Kyari did not push for investment in Nigeria’s health infrastructure: he never used local health services. As an article on the BBC website put it, Nigeria’s ruling elite like Kyari “normally jet off to the UK, Germany or the US as the slightest headache”. Then, suddenly, Covid-19 struck and the opportunity for medical visits overseas disappeared. For instance, when Kyari returned from an official trip to Germany and then proved positive for Covid-19, he would have gone back to Germany or go to the UK immediately for medical treatment. But he could not as those countries, fearing the spread of Covid-19, stopped welcoming foreign visitors, including medical tourists! In an article on 12 April, Britain’s Sunday Times said this about Kyari: “When Nigeria’s all-powerful presidential chief of staff tested positive for the coronavirus, a doctor treating him in Lagos had to apply to a private London hospital for a copy of his medical records.” The inference was that, prior to that time, Kyari was not using the Nigerian health system. The paper added: “Abba Kyari and his friend, President Muhammadu Buhari, have always flown abroad for medical attention rather than risk their own chronically underfunded local hospitals.” It was a damning indictment on Nigeria’s ruling elite. Recently, Boris Johnson, the British prime minister, who had serious Covid-19 illness, was discharged from the intensive care unit. When he left St Thomas hospital, he said: “The National Health

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If Kyari had extended his passion for infrastructure to health infrastructure and Nigeria had the “worldclass” hospitals that Buhari’s party promised, maybe, given that many have survived serious Covid-19 illness, he would still be alive today

Service, NHS, has saved my life – no question”, adding that “things could have gone either way” without the NHS, which he described as “the best of this country.” But Nigeria runs down its own health system. In 2015, the manifesto of the All Progressives Congress, APC, on which Buhari ran for president, said: “We will increase the quality of all Federal Government-owned hospitals to world-class standard within five years.” So, what happens to that manifesto commitment? Of course, it is a broken promise. Today, Nigeria has one of the worst health services in the world, with 1.95 nurses and doctors per 1000 people, according to the World Health Organisation. It also has one of the world’s largest medical brain drains. A report submitted to the UK Parliament last year said that 2,000 of the doctors in the UK initially qualified in Nigeria. Few want to waste their medical career in bog-standard hospitals in Nigeria when they can train and practise in reputable medical institutions abroad. In a recent piece, the respected research outfit, S B Morgen Intelligence, said: “Perhaps healthcare will get the needed investment now that everyone is unable to escape as medical tourists after decades of neglect or rot”. And, last week, the Secretary to the Federal Government, Boss Mustapha, said that “Nigeria’s health sector will not remain the same postcoronavirus”, adding that “all measures would be taken to improve the sector”. Where is the money to do that now, with oil selling at below $20 per barrel? But here is the moral of all this. If Kyari had extended his passion for infrastructure to health infrastructure and Nigeria had the “world-class” hospitals that Buhari’s party promised, maybe, given that many have survived serious Covid-19 illness, he would still be alive today. Sadly, Abba Kyari was, it seems, a prominent victim of his governing cohort’s utter misrule of Nigeria. May his soul rest in peace! Dr. Fasan, a London-based lawyer and political economist, is a Visiting Fellow at the London School of Economics. e-mail: o.fasan@lse.ac.uk, twitter account: @olu_fasan

The Nigerian Code of Corporate Governance – Principle 27 – Stakeholder communication “Communicating and interacting with stakeholders keeps them conversant with the activities of the Company and assists them in making informed decision”

n today’s socio-political climate, cultivating the trust of stakeholders is critical to corporate success. Public and media scrutiny of what organisations say and do is immediate, relentless and unforgiving (where these are perceived as negative). It is therefore more important than ever for businesses to clearly articulate and communicate corporate actions, recognising that accountability is to a wider spectrum of stakeholders, beyond customers (clients) shareholders and prospective investors. Good corporate governance initiatives facilitate effective monitoring and provide incentives for the Board and Management to pursue objectives that are in the interest of the Company and its shareholders. Regulators are the gatekeepers of corporate governance and are tasked with protecting stakeholders, whilst ensuring that the Board and Management have sufficient latitude to perform their responsibilities and create value for shareholders. A key provision of the NCCG is the explicit recognition of the Board’s duty to consider the wider stakeholder responsibilities when promoting the success of the Company. The thrust of the provision is clear viz - adequate communication of a Company’s affairs to its shareholders - and wider stakeholders - is an integral part of a Board’s leadership role. Timely and continuous disclosure of material information on the activities of the Company ensure a balanced and fair view of the Company and

assists investors to effectively monitor compliance with the Code. It therefore behoves on the Board to ensure that Annual Reports and all channels (website, investors’ portal, marketing literature, etc.) of communication contain accurate and up-to-date information on the Company’s affairs. In the scheme of things, it is expected that the focus on wider stakeholder engagement will prompt companies to explain how and to what extent they consider the interests of their employees, suppliers, customers and other stakeholders and how these impacts their decision-making process. Stakeholder engagement mechanisms may range from formal events, special committees, external assessments and customer satisfaction surveys. The Annual Reports present a prime opportunity for the Company to present its story. However, given the significant regulatory disclosures required to be covered therein, it can very easily be considered a legal and regulatory box-ticking exercise (fulfilling all righteousness), an approach which companies should consciously seek to avoid. Good engagement with stakeholders is integral to helping them understand the issues facing the Company, how it is addressing key areas of public concern and why Directors believe their actions are in the best interest of the business and stakeholders. It will provide an opportunity for example to discuss how the Board and Management are www.businessday.ng

responding to a crisis such as COVID-19, the Business Continuity Plan and how the operations of the Company have been or will be impacted going forward. The Code also recommends the establishment of an Investor’s Portal on the Company’s website, where the Communication Policy as well as the Annual Reports for a minimum of five immediately preceding years and other relevant information about the Company should be published and made accessible to the public in downloadable format. The essence of publishing the Communication Policy is to provide clarity on how to go about requesting an engagement, where enquiries should be directed and guidance on the most efficient way to have a conversation about stakeholder concerns. Feedback from adequate stakeholder engagement can significantly impact on the quality of Board decisions. Whilst it may be impracticable for the Board to engage a large number of stakeholders directly, the digital space provides a platform by which it can have access to stakeholders’ unfiltered views on issues such as Board composition, strategy, risk exposure, remuneration and other burning issues that may be of concern. Good communication will build credibility with shareholders and potentially enhance corporate strategy. For shareholders, it is important to understand the companies in which they are invested. This understanding extends beyond receiving

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Bisi Adeyemi mandatory disclosures to having a transparent process for engaging on issues that are important to them. Shareholders are however not expected to interfere in the management of the Company’s operations or use access to push for short-term gains over sustainability and long-term value creation. It is important that shareholders and Board members engage effectively in the shared pursuit of top-rate governance.

Note: the rest of this article continues in the online edition of Business Day @https:// businessday.ng Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comment(s) and reaction(s) to badeyemi@dcsl.com.ng. DCSL provides Governance Advisory, Corporate Restructuring & Board Evaluation, Board & Senior Management Training, Retreats & Strategy Sessions, Executive Talent Recruitment, HR Outsourcing, Company Secretarial services

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Monday 27 April 2020

BUSINESS DAY

EDITORIAL Publisher/Editor-in-chief

Frank Aigbogun

Our oil market collapse although critical presents opportunities for development

editor Patrick Atuanya

FG must be motivated to diversify the economy through investment-led strategies

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

Bashir Ibrahim Hassan

imes like this are critical for Nigeria, weakening her knees and may see the giant of Africa bow under the fierce blows of negative shocks in the global economy. These times have made clear to everyone the grave consequences of poor and feeble policies and lack of clear direction from the Nigerian authorities. Positively, times like this presents to Nigeria lessons, if not wasted, that should usher her into a new era of sustained economic development. Developments last week were frightening leaving the giant of Africa at the tip of a cliff. Great will be the fall if our leaders show lack of competency in delivering Nigeria from current crisis. The coronavirus-induced slump in demand globally left millions of Nigeria’s bonny light crude unsold and prices as low as $12. Likewise, confirmed cases of the deadly coronavirus reported in Nigeria jumped by 117 on

Tuesday night, the highest daily figure reported by NCDC since its first case in February. Clearly stated in our frontpage comment on Thursday shows that the confluence of COVID-19 and an oil market collapse means that our oil boom is well and truly over. Given the heavy reliance of the Nigerian economy on the crude oil market, these developments spell an impending doom. This does not only threaten the financial stability of the 36 states heavily reliant on federal allocations to pay bills but also will significantly hamper the implementation of the federal budget, putting an already battered economy in worse shape. Nigeria is currently home to high debt levels, debt servicing cost eating up more than halve of our revenues, high inflation level at 12.26 percent according to recent NBS report last week, huge infrastructural deficit, high unemployment rate closer to 40 percent when adjusted for the impact of COVID-19, under-employment and under-reporting,

bleeding stock market, poor economic rating pulling back investments etc. This leaves Nigeria with a singular option of adopting an investment-led strategy that relies on privatisation and attracting Foreign Direct Investment (FDI) while facing the possibility of its worst economic crisis in 40 years. This strategy is not new in our clamour over the last four years except that the authorities consistently ignored it. We only wish that this time, with current realities, the Nigerian authority will ride on this wheel. With Nigeria’s room to borrow narrowed and increased risk for its debt market securities, Nigeria must look at the equity side of its balance sheet. This means we must adopt ways to attract private patient capital. Over the last five years, Nigeria’s foreign patient capital has plunged annually at a compounded average of minus 10 percent. Among peers in the frontier space, Nigeria attracts the lowest at $222 million quarterly average. This is less than oneper-

cent of GDP. It is so small that if shared equally among 200 million Nigerians, each person will get only $1.11 per quarter. Policies henceforth must encourage private sector investment into ICT, infrastructure, agriculture, manufacturing, health, education, and other sectors with good prospects. The bedrock of all this is urgent investment in physical (roads, land, sea and air transport, energy transmission) and social (healthcare and education) infrastructure. The first task is to fund these investments with domestic capital and foreign investments will flood in. Foreign investors are attracted by clear policy direction and good business climate. The sole responsibility lies with the federal government to create a private sector driven economy. We cannot afford to waste lessons from the current crisis. Rather than brood over the collapse of the oil market, the FG must be motivated to diversify the economy through investment-led strategies

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

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

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Monday 27 April 2020

BUSINESS DAY

COMPANIES & MARKETS

COMPANY NEWS ANALYSIS INSIGHT

CONSUMER GOODS

Cadbury records Q1’20 revenue drop amid lower sales, heightened competition OLUFIKAYO OWOEYE

everage giant, Cadbury Nigeria’s first quarter revenue for the period ended 31st March slowed 7.9percent year-on-year to N8.55billion, while on a quarter-to-quarter basis, revenue tanked 17.9percent from N10.4bn in Q4 2019. The year-on-year drop in revenue was driven by lower volumes in Refreshment Beverages down 20.8percent year-on-year to N4.5bn. On the other hand, Confectionary segment was up 4.3percent year-on-year to N2.8bn and Intermediate Cocoa Products surged 36.5percent year-on-year to N1.2bn

recorded upticks to cushion the decline in Refreshment Beverage sales. A l s o, t h e m a k e r s o f Bournvita and Tom-Tom recorded lower cost of sales and operating expenses on the back of improved cost efficiency. Cost of sales and operating expenses fell by 9.3percent year-on-year and 13.1percent year-on-year respectively in Q1-20. The decline in costs of sales can be linked to the lower input price of cocoa which was down 6.1percent since the beginning of the year on the back of weaker global demand. At the same time, the company recorded a 9.1percent and 24.4percent yearon-year decline in selling &

distribution and administrative expenses respectively, which supported the fall in operating expenses. However, improved financial leverage provided a boost to Cadbury’s Profits as the company recorded a 203.1% growth in Net Finance Income to N30.3m in Q1 2020 from N10.0m in Q1 2019. Consequently, Profit before Tax improved 26.1% y/y to N912.8m in Q1 2020 from N724.0m recorded in Q1 2019 while Net Income was higher, up 26.0% y/y to N638.9m in Q1 2020 from N507.0m in Q1 2019. Further analysis shows that Cadbury’s net operating cash flow turned positive in first quarter at N272mn from a negative at N281mn in Q1-

19. The improvement rode on the back of a 22.8percent year-to-date increase in trade and other payables to N11.81bn from N9.62bn in FY-19, despite the 37.2percent and 17.3percent increases in inventory and trade & other receivables respectively to N8.32bn from N6.06bn and N5.32bn from N4.53bn. Analysts believe this suggests that Cadbury largely benefited from favourable credit terms from suppliers in the quarter, but struggled to sell much of its products during period under review. Shares of Cadbury traded at N7.45 on the floor of the Nigerian Stock exchange on Friday, with one year return down 30.62percent.

Members of Rivers Youth State Federation (RSYF) staging a peaceful protest at the Logistics Base of Shell Nigeria Exploration and Production Company (SNEPCO), Onne Port, Rivers State, on Friday.

BANKING

UBA’s Q1 ’20 profit hits N30bn, Interest Income up 10.7% OLUFIKAYO OWOEYE

ier-1 bank UBA recently released its audited Q1-20 unaudited numbers, which showed that the bank recorded an 8.5percent year-on-year growth in profitability in the first quarter of the year. The bank’s profit-before tax increased 8.5percent year-onyear to N32.73 billion, however, with 7.5percent jump in income tax expense to N2.63 billion, profit-after-tax growth was more moderate, settling higher by 5percent year-onyear at N30.10 billion. During the period under review, the bank printed a decent growth in interest and

non-interest income, which was enough to erode expenses pressure, leading to an expansion in profitability. Interest income increased by 10.7percent year-on-year to N109.11 billion, supported by the growth across all major lines, with the largest contributions stemming from loans and advances to customers up 25.1percent year-on-year to N60.69 billion, making up 55.6percent of total interest income. Interest expense was also up, increasing by 7.9percent year-on-year to N43.69 billion, driven by a combination of increased expenses on borrowings up 6.0percent to N10.58 billion and deposits from financial institutions up 18percent to

N125.05 billion. Non-interest income grew by 11.1percent year-on-year to NGN28.61 billion, driven by the growth in fees and commissions income up 11.6percent year-on-year to NGN18.70billion. Contributory lines to NonInterest Income was weaker relative to the corresponding period of the prior year as gains on investment securities down 40.7percent year-onyear, foreign exchange trading gains down 10.6percent yearon-year. Consequent on the growth in funded and non-funded income, the bank recorded an 11.3% growth in operating income to N91.38 billion.

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COMPANY RELEASE

Citing job loss, Rivers youths protest at SNEPCO over alleged relocation plans AMAKA ANAGOR-EWUZIE

ouths under the aegis of the Rivers Youth State Federation (RSYF) on Friday staged a protest at the Logistics Base of Shell Nigeria Exploration and Production Company (SNEPCO) over an alleged plan by the company to relocate its business to Lagos. The protesting youths, who claimed that as much as 5,000 direct and indirect jobs could be lost in Rivers State to the planned relocation of SNEPCO, carried various placards at the SNEPCO logistics base located within the Onne Port at the Onne Oil and Gas Free Zone. Some of the placards read: “SNEPCO do you hate us this much?”, Rivers State is more peaceful than Lagos. Why leave?”, “SNEPCO why?” “SNEPCO please don’t make life tougher for Rivers youths.” The protesters also appealed to President Muhammadu Buhari and Rivers State Governor Nyesom Wike to prevail on SNEPCO to stop the planned relocation. Saviour Patrick, president of Rivers Youth State Federation (RSYF), who led the peaceful protest, said the fresh move by SNEPCO to relocate out of Rivers State would lead to significant job loss in the state and render many idle. “Our attention has been drawn to your recent plans of relocating to Lagos State of Nigeria from Onne Port in spite of COVID-19 lockdown without informing your host community in a clear term as to your reason,” reads an appeal letter delivered to the company by the youths during the protest, and jointly signed by Patrick and Bishop Abhili Tam, RSYF Secretary-General. According to the letter, “It is worthy of note that in September 2018, your company launched the same bid which we vehemently protested in our

great numbers, and which took the intervention of the Director of DSS Rivers State Command and HRM Ateke Michael Tom to avert. The youth further stated that after the intervention of the two aforementioned authorities, certain resolutions were made at the Conference Hall of the DSS Rivers State Command in the presence of SNEPCO’s representatives, DSS Director, Nigerian Ports Authority representatives, Oil and Gas Free Zones Authority (OGFZA) representatives and others, which led to the suspension of the protest. “Therefore, in strong terms, we condemn the inhuman and inconsiderate move by SNEPCO to leave Onne Port, Rivers State at this critical time when we are all working to combat a common enemy of human existence,” the letter further reads. The youth however appealed to the company to reverse its decision to leave the shores of Rivers State as such attempt would be protested by Rivers youths, adding that SNEPCO would be held responsible for any breakdown of law and order, which may be the resultant effect of the planned relocation to Lagos State. “However, if you think that your planned relocation is logical, subject it therefore to dialectical examination. In other words, there should be a roundtable discussion to x-ray your reasons for relocating to Lagos State without due consultation with your host communities,” the youth suggested in the letter. They however warned that any attempt to violate the content of the letter would also have a commensurate reciprocity from the Rivers State Youth Federation cum COVID-19 Presidential order on social distancing.

APEN supports Lagos State Covid-19 response with 5,000 surgical masks, protective clothing KELECHI EWUZIE

othered by the increasing trend and spread of Coronavirus pandemic in Lagos State, the Association of Private Educators in Nigeria (APEN) has donated 5,000 surgical masks and 200 protective clothing to the Lagos State ministry of health. Lai Koiki, chairperson of APEN says the donation will ensure that those Lagos State health workers in the frontline of the fight against Covid-19 pandemic are well equipped to manage the situation. Koiki noted that this donation by the body would equally go a long way in lending support to the great work that the Babajide Sanwo-Olu-led government is doing to battle this health crisis.

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“We are Lagosians; we benefit from this government and whenever there is any challenge, APEN as a body steps up to lend our support. Covid-19 pandemic is a challenge that has affected Lagos, Nigeria and indeed the world”. Olusegun Ogbe, permanent secretary, Lagos State ministry of health, while receiving the donation on behalf of the ministry, lauded APEN for their effort and that of other private sector organizations for the way they have rallied round government with their support in the fight against this pandemic. Ogbe observed that the donation of the surgical masks will go down very well with health workers because they are personal protective equipment for the people in @Businessdayng

the frontlines, saying “this is something that we appreciate”. Bolanle Oyewole, a member of APEN, opined that one of the strategies the education body has put in place to cushion the effect of the Covid-19 on parents’ finances is reduction of fees across members’ schools. According to Oyewole, “In addition to reduction of fees, we are also looking at added offerings being put in place to argument and make sure children learning does not suffer and even when the parents do lose their jobs, we understand the times and we will work with them”. “To us, what is ultimately important is the children education and we will make sure that there are no learning gaps”, Oyewole said.

Monday 27 April 2020

COMPANIES&MARKETS

BUSINESS DAY

Business Event

COMPANY RELEASE

COVID -19 palliatives: Leadway Assurance gives back to motor insurance clients MODESTUS ANAESORONYE

ne of Nigeria’s leading insurer, Leadway Assurance Company Limited has announced a giveback for its Personal Motor Comprehensive Insurance policyholders who have been impacted by lockdown over COVID -19. The “give-back” is the equivalent of two weeks premium, to policyholders who were constrained to ground their vehicles in strict compliance of the lockdown order by the Federal Government, in alignment with the World Health Organization’s social distancing recommendations. The lockdown was initiated by government to “flatten the curve” on the Coronavirus pandemic which has impacted heavily on social life, businesses and recreation across the world. Commenting on the company’s gesture, Tunde HassanOdukale, managing director, said that “the lockdown has

had far reaching effects across the country, challenging both individuals and businesses. People are watchingand will remember how businesses treated them during this crisis. Our decision to provide the “give back” to our loyal comprehensive motor insurance policyholders will go a long way to support customers experiencing unforeseen pressure on their finances at this time. This is another way we are thanking our clients for supporting the FG to flatten the curve by staying at home.” The value of the airtime, equivalent of 50 percent of a month’s premium, will be credited to customers by the end of April, 2020 following confirmation of customer details. Customers with financial burdens can also call to discuss extended grace periods for missed payments, payment plans, and waiving late fees and penalties. Further commenting, the Commercial Director for General Insurance, Gboyega Lesi said, “As

society works together to slow the spread of COVID-19, there are more people at home, driving less and having fewer accidents. Given this reduction in road risks due to little or no driving, it is only fair that some premium be refunded so that the customer does not lose at the end of the day. It is the responsible thing to do in the face of a pandemic-inspired economic lockdown. We hope that this support will in some way help our motor insurance clients deal with the rough patches.” Before this support, the Company had made a sizeable donation to the health sector, joining other like-minded insurers to provide a #5 billion Life cover for the frontline workers helping the Nation to combat this pandemic. The leading insurer also donated Personal Protection Equipment (PPE) materials, COVID-19 test kits and foodstuff to the tune of N135 million as part of its efforts to support optimal testing and treatment of COVID-19 cases in Nigeria.

Dangote Cement completes N100bn bond program OLUFIKAYO OWOEYE

frica’s largest cem e n t p ro d u c e r, Dangote Cement Plc, has announced the successful issuance of its N100 billion Series 1 Fixed Rate S enior Uns e cure d Bonds due April 2025 under the Company’s NGN300 billion Bond Programme. According to the cementmaker, the transaction was 1.5 times oversubscribed and represents Dangote Cement’s debut bond issuance in the debt capital market. The book building with respect to the issuance commenced on 3 April 2020

following approval from the Securities and Exchange Commission and closed on 15 April 2020 at a coupon rate of 12.50 percent. Despite current market headwinds due to the COVID-19 pandemic, the transaction was extremely well received and attracted significant demand from a wide range of high-quality investors including domestic pension funds, asset managers, insurance companies, banks and international fund managers. The transaction which represents the largest corporate bond issuance in Nigeria’s debt capital mar-

ket, had a total order book amounted to N155 billion. The transaction is expected to lower the company’s average cost of debt and extend the average maturity of its debt. Dangote Cement intends to use the net proceeds of the offering to refinance existing short-term debt previously applied towards cement expansion projects, working capital and general corporate purposes. Michel Puchercos, chief executive officer, Dangote Cement, said the landmark transaction is the largest ever bond issuance by a corporate issuer in Nigeria.

Armese meters 15,000 customers in Rivers franchise area

eter asset provider Armese Consulting has supplied over 15,000 electricity meters to customers in its coverage area few months following the flag-off of the MAP exercise by the Port Harcourt Electricity Distribution Company (PHED) in Rivers State. In its Metering Service Agreement (MSA) with PHED, Armese is tasked with supply and installation of single/three-phase meters in designated coverage areas across Rivers, Akwa Ibom and Cross River States, all of which fall under the PHED jurisdiction. Armese, which boasts a 20,580sqm meter manufacturing facility with the installed capacity to produce 3 million me-

ters yearly, assured of continual supply of meters to power commercial entities and households during and after the lockdown occasioned by the corona virus. Dr. Dallas Peavey, Group Chief Operating Officer, Income Electrix, parent company of Armese Consulting, disclosed that within the past one year, Armese had also been engaged by Kano Electricity Distribution Company (KEDCO), Eko Electricity Distribution Company (EKEDC) and the Liberia Electricity Corporation (LEC), among others, to supply meters for electricity distribution. He said: “At Armese, our business orientation is 360-degree customer satisfaction. As such, we remain committed www.businessday.ng

to fulfilling our contractual obligations in the face of impossible odds, including the ravaging corona virus which has drastically affected the supply chain for meter asset assembly locally. “Anticipating and heading off unforeseen challenges so we keep customers happy has kept us in business for the past 17 years, and will continue to drive our operations in the foreseeable future.” Armese recently joined highpowered stakeholders drawn from the Akwa Ibom State Government, PHED and Ibom Power to brainstorm workable strategies ahead of the anticipated kick-off of the ‘Power for All’ project in Akwa Ibom.

L-R: Olubunmi Agbaje, shopper and channel marketing manager, Nigerian Bottling Company Ltd (NBC); Rodrigo Recio, execution excellence director, NBC; Oluyomi Moses, head of marketing, NBC, and Abiodun Ajiborode, marketing manager, Coca-Cola Nigeria, during the ‘Win a trip to the EPL promotion launch’ held in Lagos.

L-R: Adewale Yusuf, co-founder and chief executive officer, Techpoint Africa; Muyiwa Matuluko, co-founder and editor-in-chief, Techpoint Africa; Kate Ifeatu Daniels, manager, brand, and communications, enterprise business unit, MTN Nigeria; Titilola Oludimu, director, SME by Techpoint, and Damilola Runsewe, senior manager, SME segment management, enterprise business unit, MTN Nigeria, during the MTN-sponsored Techpoint SME Clinic, created to accelerate businesses with the power of technology, at the National Theatre, Iganmu, Lagos.

L-R: Chuks Afiawari, SJ of the North-West Africa Province of the Society of Jesus; Administrator, St. Francis Catholic Secondary School, Idimu, Lagos; Maduabuchi Leo Muoneme. S. J; Leslie Oghomienor, special guest of honour/ chairman, Russell Smith Group Nigeria, and Emmanuel Ogbe Akhibi, chairman of the occasion, at the St. Francis Catholic Secondary School 2020 Cultural Day/ Unveiling of the Soccer Academy held at the School Premises, Lagos.

R-L: Haruna Abdurrahman, manager lubricants; Elizabeth Aliyuda, general manager sales and marketing; Billy Okoye, managing director; Affiong Akpasubi, executive director, support services; Lawal Bello, executive director operations, all of NNPC Retail Limited, during the unveiling of the NNPC Lubricants at Abuja International Conference Centre, Abuja.

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Monday 27 April 2020

BUSINESS DAY

In Association With

A pandemic of power grabs

Autocrats see opportunity in disaster The world is distracted and the public need saving. It is a strongman’s dream Editor’s note: The Economist is making some of its most important coverage of the covid-19 pandemic freely available to readers of The Economist Today, our daily newsletter. To receive it, register here. For our coronavirus tracker and more coverage, see our hub

LL THE world’s attention is on covid-19. Perhaps it was a coincidence that China chose this moment to tighten its control around disputed reefs in the South China Sea, arrest the most prominent democrats in Hong Kong and tear a hole in Hong Kong’s Basic Law (see article). But perhaps not. Rulers everywhere have realised that now is the perfect time to do outrageous things, safe in the knowledge that the rest of the world will barely notice. Many are taking advantage of the pandemic to grab more power for themselves (see article). China’s actions in Hong Kong are especially troubling. Since Britain handed the territory back to China in 1997, Hong Kong has been governed under the formula of “one country, two systems”. By and large, its people enjoy the benefits of free speech, free assembly and the rule of law. Foreign firms have always felt safe there, which is why Hong Kong is such an important financial hub. But China’s ruling Communist Party has long yearned to crush Hong Kong’s culture of protest. Article 22 of the Basic Law (a kind of mini-constitution) bans Chinese government offices from interfering in Hong Kong’s internal affairs. That was always understood to include its Liaison Office in Hong Kong. But on April 17th the office, China’s main representative body in the territory, said it was not bound by Article 22. This suggests that it plans to step up its campaign to curtail Hong Kong’s freedoms. Xi Jinping’s incremental power grab in Hong Kong is one of many. All around the world, autocrats and would-be autocrats spy an unprecedented opportunity. Covid-19 is an emergency like no

other. Governments need extra tools to cope with it. No fewer than 84 have enacted emergency laws vesting extra powers in the executive. In some cases these powers are necessary to fight the pandemic and will be relinquished when it is over. But in many cases they are not, and won’t be. The places most at risk are those where democracy’s roots are shallow and institutional checks are weak. Take Hungary, where the prime minister, Viktor Orban, has been eroding checks and balances for a decade. Under a new coronavirus law, he can now rule by decree. He has become, in effect, a dictator, and will remain so until parliament revokes his new powers. Since it is controlled by his party, that may not be for a while. Hungary is a member of the European Union, a club of rich democracies, yet it is acting like Togo or Serbia, whose leaders have just assumed similar powers on the same pretext. Everywhere people are scared. Many wish to be led to safety. Wannabe strongmen are grabbing coercive tools they have always craved—in order, they say, to protect public health. Large gatherings can be sources of infection; even the most liberal governments are restricting them. Autocrats are delighted to have such a respectable excuse for banning mass protests, which over the past year have rocked India, Russia and whole swathes of Africa and Latin America. The pandemic gives a reason to postpone elections, as in Bolivia,

or to press ahead with a vote while the opposition cannot campaign, as in Guinea. Lockdown rules can be selectively enforced. Azerbaijan’s president openly threatens to use them to “isolate” the opposition. Relief cash can be selectively distributed. In Togo you need a voter ID, which opposition supporters who boycotted a recent election tend to lack. Minorities can be scapegoated. India’s ruling party is firing up Hindu support by portraying Muslims as covid-19 vectors. Fighting the virus requires finding out who is infected, tracing their contacts and quarantining them. That means more invasions of privacy than people would accept in normal times. Democracies with proper safeguards, like South Korea or Norway, will probably not abuse this power much. Regimes like China’s and Russia’s are eagerly deploying high-tech kit to snoop on practically everyone, and they are not alone. Cambodia’s new emergency law places no limits on such surveillance. False information about the disease can be dangerous. Many regimes are using this truism as an excuse to ban “fake news”, by which they often mean honest criticism. Peddlers of “falsehood” in Zimbabwe now face 20 years in prison. The head of a covid-19 committee under Khalifa Haftar, a Libyan warlord, says: “We consider anyone who criticises to be a traitor.” Jordan, Oman, Yemen and the United Arab Emirates have banned print newspapers, claiming that

they might transmit the virus. Judging by what has already been reported, power grabbers on every continent are exploiting covid-19 to entrench themselves. But with journalists and humanrights activists unable to venture out, nobody knows whether the unreported abuses are worse. How many dissidents have been jailed for “violating quarantine rules”? Of the vast sums being mobilised to tackle the pandemic, how much has been stolen by strongmen and their flunkeys? A recent World Bank study found that big inflows of aid to poor countries coincided with big outflows to offshore havens with secretive shell companies and banks—and that was before autocrats started grabbing covid-related emergency powers. Better checks are needed. “Right now it is health over liberty,” says Thailand’s autocratic prime minister, Prayuth Chanocha. Yet many of the liberty-constricting actions taken by regimes like his are bad for public health. Censorship blocks the flow of information, frustrating an evidencebased response to the virus. It also lets corruption thrive. Partisan enforcement of social distancing destroys the trust in government needed if people are to follow the rules. Cruel, but inept Where does this lead? Covid-19 will make people poorer, sicker and angrier. The coronavirus is impervious to propaganda and the secret police. Even as some leaders exploit the pandemic, their inability to deal with popular suffering will act against the myth that they and their regimes are impregnable. In countries where families are hungry, where batonhappy police enforce lockdowns and where cronies’ pickings from the abuse of office dwindle along with the economy, that may eventually cause some regimes to lose control. For the time being, though, the traffic is in the other direction. Unscrupulous autocrats are exploiting the pandemic to do what they always do: grab power at the expense of the people they govern.

A Balkan betrayal Essential workers

The Gulf states should take better care of their migrant workers It is not only humane, it is practical

IFE HAS never been easy for the Gulf’s migrant workers. Though they are around half of the region’s population and are essential to its economy, the locals give them little respect. Coming from poorer countries such as India, Pakistan and Nepal, most work long hours for wages that are high compared with salaries back home but low by any other standard. They care for Kuwaiti children, nurse sick Saudis and build Dubai’s skyscrapers. When their workday is done, many are crammed into spartan dormitories by their employers. Whether visiting workers have lived in the Gulf for two months or two decades, they are deemed to be “temporary” and are left out of the social contract. Most citizens treat them as a subservient underclass. The outbreak of covid-19 has

made life even harder for migrants, who probably account for most of the recorded infections in the Gulf and are also bearing the brunt of the economic fallout. Many are locked down, out of work and unable to go home because of restrictions on travel (see article). Some struggle to afford food. Governments should take better care of them. That is not only humane, it is also practical. If the Gulf states do not start treating their guests with more compassion, they are likely to find that their outbreaks last longer and that their economies recover more slowly. So far, the pandemic has revealed more bigotry than benevolence. An MP in Kuwait wants to “purify” the country of illegal workers. “Put them in the desert,” says a famous Kuwaiti actress. A viral video in Bahrain featured a man complaining of migrants being treated next to citizens—never mind that half the nurses in Bahrain come from abroad. In hospitals across the region foreigners are on the front Continues on page 17

Monday 27 April 2020

BUSINESS DAY

In Association With

Government finances

The Gulf states should take better care of their migrant workers

After the disease, the debt

To cope with the expensive legacy of the pandemic, governments will have to find the right path between stimulus and restraint

ATIONAL LEADERS like to talk about the struggle against covid-19 as a war. Mostly this is a figure of speech, but in one respect they are right. Public borrowing in the rich world is set to soar to levels last seen amid the rubble and smoke of 1945. As the economy falls into ruins, governments are writing millions of cheques to households and firms in order to help them survive lockdowns. At the same time, with factories, shops and offices shut, tax revenues are collapsing. Long after the covid-19 wards have emptied, countries will be living with the consequences. An astonishing deterioration in the public finances is unfolding (see article). America’s government is set to run a deficit of 15% of GDP this year—a figure that will go up if more stimulus is needed. Across the rich world, the IMF says gross government debt will rise by $6trn, to $66trn at the end of this year, or from 105% of GDP to 122%—a greater increase than was seen in any year during the global financial crisis. If the lockdowns last longer, the load will be greater. Managing such colossal debts will burden Western societies for decades to come. Few subjects in economics attract more scaremongering than government borrowing. The national-debt clock ticking near Times Square in

New York has warned of imminent fiscal Armageddon since 1989. In fact a country’s public debt is not like a household’s credit-card balance. When the national debt is owned by its citizens, a country in effect owes money to itself. Debt may be high, but what matters is the cost of servicing it and, as long as interest rates are low, this is still cheap. In 2019 America spent 1.8% of GDP on debt interest, less than it did 20 years ago. In 2019 Japan’s gross public debt was already almost 240% of GDP, but there were few signs that it could not be sustained. In countries that print their own money, central banks can hold down interest rates by buying bonds, as they have in recent weeks on an unprecedented scale (the Federal Reserve has bought more Treasuries in five weeks than were issued, on net, in the year to March). Just now there is

no risk of inflation, particularly since oil prices have collapsed. Most economists worry less that governments will borrow recklessly, than that they will be too timid because of an irrational fear of rising public debt. Inadequate fiscal support today risks pushing the economy into a spiral of decline. Yet while spending freely now to avoid a deeper slump is the only sensible path, wild borrowing for years would eventually threaten trouble. America has strong defences against an outright debt crisis, because the dollar is the world’s reserve currency and foreigners want to own its bonds. But other rich countries do not have that luxury. Italy’s towering debt and membership of the euro zone condemn it to live with the perennial threat of a financial panic should the ECB stop buying its bonds.

The good news is that financial markets suggest rates will stay comfortingly low for decades. But so much is still unknown about the virus and its effects that, now of all times, investors cannot see clearly very far into the future. Some economists worry, that once the virus abates, a price-andinterest-rate spiral could get under way as a burst of demand runs up against supply chains that have been wrecked by the pandemic. Governments will thus have to walk a treacherous path between stimulus today and prudence tomorrow. Success is not guaranteed. After the second world war countries shrank their debts over the course of decades, but only by using a bossy combination of high taxes on capital, financial repression (forcing domestic investors to hold debt at artificially low interest rates) and inflation, which erodes the real value of debts over time. A baby boom and rapidly rising levels of education made it easier for economies to grow their way out of debt. Japan has not faced a bond-market crisis since the 1990s, but its debt-to-GDP ratio has continued to rise. After the financial crisis in 2007-09 some European countries opted for budget cuts in order to cut debts, with mixed results and a big political backlash. The politics of deficit reduction

A bumpy road from plot to plate

The race to feed Africa during a pandemic There is plenty of food, but getting it to people is a challenge

NCE THE market was closed, all my knowledge was over,” sighs Brian Kayongo, a spare-parts trader from Kampala, Uganda’s capital. Until the covid-19 lockdown he spent most of his time in the city. He knew about spark plugs, not seeds. But now he is planting maize and beans on a patch of land he has rented in a nearby village. Everybody there is digging, he says. Even the young people who turned up their noses at farming have “surrendered” to the tyranny of the hoe. Mr Kayongo is less worried about the virus than how to eat. And he is not alone. The UN’s World Food Programme (WFP) warns that the number of people who are “acutely hungry”, most of them in Africa, could double this year. The World Bank forecasts that agricultural production in sub-Saharan Africa will fall by 3-7%, and food imports by 13-25%, depending on how freely trade flows. Yet there is plenty of food in the world. If the pandemic creates hunger, it will be policy failures, not crop failures, that are mainly to blame. The nightmare scenario would be a repeat of the food crisis in 2007-08, when the world’s governments hoarded staple grains, making prices soar. Africa imports more than a quarter of

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its cereals. Much of the rice that Ghana gobbles up comes from Vietnam—which has restricted exports. Shiploads of Indian rice bound for Senegal and Benin have been stranded in gridlocked ports. In normal times several west African countries spend more than half their export earnings buying food. As the prices of their own commodities fall and their currencies weaken, they will have even less purchasing power than before. Fortunately world food systems today are “in a very different situation” from the crisis of 200708, says David Laborde of the International Food Policy Research Institute (IFPRI), a think-tank in Washington. Back then export re-

strictions blocked about 11% of the calories that flowed through global markets. In the pandemic similar measures have affected only 3% of supplies. The oil price was rocketing in 2007; now traders cannot give it away. World food stocks are high. Prices for rice are up, but not to crisis levels. South Africans can partly shift consumption to homegrown maize after a bumper crop, says Ferdi Meyer of the Bureau for Food and Agricultural Policy, a research group. Instead, covid-19 is hitting people’s pockets. In African cities the average household allocates half its expenditure to food. That budget has shrunk as economies nosedive and lockdowns close the informal businesses in which

most workers hustle. The IFPRI estimates that 80m more Africans, mostly in cities, could see their incomes drop below the equivalent of $1.90 a day (though its model does not account for domestic stimulus packages). Several governments have tried to help by handing out food or regulating prices. But there have been problems. In Uganda four officials overseeing distribution were arrested on suspicion of fraudulently inflating prices. In Kibera, a slum in Kenya’s capital, Nairobi, women were trampled and police fired tear-gas as thousands of people jostled for a giveaway from wellwishers. It would be simpler just to give cash, which can be sent to people on their mobile phones. The other priority is to keep food moving. Only a fifth of the food in Africa is eaten by the families that grow it, calculate researchers at Michigan State University. The rest moves down long supply chains, via lorries, processors and wholesale markets, before trickling out through millions of informal traders. Those with land can fall back on their own crops for a time. But even the poorest rural households buy nearly half their food (by value). Many are only part-time farmers, topping up their earnings with transport, trade or wage labour.

Continued from page 16

line fighting the virus. Discrimination is bad enough, but the dormitories where migrants live are incubators for covid-19. With four or more to a room, there is no space for social distancing. At a big labour camp in Qatar one infection quickly became hundreds. Far from the Gulf, Singapore, which treats migrant workers somewhat better, thought it had the virus under control until it broke out in their dormitories. Now infections are rising fast and the authorities have had to extend restrictions on work and travel. Neglecting migrants hurts citizens, too. The dormitory outbreaks stand a good chance of spreading to the permanent population, lengthening lockdowns. Xenophobes see this as yet another reason to banish foreigners. But countries such as India, which have their hands full, are not cooperating with efforts to return their jobless, potentially ailing expatriates. The Gulf states are at last taking steps to stem the virus in migrant areas. Some have launched massscreening and are testing those with symptoms. Temporary housing has been set up to allow social distancing. Most countries are treating covid-19 patients, including migrants, without charging them. Saudi Arabia has also released dozens of migrants held for minor immigration offences, so that prisons do not become plague factories. The United Arab Emirates is automatically renewing the paperwork for migrant workers so that they don’t find themselves on the wrong side of the law just because they are locked down. That is all to the good, but more needs to be done. Some migrants are still working—building stadiums for the World Cup in 2022 or facilities for the World Expo next year. Employers should be held accountable for their safety. Many migrants cannot work, though, and states should care for them, too. Gulf countries can afford to guarantee a portion of their wages during the outbreak. That will not only ensure that they do not go hungry—it will mean that someone is there to turn the lights back on when businesses start to open up again.

Monday 27 April 2020

BUSINESS DAY

INTERVIEW

‘Teachers are common denominators In discussing various current issues with select journalists, Obafemi Hamzat, Lagos State deputy governor, says over the time, the state has focused on teachers as they are the common denominators in shaping the children’s learning capacity. Hence, the best thing to do is to concentrate on the teachers, their welfare, skills, their training and the way they approach teaching. Excerpt:

What about Eko Excel? he status is just that we started with 300 Schools. What that means is that all the primary school teachers will have a tablet that allows them to concentrate on teaching so that they do not need to do all the teachers note that needs to be done and schedule of work. We have trained them in knowing the essence of teaching. Just changing the essence of teaching and even how they talk to the children/address them. Even if a child does something wrong, there are ways of correcting them. So, all these types of training have happened and so, speaking with the teachers, they truly appreciate it because the reality is that they are doing a difficult job as children are not easy to manage. So, part of the training is giving them the skills. Around the world, focus has always been on the provision of equipment for the classrooms, and to have a great classroom for learning but those things don’t teach children as it does not mean the children will come out well. You might have a great classroom but it does not make anything. Over the time, what the state government has done is to focus on the teachers as they are the common denominators. It means we must concentrate on the teachers. They are the common denominator. After six years the child/children will go but the teachers remain over and over again. So, we realise that the best thing to do is to concentrate on the teachers, their welfare, skills, their training and the way they approach it. That is what Eko Excel is doing. It is too early to know the impact. In two to three years’ time, we would see how the teaching method has changed. We would see how it has affected the culture of our education, the children and everything. Although what we have seen so far is good, but it is difficult to measure the impact right now. Also, we have seen that the teaching method have changed and the teachers seem to be more responsive. And we are also able to now gather information better through the equipment that will help us to geo-reference. And so, we can know for instance in Class 4A in Agidingbi Primary School, 20 students came to class or 21 children came at 9am. So, why are they coming to school late? Is it that they are living far from school? So, we can get all these information for us to plan well. Also, it has helped us in monitoring the time the teachers resume work. Also, if a teacher is coming late to school, why is it so? For example, a teacher teaching in Ikorodu and living in Oworonshoki, so why

can’t we just move the teacher to around the place he or she lives for convenience and a good delivery of the job. So, it is giving us the data for us to plan well. We are also finding out that some schools have only seven children while in some schools they have up to 60. So it tells us that in some cases, maybe we are building in wrong places. So, maybe we need to build more classes in such areas because in some local governments, the numbers of children in school are extremely small compared to some others. So it giving us data to plan and our teachers are also getting better. Issues on health infrastructure and new hospitals In terms of achievement, l feel it is for you journalists and citizens to say but one of the things we think is important is our education sector and our health institutions. You will notice that we increased the budget of health by almost 70 per cent and one of the things we want to do which you will see very soon is that we want to make sure that every part of Lagos is covered. We are planning to build a General Hospital in Ojo, that axis doesn’t seem to have any. We are also planning to build a spinal injury hospital somewhere in Gbagada. We are also getting people to help us design as we have been made to understand that a lot of our General Hospitals need to be redesigned. For example, you go to UCH, Ibadan at night without AC you feel cold because of the architectural design. It is designed so that air can pass through. That is cross ventilation. We have gotten people that design hospitals for the tropics. Don’t let us just build anything, let us build something that is easier to maintain and allows for air – ventilation, so that you don’t even have infection. Part of the challenge in most hospitals is that you go for the treatment of one ailment and later get infected with another thing. So these are the questions we asked our medical team. We are not medical doctors but we know these things happen. So are they redesigning? The new hospitals we want to build, like the new children hospital, these are things we plan to do and people will start to see. Addressing malnutrition among school children For us, it is important that we fix primary education in this country. That is why we pushed forward the Eko Excel and the children because if that foundation is broken/shaken, then it is a dead issue. The other one we are trying to www.businessday.ng

push but that does not seem to get attention now is Nutrition. In our country, in the northern part of the country, study show that 52 percent of our children between the ages of 0-5 years are malnourished. In the southern part, about 20 percent, that is not good enough. Yes, it is good to build roads, provide amenities and other things but if our children are malnourished from 0-5 years and doctors have told us that if it is true then we have lost the show because this is the time the brain develops So, we have a committee on nutrition and also a department on nutrition but what is surprising is that study shows that it is not the children of the poor that mostly malnourished. The children of the rich and middle class can actually be malnourished as well if they are not eating right because as children they like to eat anything. Let them eat the right thing as parents and government. If we can reduce that number, it would be a fantastic achievement even though it is not something that people like to talk about but the impact will be good because we would now build children that are healthy and intelligent thereby the future of our country will be secured. So if we can focus on the nutrition and pry education too, l think it

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will be a major achievement for us. Your administration will be 300 days soon – what is your message for Lagosians? The most important thing is that love your neighbour as you love yourself. We must come together as a people. This is the most important time to uphold that. Think about others welfare and do onto others what you want them to do to you. Be safety conscious and care about others. If you are sick, take yourself to the hospital and not infect others. Do not drop garbage in the canals because some other people will be affected. Come together and take care of yourselves as a people. What is the way forward in the state transportation sector? No alternative after the restriction of bicycles and motorcycles/unions activities/gridlock/traffic lights/ water transport and containing COVID-19 with BRT/ LBSL? Ban on Okada/Keke - “The most important thing for us is that people must be alive before they can do anything. When the life is lost, then there is really nothing else. It’s a dead end. For us, what is important is how do we secure this society? There are details and information @Businessdayng

that the government sometimes has that you can’t even share with citizens because they won’t be able to sleep. So, we take some of these decisions when we see that lives can be threatened and that is it. For example, look at a report by the NDLEA, it is not a Lagos State Government organisation, it is federal, that shows clearly the way drugs have been thrown around every state now on Okada and Keke Marwa, and the cultism that is germinating even in primary schools in our state is through this process. So, we would be really stupid as a people if we don’t stop that. So, it is not about inconvenience, it is about our future as a people. So, we have to now decide what is more important for us. It is about the lives of our children or is it about the way to get to point B from A. If those people, our children, if their lives are threatened, then there is no reason for us to be here. Your question presupposes that maybe we should have put in place other things before the restriction. It will be too late; it will be too late if the lives of those children are not secure and we will be very irresponsible that is why it was restricted in certain areas where we saw the upsurge. We underestimate the power of ourselves as a people. I will give you an example, near my own house, the same day where we normally have Keke Marwa and the rest, I saw some of these mini buses about four of them, then I stopped and said

Monday 27 April 2020

BUSINESS DAY

s to enhancing child’s learning’ how did they come here. They answer and said Oga since we said they should not use Okada and Marwa again. Today, I must have counted about 20. I just called the Chairman of the LG to get a place where they can park properly so that they dont obstruct traffic. So, there is not vacuum in Lagos, No! (with the restriction).What you will see is that we must find a way to unleash the power of the private sector to fill these things. What are we doing, because we must also not solve problem in a nick jack way and then say we are just solving it… Of course, we are talking to companies. They wanted to bring those mini buses, but we are saying that why do you want to bring those some buses and create jobs for your own people, why can we create plant here? So, very soon around Apapa-Oshodi Expressway, we will see construction that will start and the Assembly. That is more important than just to say we will create jobs for another country in India or somewhere else. But why can we help our own people? Why can we solve our problems by ourselves and do things that will be sustainable as a people not just… It is going to bring hardships but of course… the reality is that nobody builds anything sustainable without going through a process. So, the question is which process should come first? You want to save lives and then you have a sustainable way of solving that problem from bottom. We can bring in buses and then when they need spear parts, 80 percent of them will shut down. So, let us think through the whole thing and make sure that we bring in solutions that will now also create jobs, which will lead to economic activities for our country. The biggest challenge that we have as people is that our economic is not developed enough. The reality is that our budget is too small as a nation. Let us unleashed that economy by doing things better, it might be painful, but let us do it so that the future generation will not go through what we are going through. NURTW The challenge with the Transport Union is that it is a union, and it is national that is bound by law. People say you can just ban them. The truth is that they are like ASUU. There are things that ASUU does that I don’t support, does that mean we should just ban them, no! We will keep engaging them; we will keep talking to them. NURTW is a union recognised by law in our country, the only thing is that if we don’t like it, then let’s nationally now change that law. For example, just yesterday, we were going on the Badagry Expressway, we saw buses taking one-way, we stopped and one of the things that I spoke to the chairman of the union is this, you have a chairman that is controlling that place, if this continues, that chairman should be removed. If you can’t manage your area and then we have one-way (drivers) all over the place, then let take him (such chairman) away. You give him (chairman) that responsibility now. Don’t just collect money from them, monitor their activities. He said that the chairman should not just collect dues from them but should also monitor their activities. “We must engage them to make sure, whether we like it or not, they have some

roles that they play in the transportation sector because you know what, transportation sector is not something that private people go into without subsidy from government all over the world. But they are doing it without that source, so we must find a way to make it better for them and for us as a people. The engagement must continue for us to have a peaceful society. Traffic situation The persistent gridlock in the state is due to breakdown of vehicles, especially the articulated vehicles, ongoing road contributions and repairs. One, the biggest challenge that we have seen is the breakdown of vehicles-especially the articulated vehicles, that is the biggest challenge we are having now and that goes a lot way... (affecting free flow of traffic). So, what do we do? Does it mean that we should start looking at the road worthiness of these trucks? But remember, we are talking about economic activities, we also need to give people trucks. But if your vehicle (truck) is 40 years old for instance, should we replace it but these things are not cheap. We don’t want to just shut them down without getting an alternative. Construction Two, we are also doing a lot of construction, for example Ojota, we are replacing the whole length with concrete. Look at Apapa-Oshodi Expressway, they are doing concrete and the problem is that on that corridor, they are doing 300 metres every day but it takes 14 days to cure. So, because it takes 14 days to cure no vehicle can pass within the 14 days. It means that for a whole lot of time that is a challenge about there. In fact, it is one of the reasons that we are talking to the company that maybe we should use reinforced battlement now rather than a concrete particularly when we are getting Oworonshoki, we are looking at all those options. Alaka We shut down Alaka because of the expansion joint, it is a problem. Because a lot of these things are happening, there will be (gridlock). But, I think it is better to do it once and in another six or seven months, everybody will be okay. Traffic light in major junctions The ones (traffic lights) that are working, the biggest problem we have is power, They have censors or what they called controllers that monitor and they are getting better at the monitor. And censors are becoming more intelligent to say that there is no traffic here, instead of the problem is that the moment there is no light and it shut downs, the calibration goes hay wire. What that means is that we have to now replace that censor which we don’t manufacture here, so we are still using that manual. So, everything is a function of what do we have but in term of www.businessday.ng

giving to us.

street light across, we are working on it but the challenge is can we get the ones that use solar (power)? And then, when we have persistent rain, will it work? That is what we are testing now? The moment we are sure that can be done, we will deploy. We want to make sure that we can have a system that will work all through without this power challenge that we have. They moment we are comfortable with our testing, then we will start deploying aggressively and repairing the ones that are already spoilt VIO operation impeding traffic Ordinarily, the VIO should not be on the street because the VIS is the vehicle inspection service. What it means is that people must take their vehicles to the VIO office and then get road worthiness and the rest of it. They must check everything that is how it is obtainable everywhere in the world. In the US when you buy a car, for the first four years, new one, you don’t do it they assume that the vehicle is okay, after that you take the vehicle to them for check. The challenge is if they say you can’t drive that car, what will be the response of everybody. Are we ready as a people to actually accept that? We must get there! It must be gradual. The biggest challenge is breakdown of vehicles. The question is, are most of these vehicles supposed to be on the road in the first instance? The VIO must do that responsibility and make sure vehicles that are not supposed in the road are removed from the road. In fact, whether we like it or not, the Ministry of Transportation has a drone now that show when and where we have a breakdown anywhere. If the inspection was well carried out, there won’t be breakdown of vehicles of the road, accidents would be minimal. Water transport The commitment of the administration to taking advantage of water

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and develop water transport, saying 14 boats had been bought and being used to convey people in a most comfortable way. Since most economic activities are in the island, many residents along costal line could take advantage of the waterways to get to their destinations, and thereby reduce pressure on the road. We need the water not just to farm but also for transportation. We are using it and buying more boats. That is why the Lagos State Government just procured those 14 new boats so that we can galvanise. If you see how successful is it, not in terms of money but in terms of movement, we hope to do another set so that that will encourage the private sector to start to look at it. And then we have to decide what we need to do to improve on it. We can buy bigger boats so that instead of four trips (for instance) we will take two trips and carry the same number of people. The good things that we have done is that all those boats were actually built in Nigeria. Of course, we brought the engine but we have been able to build that capacity to build boats, which is good providing job opportunities. we don’t just want to give jobs to other countries, by keeping importing things into Nigeria. Containing COVID-19 with BRT/LBSL At what level do we want to shut down? That is something that as a state we cannot just take alone. We must talk with the Federal Government. A state cannot just do that. We must make sure that we talk to the FG, what’s the plan and get all these things right. If people stay home and they dont have means of income, there are some people that are daily earners, so what do we do?. We must plan it well before we just make this decision. How it affects them, what do we do to make sure that we don’t keep people in penury just because we want to. We have gone through some things before, we have gone through Ebola. we will go through this, I don’t have any doubt. The only thing is that we must just listen to medical instruction that they are @Businessdayng

On the 37 LCDAS in Lagos If you recall, the creation of LCDAs is a constitutional issue. You recall that we went to Supreme Court ,that judgement is about 1,400 pages, so ,what the Supreme Court was that Ok, you have the right but we cannot force the National Assembly to list. As a state, we, of course have the right .So we went to court at that time because the FG seized funds for the local governments and the court said it must be released but that however, there is a political system. The challenge is that, so the National Assembly of course, we have written, we have pursued. So remember that Lagos State is one of the 36 states ,we have to keep working with everybody to make sure that, because the moment it is listed, you know the implications: other states will begin to say they want to list their own. So the reality is that ,like everybody has said, I am not a lawyer ,all the senior lawyers in the country have said it is an anomaly to actually list local governments in the constitution. May be what should be done is to remove them from the constitution. For example, we said we have 774 local governments but Bakassi is no longer part of our country. Have we removed it and say 773? By listing the LCDAs in the constitution creates ambiguity. It is the Assemblies that make laws that govern the local governments .The state assemblies can say the tenure will be five years right? Oyo State can say it is three years. Each state should be able to to determine .That is why listing the them in the constitution. You know human beings are not perfect. Of course, we are still pursuing it (Listing),we are pursuing many things. The special status for Lagos and so on. We are pursuing so many other things; you know it is lobbying and collaboration with a lot of other people. On why it is difficult getting the LCDA listed despite the fact that the APC controls the state and FG Of course, you understand the characteristics of our country. A journalist once said, we are like a man with 356 legs and it is difficult to carry. That is the challenge. I don’t think it is about political parties really. It is about the states, it is about the local governments, it is about the different beliefs and so on. I think what will work is to look at all the states and see what each one can get. So, it won’t look like they are doing from Lagos. Our own argument has been clear: The truth is that we are the most populous, we are the smallest in terms of land, and we were a federal capital territory before. So, everywhere in the world where that happens, there is concession. That is why the tube in London, 70 percent funding is from the Federal. The New York subway is the same. So, if we want to be in that class, we must do the same. That is our argument and that it is the argument we will continue to have.

Monday 27 April 2020

BUSINESS DAY

MARKETS INTELLIGENCE Supported by Asset Management Corporation of Nigeria (AMCON)

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Week Ahead

Watchlist

Listed manufacturers fail to sweat investors’assets in generating sales BALA AUGIE

isted manufacturers are not using investors’ fixed assets to generate enough sales, and the unprecedented global macroeconomic uncertainness by the coronavirus pandemics and sharp drop in oil price could compound margin woes. The combined average fixed asset turnover (FAT) ratio of 17 largest manufacturers fell to 1.80 times in December 2019 as against 1.86 times recorded in December 2018. That means on average they generate 1.80 times more sales than the net book value of their assets. Analysts say the FAT ratio will continue to deteriorate on the back of weak demand, adding that in the time of economic downturn companies are not encouraged to revamp up capacity. The demand isn’t large enough because they are operating at low capacity. Supply is well ahead of demand. If there is large enough product, companies will ramp up capacity and open more lines,” said Wale Okunringboye, analyst at Sigma Pensions Limited. “For the cement industry, people are not going to be building house. The demand is not going to come back this year as we are grappling with an economic meltdown brought on by the coronavirus pandemic,” said

Okunringboye. The FAT ratio for the cement industry is flat at 0.66 times, as reduced capital expenditure (CAPEX) spending by the government given weaker earnings (particularly oil revenue) continues to sting the construction industry. The largest consumer goods firms saw FAT ratio fall to 1.25 times in December 2019 from 1.43 times as at December 2018, as the industry remain the hardest hit from an economic downturn. Similarly, the pharmaceutical industry’s average fell to 3.86 times in the period under review as against 4.63 times as at December 2018. But drug makers may revamp up capacity as government through the central bank has approved a special stimulus package pave the way for them to import and manufacture drugs in the face of the coronavirus pandemic. Nigeria is in uncharted territory as the lockdown imposed by government so as to contain the spread of the virus has disrupted business activities, raising concerns about the impact on the already weak consumer purchasing power. The recent string of economic data releases reflecting life under lockdown has been even grimmer than expected, spurring IMF a few weeks back to forecast a negative Gross Domestic Product (GDP) of 3.4 percent for the country. The Minister for Finance, Za-

P.E

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

naib Ahmed, has already reduced the government’s projection of 2.10 million barrels a day of production to 1.70 million, and it working to Nigeria’s record $35bn budget for 2020. The Manufacturing Purchasing Managers Index for the fell to 51.1 in March from 58.3 in February, while the full impact of the pandemic is expected to be felt more this month. Capitulating to pressure, the central bank devalued the official Naira rate to N360 to the dollar from N305. Hitherto the outbreak of the virus from Wuhang city of China, manufactures were struggling with a menacing gridlock at the premier port in Apapa, weak purchasing consumer power unstable power supply, border closure by government, and hefty levies. These bottlenecks have hindered companies from delivering higher return to shareholders in form of bumper dividend and share appreciation, while valuation remains unattractive as investors continue to dump shares on the back of poor earnings results and lack of transformation agenda on the part of government. Manufacturers are inefficient and they are unable to turn each Niara invested in sales into higher profit as industry average combined net margin fell to 7.071 percent in December 2018 from 10.30 percent as at December 2018, according to data gathered

by BusienssDay. Their combined net income reduced by 17.85 percent to N385.55 billion in the period under review from N469.33 billion the previous year; while industry operating profit dipped by 12.97 percent to N468.44 as at December 2019. The Nigerian Stock Exchange (NSE) All Share Index (ASI) HAS shed -15.14 percent since the start of the year. But Analysts at Chapel Hill Denham Limited in a recent report said the shutdown is boon to Nestle Nigeria Plc and Flour Mills of Nigeria plc, as consumers are spending more on food-which is largely driven by stockpiling. “Both companies have a diverse portfolio of brands that are considered as essential items by consumers,”said Abiola Gbemisola, analyst at Chapel Hill Denham Limited The report also stated that Nestle Nigeria’s premium brand such as Maggi cube and cereals is ubiquitous. Analysts at Chapel Hill Denham said that on the flip side, the restriction in human congregation in most parts of the country will affect the revenue and earnings of brewery companies such as Nigerian Breweries Plc (NB), Guinness Nigerian Plc (Guinness) and International Breweries Plc (Intbrew). “This is because people can no longer go to bars or hotels as they used before the restrictions, and an extension of the lockdown could bring more pains to brewers,” said the analysts.

The stock market declined for the fifth-straight trading session on Friday to end its worst week after CBN’s CRR policy weighed on banking stocks and set off 2020’s longest bear-run. Nigerian equities fell for all five trading sessions last week to close 2.65 percent lower weekon-week, and end January on a very different tempo than it began the month. Bank stocks shed 5.17 percent to push Year-to-date return to 7.46 percent, down from around 10 percent at the beginning of the week, while analysts say the bearish sentiment will likely extend to trading this week. “Next week, we expect bearish pressures on the equities market to remain, as investors continue to selldown on banking counters,” said analysts at Lagos-based Chapel Hill Denham in a note to clients.

N23bn Interswitch Limited has listed its N23bn callable senior unsecured bond with a tenor of seven years at a fixed rate of 15percent, embedding a call option that can only be exercised from the second year, are payable in full at maturity A callable bond is a bond that the issuer may redeem before it reaches the stated maturity date. In essence, a callable bond allows the issuing company to pay off their debt early. According to the company, this is part of its N30bn debt issuance programme through a special purpose vehicle, Interswitch Africa One Plc.

BusinessDay MARKETS INTELLIGENCE Team Lead: BALA AUGIE, IFEANYI JOHN; Graphics: FIFEN FAMOUS

BMI provides in-depth analysis and data on industries, companies, stocks, currencies, fixed income/credit, economics, regulation and factors that influence investor’s decision-making Continues on page 37 Email the BMI team balaaugie@yahoo.co.uk; augiebala@gmail. www.businessday.ng

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Monday 27 April 2020

BUSINESS DAY

IMPACT INVESTING

In Association With

Impact investing and COVID 19

solutions that focus on quality job creation or financial inclusion. Catalytic capital can also play a critical role in this phase, especially in innovation and systems change. How are impact investors addressing COVID-19? How are impact investors demonstrating their leadership and taking tangible steps to change the course of this pandemic? GIIN members and strategic partners around the world are leveraging the power of finance to address the world’s biggest challenges. The following list of news and resources details many examples of the coronavirus-related initiatives being led by GIIN members around the world. Funds/Funding Initiatives: BlackRock BlackRock commits $50 million to help meet immediate needs of those most affected. The group is committed to supporting people impacted by this global crisis, especially in the communities where we operate. This includes support for the people and programs providing direct services on the frontlines and for the most financially vulnerable members of our global community who will feel its impact hardest, today and in the months to come. The group has committed $50 million to relief efforts, helping meet immediate needs of those most affected right now and by addressing the financial hardship and social dislocation that this pandemic will bring as families grapple with job disruptions, school closures and unexpected parental, childcare and medical costs. www.businessday.ng

Ford Foundation, Nonprofit Finance Fund, and others The World Bank and IFC’s Boards of Directors approved an increased $14 billion package of fast-track financing to assist companies and countries in their efforts to prevent, detect and respond to the rapid spread of COVID-19. The package will strengthen national systems for public health preparedness, including for disease containment, diagnosis, and treatment, and support the private sector. IFC, a member of the World Bank Group, will increase its COVID-19 related financing availability to $8 billion as part of the $14 bil-

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Despite Africa being home to six of the world’s 10 fastest growing economies, according to the World Economic Forum, the coronavirus-related economic crisis could reduce foreign direct investment globally between 30% and 40%, according to the United Nations, a tough result for Africa.

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OVID-19 is an overwhelming challenge, which makes it difficult for investors to determine how to respond to address some of the challenges that this pandemic raises - both now, in the medium term, and in the long term. To help investors frame their efforts, the Global Impact Investors Network (GIIN) has begun examining patterns of lessons investors have learned from past disasters and global crises. Some patterns worth noting help to outline an emerging model, which demonstrates that three distinct phases of funding (or investment) are needed to address this global crisis: Response The response phase features of funding are largely about dealing with an immediate need to respond to an emergency. For instance, in looking at public health, this could be funding to supply equipment, beds, and personal protective equipment for frontline health staff. Here the funding needs to be coordinated, liquid and unrestricted. And the nature of funding is largely grant or government aided emergency funding. Recovery In the recovery phase of funding, the focus is on trying to maintain infrastructure that isn’t broken and tries to restore infrastructure. Examples of this might include: the government stepping in with economic packages to prevent job losses/provide sick leave/unemployment support, investors providing bridging loan facilities, and investors relaxing terms in order to provide investees with the breathing room to weather the storm. Resilience The resilience phase of funding focuses on more systemic solutions – long term future proofing so that we do not end up in the same situation again. During this phase, there are investments in innovation - technologies and solutions that start to consider how we build a more resilient, better prepared world. These may include investments in medications and vaccinations, but it also can include investments into new technologies to cope with future problems. In this phase, particularly because of the pervasive scale of the COVID-19 pandemic, we may see investment in radical systemic change as well such as changes that either are at the root cause of the pandemic or are highlighted by it. For example, investment in solutions to prevent environmental degradation, or investments that address inequality through

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lion package, up from an earlier $6 billion, to support private companies and their employees hurt by the economic downturn caused by the spread of COVID-19 Mastercard, Bill & Melinda Gates Foundation, and Wellcome The Bill & Melinda Gates Foundation, Wellcome and Mastercard have committed up to $125 million in seed funding to speed-up the response to the COVID-19 epidemic by identifying, assessing, developing, and scaling-up treatments. The partners are committed to equitable access, including making products available and affordable in lowresource settings. The COVID-19 Therapeutics Accelerator will play a catalytic role by accelerating and evaluating new and repurposed drugs and biologics to treat patients with COVID-19 in the immediate term, and other viral pathogens in the longer-term. Currently there are no broad-spectrum antivirals or immunotherapies available for the fight against emerging pathogens, and none approved for use on COVID-19. The Gates Foundation and Wellcome are each contributing up to $50 million, and the Mastercard Impact Fund has committed up to $25 million to catalyze the initial work of the accelerator. The Gates Foundation’s funding is part of its $100 million commitment to the COVID-19 response announced recently. The Rockefeller Foundation The Rockefeller Foundation has voted $20 million to create a better tracking and management system for COVID-19 and address the needs of America’s workers, families, and vulnerable communities @Businessdayng

around the world. The Foundation is supporting efforts in these key focus areas: new technologies to accelerate current and future pandemic preparedness and response capabilities around the world, and systemic change to close the gaps this crisis has highlighted for those in need. The Rockefeller Foundation will also provide key assistance and support in the cities where it operates, especially Bellagio, Italy; New York, NY; Washington, DC; Nairobi, Kenya; and Bangkok, Thailand. Vital Capital Fund Vital Capital, a pioneering impact investor focused on companies in sub-Saharan Africa, has announced a new debt facility providing loans to promising businesses to help them get through the coronavirus pandemic while continuing to offer essential services. The Vital Impact Relief Facility will start with an initial $10 million in capital and will issue roughly 10 loans on favourable terms of approximately $1 million each with duration of up to four years. Vital also plans to open the facility to other investors to extend the available pool of capital. The vehicle will primarily target companies involved in agroindustry & processing, healthcare, sustainable infrastructure and education, and is initially launching in Kenya and Uganda. It will then expand into Vital’s target geographies including Ghana, Democratic Republic of Congo, Côte d’Ivoire, Angola and Senegal. Despite Africa being home to six of the world’s 10 fastest growing economies, according to the World Economic Forum, the coronavirusrelated economic crisis could reduce foreign direct investment globally between 30% and 40%, according to the United Nations, a tough result for Africa. Soros Economic Development Fund / Open Society Foundations SEDF has mobilised a small internal investment team to look for opportunities where impact investments will be a suitable and timely response to the COVID-19 crisis. The priority areas for response are testing, developing vaccines and treatment, and the deployment of infrastructure for health services, including telemedicine. We recognise that much of this work requires government intervention or grant funding by foundations. However, we are ready to engage where working capital facilities, flexible debt for rapid expansion, or concessional project finance can make a crucial difference to finding or rolling out ways of mitigating the effects of the virus or of future pandemics and expanding access to medicines for all.

Monday 27 April 2020

BUSINESS DAY

This is MONEY

• Savings • Travel • Debt & Borrowing

A guide to your Personal Finance

• Utilities • Managing your Tax

The smart way to expand profit–creating new market monopoly The Solid Wealth Messenger

Grace Agada

he No 1 Leadership Position in every industry is already taken. Yet everyday thousands of business owners struggle to lead their own market. They desire to lead their own market because the market leadership position is a profit position. Companies that lead the market capture as high as 70% market share and enjoy unmolested economic advantage. This puts other companies at a great disadvantage scrambling for leftover profits. The default reaction for these companies is to fight back. They fight back by offering the same homogenous products as the market leader. They invest heavily in advertising in ways that hurt their bottom line. And they engage in fierce battles in the bid to gain more market share. But no matter what these businesses do they cannot dislodge the market leader this way. Especially when these market leaders serve their consumers well. History shows that a head to head competition with a market leader is expensive and unproductive. For example, Microsoft has been in a fierce battle trying to unseat Google as the market leader in the search industry. They have invested over 10 billion dollars on Bing. Yet no dent has been created on Google’s share of the search engine market. This shows that going after the strength of a market leader to gain more market share is a fool’s strategy. To succeed at expanding profit businesses must bypass the strength of market leaders and strike at their weaknesses. They must stop being copycats and find new ways of expanding profit that make it hard for market leaders to compete. Expanding business profit in the 21st century is thus not about dislodging a market leader. But about focusing on the people with the power to enthrone businesses. So, who has the power to enthrone businesses as Market Leaders? Consumers enthrone businesses as market leaders. They enthrone businesses that offer new or different solutions to their problems and meet their needs in new ways. Businesses thus cannot enthrone themselves as market leaders by killing other businesses. They have to rely on favorable patronage from consumers to emerge as market leaders. When businesses enter the market with a new value that solve consumer’s problems in new ways. They gain a predominant market share. Thankfully consumers have a myriad of problems. And these

problems can be solved in several different ways. This provides enormous opportunities for other business owners to emerge as market leaders. The goal for smart business owners is thus not to follow the herd, be relegated to leftover profits, or be led by a market leader. But to escape the web of competition, find new ways to meet consumer’s needs, and lead their own market. To do this successfully businesses must study their industry value chain and how it relates to the consumer value chain. They must closely assess the established value and position of the market leader. And position their businesses in ways that make it unprofitable for market leaders to compete. There is a simple way to achieve this and here is how. An Industry leader overtime overextends their value offerings. They do this in the bid to gain more market share. This overextension harms their value proposition and dilutes their brand positioning. Which in turn split their consumer base into three segments. The first segment is the ideal consumer segment. These are the most profitable consumer segment for the incumbent. They patronize incumbent businesses because they derive certain values such as pride, status and the bragging rights of working with the leader. Incumbent businesses over time design their businesses to favor this consumer segment. It is hard to compete with the incumbent over this consumer segment. The second segment of consumers is the target consumers. Target consumers are the second most profitable consumers for incumbent businesses. They desire individualization and customization which incumbent businesses can often not provide because of their bias towards their most profitable consumers. Overtime this consumer segment are underserved and overlooked which opens room for other small businesses to play. The third consumer segment is the Next Generation consumers. They are the least profitable consumer segment for incumbents but the future of the business. Con-

sumers in this segment are usually ignored or at best-offered unfit services. Incumbent businesses find it hard to serve these consumers because they value certain attributes that most times are at conflict with the values of their most profitable consumers. Businesses that want to emerge as market leaders, must find new way to solve the problems of the last two consumer segments. Attacking the incumbent or trying to beat competitors at their old game is a cost strategy. To expand profit in today’s market, business leaders must reinvent a whole new game. They must discover new problems, create new solutions, own new markets, and dominant them overtime. Creating new market monopolies is thus the most effective profit expansion strategy in the 21st-century. So how then can Businesses Create New Market Monopolies? To create new market monopolies businesses must do three things. First, they must create new value for a certain category of consumers that gives them a certain unfair advantage. Second, they must create a unique process for delivering this value that shields them from the competition. Third, they must make this new category profitable. Let’s look at each of these points in detail To create new value for a new category of consumers businesses must learn how to innovate. They must develop the capacity to lift industry standards beyond existing limits. To do this successfully business leaders must do three things. First, they must understand the highest standard of value that exists within their industry. Second, they must disrupt these standards and find new ways of solving the same problem or find new problems. Third, they must offer value and choose positions that contrast with the incumbent business to avoid retaliation. The purpose of creating new value is not to attract the sledgehammer of the incumbent. But to own new markets and sometimes open rooms for collaboration and partnerships. Creating new values that solve consumer’s problems in new ways is thus the most effective way to create a new market monopoly.

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The purpose of a business is to lead with profit. The best way to lead profit is to discover, own and Lead a profitable Market

Next is creating a unique delivery process. A unique delivery process is any process that delivers value to consumers in ways that meet or exceed their expectation. It is the delivery of a promised value in a standardized, predictable, and consistent way. Creating this kind of delivery system ensures that a business value proposition is homogenous throughout the company. It is also a cost-effective way of generating repeat businesses. Having a unique delivery system help businesses highlight their differentiation, create a monopoly around their delivery system and leave competitors in the dark. Next is making a chosen category profitable. Not all new markets are profitable. And not all innovation lead to profit. Making sure a new market is profitable before investing in it is critical for success. To make a category profitable business leader must shift from revenue strategies that focuses on consumer quantity. To revenue strategies that focuses on consumer quality. They must devise means to maximize profit per consumer and per a small pool of customers. To extract maximum profit from the same pool of customers businesses must expand the breadth and depth of value they offer to category consumers. They must also develop seamless systems that move customers from one level of value to the next. Shifting revenue strategies from quantities and short-term profit to quality and long-term profits is the best way to make a category profitable. The purpose of a business is to lead with profit. The best way to lead profit is to discover, own and Lead a profitable Market. To lead a profitable market, business owners need new ideas, fresh perspective, and innovative ways of solving customer’s problems. If you need new ideas, fresh perspectives and a way to reinvent your business so you can emerge the leader of a profitable consumer market, we can help you. Send an email to info@createsolidwealth.com Companies that lead the market welcomes the future. All others are scared to death and their disappearance means little to the world. Grace Agada, is the First Profit Longevity Expert for B2C type Businesses. Grace believes that profit is the only thing that keeps businesses Alive. And so, she dedicates her time helping business Owners safeguard their long-term and short-term profit. Grace help business owners achieve three things. First, she helps them proactively self-disrupt their businesses so they can find new ways to optimize exiting Profit centers. Second, she helps them discover new market opportunities so they can capture long-term profit. Third, she helps them develop an integrated ecosystem of value so they can shield their businesses from the one-generation death sentence that kill businesses after the death of the founders. Through a 3-step process, Grace is able to transform ordinary businesses to businesses with Immortal Name and Legacy.

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

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Monday 27 April 2020

BUSINESS DAY

real sector watch

AfCFTA to wait till 2021 as coronavirus ravages continent ODINAKA ANUDU

he African Continental Free Trade Area (AfCFTA), billed to start on July 1, may have to wait for one year as the continent battles to contain the spread of coronavirus. Mansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), said implementation of the treaty in 2020 was looking more unlikely as some of the negotiations that should be going on had been suspended owing to the virus. “We are not sure it will go on. How can you talk about AfCFTA when borders are closed, everybody is on a lockdown and coronavirus is spreading?” he asked. “This is obviously not possible because the protocols have not been finalised. My expectation is that it will be delayed by one year,” he said. The AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent. It is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda

2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent. Negotiations on protocols have been stalled as each country struggles to contain Covid-19. Many African countries from Nigeria to South Africa are on lockdown to contain the deadly virus. The coronavirus cases in Africa’s biggest economy have surpassed 1,000 while South Africa’s have exceeded

4,000 with several deaths in both countries. Many African countries would be economically broken after the pandemic, making it difficult to negotiate a trade treaty, said a Nigerian trade expert, who was part of the AfCFTA negotiation process. “It is not official, and no one has discussed that, but it is looking likely to start next year,” the source said. The sub-Saharan Africa region will plunge into its first recession for 25 years,

compared with 2.4 percent growth last year, according to the World Bank’s Africa’s Pulse. The AfCFTA is expected to favour Nigerian companies, especially export-oriented firms and multinationals, according to analysts. Nigerian export companies such as De-United Foods, British American Tobacco, Indorama Eleme Fertilizer & Chemicals and Dangote Group, among many others, have the opportunity to grow their mar-

gins, expand operations and earn bigger foreign exchange as the African Continental Free Trade Area (AfCFTA) offers them an opportunity to consolidate foothold on the continent. The benefits are even extended to governmentowned Nigerian National Petroleum Corporation (NNPC)/ Petroleum Investment Management company (PPMC), which has the chance to expand export of Naphthalene, a chemical product obtained from

petroleum distillation. This product was Nigeria’s biggest export product in the second half of 2017, according to the Nigerian Export Promotion Council (NEPC). On how manufacturers are coping with lockdown, Ahmed said factories producing food, beverage, medicines, sanitary and hygienic products were open, though distribution was not smooth-sailing. He said manufacturers’ vehicles were being interrupted in some states by security agencies who had little or no awareness about sectors classified as essential by the Federal Government. He further said that production among food, beverage, sanitary and drug firms had gone uninterrupted but many manufacturers were unable to reach consumers owing to the closure of retail markets in some states. “In many areas, the problem has to do with the retail market because some states have closed down such markets,” Ahmed said. “Producers cannot get their products to the market when the retail markets are closed.” He said the decision to lock down the entire country, though necessary, could cripple production, distribution and sales made by firms.

Why drug makers can’t help Nigeria during disease outbreaks—PMG-MAN ODINAKA ANUDU

igerian pharmaceutical industry offers little support during disease outbreaks because it is not competitive and the country pays lip service to issues that will rejuvenate it, according to the Pharmaceuticals Manufacturers Group of the Manufacturers Association of Nigeria (PMG-MAN). Drug makers primarily carry out research to contain the spread of diseases, and also produce protective equipment for health workers. But only little is happening in the industry as coronavirus spreads across Nigeria. In an inter view with BusinessDay, Fidelis Ayabae, chairman of PMGMAN, said the countr y always makes case for importation of drugs more

than local manufacturing, stressing that the situation often backfires during disease outbreak. “The only remedy for drug security is encouraging local manufacturing,” he said. “It has come to a situation where there is every man to himself. So, what do we do? As long as we think that drug importers have an argument, we will continue to struggle,” he said. Coronavirus, which originated from Wuhan, China, is ravaging many nations, with deaths in hundreds of thousands across the world. The United States in early April invoked a Korean War law and ordered 3M Co. to stop export of protective masks to Canada and Latin America and sell to the federal government. Several countries across the world are hoarding export of protective gears, test kits and other medical equipment www.businessday.ng

for self-preservation. Germany, Russia and the Czech Republic have, at different times, banned export of protective gear including masks and gloves, while India had once restricted sales of paracetamol. Ayabae said this should be a lesson for Nigeria which is not doing enough

to support its local manufacturing sector. He advocated that hospital-based drugs, which drug makers could produce in the country, should no longer be allowed in. “There is local capacity for hospital-based medicines, which are used for general ailments here,” he said.

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Ayabae’s position is protectionist, but he insisted that it is always better to support local manufacturers than importers as the former are job creators in the economy. The Nigerian pharmaceutical industry has been hard hit by a number of factors, one of which is lack of funding. This has exposed the likes of Evans Medicals to humongous debts it could not repay. Some players in the industry are also accused of not doing due diligence properly before embarking on expensive projects to meet the World Health Organisation (WHO)’s certification. The WHO certification enables firms to compete for international bids. Apart from funding, the industry is also hard hit by high production cost, which makes its drugs more expensive than imported ones. Cost of production @Businessdayng

occupies 30 to 40 percent of their expenditure as the firms spend a lot on energy, water, research and development as well as raw materials. Most of the raw materials used by these drug makers are imported because Africa’s most biggest economy does not have a strong petrochemical industry that should produce resins and excipients. In an earlier interview, Okey Akpa, chief executive officer of SKG Pharma, had said over-dependence on imports for inputs is hurting the industry. “Virtually every raw material in this sector has a high import dependency ratio. If you then face the scarcity of forex like we do have in this country, it poses further challenge,” Akpa told BusinessDay in 2019. Akpa said the industry needs an urgent support to save Nigeria during emergencies.

Monday 27 April 2020

BUSINESS DAY

Start-Up Digest

In association with

Babatunde: Producing face masks to curtail spread of COVID-19 Josephine Okojie and Bunmi Bailey

ut of her desire to help curb the spread of the novel coronavirus pandemic, Olusola Babatunde, a fashion designer and the managing director of Onestop Celebration Limited, has commenced the production of face masks in Nigeria. Olusola is one of the dozens of entrepreneurs across the globe that have been lured into the production of face coverings in recent weeks as hospitals and public health officials scramble for protective gears against the deadly coronavirus pandemic. “I felt strongly that I could do something to contribute my own little quota to curbing the spread of the COVID- 19 virus in the country,” she says. Apart from the present situation, the entrepreneur was motivated to commence production of face masks to

change the narrative of the country always seeking solutions from the developed world. “I was concerned about how the government was already looking abroad for solutions to this crisis without full exploration of its own resources,” Olusola says. “I wanted to change this, so, I swung into action as a patterns maker and produced face mask samples. I started lobbying some government agencies to inform them that these masks could be made locally instead of importing them,” she explains. Recently, the Lagos State government and others in Nigeria said they could enforce the use of face masks by the general public. The enforcement is expected to further increase the demand for face coverings in Africa’s most populous nation, thus creating a larger market for entrepreneurs who are in the manufacture of the products. Since starting some weeks

Olusola Babatunde

ago, Olusola, who is also the founder of the OSC College of Fashion, has produced more than 300,000 face masks to confront the pandemic. “We have been able to produce over 300,000 face masks

for government agencies, non-governmental agencies (NGOs), corporate organisations and the bottom of the pyramid,” she says. The designer says all materials for the production of the

facemask are sourced locally and that her employees are mostly contract workers who are contributing immensely to boost the output. She is currently deploying all her revenues from fashion business to the production of the facemasks. She says post-COVID-19, her business plans to establish a state-of-the-art garment factory to revolutionise the country’s fashion industry. She notes that the Nigerian fashion industry has great potential and with the right infrastructure and enabling environment, the industry will become a global force to reckon with. “Nigeria’s fashion industry is growing and has great potential. With the right investors, infrastructure and enabling environment, we would amaze the world,” she says. On challenges confronting her fashion business since starting in 2009, the designer says that people’s perception of the fashion profession was

one of the major hurdles she had to confront with. She adds that inadequate infrastructure and lack of access to adequate finance are also major challenges confronting her business. She urges the government to enforce local patronage by compelling all of its agencies and institutions to patronise local manufacturers. “The Nigerian government, through its various agencies, should enforce the patronage of locally made products,” she says. “This will provide an offtaker for SMEs. The government should create an enabling environment for businesses and should always engage stakeholders in industries prior to the development of policies,” she adds. On her advice to other entrepreneurs, Olushola says, “Don’t give up and see opportunities in every situation. Be consistent at what you are doing and most importantly always rely on God.”

How Arunaye builds multi-million naira media platform Newton Arunaye is a graduate of the Federal University of Petroleum Resources Effurun (FUPRE) and Petroleum Training Institute (PTI). He has turned his passion into profitability, delving into the entertainment media space. After studying Electrical/Electronics Engineering, he started an entertainment blog known as Legit9ja, which has now gained some recognition. Arunaye, who hails from Delta State, Nigeria, speaks on his little beginning and how he manages to stay afloat amid ravaging coronavirus pandemic, in this interview with Desmond Okon. What is Legit9ja all about? e git9ja is an online hub with a deep passion and curiosity for entertainment, youth, and pop culture. It is dedicated to reporting, analysing and creating trends around music, lifestyle, events and all other extensions of presentday culture.

What inspired the birth of the platform? Being the founder, I have always had a passion for entertainment from my childhood. I also felt I could tell the stories of the young talents around me who were trying to showcase themselves to the world. I took it seriously during my school days. Officially Legit9ja started on the 23rd of October, 2015. Did you receive any funding or investment? No. Tell us about the platform’s achievement so far? It has really been eventful. Legit9ja.com emerged the best entertainment hub of

the year in the just concluded Peace Legend Awards 2019 held at Oriental Hotel in Lagos. It is a three-time winner of Best Entertainment Blog at Warri Entertainment and Recognition Awards (WERA) in 2017, 2018, and 2019. What is the unique selling point of Legit9ja? Promotion and appreciation of entertainment lifestyle remain our edge ahead of others. How do you plan to compete with bigger entertainment platforms? Our plan is to continue to improve our readership by bringing entertainment to people’s doorsteps. More so, we do not intend to compete with everyone but to put out credible information and also showcase talents to the world. Credibility of news in the media space is key to success. How do you plan to make sure information from Legit9ja is trusted by readers? Since inception, perspecwww.businessday.ng

tives gauged from our readers have shown that we are guided by truth in reportage. Over the years, Legit9ja has employed creative and vibrant reporters who understand the rudiments of communication. We put out contents verified with proofs directly or indirectly from the sources, social media accounts, and also by reaching out to the persons concerned. Is there an area of entertainment Legit9ja intends to focus on to edge competitors? Apart from being an entertainment hub of information, we have embarked on

Newton Arunaye

showbiz. Any moment from now, Legit9ja will be streaming live on television screens as part of 2020 resolution. So, we will continue to focus more on music, celebrity lifestyle and news. What were the challenges you faced while starting and how did you overcome them? The initial challenge was finance and also having a voice in the society, and consistency shows we are getting better. I understand you recently launched a new App. Please tell us a bit about that. In bid to make information mobile-friendly for our readers, we decided to launch an application for both Androids (OS) and Apple (IOS) devices, which have been made available on Google Play Store. The application is to get closer to our users to easily get feedback and engagement. This application has been made faster with notifications to inform users of any updates around the entertainment

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industry. How is Covid-19 pandemic affecting your business and workers? The pandemic has really caused so much damage to all facets of life, and the new media is not left out. So many important appointments have been turned down as a result of the outbreak of coronavirus. Every worker/hustler is now left with the option of working at a slow pace or home. This continues to bring delays at all levels because entertainment as a business deals with person-to-person appointment. Other youths like you are out there scrambling for food and causing nuisance. Would you say that starting the blog has helped you out of poverty? Being a professional entertainment/new media hub entails so much. When you are good at what you do, definitely reward is on the way. I have paid my dues trying to deliver many talented artistes out there via my promotional offers. @Businessdayng

What prospects do you see in the entertainment industry? Entertainment industry at large has evolved, from the mainstream to new media, and now the digital. It takes special orientation to move along with the trend. Many entertainers find this so difficult in that going digital is faster in reach, but it requires more capital expenditure. What is your vision in the next five years for Legit9ja? Legit9ja is no longer a small entertainment hub. We are now big beyond our tentacles. Just a few weeks ago, we launched our mobilefriendly application to suit both Android (OS) and Apple (IOS) devices. Immediately after the Covid-19 outbreak, we will be shocking the world in a digital way. Legit9ja TV is underway. What drives you as a young entrepreneur? The need to push the talented people around my environment to the world has always been the trigger.

Monday 27 April 2020

BUSINESS DAY

Start-Up Digest Inimgba: Improving Covid-19 information access through Infodemics ODINAKA ANUDU

nformation dissemination is critical during disease outbreaks. Quality and accurate information reduces speculations and fears which are often detrimental to health and well-being. In the age of fake news and misinformation, authentic information plays a vital role in ensuring that people do not panic, under-react or over-react. In the last two months, several conspiracy theories have arisen concerning coronavirus, its pattern of spread and cure. There have been insinuations that coronavirus kills only whites but not black people. This has proven to be untrue, with the high number of deaths of black people in some parts of the United States and even Africa. A school of thought has also arisen prescribing the use of certain unscientifically proven drugs to the people across the world. Some have taken the drugs even when they were neither sick nor tested positive to the virus. Three people were reported to have been hospitalised for abusing chloroquine in Lagos around late March. A man was also reported to have died in the United States on March 23 for ingesting chloroquine phosphate. Moreover, some communities have advocated the use of lime and honey to cure the novel virus. While all these might have worked in some instances, they still pose dangers for being unscientific and untested. This is where Nestor Minimyo Inimgba, an obstetrician and gynaecologist, comes in. Though Inimgba is a lecturer at University of Port Harcourt, he is more of an entrepreneur and health innovator. He set up a platform known as Infodemics to provide Nigerians with accurate and quality information about coronavirus, Lassa Fever and other deadly diseases. Infodemics employs existing social hierarchies in a community to effectively communicate health risks. It sends out questionnaires

A business guide to surviving the corona virus pandemic

Nestor Inimgba

to students, teachers and communities to determine their level of understanding of deadly diseases such as Ebola, Lassa Fever and coronavirus, also known as Covid-19. Through its algorithms, information is sent to appropriate authorities to educate them on how communities understand or would respond to disease outbreaks. “Our algorithm allows us disseminate information to the most vulnerable people using social circles. For instance, school pupils via their principal, community indigenes via their traditional heads,” Inimgba said on his Infodemics blog recently. According to the entrepreneur, Infodemics harnesses tech prowess to disseminate real time information to hard-to-reach areas during disease outbreaks. It also manages volunteers, coordinate with communities with authentic feedback, according to information on its website. It has applications such as Infodemics Blog, Covid-19 Tracker and Check In. On March 17, Ventures Platform, a Nigerian-based innovation hub, announced its decision to provide workspace, mentorship and $1,000 to seven start-ups working to reduce the spread of coronavirus. Infodemics was one those selected for the project. The seven were enrolled on a five-day bootcamp, targeted at helping them to improve their outcomes.

The selected founders and startups worked with a select group of stakeholders to finalise solutions and launch. Each startup was given access to three mentors with rich experience in business and health. Infodemics, in partnership with African Achievers Awards, recently hosted a virtual pan-African COVID 19 conference, which it described as ‘a huge success.’ “Having to hear directly from directors at the World Health Organisation and policy makers around Africa was a step forward,” Infodemics posted on its Twitter handle. Inimgba won a health contest in 2018 and has continued to innovate. Many Africans may have forgotten Ebola virus which experts say is more dangerous than coronavirus in terms of mortality. But Infodemics still passes information across to African communities to educate them on what to do and what not to. One of the impressions being corrected by the organisation is that salt water cannot be used to cure Ebola. Just like there have been several unscientific postulations around Covid-19 cure, they have also been speculations around the use of salt water or certain types of water to cure the virus. But Infodemics debunks this on a daily basis to enable people have access to accurate information.

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OVID-19 is as much a public health issue as it as an economic one. As a business owner, you are very aware of this and it might seem like it is impossible to get a handle on the future of your business. Everywhere you look, someone has something to say about the virus and what it means for you and your future. Here, in this article, we want to put your future back into your hands. We are offering a clear rubric that allows you to distil all of the noise and fear into a path forward for your venture. So, before you read any further, grab a pen, a jotter and the most up-to-date versions of your venture’s balance sheet and operating model. Once you’ve grabbed those, let’s get to work. Mckinsey’s Insights team has put together an article highlighting different possible scenarios and their consequences. Take a look and then build out your own scenarios. What are three or four scenarios relevant to your business context? Build out (and write down) your own clear map. Then step back from this exercise on future prediction and draw a picture of what your business looks like today. At this very moment. Try to build as complete a picture of your affairs as possible: cash in the bank, clients, orders, suppliers, loans, employees, etc. How do things look? Once you’ve got both these pictures (scenario models + business situation) clearly written out, you need to take the time to chart your course forward under each of the scenarios you built out in the first exercise. This is important whether you are a family business, a solopreneur, a startup CEO or someone just hustling to make ends meet. You absolutely need to plan because it allows you to see the possible futures for your venture. If at any point you feel like you are struggling with this process and need help, reach out to us for a free consultation. We are, as always, keen to work with you. Each business future map should make it clear to you how all aspects of your business will be affected: salaries, revenue forecasts, orders, clientrelationships, supply chains, employees, etc. You might need to cut salaries, you might need terminate contracts, you might even need to hire people! Perhaps the team you need for the future of your business is not the team you have now. Perhaps your model needs to change to adapt to our new world order because COVID-19 is here for the long haul. Building this understanding helps you to take your power back. You cannot short-circuit it; you cannot

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outsource it and you should not postpone it. Depending on your business, your interactions with your clients and suppliers (and possibly contractors) may be based on contracts. You probably do not have the power of a full legal team but you can yourself take the time to review your existing contracts and the implications for the prevailing circumstances. Can you fulfil your obligations? Do you have clauses for extenuating circumstances? Do you need to engage a lawyer to help you renegotiate terms and get you more leeway? Always think in terms of the specifics and remember that because everyone is struggling, many want to offer help so all of us get through this stronger. Some companies are even offering free legal advice and this is a great time to capitalise! Armed with all of this information, you need to reach out to your key stakeholders. A simple bucketed list might look like: suppliers, clients, employees and shareholders. Let them know that you now have a path forward that is adaptive to the circumstances at hand. Start with salutations that acknowledge that you understand the gravity of the circumstances and are empathetic to whatever they might be experiencing. Let them know that as a venture,

‘

Perhaps your model needs to change to adapt to our new world order because COVID-19 is here for the long haul you still recognise that they matter even if everything feels like it is in flux. Be open with your clients about your ability to fulfil your obligations to them and open up the floor for negotiations for them to fulfil their obligations to you. It might be helpful to categorise your clients into buckets (paid, unpaid, high-priority, low-priority, etc.) so you can clearly define their needs and manage their expectations. What happens next for clients whose orders are unfulfilled? For clients who have not settled bills, make a collaborative payment plan that manages this. Remember here that people always remember how you make them feel not usually what actually transpires. So, tread lightly, tread carefully and tread intelligently. Figure out how your sup@Businessdayng

plier’s ability to deliver on its obligations to your business will affect your operations. That means calling them and asking specific questions about volume, timelines and price point. Do not take anything for granted. You need to understand whether you need to find new suppliers or reconfigure your existing contracts with your current supplier. Again, be open with your suppliers, as you would like your clients to be open with you, so that they too are able to plan and make informed decisions. Then take a look at the implications of those conversations with suppliers and clients. What does it mean for your team in light of your scenario maps? Embrace the unfortunate reality that you might have to place some employees on furlough - a leave of absence - and others might have to be let go altogether. You can make these decisions based on your assessment of your client needs and plans for your business future. Be honest and open with your entire team because everyone needs to understand that it is sink or swim time. You may need to come to agreements with them on salaries, bearing in mind their own financial obligations. Be rational but compassionate, making sure to lead by example. In fact, we highly recommend that your first point of contemplation is whether to do away with you and senior partners’ salaries altogether before you take the axe to the lower members of your team. As you do all of this, remember to keep things simple; the best solutions often are. The underlying theme here is that you must be proactive about getting information from your stakeholders that will help you plan for your business. This process, which will likely take several hours, will not be a productive use of your time without focussing on the essentials that matter. Ignore the noise. We hope this article equips you with the tools to start to move forward. Crucially, remember that we are going through this as a community and so where you have some leeway, be generous with your stakeholders. Help them to see, too, the benefits of adopting the same approach. We are rooting for you to succeed and are available in earnest to get you there. PS: You might qualify for a loan from NIRSAL and/or a movement and operations permit. Kristin & Oladoyin www.spurt.solutions Reach us at admin@spurt. group if you have any questions or comments.

Monday 27 April 2020

BUSINESS DAY

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COVID-19: OPS makes case for exit strategy as a prelude to reopening economy HARRISON EDEH, Abuja

s the Federal Government battles with the coronavirus pandemic, the Organised Private Sector (OPS) in Nigeria has called for the designing and implementation of an exit strategy as a prelude to reopening the national economy. In a proposal sent to the Presidential Taskforce and obtained by BusinessDay last Wednesday, the OPS noted that the current lockdown was in urgent need of review, while observing the need to fine tune the government’s strategy to accommodate the economy. Adetokunbo Kayode, president of Abuja Chamber of Commerce and Industry, who signed the proposal on behalf of concerned OPS members, observed that current strategies were no longer sustainable, as he emphasised on the need for a defined exit strategy. Kayode in the proposal called on the government to urgently

commence immediate plan for an exit strategy in review of the COVID-19 lockdown, and to reopen the national economy while it proactively battled the pandemic. He observed that reports from underprivileged grass root areas, city suburbs and inner city areas indicate increasing restlessness among those whose livelihood depended on daily pay or trading, while emphasising, “It is agreed that the lockdown was occasioned by dire need to contain the pandemic. But by now, the conclusion of the third week of the lockdown, there are urgent calls for the designing of an exit strategy. “This is expected to combine the continuation of procedures to contain and reduce further spread of the pandemic as well as reducing the present serious socio-economic problems facing the populace.” According to the proposal, “The current total lockdown in most states of the country is becoming unsustainable as resistance from

the poor will continue to grow especially within the suburbs and city slum settlements where majority of the population resides. South Africa and Brazil are typical examples. “We are convinced that preserving the livelihoods of the citizenry should also be a critical part of that pandemic action plan.” It stated that several countries were already designing such exit strategies, with an eye on safety and sustenance of economic livelihoods. Kayode also recommended in the proposal the setting up of a framework on an exit strategy for the gradual opening of the economy, which will include representatives of NACCIMA, MAN and other OPS members. The proposal also called on the Federal Government and states to adopt a technology driven COVID-19 tracking system. “This will make tracking, tracing and identification easier. The technology is readily, available and is already being used in Africa,

India, South Korea, China among others,” it emphasised. The proposal also called on the Nigeria Immigration Service to give maximum support to the Nigerian Centre for Disease Control and the state Committees in the effort to track persons who arrived in Nigeria from January to March 2020 for testing and screening. “The PTF and Ministry of Trade should actively support massive production and free distribution of sanitizer and face masks for mandatory use in public and other designated places. The proposal also drummed support for mandatory use of face masks and permit use of scarves or any cloth where there is no face mask in public places, public transport, market places, open places, etc., and enlisting the support and buy-in of the NURTW and market officials, etc, to enforce Mandatory use of face mask or covering for mouth and nose and using hand sanitizers just before entering any public transport.

COVID-19: Abia traces 209 contacts of 2 index cases in state GODFREY OFURUM, Aba

bia State government says its State Rapid Response Team and medical protocol subcommittee of the inter-ministerial committee on COVID-19, in conjunctionwith the team from Federal Medical Centre (FMC), Umuahia, have traced 209 contacts of the two index COVID-19 cases in Abia State. This process, according to a statement by John Okiyi Kalu, state’s commissioner for information, covered mainly three local government areas (LGAs) of the state - Ikwuano, Ukwa West and Umuahia North. According to the statement, “All those traced are currently in isolation and under surveillance and a team from World Health Organisation (WHO) is providing support. “Both index cases, who are above 70 years with underlying medical conditions such as diabetes, hypertension, heart disease and left ventricular failure, are stable and receiving care at the Federal Medical Centre (FMC) Umuahia,

LAPO MFB refutes report on debtors chase Hope Moses-Ashike

Governor Abdulrahman Abdulrazaq of Kwara State (m) flanked by officials of the state during start of biometric registration for COVID-19 lockdown palliatives for 20,000 transporters, in Ilorin. NAN

Risk managers urged to brace up for new normal in businesses post Covid-19 Hope Moses-Ashike

isk managers have been advised to brace up for the new normal in businesses post Covid-19 lockdown, which comes with opportunities and challenges. Covid-19 has affected the global economy with its impact on Nigeria as well as other African countries. In response to the effects of COVID-19 on the economy, private and public companies as well as regulators are implementing procedures and plans to ensure survival during this pandemic. Risk Managers Association of Nigeria (RIMAN) in collaboration with EY held a webinar on ‘COVID-19: Risk Management Business Resilience’ on Tuesday. Folakemi Fatogbe, chairman, BOT, RIMAN, director, risk management, Central Bank of Nigeria (CBN), said risks managers should look at IFRS 9, which set a framework for determining credit risks. She listed sectors of the economy with high risk to include

tourism, aviation, hospitality and retail sectors. Theonesthatarelikelytodowell she said were healthcare, telecoms, commerce and media, and “we have to consider capital availability.” Magnus Nnoka, president, RIMAN, chief risk officer, Coronation Merchant Bank, noted that risk managers were involved in designing risk strategies, and urged them to reassess their risk management, risk strategies and business models at this time. “There is going to be new normal that will come with its risks,” Nnoka said, stressing that some businesses are going to die, some will survive while some will merge post Covid-19. Jude Monye, executive director, enterprise risk management, Heritage Bank, admitted that application of technology and data analytics were key factors for any business. He said risk managers should drive the new business model, adding that a lot of scenario planwww.businessday.ng

ning is going to come on board. Employees loyalty, trust and relationships are important at this time said Monye, who also said there has to be Board that is very agile and resilient. Ben Afudego, partner, West Africa Advisory Lead, EY, advised risk managers to Review the risk appetite framework and operational resilience capabilities in light of lessons learned from the Covid-19 disruption. He emphasized the use of new technologies and data analytics to put in place early warnings trigger to manage potential future disruptions. “Update risk models based on new realities and contribute to the design of new products with consideration for emerging risks,” Afudego told risk managers, saying also that they should provide risk and control oversight on postlockdown programs to support transition to business as-usual focusing on workforce, location, operations and business strategies.

isolation centre. “One of the patients that was previously supported with oxygen is currently breathing well without any respiratory aid”. Kalu in the statement also stated that all the medical personnel involved in management of the patients and their family members were currently in isolation with samples from some already collected for testing. “We are awaiting results for the suspected case, who is resident of Ikot Ekpene Road, Aba, and will inform appropriately as soon as the result returns from the NCDC testing facility. “All Abians and residents are strongly advised to continue to observe all the previously issued guidelines from NCDC and the state inter-ministerial committee, including compulsory use of face masks, regular hand washing with soap under running water, use of hand sanitizers, maintenance of social distancing and avoid leaving their houses except to buy food and drugs”.

APO Microfinance Bank Limited on Sunday exempted itself from an online report captioned “Nigeria Microfinance Banks Chase Debtors as COVID Lockdown Cripples Businesses”, by Sahara Reporters. A statement by the management of the bank stated that LAPO MFB closed down its operations, credit operations inclusive, across Nigeria on Wednesdays, March 25, 2020, few days before the Lockdown directive for Lagos, Ogun and the Federal Capital Territory, and a full month before the said publication. “For the notice of our clients and the public, the decision was widely publicised with a press statement in some national newspapers; radio jingles were deployed in pidgin, Hausa and Yoruba. In addition, information banner was displayed on all our Social Media handles while bulk SMS were sent to

our clients,” the statement read. LAPO MFB has been distributing food items, mainly rice and tomatoes paste to its clients across the country, to alleviate the obvious hardship caused by the crisis. Also, LAPO has also made cash contributions to two states to complement their ongoing efforts to provide palliatives to low-income Nigerians, a segment to which our clients belong, the statement said. The statement further said all senior manager of LAPO and key field managers had been making thousands of telephone calls weekly, to clients checking on their well-being and educating them on COVID-19 precautions. “We take strong exception to this attempt to ‘perfume’ lazy reportage on microfinance with the name of LAPO Microfinance Bank. Simple verification exercise would have been helpful and saved the online publication from speculation of unethical pecuniary motive”.

COVID-19: Stakeholders urge review of internal control, audit practices for business quality assurance ENDURANCE OKAFOR

o maintain and keep businesses going forward amid coronavirus pandemic there is need to review practices to ensure the maintenance of quality assurance, practitioners from internal and control industry have said. According to industry players, the impact of the coronavirus on businesses also presents an opportunity for internal auditors and controllers to be relevant. “As Internal Auditors and Internal Control practitioners, our plans and strategies cannot be static but dynamic. My take is that we should go back and review them to tie in with the current realities,” Owolade Olawore, group head, Internal Control & Enhancement, First Bank said during a panel session on EYs webinar on Thursday. Citing fall in demand, supply chain disruption, credit risk, cybersecurity, and loss of workforces as some of the threats COVID-19 outbreak pose to businesses, the virtual conference by EY: Maintain-

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ing trust through COVID-19 disruption, highlighted measures internal auditors and controllers can adapt to support business growth. “We have to seek and share new knowledge; look at new ways at bringing that quality assurance in internal audit and control functions,” Humphrey Okolie, CEO, Institute of Internal Audit (IIA) said. Some of the practices recommended by the industry players include; conducting dynamic risk assessments and reprioritizing audit activities, increasing reliance on technology by converting field audits to desktop, analytics-based reviews and accepting digital evidence and introducing flexibility into audit procedures through collaborationtoolsandremoteworking “As internal auditors and internal controllers, it is time for us to upscale ourselves in our day-to-day function, roles and duties in providing that quality assurance to the business. It is no longer business as usual. That time is now or never,” Bunmi Akinde, partner, EY Risk Advisory and member of Board of Trustee, IIA said. @Businessdayng

The outbreak of the deadly coronavirus has brought economic activities in Nigeria to almost a standstill. This has disrupted a lot of businesses as most commercial hubs in the country have been put under lockdown. To curtail the spread of the deadly coronavirus, President Muhammadu Buhari recently announced the 14-day extension to a lockdown in Lagos, Abuja and Ogun states to combat the coronavirus pandemic. Buhari said, “It has become necessary to extend the current restriction of movement” that was set to expire later in the day. Meanwhile, Nigeria Governors Forum gave a hint on Thursday that it is likely there will be a possible extension of the lockdown across states, as confirmed cases in the country have gone above 700. The outbreak of COVID-19 which has led to the crash in crude price, due to a slump in demand poses a threat to the possibility of Nigeria’seconomytoexpandin2020. Like2016recession,manyindustries in the crude oil-depended economy are expected to take the most hit.

Monday 27 April 2020

BUSINESS DAY

Live @ The Exchanges

Stock market declines by 1.41% in one week Stories by Iheanyi Nwachukwu

n the trading week ended April 24, the Nigerian Stock Exchange (NSE) All-Share Index (ASI) and Market Capitalisation depreciated by 1.41percent to close the week at 22,599.38 points and N11.778 trillion

respectively. All other indices finished lower with the exception of NSE Insurance, NSE ASeM, NSE Meri Growth and NSE Industrial Goods, which appreciated by 1.17percent, 3.55percent, 0.96percent and 0.71percent. Twenty-five (25) equities appreciated in price during the review trading week, lower than 37 equities in the

preceding week. Thirty-three (33) equities depreciated in price, higher than 21 equities in the preceding week, while 105 equities remained unchanged, the same in the preceding week. The market recorded turnover of 1.195 billion shares worth N13.979 billion in 20,591 deals, in contrast to a total of 1.495 billion shares valued at

N12.894 billion that exchanged hands the preceding week in 20,982 deals. The Financial Services industry (measured by volume) led the activity chart with 965.571 million shares valued at N7.811 billion traded in 11,710 deals; thus contributing 80.79percent and 55.88percent to the total equity turnover volume and value respectively. The Industrial G oods

industry followed with 54.803 million shares worth N1.509 billion in 2,043 deals and the Conglomerates industry, with a turnover of 54.114 million shares worth N111.406 million in 460 deals. Trading in top three equities namely, FBN Holdings Plc, Guaranty Trust Bank Plc and Zenith Bank Plc. (measured by volume) accounted for 581.950 million shares worth

N6.363 billion in 7,185 deals, contributing 48.69percent and 45.52percent to the total equity turnover volume and value respectively. A total of 313,523 units of exchange traded funds (ETFs) valued at N3.919 million were traded in the review week in 11 deals, compared with a total of 52,216 valued at N103.109 million transacted the preceding week in 15 deals.

expectations. Also, over N552 billion from the sales of public enterprises were realised in the third phase between 1999 to 2007. With the positive impact highlighted above on privatization through public offering, it is possible in the long run to envisage the emergence of Nigeria as one of the attractive depots for investment given the Governments’ continued efforts towards privatisation of

the state owned entities. Furthermore, privatisation through public offering mays serve as a credible initiative that can be used to address the well-established infrastructure gap whilst ensuring good governance and democratized ownership within Nigeria.

Economy & Market:

Impact of privatisation on Nigeria’s economy

t her earlier stage of development, Nigeria was characterised by a strong government presence which resulted in the establishment of about 600 public enterprises solely owned by the government. These public enterprises influenced various sectors of the economy chief of which was providing infrastructural facilities to enhance the overall welfare of the society. The United Nations Development Programme (1990), noted that despite the huge sums spent by various governments on these state owned enterprises, their performance fell far below expectations. The problems of public enterprises are multidimensional and according to World Bank’s Human Development Report of 1983, these problems include poorly planned investments; political influence in decision-making; costly and inefficient application of public funds; increasing budgetary burden; over-extension of government managerial capacity; and diversion of credit and other resources from the private sector. In 1986, the inefficiency of state owned enterprises became the launching pad of a global programme – Structural Adjustment Programme (SAP) with the main objective of ensuring efficient and effective resource allocation and utilization in Nigeria. Privatization was then adopted to achieve this objective and formed an integral part of the SAP. Further, the Privatization and Commercialization Act of 1988, formally set up the Technical Committee on Privatization and Commercialization (TCPC) chaired by Dr. Hamza Zayyad with a mandate to privatize 111 public enterprises and commercialize 34 others. During the first phase of the privatization exercise which lasted from July 1988 till June 1993, about 88 governmentowned enterprises were either fully or partially privatized jointly with foreign or private Nigerian investors. However,

for basic industries with large capital requirements such as vehicle assembly plants, paper and steel mills and sugar and fertilizer companies, privatization proved challenging due to the financial insolvency and negative net assets of these entities. This first phase of the privatization programme had an absolutely positive outcome and succeeded in providing relief for government in financing public enterprises. Furthermore, the Nigerian capital market was deepened and broadened by the large body of shareholders created as a result. An example is the Flourmills Nigeria Plc public offer price of N0.80 and market price of N0.61 as at 23rd January 1989 which grew to a market price of N21.25 as at 31st March 2020. The equity market capitalization of the Nigerian Stock Exchange (NSE) through which the shares were sold grew from N8.9 billion in 1987 to N65.5 billion in 1994 (after Phase-I) and N11.39 trillion as at the end of March 2020. The catalytic effect of the volume of shares released into the market via the privatization exercise cannot be overemphasized. In 1999, under the Bureau for Public Enterprises (BPE), the second phase of the privatization programme kicked off with 97 enterprises slated for privatization. From December 1999 to date, additional enterprises have been privatized either through core investor sale or concession. This added a large volume of shares to the capital market whilst at the same time, the Federal government realized Significant revenues from the sales. These enterprises include Transnational Corporation of Nigeria (Transcorp), Power Holding Company of Nigeria (PHCN), Nigerian Telecommunication Company (NITEL), Nigeria Newsprint Manufacturing Company Limited, Abuja International Hotel (Le Meridien), National Clearing and Forwarding Agency, Stallion House, NICON Hilton Hotel and Eleme Petrochemiwww.businessday.ng

cals Company Limited among others. A positive effect of privatization in Nigeria is the increase in the number of companies listed on the Nigerian Stock Exchange (NSE) by privatising through public offering and the attendant increments in public participation in capital market activities. It is important to note that the Capital Market plays a significant role and serves as a facilitator and stimulant for socioeconomic growth and development through the mobilisation of long-term funds. So far, the privatized enterprises in Nigeria have been able to achieve the desired objectives of increased efficiency and productivity and this is reflected in the appreciated market prices in the now public companies. Some other examples include; Okomu Oil Palm which was privatized and listed on the NSE in 1991 and has since grown to become Nigeria’s leading oil palm company with a current share price of N68 and a market capitalisation of over N52.51billion as at 31st March 2020. The re-establishment of the Bureau for Public Enterprises (BPE) in 1999 led to the privatization of Benue Cement Company along with 24 other companies by the then Abdulsalam Abubakar regime. Consequently, the Federal Governments majority shares in the company were sold in April 2000 with the emergence of Dangote Industries Limited as the core investor in the Company. By 2006, the annual turnover of the company skyrocketed to a sum of N6.02billion from N391 million in 2003 indicating a giant stride. From a mere N5 at the end of the first quarter of 2006, the market price of the stock appreciated to about N55 in April 2007. On the revenue side, privatisation of Government Owned Businesses helped to create additional liquidity for the Government thereby facilitating debt reduction.

Other direct and indirect benefits include; financing new expenditures, increasing the scope of investments in infrastructure and further improved tax revenues driven by the collections from the privatized businesses. For example, in the first phase of the privatization exercise in March 1991, over N200 billion was remitted to the Treasury, the proceeds which had by far exceeded initial

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...By State Owned Enterprises Department of The Nigerian Stock Exchange

Monday 27 April 2020

BUSINESS DAY

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Monday 27 April 2020

BUSINESS DAY

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BUK professor joins growing list of... Continued from page 1

Chikwe Ihekweazu (4th l), director-general, Nigeria Centre for Disease Control (NCDC), and members of the National Response Team pose with some officials of Nigerian Air Force, who flew the team round the country to engage the leadership of states and to strengthen Nigeria’s COVID-19 response. NAN

What N1.4trn CRR deduction by CBN means for banks HOPE MOSES-ASHIKE & BUNMI BAILEY

he Central Bank of Nigeria (CBN) has deducted a whopping N1.4 trillion from the banking sector’s Cash Reserve Requirement (CRR) as all Nigerian Deposit Money Banks (DMBs) and merchant banks failed to meet the 65 percent Loan-to-Deposit Ratio (LDR) at the end of March 2020. This is coming at a time when the COVID-19 pandemic has hit hard on the economy and financial sector. CRR is the amount in percentage of total deposits that the banks must keep with the CBN. The deduction, though in line with the CBN’s liquidity management measures as the excess liquidity in the banking sector stood at above N1 trillion on Thursday, analysts are surprised at the scale of the CRR debit. What this means is that banks may go hard on their debtors despite CBN imploring them to consider loan restructuring for their customers. It means that banks are under pressure as interest income, a major earnings source, will be affected as they have fewer funds for investment and lending. “Our monetary policy system is in a mess,” said Damilola Adewale, a Lagos-based economic researcher. The debit at this critical time points to yet another policy error by CBN, Adewale said. He said he thought the CBN would have reviewed the CRR downwards to enable banks have more liquidity to support businesses. “It seems banks’ major

... Lenders’ interest margin at risk ... Loan restructuring for customers not feasible headache now is excessive regulations, ahead weak oil prices and weak tough operating environment,” he said. The list of banks debited, as seen by BusinessDay, showed that tier-one lenders were mostly affected. Zenith Bank plc was debited N355.9 billion, First Bank of Nigeria N206.1 billion, United Bank for Africa (UBA) N204.7 billion, GTBank N65.6 billion, and Access Bank N41.3 billion. Other banks include Stanbic IBTC N143.9 billion, Standard Chartered N120.6 billion, Union Bank N49.8 billion, Ecobank N43.05 billion, Citibank N38.3 billion, Fidelity Bank N32.1 billion, among others. The CBN on January 8, 2020 extended the deadline for meeting the 65 percent Loan-to-Deposit Ratio (LDR) to March 31, 2020. Omotola Abimbola, a macro and fixed income analyst at Lagos-based Chapel Hill Denham, said the debit was not completely unexpected, although the scale of the debit was very large. As at Thursday, excess cash liquidity that banks were holding was above N 1 trillion, which was extremely higher than the normal level of excess liquidity in the banking sector. The excess liquidity, Abimbola said, is attributed to a number of factors, one of which is that Foreign Portfolio Investors (FPIs) who liquidated their naira investments cannot get out because there is no liquidity in the Investors’ and Exporters’ (I&E) forex window. www.businessday.ng

“So, I guess that is why the CBN decided to take a decision to take away that liquidity in form of CRR debit to reduce the level of demand for FX,” he said. He, however, suggested that CBN should try to be consistent in its policy and also try to communicate to the market its plans to actually solve the liquidity challenges in the I&E window currently. “It depends on what happens as well because one thing we can not rule out is that once the CBN returns to the I&E window to start selling dollars and liquidity inflows improve, the FPIs will have their money and will evidently have to take away their funds again,” Abimbola said. “So, there is a chance that the CBN may try to return the money debited from the banks because when people try to exit the market, they would need to exchange their naira for the dollar. But for the banking sector, it will be a very challenging year for them,” he said. Uche Uwaleke, professor of Finance and Capital Market, Nasarawa State University, Keffi, and chairman, Chartered Institute of Bankers of Nigeria, Abuja branch, said the effectiveness of monetary policy is largely a function of the extent to which DMBs comply with CBN’s guidelines and reserve requirements. Until these requirements are amended based on evidence considered by the CBN to be in the overall interest of the economy, any bank that flouts the requirements should be made to face the appropriate

sanctions as a deterrent to others. “It bears repeating that the regulation of the financial system, over which the CBN superintends, in this period of crisis cannot afford to lax,” Uwaleke said. The CBN at the first meeting of the Monetary Policy Committee (MPC) in January increased the CRR to 27.5 percent from 22.5 percent. MPC members had in February raised concern on the excess liquidity in the banking sector, occasioned by open market operations (OMO) ban for non-bank investors and corporates, saying it was a threat to foreign exchange stability and the country’s external sector. Gbolahan Ologunro, a research analyst at Lagos-based CSL Stockbrokers, said the CBN is trying to ensure banks do not start to speculate in the FX market. “The profitability of banks might have suffered another blow, despite regulatory-induced cuts in e-banking fees amidst a blurry macro outlook which is expected to drive impairment charges in the short to medium term. The funds sterilised by the apex bank effectively limit the quantum of funds banks can invest in riskfree instruments or creating risky assets,” Ologunro said. “Accordingly, banks will have to forgo the interest income that should have been earned on such funds and at the same time still bear the cost of the funds. It is a double whammy for Net Interest Margin (NIMs),” he said.

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Communication at BUK was known to be managing diabetes. However, there is as yet no evidence that his death is connected with the coronavirus disease currently ravaging Kano. Kano State has witnessed many high-profile deaths recently, checks by BusinessDay show. On Saturday, several media reported the deaths of Ibrahim Ayagi, Kanobased professor of economics, a former head of Nigerian Economic Intelligence Bureau and CEO of Hassan Gwarzo Group of Schools; Dahiru Khadi, former Grand Kadi of Kano; Musa Tijjani, a former editor of the state-owned Triumph Newspaper, among several others. Last week, SaharaReporters reported that fear was growing in Kano after over 150 persons died under the space of three days, causing undertakers and grave diggers in the city to express deep concerns. “The Facebook pages of my friends from Kano have become obituary boards, and there’s no way to defend that it’s normal,” wrote Gimba Kakanda, a postgraduate student of International Relations at the London School of Economics. “The mortality rate in Kano seems to have surged, and even though it’s not been linked to any disease yet, it’s important to determine the causes of these deaths,” he wrote. The true causes of the deaths are, however, yet to be ascertained, and there are as yet no clear indicators connecting the deaths to the ravaging COVID-19 Abdullahi Ganduje, governor of Kano State, has since come under fire over the rising deaths in the state amid the coronavirus pandemic. As at 5:00pm on Sunday, Kano has recorded 77 cases of COVID-19, according to Nigeria Centre for Disease Control (NCDC). But some residents fear there may be more cases than recorded as the state

lacks testing capacity. The COVID-19 testing laboratory in Kano State was shut on Wednesday following reported lack of testing materials. Some of the staff in the laboratory were also said to have tested positive for COVID-19, prompting the shutdown of the facility. Many have criticised Ganduje for not being proactive in containing the spread of the virus in the state. Amid the rising criticism, the state government says it has instituted an investigation, led by the Ministry of Health, to determine the causes of these and other recent deaths. The governor, responding to reports of multiple deaths within Kano, on Wednesday said the state had recorded only one COVID-19 death. “You know that there is a lot of fake news going around and we have already started arresting all those who are peddling such rumours. The death recorded from coronavirus is only one and the NCDC is aware of that,” Ganduje said. The governor has announced that his government has approved the purchase of one million face masks to be distributed to residents. At a press conference on Saturday, he said the state government had rented a hotel where suspected cases whose blood samples were taken are kept, adding that the isolation centre at Sani Abacha Stadium can accommodate 210 people. The governor said the isolation centre at Kurna Dawakin Kudu where the intensive care unit (ICU) is situated is also active, though there are challenges of ventilators and other major facilities, while the 100bed isolation centre at Muhammadu Buhari Specialist hospital is also working. He appealed to the Federal Government for assistance, disclosing that Aliko Dangote, Africa’s richest man who hails from the state, has promised to make some donations.

What the next chapter of The Oil Crisis will... Continued from page 2

ally have to start shutting down wells”, he said. “In terms of the dynamicsoffiscalandmonetary policyitjustaggravateswhatwas already a dire situation.” Any fiscal stimulus less than 7-10% of Nigeria’s GDP will be like a drop in an ocean. That Nigeria pull back from tapping the debt market last quarter is sure sign of how things have @Businessdayng

fallen apart already. In its full bloom, the impending economic crisis in Nigeria will inflict massive job lay-offs, unpaid salaries will mount leading to hefty depletion in the disposable income of Nigerians, widening poverty pit and even social unrest. There will big hits to the equity market and the real estate sector with the jobs held in the sector.

Monday 27 April 2020

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper

Europe prepares to ease lockdown measures

France and Spain to outline exit plans as spread of virus slows DAVID KEOHANE, DANIEL DOMBEY AND MILES JOHNSON

he French and Spanish governments will on Tuesday outline detailed plans to ease their lockdowns, as more European countries seek to map out an exit route from the economically damaging measures brought in to contain the virus. Leaders across the region are grappling with how to balance reopening the economy with keeping the coronavirus epidemic under control. Germany, which has had more success in containing the outbreak than some of its neighbours, began reopening shops last week, and plans to reopen schools early next month. On Sunday, French prime minister Edouard Philippe confirmed that he would present the “national deconfinment strategy” on Tuesday, with a focus on six themes: “health (including masks, testing and isolation), school, work, shops, transport and gatherings.” France is in its sixth week of lockdown to prevent the spread of the coronavirus, which has killed more than 22,600 people. This month, however, the number of people in hospital and intensive care have both fallen steadily. The country is due to gradually reopen from May 11, with no decision taken on bars and restaurants until the end of that month. The plan for the country, said Mr Philippe on Twitter, would be put to parliament for a vote, before being presented to local politicians

and other “social partners”, such as unions. In an opinion published on Saturday, the government’s council of scientific advisers warned against relaxing the lockdown measures too quickly because it “could result in a rapid increase in the number of cases” and “serious cases in hospital and intensive care”. The council has advised that people keep working from home as much as possible and — despite the government indicating that it intends to start reopening schools from May 11 — said it was against any return to schools or crèches before September. It also “strongly discouraged”

international travel in “the months” after the lockdown ends, to avoid the risk of quarantine abroad or as people return to France. Spain is also planning to relax its six-week-old coronavirus lockdown — one of the toughest in the world — in the coming days by allowing people to walk and exercise outdoors from the start of next month. In a televised address to the nation on Saturday night, Pedro Sánchez, prime minister, highlighted the country’s falling official daily death toll — which on Sunday fell to 288, the lowest for more than a month. He added that if the figures continued to improve the government would permit adults to go for

walks and exercise outside their homes from May 2. His administration has already announced that as of Sunday, children under the age of 14 can go for walks of up to 1km from their homes if they are accompanied by an adult. Mr Sánchez warned, however, that the government planned to phase out the lockdown only slowly throughout the month of May, and possibly June, with variations by region and sector. Unlike France, the Spanish government has also avoided giving specific dates for relaxing measures. “We have to be very prudent,” he said, arguing that the period of

phasing out the lockdown would be as risky and as dangerous as the initial period of the pandemic and that people would need to retain social distancing. “We will only win this battle definitively when we have a vaccine or a treatment that can serve as a remedy,” he said. Mr Sánchez is due to outline the government’s full plan to phase out the lockdown on Tuesday. Ahead of his remarks, people in various parts of Spain protested against the government by banging pots and pans in their houses. Giuseppe Conte, Italian prime minster, said that details of his government’s plan to allow a large number of companies to reopen from May 4 would be made public at the start of next week “at the latest”. “We cannot continue [like this] beyond this lockdown,” he said in an interview with the Italian daily La Repubblica. “We risk too heavily compromising the country’s socioeconomic fabric”. However Mr Conte warned that the current restrictions would not be lifted, only revised, and he said the need for self-certification forms to be filled out by Italians would continue. Schools will remain closed until September, while bars and restaurants would not be allowed to immediately reopen in May. In the UK, pressure is growing on Prime Minister Boris Johnson to put forward an exit strategy from Britain’s lockdown as he returns to work two weeks after being released from hospital. However, Dominic Raab, foreign secretary, said on Sunday that it would be “irresponsible” to discuss ways of easing restrictions.

Italy bonds reprieved as S&P downgrade avoided Agency holds rating at two notches above ‘junk’ despite rise in borrowing costs TOMMY STUBBINGTON

taly has escaped a potential downgrade to its credit rating by Standard & Poor’s, handing the country’s bonds a reprieve following a recent sell-off that has pushed borrowing costs sharply higher. Following a regular review of Italy’s creditworthiness, S&P on Friday held the rating at BBB, two notches above “junk” status, despite forecasting a leap in Rome’s debt level to 153 per cent of GDP by the end of the year as the government ramps up borrowing to fund its response to the coronavirus crisis. The rating agency said that the European Central Bank’s massive asset purchase programmes were “backstopping this additional public borrowing”. The announcement followed an earlier statement by Moody’s saying Italy’s rating should be “broadly unaffected” by the pandemic because of the temporary nature of the economic shock. Moody’s currently rates Italy one notch above junk.

S&P retained its negative outlook for Italy’s rating, saying it could decide to downgrade it if borrowing costs rose further. “We could lower the ratings if government debt to GDP fails to shift on to a clearly discernible downward path over the next three years, or if there is a www.businessday.ng

marked deterioration in borrowing conditions that jeopardises the sovereign’s public finance sustainability,” the rating agency said in a statement. Italy’s bonds have come under increasing pressure in recent weeks as investors worry about a

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deluge of new debt issuance and the reluctance of other eurozone members to share the financial burden of fighting the crisis. The sell-off continued early on Friday after EU leaders remained deeply divided on the issue of jointly backed bonds at Thursday’s sum@Businessdayng

mit, but recovered later in the day with traders saying the European Central Bank had stepped up its buying of Italian debt. Italy’s 10-year bond yield fell to 1.85 per cent, down from a onemonth high of more than 2.2 per cent earlier in the week but still well above the low of 1.2 per cent in late March following the ECB’s announcement of its €750bn emergency bond-buying programme. Friday’s announcements by S&P and Moody’s will reassure some investors who were expecting a downgrade, and make it less likely that Italy will be handed a junk rating in the near future. Italy would see its bonds thrown out of widely followed indices if two of the big three agencies strip it of the investment grade status, forcing some investors to sell its debt. “There’s now a better chance that this massive expansion in borrowing can take place without some sort of joint issuance in the eurozone,” said Peter Chatwell, head of multi-asset strategy at Mizuho International.

Monday 27 April 2020

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Will central banks serve up fresh stimulus? Market Questions is the FT’s guide to the week ahead FT REPORTERS

ill the Fed do more to boost financial markets? As the US Federal Reserve convenes on Tuesday for its scheduled twoday monetary policy meeting — the first since emergency meetings last month to address the market turmoil caused by the coronavirus pandemic — investors will be looking for indications of further support measures. Last month, the Fed announced an array of measures that included slashing policy rates to near-zero, launching an unlimited asset-purchase programme for US Treasuries and agency mortgage-backed securities, easing certain rules for banks and co-ordinating with select central banks to lower the cost of borrowing dollars internationally. In the days and weeks that followed, the Fed stepped in to shore up the $1.1tn market for commercial paper, used by companies to raise short-term cash, and lent support to the markets for corporate debt and municipal debt, among others. It also set up facilities to help small businesses and households, in conjunction with efforts by Congress to provide a historic amount of relief in the form of loans and direct cash transfers. Many of these facilities are yet to get under way, and analysts are keen to find out when they will do so. Investors are also looking for guidance as to where the Fed still sees signs of strain, even as trading

Investors will be closely watching the meetings of central banks across the globe this week for indications of further measures to tackle the coronavirus fallout © FT montage; Bloomberg

conditions broadly stabilise. Some are eager for the Fed to intervene more aggressively in the $4tn municipal bond market, where states and cities raise cash. Others see a need for more support to credit markets, specifically for high-yield borrowers. Colby Smith What options remain for the ECB? The European Central Bank has been doing everything it can to try to soften the economic blow from the pandemic. But with economic activity falling and Italy’s borrowing costs on the rise again this month, the pressure is on the ECB to deliver yet more at its meeting on Thursday. The bank, led by Christine Lagarde, last month ramped up its quantitative easing programme

with an announcement of a further €750bn of bond-buying, and has also loosened many of the restrictions previously governing such purchases. On Wednesday it also eased restrictions on the collateral banks can put up in exchange for liquidity, meaning it will now accept the bonds of “fallen angels” — companies that have lost their top-quality credit ratings. Nevertheless, many economists expect the ECB to increase the scale of its bond-buying further, or even include riskier high-yield bonds, as the US Federal Reserve has done. “We doubt that policymakers will tolerate peripheral sovereign spreads remaining so high for very long,” said Capital Economics’ Oliver Jones, who expects the bank to increase its programme soon.

Investors can also expect renewed calls by the ECB for eurozone governments to spend more to kick-start their economies. Such calls have faced some backlash in northern countries that oppose the issuance of shared debt to fund support for hard-hit countries. “There’s a tug of war with the fiscal authorities,” said Tim Drayson, head of economics at Legal & General Investment Management, who expects the ECB to reiterate its call for fiscal stimulus. “There’s been such a shortfall in aggregate demand that the fiscal authorities are the only actors in the economy that can close some of that gap,” he added. Laurence Fletcher What further action will the

Bank of Japan take? The Bank of Japan’s monetary policy meeting on Monday will provide a deeper insight into the central bank’s increasingly unorthodox measures, and provide important clues as to what it might do next. At its last monetary policy meeting in mid-March, when global markets were tanking, the BoJ resisted the temptation to push interest rates deeper into negative territory. Instead, in a shock-and-awe effort to convince investors of its firepower, it aggressively raised the amount of exchange traded funds that it could theoretically buy. Across the 27 trading sessions since that meeting, the central bank has purchased very close to ¥2tn ($18bn) of exchange traded funds in its efforts to support the market in the face of global turmoil. In some quarters this mighty effort has been seen as a qualified success, given that the Nikkei 225 benchmark is now about 14 per cent higher than it was then. The central bank’s strategy at this point, says Naoya Oshikubo, senior economist at SuMi Trust, will be to assess the results of its previous interventions before working out whether it now needs to do more. “Unless we see further market deterioration, such as the yen strengthening to below ¥100 against the US dollar, it is highly unlikely that the BoJ will dig deeper into negative rates. Doing so would have significant side-effects, including a negative impact on the earnings of financial institutions, further destabilising the financial system,” said Mr Oshikubo. The dollar/yen rate was about ¥107.5 on Friday.

China warned EU 3 times over virus propaganda report Diplomatic complaints highlight Beijing efforts to curb criticism over pandemic MICHAEL PEEL AND TOM MITCHELL

hina complained to the EU at least three times and warned bilateral relations would be hit should the bloc publicly accuse it of spreading coronavirus crisis propaganda, according to European officials. The Communist government made the protests last week after details emerged of an internal EU report that pointed to evidence of Beijing using “both overt and covert tactics” in a “global disinformation campaign” to avoid blame for the pandemic. The diplomatic pressure highlights China’s strong pushback against accusations from Europe that it is attempting to use the health emergency to sow division and make strategic gains. The EU published some elements of the internal disinformation report in a toned-down form late on

Friday, after a behind-the-scenes row between officials over what to include. The warnings from Beijing came after the news organisation Politico reported excerpts from the EU disinformation report on Tuesday. One complaint was made at political counsellor level to the EU diplomatic service’s headquarters in Brussels and two by the Chinese foreign ministry in Beijing, European officials said. Wang Lutong, the Chinese foreign ministry director-general for Europe, called Nicolas Chapuis, EU ambassador in Beijing, European officials briefed on the matter said. Mr Wang denied China was spreading disinformation and said he was alarmed by reports that the European bloc was about to issue a statement criticising his country. He said that if the EU were to follow the US in publicly attacking China, it www.businessday.ng

would be pushed back as the US had been, adding that this would be unfortunate. Mr Chapuis responded that it was the EU’s duty to document disinformation from China and other countries, adding that such activity should be countered and stopped, the European officials said. Yang Xiaoguang, a Europe specialist at the Chinese foreign ministry, had earlier warned the EU embassy in Beijing against publication of the disinformation document’s conclusions, according to a bloc diplomatic note first reported by Reuters. Mr Yang said publication would severely harm EU-China co-operation and make Beijing “very disappointed” and “very angry”, European officials familiar with the note’s contents said. The Chinese foreign ministry didn’t respond to a request for

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comment. The EU said it never commented on internal diplomatic contacts and communications with partners from other countries. Mikko Huotari, executive director of the Mercator Institute for Chinese Studies think-tank, said the episode showed how the pandemic had prompted Beijing to intensify its efforts to shut down international censure. “They have been all in on this for months and years and they are pushing it harder now,” he said. “They don’t tolerate any criticism and they don’t seem to recognise that doing this externally will have repercussions for them and their credibility.” The Chinese pressure sparked a dispute in Brussels during the editing process of a public bulletin based on the internal disinformation report, according to internal emails first reported in the New @Businessdayng

York Times and seen by the FT. One disinformation analyst raised concerns that changes being made showed the EU’s “apparent willingness to self-censor in response to Beijing’s threats”. The bulletin published on Friday included allegations of “covert Chinese operations on social media” and attempts by Chinese officials and state media to curb mentions of the city of Wuhan as the origin of Covid-19. The reference in the internal report to a “global disinformation campaign” by China did not appear in the public version. The EU insisted it had not bowed to political pressure to soften the contents of the published document. It said the bulletin was the product of a normal editing process, adding that it devoted “particular attention” to ensure phraseology in public reports was “unassailable”.

Monday 27 April 2020

BUSINESS DAY

abujacitybusiness Comprehensive coverage of Nation’s capital

Covid-19: Labanese donate 6000 bags of rice, 600 bags of flour, others to FCT ... 4U Supermarket donates over N 600,000 palliatives James Kwen, Abuja

T L-R: Mariam Katagum, minister of state for industry, trade and investment; Richard Adeniyi Adebayo, minister of industry, trade and investment, and Nasir Sani-Gwazo, permanent secretary, Ministry of Industry, Trade and Investment, during a weekly briefing by the Emergency Operation Centre (EOC) of the Committee on sustainable production/delivery of Essential Commodities on COVID-19 Pandemic in Abuja. Picture by Tunde Adeniyi

Covid-19: Abuja tailors support fight with free distribution of face masks ... Targets paramedical staff, FCT street sweepers Harrison Edeh, Abuja

he National President of Nigeria Labour Congress, Ayuba Wabba said the National Union of Textile and Garment workers, particularly the tailors in Abuja would be supporting the efforts of the front line workers in the Federal capital Territory with free distribution of face masks to curb the spread of the virus. Ayuba gave this information at the daily briefing of the Presidential Task Team ,as he lauded the efforts of the federal government in curbing the spread of the pandemic. “A s p a r t o f o u r contribution,the National Union of Textile and Garment workers,particularly the tailors in Abuja who are under

that union,came up with the idea to say that in order to support this fight, they needed to support this fight and think out of the box by producing for his locally made fave masks.” “They have so produced in large numbers and our intention is to distribute free to other category of front line workers, he said. Speaking further on beneficiaries, he said: “if you pass around the cities of Abuja,there are workers that their work is not so much recognised but they contribute a lot. For instance, as early as 5.am I see people sweeping the streets and these are the people that needs also to be protected from contaminated thrashes throne to the streets. “First, we are going to distribute to them free as well as other paramedical staff also

working and enforcing some health decision. “We want to thank the COVID-19 committee that is working assiduously to curb the spread of the pandemic,it is not an easy job” he emphasised. On the interface with Labour Union, Ayuba said: “Mr. Chairman,let me use this occasion to thank you immensely for the interface that you have allowed particularly through your office and the Nigerian Labour Congress. “I assure you that we are going to be very reasonable as we interface with your office especially on the whole idea of working together to achieve results. “Let me also thank the Ministry of Health.These are very difficult times and clearly I want to lend my voice to this

front line health workers in doing very wonderful work. “We have continued to engage with them and that is why we set up labour -civil society room ,where workers and their unions can also phone in and raise any concern about their work. “It is important that we emphasise what the minister has said about scaling up occupational health and safety on the concerns of number of health workers that have been infected so far. “I think there is no gainsaying the fact that the health workers need to protect himself while rendering service to others. “I quite appreciate the gesture to health workers that the government is coming up with to try to support this front line health workers.

ECOWAS naval operation rescues 11 crew members of hijacked vessel Godsgift Onyedinefu, Abuja

combined naval operation of ECOWAS Maritime Zone E, involving the Nigerian Navy Special Boat operatives and Benin Navy has led to the rescue of 11 crew men onboard a hijacked Portuguese flagged container ship, MV TOMMI RITSCHER in Benin Territorial Waters. The vessel was reportedly attacked by unknown number of gunmen at Zone 3 anchorage in Cotonou water with 19 crew members comprising Ukrainian, Bulgarian and Filipinos.

John Enenche, Coordinator Defence Media Operation (DMO), Defence Headquarters disclosed this in a statement in Abuja. Enenche said following the pirate attack, the Nigerian Navy (NN) received a request for assistance from the Benin Navy under the Memorandum of Understanding (MoU) of ECOWAS Zone E. “Accordingly, after the necessary briefings, the boarding operations commenced at about 1730 on 20 Apr 20, with the NN SBS elements in the lead. After the successful boarding of the Ship, which eventually www.businessday.ng

was to be unopposed. “11 crew members were rescued from different parts of the ship. However, 8 crew members of the Ship and the pirates could not be located onboard the ship. The SBS remained onboard to ensure security of the vessel and the crew. MV TOMMI RITSCHER came alongside to Cotonou Port for a more comprehensive search of the ship on 21 Apr 20,” the statement read. Enenche recalled that in 2013, Gulf of Guinea Heads of State and Government met in Yaounde, Cameroon to adopt the Yaoundé Declaration on the Gulf of Guinea

Security and resolved to create an inter-regional Coordination Centre on Maritime Safety and Security for Central and West Africa, to be headquartered in Yaoundé, and implement a new Code of Conduct Concerning the Prevention and Repression of Piracy, Armed Robbery Against Ships and Illegal Maritime Activities in West and Central Africa. “It is against this background that the feat achieved by the Nigerian and Benin Republic Navies represents a concrete step towards the operationalization of the ECOWAS Maritime Zone E framework,” he said.

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he Lebanese community in Nigeria has donated 6000 bags of rice (5kg), 600 bags of flour (50kg), 3900 cartons of indomie noodles and 3000 pieces of soya oil to the Federal Capital Territory Administration (FCTA) to cushion the effects of the Covid-19 lockdown on the poor and the vulnerable in the Territory. They also donated 2000 cartons of table water, 1,875 pieces of palm oil, 800 cartons of Tomato pastes, 500 cartons of Spaghetti and 400 cartons of soap. Making the donation at the FCTA Headquarters in Abuja, the Lebanon Ambassador to Nigeria, Houssam Diab said it was their token appreciation to the containment of the dreaded Covid-19 by the Federal Government and the FCT Administration. He called on the FCT Administration to distribute the items to the poor and vulnerable families that are suffering from the Covid-19 pandemic. “We bring these trucks of food and consumable goods as our token of appreciation to what the Honourable Minister is doing on behalf of the President to keep the residents and citizens of the FCT save”, Diab said. Speaking, the Minister of

FCT, Muhammad Bello who described it as the highest donation said the Lebanese community has proven be truly part and parcel of the FCT and thanked them for the gesture. “This afternoon we are receiving a highly placed delegation under His Excellency the Labanese Ambassador and you can see what they have brought. I don’t have a much to say just to thank you. It is the highest individual donation”, Bello said. Receiving the items, FCT Minister of State, Ramatu Aliyu also described the donation as largest one received so far and the items will be distributed to the vulnerable in the Territory. “The largest donation we have received so far in the Federal Capital Territory. We want to say a very big thank you to you the Ambassador of Labanon to Nigeria and the team that all came together believing in us. The Lebanese community has proven true to be part and parcel of the FCT. “The goods you brought today we will ensure that they are distributed across the Territory to the needy. This will go a long way to cushion the effect of the sit at home ordered by the President Muhammadu Buhari”, Aliyu said.

Taraba Speaker condemns killing of 18 in Lau LGA Nathaniel Gbaoron, Jalingo

he Speaker of Taraba State House of Assembly, Joseph Kunini has condemned the killing of about 18 persons and destruction of property, following recent attack on Shomoh Sarki village in Lau Local Government Area of the State by suspected Jole militia. The Speaker who spoke to BusinessDay in Jalingo said that it was barbaric and highly insensitive for any group of persons to take up arms against another group at a time that the whole world was struggling with the global devastation caused by Covid-19 pandemic. The Jole militia, had stormed the sleepy Shomoh Sarki village in the early hours of Easter Sunday, shooting sporadically, killing and maiming the villagers as some drowned after jumping into River Benue. “I feel highly saddened by the event of Easter Sunday night, where some militia attacked the Shomoh village and killed several persons before destroying the whole @Businessdayng

village. The cruelty of this attack is further worsened by the timing which is coming when the whole world is battling to contain the global pandemic of Covid-19. “At this point, we are supposed to be our brothers keepers and to work for the common good rather than taking arms against one another. This is barbaric, inhuman and the height of insensitivity. This must be condemned in the strongest terms even as I call on the relevant authorities to make sure the perpetrators of this dastardly act are brought to book”. He lamented that despite series of peace and reconciliation meetings, jointly organized by the State Government and Lau Local Government Council in collaboration with Bakula Chiefdom, the Jole militia still went ahead to carry out the heinous crime. The Speaker wondered why the warring parties, especially the Jole, refused to heed to the clarion call by Governor Darius Ishaku that people should give him peace so that he would give them development.

Monday 27 April 2020

BUSINESS DAY

BD Money Personal Finance

Here are free online learning sites to sharpen your skills amid lockdown BUNMI BAILEY

ith a third of the global population on COVID-19 lockdown, many are taking advantage of the availability of e-learning services to sharpen their skills. And since not much economic activities are being carried out except for essential ones, people should be being encouraged to use this time to self-study and learn new skills. The e-learning sites is widely adopted by the education sector and with this lockdown, it is becoming more useful and popular at this time. And the internet services serve as a platform for people who seek education in any form like master’s degree programs, computer science, K-12, study programs etc. Here are eight outstanding free websites to access academic courses. Coursera This American online learning platform founded by Stanford professors, Andrew Ng and Daphne Koller offers massive open online courses, specialization and degrees. Founded in 2012, it has more than 35 million learners, 150 university

partners, 2,700 courses, 250 specializations and four degrees. In addition to free courses, Coursera offers courses generally ranging from $29 $99. Specializations and degrees are priced higher. The course instructors include experts from the world’s top colleges and universities, and courses include recorded video lectures, community discussion forums and both graded and peer-reviewed coursework. You can also receive a course certificate for each course you complete.

Stanford Online Stanford online, an education initiative at Stanford University, offers free online courses, professional certificates, advanced degrees and executive education. It offers courses from Stanford’s undergraduate and graduate schools, including Stanford Law School, Stanford Business School and Stanford Medical School, among others. edX This is massive open online course provider hosts online university-level courses in a wide range of

disciplines to a worldwide student body, including some courses at no charge. It also conducts research into learning based on how people use its platform. You can access 2500 free online courses from 140 leading institutions worldwide, gain new skills and earn a certificate of completion. TED-Ed TED-Ed has a global network of more than 250,000 teachers that serves millions of teachers and students around the world every week. This award-winning youth and education arm whose mission is to share and spread ideas from teachers and students includes innovative content such as original animated videos and a platform for teachers to create interactive lessons. Harvard Extension This online website provides free courses from Harvard, one of the top universities in the world that allows you to search for courses according to a professional certificate making it an easier option if your goal is to have a certificate Open Culture online courses Open Culture’s listing of free online education courses highlights 1,000 lectures, videos and podcasts from universities around the world.

Its list features courses from England, Australia, Wales and many state universities around the United States The site features a lot of material found only on universities private sites, all in easy to browse categories. This means you can find hundreds of university courses, without having to visit and search each university’s own site. Khan Academy Khan Academy partners with many post-secondary schools offering a useable, well organized interface. Also curating many courses from around the web, it offers impressive depth on many different subjects. Among the more well-known educational sites, Khan Academy is also incredibly useable, which may make it easier to keep learning goals. Open Yale Courses Just like Harvard Extension and Stanford online, it offers courses only from Yale. While the site is similarly limited to topics taught at the school, Open Yale Courses offers a lot of videos of actual campus lectures. The availability of videos makes the site a great option if you’re looking for quality courses, but learn better by watching than by reading.

Economy

Liquidity, safety of staff are top concern for Nigerian businesses amid coronavirus pandemic, Here’s why MICHAEL ANI

usinesses in Nigeria have identified Liquidity and the safety of their staff among the most pressing business needs they are concerned about as they grapple with the impact of the COVID-19 pandemic. These are some of the findings from a survey conducted by Pricewaterhouse Coopers (PWC) Nigeria. The survey findings were revealed during a recent webinar hosted by the firm, on the economic implications and policy responses to COVID-19. The survey had about 3000 respondents ranging from managers to CEOs and business owners. Asked what their top business concerns were, 22.5 percent pointed at Liquidity, that is the availability of immediate cash to pay bills especially following disruption to business activities that has been experienced. This was followed by Safety of staff at 15.4 percent, which is an impressive indication that Nigerian businesses have a people focus and were not only concerned about their profitability. The third signifi-

cant business concern identified was infrastructure for remote working (14.6 percent ) further buttressing the need for access to electricity and internet connectivity. Providing the results of the findings Taiwo Oyedele, Fiscal Policy

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Partner and West Africa Tax leader at PwC noted that most businesses (78.4 percent) do not plan to lay off staff as a result of the crisis. This presents a very positive picture. However, decisions on staff retention are often top management

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decisions and it could mean that a good percentage of respondents may not be privy to such plans by their organisations. The other 21.6 percent admit that they will lay off various percentages of staff as a consequence of the pandemic. Of this group however, 55.3 percent do not think government intervention will influence their decision on laying off staff with the rest indicating they would retain their employees if government’s intervention were able to take care of varying percentages of their staff wage bill. As part of its societal impact, PwC has indicated that it would provide free business continuity support services to small businesses employing between 5 to 50 employees who undertake to retain all their staff during this period. It would appear that the much needed investments to stimulate growth and move the needle on poverty will be greatly impacted as a result of the COVID-19 crisis as 56.7 percent of respondents indicated that they will delay investment decisions while 19.4 percent stated that they would invest less. Majority of the survey respondents think that governments @Businessdayng

interventions have either been grossly inadequate (23.8 percent) or inadequate (43.9 percent) with 17.5 percent expressing indifference to what the government has done up to the date of the survey. Only 14.4 percent agree that government’s intervention has met their expectations. This provides a clear message to the government both at the federal and state levels pointing either to the need to do more, or to better communicate what is being done already to help shape public perception. Among the top two areas that respondents believe government’s intervention should be focused include tax relief (30 percent), provision of loans at zero or low interest rate (29.3 percent), and cash transfer to the poor (16.9 percent). Overall, the businesses surveyed agree that the private sector has a role to play in supporting government’s fight against Covid-19 with 85.5 percent suggesting that they are best suited to provide support in the area of provision of items, equipment and facilities compared to only 10.7 percent who will consider donating cash to the government.

Monday 27 April 2020

BUSINESS DAY

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Monday 27 April 2020

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Friday 24 April 2020 Company

Market cap(nm)

Price (N)

Change

Trades

Volume

Company

Market cap(nm)

Price (N)

Change

Trades

Volume

PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 220,380.40 6.20 -2.36 172 22,506,253 201,776.59 5.90 -0.84 200 12,023,722 UNITED BANK FOR AFRICA PLC ZENITH BANK PLC 441,120.74 14.05 1.08 378 10,952,003 750 45,481,978 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 156,144.52 4.35 -2.25 296 25,724,916 296 25,724,916 1,046 71,206,894 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,116,869.36 104.00 4.00 135 849,016 135 849,016 135 849,016 BUILDING MATERIALS DANGOTE CEMENT PLC 2,215,265.96 130.00 -1.14 204 2,291,201 LAFARGE AFRICA PLC. 185,239.65 11.50 -1.71 145 3,981,056 349 6,272,257 349 6,272,257 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 290,926.99 494.40 - 9 6,216 9 6,216 9 6,216 1,539 78,334,383 REAL ESTATE INVESTMENT TRUSTS (REITS) SFS REAL ESTATE INVESTMENT TRUST 1,386.00 69.30 - 0 0 10,175.81 40.70 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) UPDC REAL ESTATE INVESTMENT TRUST 9,072.12 3.40 9.68 14 906,226 14 906,226 14 906,226 OTHER FINANCIAL INSTITUTIONS NIGERIA ENERYGY SECTOR FUND 411.91 552.20 - 0 0 VALUEALLIANCE VALUE FUND 3,312.39 103.20 - 0 0 0 0 0 0 14 906,226 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 12 16,958,338 52,512.75 55.05 - 6 2,064 OKOMU OIL PALM PLC. PRESCO PLC 36,450.00 36.45 - 12 130,940 30 17,091,342 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,500.00 4.25 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,950.00 0.65 - 4 2,600 4 2,600 34 17,093,942 DIVERSIFIED INDUSTRIES JOHN HOLT PLC. 198.47 0.51 - 0 0 S C O A NIG. PLC. 1,903.99 2.93 - 0 0 30,079.51 0.74 2.78 17 695,065 TRANSNATIONAL CORPORATION OF NIGERIA PLC U A C N PLC. 17,864.04 6.20 -8.15 205 11,907,724 222 12,602,789 222 12,602,789 BUILDING CONSTRUCTION ARBICO PLC. 381.65 2.57 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 34,056.00 25.80 - 65 732,744 ROADS NIG PLC. 165.00 6.60 - 0 0 65 732,744 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 1,922.81 0.74 -9.76 21 1,649,470 21 1,649,470 86 2,382,214 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 6,341.89 0.81 - 17 141,130 GOLDEN GUINEA BREW. PLC. 829.98 0.81 - 0 0 GUINNESS NIG PLC 41,398.24 18.90 - 164 2,213,246 INTERNATIONAL BREWERIES PLC. 128,937.93 4.80 -4.00 31 532,600 NIGERIAN BREW. PLC. 275,893.12 34.50 - 79 402,959 291 3,289,935 FOOD PRODUCTS DANGOTE SUGAR REFINERY PLC 144,000.00 12.00 - 64 1,338,704 FLOUR MILLS NIG. PLC. 86,107.97 21.00 -6.43 53 1,487,272 HONEYWELL FLOUR MILL PLC 7,930.20 1.00 - 6 40,176 MULTI-TREX INTEGRATED FOODS PLC 1,340.10 0.36 - 0 0 N NIG. FLOUR MILLS PLC. 766.26 4.30 - 0 0 NASCON ALLIED INDUSTRIES PLC 26,626.86 10.05 - 19 121,839 UNION DICON SALT PLC. 2,993.06 10.95 - 0 0 142 2,987,991 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 13,992.61 7.45 7.97 72 974,837 NESTLE NIGERIA PLC. 721,317.19 910.00 - 74 21,237 146 996,074 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 5,641.31 4.51 - 19 219,096 19 219,096 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 16,874.53 4.25 - 18 74,622 UNILEVER NIGERIA PLC. 63,195.06 11.00 - 101 469,220 119 543,842 717 8,036,938 BANKING ECOBANK TRANSNATIONAL INCORPORATED 84,407.94 4.60 2.22 58 3,814,498 FIDELITY BANK PLC 52,734.13 1.82 1.11 46 5,559,740 GUARANTY TRUST BANK PLC. 568,021.76 19.30 2.12 518 51,397,869 JAIZ BANK PLC 16,499.98 0.56 1.82 17 317,712 STERLING BANK PLC. 36,851.74 1.28 1.59 31 1,329,838 UNION BANK NIG.PLC. 198,021.12 6.80 4.62 23 1,673,752 UNITY BANK PLC 5,260.20 0.45 - 11 426,270 WEMA BANK PLC. 23,916.17 0.62 3.33 56 2,929,281 760 67,448,960 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 9,404.07 0.83 - 12 148,058 AXAMANSARD INSURANCE PLC 16,590.00 1.58 - 2 580 CONSOLIDATED HALLMARK INSURANCE PLC 2,439.00 0.30 - 1 82,000 CORNERSTONE INSURANCE PLC 7,953.93 0.54 - 1 60,000 GOLDLINK INSURANCE PLC 909.99 0.20 - 0 0 GUINEA INSURANCE PLC. 1,228.00 0.20 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC 487.95 0.38 - 0 0 LASACO ASSURANCE PLC. 1,757.62 0.24 -4.00 10 1,351,334 LAW UNION AND ROCK INS. PLC. 4,296.33 1.00 - 1 20,000 LINKAGE ASSURANCE PLC 4,240.00 0.53 - 0 0 MUTUAL BENEFITS ASSURANCE PLC. 2,234.55 0.20 - 0 0 NEM INSURANCE PLC 11,617.11 2.20 - 2 100,000 NIGER INSURANCE PLC 1,547.90 0.20 - 0 0 PRESTIGE ASSURANCE PLC 2,960.40 0.55 - 0 0 REGENCY ASSURANCE PLC 1,333.75 0.20 - 0 0 SOVEREIGN TRUST INSURANCE PLC 2,272.89 0.20 - 0 0 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 0 0 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 3 403,242 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 0 0 WAPIC INSURANCE PLC 6,477.75 0.27 -3.57 16 966,639 48 3,131,853 MICRO-FINANCE BANKS NPF MICROFINANCE BANK PLC 2,858.30 1.25 - 0 0 0 0

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MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 6,784.62 1.05 - 0 0 ASO SAVINGS AND LOANS PLC 7,370.87 0.50 - 0 0 INFINITY TRUST MORTGAGE BANK PLC 5,671.82 1.36 - 0 0 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 0 0 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,400.00 3.70 6.94 39 1,340,492 CUSTODIAN INVESTMENT PLC 33,820.72 5.75 - 4 50,270 DEAP CAPITAL MANAGEMENT & TRUST PLC 495.00 0.33 - 0 0 FCMB GROUP PLC. 31,684.34 1.60 4.58 83 8,736,240 ROYAL EXCHANGE PLC. 1,080.53 0.21 - 0 0 STANBIC IBTC HOLDINGS PLC 299,391.57 28.50 - 37 278,889 UNITED CAPITAL PLC 14,400.00 2.40 -0.83 68 4,760,067 231 15,165,958 1,039 85,746,771 HEALTHCARE PROVIDERS EKOCORP PLC. 2,991.61 6.00 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 1,030.41 0.29 - 0 0 0 0 MEDICAL SUPPLIES MORISON INDUSTRIES PLC. 593.50 0.60 - 0 0 0 0 PHARMACEUTICALS EVANS MEDICAL PLC. 366.17 0.50 - 0 0 FIDSON HEALTHCARE PLC 5,111.58 2.45 - 6 78,077 GLAXO SMITHKLINE CONSUMER NIG. PLC. 6,397.94 5.35 -0.93 22 246,027 4,658.13 2.70 - 11 86,505 MAY & BAKER NIGERIA PLC. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 1,139.49 0.60 - 3 112,000 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 1 200 43 522,809 43 522,809 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 710.40 0.20 - 6 1,023,000 6 1,023,000 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 911.95 0.31 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 0 0 NCR (NIGERIA) PLC. 216.00 2.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 287.07 0.58 - 0 0 0 0 PROCESSING SYSTEMS CHAMS PLC 986.17 0.21 - 2 160,000 E-TRANZACT INTERNATIONAL PLC 10,962.00 2.61 - 0 0 2 160,000 TELECOMMUNICATIONS SERVICES AIRTEL AFRICA PLC 1,123,311.48 298.90 - 6 2,004 6 2,004 14 1,185,004 BUILDING MATERIALS BERGER PAINTS PLC 1,941.82 6.70 - 7 28,109 BUA CEMENT PLC 1,117,523.68 33.00 - 11 4,854 CAP PLC 14,630.00 20.90 -9.91 12 265,404 MEYER PLC. 265.62 0.50 - 1 333 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,769.32 2.23 - 0 0 1,156.20 9.40 - 0 0 PREMIER PAINTS PLC. 31 298,700 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,192.12 2.03 - 0 0 CUTIX PLC. 2,113.59 1.20 - 6 36,275 6 36,275 PACKAGING/CONTAINERS BETA GLASS PLC. 34,998.04 70.00 - 4 372 GREIF NIGERIA PLC 388.02 9.10 - 0 0 4 372 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 41 335,347 CHEMICALS B.O.C. GASES PLC. 1,519.29 3.65 - 3 15,725 3 15,725 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 0 0 0 0 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 77.00 0.35 - 0 0 0 0 3 15,725 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,252.54 0.20 - 2 3,472 2 3,472 INTEGRATED OIL AND GAS SERVICES OANDO PLC 28,592.25 2.30 - 49 1,143,626 49 1,143,626 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 58,019.78 160.90 - 8 1,535 ARDOVA PLC 12,438.69 9.55 - 22 42,549 CONOIL PLC 12,074.77 17.40 - 9 5,223 ETERNA PLC. 3,116.91 2.39 - 4 4,151 MRS OIL NIGERIA PLC. 4,206.05 13.80 - 4 21,944 TOTAL NIGERIA PLC. 32,695.95 96.30 - 19 7,278 66 82,680 117 1,229,778 ADVERTISING AFROMEDIA PLC 1,509.28 0.34 - 0 0 0 0 AIRLINES MEDVIEW AIRLINE PLC 15,796.05 1.62 - 0 0 0 0 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 235.27 0.20 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 2,686.42 2.90 - 8 110,285 421.96 0.90 - 0 0 TRANS-NATIONWIDE EXPRESS PLC. 8 110,285 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 0 0 0 0 HOTELS/LODGING CAPITAL HOTEL PLC 4,181.71 2.70 - 0 0 2,224.31 1.07 - 0 0 IKEJA HOTEL PLC TOURIST COMPANY OF NIGERIA PLC. 7,076.28 3.15 - 0 0 TRANSCORP HOTELS PLC 30,401.62 4.00 - 0 0 0 0 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 3,960.00 0.33 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 187.49 0.31 - 0 0 LEARN AFRICA PLC 794.59 1.03 - 6 22,891 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 0 0 UNIVERSITY PRESS PLC. 452.98 1.05 9.38 11 1,025,511 17 1,048,402 ROAD TRANSPORTATION ASSOCIATED BUS COMPANY PLC 580.20 0.35 - 1 10,000 1 10,000 SPECIALTY INTERLINKED TECHNOLOGIES PLC 688.80 2.91 - 0 0

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Company IN FOCUS

BUSINESS DAY Monday 27 April 2020 www.businessday.ng

Will Lafarge sustain this path of profitability amid economic, industry headwinds? OLUFIKAYO OWOEYE

n our last review of the company titled Lafarge Africa plc: Set to regain vibe after a disappointing past, we predicted that the cement maker maybe back on the path of profitability following the release of its third quarter result. Expectedly, following the release of its full year result, the cement maker rebounded back to profitability. However, due to recent developments in the global economy which has seen the price of crude plummeting, coronavirus epidemic, and mounting competition, there are concerns that these headwinds are likely to drag the demand for cement and possibly harm cash flow going forward in 2020. With COVID-19 induced economic downturn, and with its negative passthrough to private sector cement demand, also fiscal pressures faced by the Federal Government due to drop in crude oil revenue would ultimately lead to the rescheduling of infrastructure projects, and subsequently weigh on public investments. Management said it anticipates the impact of the economic shutdown on cement volume to be more evident from Q2-20, since it’s volume growth in Q1-20 are already ahead of last year Lafarge printed a revenue of N212.9bn in full year 2019, a 2.2percent decline when compared with full year 2018. The decline in revenue was on the back of lower revenue from Aggregate and Concrete which was down 21percent year-on-year to N5.bn amid the marginal decline in Cement Sales which was down 2percent year-on-year to N207.2billion. EBITDA however grew 7percent year-on-year to N65.0billion, driven by the marked decline in Operating expense down 27.3percent to N20.5bn, which was due to

steep decline in Admin Expenses adjusted for depreciation down 36.6percent to N15.4bn which offset the increase in Selling and Distribution Expenses up 30.7percent to N5.1bn. The decline in Admin Expenses was on the back of a reduction in consultancy fees (N847.9m in FY 2019 vs N3.1bn in FY 2018) and technical service fees (N3.8bn in FY 2019 vs N6.3bn in FY 2018). On the other hand, the rise in Selling and Distribution Expenses reflects increased spending on advertisement cost up 76percent to N2.0bn as competition in the cement industry intensify. The company also recorded a sharp decline in Finance Cost down 53percent year-on-year to N220.bn in Full year 2019 as compared to N41.6bn in FY 2018, which was driven by the decline in Interest on borrowings (N18.1bn in FY 2019 vs N27.7bn in FY 2018) and the absence of FX loss in 2019 (FY 2018; N8bn). The decline in Interest on borrowings was due to the deleveraging efforts of management, following the rights

issue of N89.2bn in 2019. Notably, the company’s borrowings fell by 79percent year-onyear to N64.2bn in FY 2019 from N301.5bn as at FY 2018, due to the dual impact of the capital raise via Rights Issue and the disposal of Lafarge South Africa Holdco (LSAH). This sharp decline in Gross debt led to a significant improvement in the leverage position of the company (Debt/ equity ratio of 0.19x in FY 2019 compared to 2.24x in FY 2018), with net debt stood at N37.1bn in FY 2019 compared to N288.9bn in FY 2018. Lafarge’s impressive 2019 fullyear standalone earnings is not surprising following the divestment of its Lafarge South Africa Holdco. (LSAH) that has been the major drag to the group’s business over the last few years. Prior to the disengagement, LSAH had reported a loss of NGN9.4 billion over 7M-19. According to Mustapha Wahab, analyst at Cordros Capital, at that run-rate and assuming no divestment, the group would have

reported another loss after tax of N570.0 million, Also, the repayment of all WAPCO’s FX related borrowings means that the company’s earnings are now less volatile despite the recent oil price collapseinduced currency pressure. The proceeds from LSAH disengagement have been used to offset all its Foreign Currency debt of $293 million, including accrued interest of $23 million. From N266.20 billion in 2018, debt (ex-overdraft) has declined to N64.19 billion, paving the way for a 56.1percent year-on-year decline in finance charges over 2019FY. Total debt may likely reduce further to N48.2 billion, due to the maturity of one of its bonds in 2019 (N26 billion) The merger story The company had bought Lafarge South Africa Holdings in a bid to expand operations, however, the post-acquisition period in South Africa didn’t go as planned as the country’s cement sector became less unfriendly as the country slided into recession, increased competition, importation of cement in South Africa and increase in the price of cement price peaked. Lafarge Africa was incorporated in Nigeria in 1959. The Company formerly known as Lafarge Cement WAPCO Nigeria Plc changed its name after a special resolution was passed by the shareholders at an Annual General Meeting held on Wednesday 9 July 2014. The change of name became effective with the acquisition of shares in Lafarge South Africa Holdings Limited (LSAH), United Cement Company of Nigeria Limited (UNICEM), AshakaCem PLC (AshakaCem) and Atlas Cement Company Limited (Atlas). On July 15, 2016, Lafarge S.A. France and Holcim Limited, Switzerland two large global players

merged to form LafargeHolcim Group based in Zurich, Switzerland. Consequently, Lafarge Africa is now a subsidiary company of Lafarge Holcim. AshakaCem Limited was incorporated in Nigeria on 7 August 1974 as a private limited liability company and was converted to a public limited liability company in July 1990. In April 2017, the shareholders of AshakaCem at an Extraordinary General Meeting (EGM) passed a resolution to delist the company from the official list of the Nigerian Stock Exchange (NSE). Subsequent to the delisting of the company, the shareholders of AshakaCem at a meeting ordered by the Court held an EGM on October 23, 2017 at which a Scheme to re-organize the issued share capital of the company was passed. The resolution passed at the court ordered meeting was subsequently filed and sanctioned by the Federal High Court and the sanction officially gazetted. At the conclusion of the scheme, Lafarge Africa owns 100percent of the issued share capital of AshakaCem. AshakaCem’s main business is the manufacturing and marketing of cementitious materials. Ashaka Cem has a production capacity of 1.0mtpa. Wapsila Nigeria Limited was incorporated in Nigeria on 1 December 2014 as a wholly owned subsidiary of Lafarge Africa Plc. Its main business is the generation and sale of power. The Company is yet to commence operations as at 31 December 2019. In November 2019 through a shareholder meeting ordered by the Federal High Court and the resolutions sanctioned by it, Lafarge Readymix Nig Ltd. was merged into Lafarge Africa effectively from 30th November, 2019. The Court Sanction was registered with the CAC and published in the official Gazette of the Federal Government of Nigeria. Way forward Lafarge’s improved balance sheet creates scope for limited exposure to exchange rate volatility, reduced finance expense and acquisition of additional debt for capital expenditure if needed. Also the company remains a compelling proposition in the medium to long term due to its recent restructuring, with company’s cash flow expected to recover strongly in full year 2022 alongside expected improvement in domestic macro. How well management respond to the triple-whammy effect of coronavirus epidemic, plunging crude oil revenue, and intense competition will put to test the resilience of the cement maker

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