BusinessDay 27 Jun 2019 by BusinessDay

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Bitcoin surge pushes weekly gain to 40%

A problem of two halves: Poverty and inequality B

FRANK ELEANYA

DIPO OLADEHINDE, MICHEAL ANI, BUMMI BAILEY & ENDURANCE OKAFOR

hen it comes to lifting at least 100 million extremely p o or people out of lack, poverty reduction is one half of the problem. Inequality, as measured by the Gini index, which measures income distri-

L-R: Osagie Okunbor, country chairman, Shell; Isiaka AbdulRazaq, chief financial officer, NNPC, and Patrick Olimah, executive director, Asset Management Total, at the signing ceremony of the $500m Financing for NNPC/SPDC JV in London.

bution among a population, is another half of the dilemma. Nigeria is Africa’s largest economy, yet three in every five Nigerians live in poverty. However, inequality has also reached extreme levels. Put in another context, if poor Nigerians were a country, it would be more populous than Germany. Almost six people in Nigeria fall into this trap every

minute. In 2009, the difference between the haves and have-nots in Nigeria increased by 3 percentage points, according to the Gini index compiled by the World Bank. Over the years, Nigeria’s economy has grown without creating adequate opportunities for the broader population. Resources are unevenly distributed, result-

ing in persistent disparity across generations and regions. Outside of a job in the agriculture sector, the best employment prospects for a young and bulging labour force are urban centres like Lagos, Abuja and Port Harcourt. Residents in other cities lag behind in terms of wages and living standards. Continues on page 37

itcoin the most popular virtual currency surged as much as 18 percent on Wednesday, topping $13,000 for the first time since January 2018, and bringing its gain since late Friday to almost 40 percent. The digital asset has climbed more than 200 percent since December, prompting many investors to ignore the 74 percent drop last year that followed the unprecedented 1,400 percent surge in 2017. “While I understand the excitement for the community that a company like Facebook, backed by other big names, has launched its own coin, this just feels a lot like last time and we all know what happened then,” Craig Erlam, senior market analyst at Oanda Corp. in London wrote in a note. “Perhaps this time the drop off won’t be so Continues on page 37

Inside Trouble brews over OML 25 as Kula leaders take ‘final’ position P. 2

Thursday 27 June 2019

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news First Bank to redeem $450m notes ahead of maturity

L-R: Jimi Lawal, senior adviser and counsellor to Kaduna State governor; Nasir el-Rufai, Kaduna State governor; Aliko Dangote, president/CEO, Dangote Industries Limited, and Devakumar Edwin, group executive director, strategy, portfolio development and capital projects, Dangote Industries Limited, at the tour of Dangote Refinery and Fertiliser Plant in Ibeju-Lekki, Lagos State, yesterday.

…as lender’s foreign currency liquidity strengthens SEGUN ADAMS

irst Bank of Nigeria Limited, the largest subsidiary of FBN Holdings, intends to redeem its fixed-rated subordinate note held by its Netherland-based subsidiary FBN Finance Company B.V., two years ahead of maturity, it said Wednesday. The US$450m, 8% subordinated notes raised from the international debt market are due in July 2021, but the Bank plans to exercise its option to call and pre-pay holders at the next callable date of July 23, 2019, it said in a statement filed to the Nigerian Stock Exchange Wednesday. A subordinate loan or junior debt is a debt instrument which ranks below other loans and securities in terms of repayment or claims on an asset of the issuer. In events of default, holders of senior debt would be fully settled first before holders of junior debt notes. According to the tier-one lender, the early redemption demonstrates the bank’s

strong financial position. “This liquidity management exercise demonstrates the strength of the Bank’s foreign currency liquidity and robust capital base,” FBN said in the statement, noting that the move would further enhance the efficiency of its balance sheet. First Bank of Nigeria is a tier-one lender with over 10 million active customer accounts and more than 750 business locations. With over 120 years of quality service delivery, the bank has spanned beyond the African continent and currently operates across Africa, Europe, the Middle East and Asia. First Bank grew net profit in Q1 2019 by 7 percent to N15.79 billion from N14.77 recorded in the corresponding period of 2018. The improvement in its bottom-line was despite a 2.1 percent ease in net interest income which stood at N 74.18 billion. First Bank was able to record significant gains in other revenue segments.

Trouble brews over OML 25 as Kula leaders take ‘final’ position … Ignore Governor Wike’s order, stage protest in Port Harcourt Ignatius Chukwu

rouble is brewing in Kula Community, close to the Atlantic Ocean, over right of operation of Oil Mining Licence 25 in Akuku-Toru Local Council Area of Rivers State, as leaders of the area have pointedly turned down appeals by the Rivers State governor, Nyesom Wike, to allow the operators resume work. The governor had last Saturday, June 22, 2019, ordered the various factions to sit down and resolve the matter to allow operations resume. A meeting fixed for Tuesday, June 25, 2019, at the Hotel Presidential, however broke down and a stern position emerged from the Kula leaders. Instead, the leaders, one by one, said Shell should leave their area and hand over to Belemaoil, owned by a son of the community. Addressing a crowded press conference at the Atlantic Hall of the Hotel Presidential, the leaders said they were shocked to sit for over three hours without Governor Wike or any representative coming to address them. They said they had resolved thatShellwhohadwonbackthe licence must divest to Belemaoil, saying the women occupying the oilfield would remain there

for as long as it would take. The spokesman of the community, Fiala Okoye-Davies, reading a prepared address, accused Shell of using a particular political party and the chairman of the local council to forcefully invade Kula. They interpreted the one-week ultimatum to be a prelude to a military crackdown and warned that violence would follow any such move. He said: “We remain resolute, we remain united and committed to the dream of economic liberalisation, education of our youth, emancipation from the shackles of slave masters who have destroyed all our aquatic livelihood with their oil pollution and wanting to sell their assets and hand us over to an unknown new slave master.” They revealed the crux of the matter to what they said was a plan for Shell to divest and hand over to an oil company other than Belemaoil. They rejected any further meeting in Port Harcourt but Kula, should the governor be interested, but insisted that it was the Federal Government and the Nigeria National Petroleum Corporation (NNPC) that would have to lead in any further discussions.

•Continues online at www.businessday.ng www.businessday.ng

Nigeria dithers on ranching as Namibia starts beef export to China STEPHEN ONYEKWELU

amibia has broken a new ground for the Afr ican continent as its Agrade beef enters China, the world’s largest consumer market, opening an enormous opportunity for its ranchers, but Nigeria continues to fail at elaborating a clear ranching policy. Elia Kaiyamo, Namibian Ambassador to China, welcomed the first batch of Namibian beef, Tuesday, in China during a ceremony in Shijazhaung, in the Hebei Province. Namibia is the first African country to export beef into Chi-

na. Since 2005 the country has been in the process of obtaining access to the Chinese market for its beef products. A final Memorandum of Understanding (MoU) was signed in March last year. The first agreement on animal health and quarantine, between the two countries, was signed in Beijing in 2011. “Here, on behalf of my government and my people, I would like to extend my heartfelt gratitude to all those who have been working hard to make this happen,” Kaiyamo said. China has been identified as an important market for Namibia as it imports 6.5 million tonnes of beef, 250,000 tonnes

of mutton, 2.3 million tonnes of pork, and 1.7 million tonnes of chicken yearly. This is a market Nigeria can also compete for. Namibia is a semi-arid country, well-endowed with natural pastures and is suited for extensive livestock ranching, comprising 37 percent of the land area. Its naturebased beef products have long been preferred worldwide, especially in European Union countries, Norway and South Africa. Namibia has less than 4 million heads of cattle. Nigeria has a bigger potential but the absence of ranching facilities has stalled the development of this industry. A 2018 report by BusinessDay showed

that Nigeria has an estimated 19 million heads of cattle and on a conservative estimation of N100,000 per cattle, this comes to a N1.9 trillion market. The cattle market is filled with enormous potential for beef and dairy products. However, Africa’s most populous country mostly imports from other countries for local consumption because locallybred herds are unable to meet consumption needs. Seventy percent of the cattle business in Nigeria depends on herds imported from Cameroun, Chad, Burkina Faso, Mali, and Niger.

•Continues online at www.businessday.ng

Cabinet appointment: Governors, groups pile pressure on Buhari ...Lobbyists turn Aso Villa into Mecca ...President has his list ready – APC source TONY AILEMEN & STELLA ENENCHE, Abuja

s Nigerians continue to wait for the list of President Muhammadu Buhari’s ministers nearly one month after the president was sworn in for a second four-year term on May 29, the Presidential Villa, Abuja has turned into a Mecca of sorts as various political actors, especially serving and former governors, lobby for positions. BusinessDay findings show various groups have besieged the Villa to lobby for ministerial positions, including ethnic-based sociocultural groups. But despite the intense lobbying by those seeking ministerial positions, a source in the ruling All Progressives Congress (APC) told BusinessDay emphatically that “the President already has his list” ready and “is just waiting for the National Assembly to reconvene to sub-

mit the list to them”. TheAPCsource,whocraved anonymity, insisted that the ministerial“listisready”andthat the delay in making it public was “strategic”. “Power sharing has always been used to pacify aggrieved party members who lost out during party primaries and as a reward for those who invested time and material resources in electing the President,” the source said. “President Buhari is mindful of the post-2015 election crisis that rocked our party and turned those who brought him to power against him and he will not want to make the same mistakes this time around,” he said. There are also findings that many of the immediate past ministers are still hanging on in expectation that they would makethelistofthenewministers. Abubakar Malami, immediate past minister of justice, who chaired the Presidential Committee on Autonomy of

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State Legislature and Judiciary, is one former minster who appears expectant. Malami on Tuesday led the committee to present the reports to President Buhari at the PresidentialVilla,wherehesaiddespite the dissolution of the cabinet, the President has the prerogative to give him any assignment. “I am here based on the powers of Mr. President who exercises the powers of his prerogatives to appoint anyone, and as a Nigerian for that matter. ThisremainsaprerogativeofMr. President,” he said. Some of the immediate past governors with strong chances of making President Buhari’s cabinet include Akinwunmi Ambode who, sources told BusinessDay, is being pencilled down to head the Budget and National Planning Ministry. It was also gathered that Jibrilla Bindow, immediate past governor of Adamawa State, is battling to wrestle the state’s slot from Buba Marwa, a former military administra-

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tor of Lagos and Borno States. Marwa was very visible in the last campaigns that returned President Buhari to office and is said to be very close to the powers that be at the Aso Rock Presidential Villa, including the First Lady, Aisha Buhari. TheFirstLadyisseenasplayingastrongrolethistimearound in determining who gets what and where as she has insisted that she would work against hijack of the process leading to the selection of political appointees in this “Next Level”. There are also indications that some of the immediate past ministers have engaged several strategies to retain their posts. While some are said to have planted their cronies in the ministries they headed, some have refused to remove their personal effects from those ministries with the belief that they would be returned to their posts.

•Continues online at www.businessday.ng

Thursday 27 June 2019

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NEWS Presidency desirous of seeing more women play active role in maritime – Aisha Buhari AMAKA ANAGOR-EWUZIE

ife of President Muhammadu Buhari, Aisha Buhari, said in Lagos on Tuesday that President Muhammadu Buhari was desirous of seeing more women play active role in the nation’s maritime industry. Speaking in an event to mark 2019 Day of the Seafarer with the theme “Gender Equality” with special focus on the empowerment of women in the maritime sector, the First Lady called on government agencies, ship owners and other stakeholders in the maritime industry to highlight opportunities for women in the wide range of maritime careers and professions with the view of encouraging them to participate. Represented by Dolapo Osinbajo, wife of the Vice President, she stressed the need for women to know there were equal opportunities for both men and women in shipping. She called on all government agencies in the maritime sector to ensure the achievement of the United Nations Sustainable Development Goal 5, aimed at attaining gender

equality and the empowerment of all women and girls in Nigeria. She however called for education of young girls on the opportunities and benefits derivable from being a seafarer and to dissuade them from the belief that seafaring was only for men. Earlier in his welcome address, Dakuku Peterside, director-general of theNigerianMaritimeAdministration and Safety Agency (NIMASA), organiser of the event, described the event as an opportunity to appreciate the contributionofwomenintheindustry andtoencouragemorewomentotake up careers in seafaring and other areas of the maritime industry. In addition, he said the event was aimed at drawing attention to the issues of women empowerment and the need to eliminate various forms of discrimination against women in terms of employment as well as career progression. Peterside pointed out the need for government to develop policies that would lead to equal opportunity and fair treatment of women. “Aside being a fundamental human right, gender equality is essential

to achieving peaceful societies and sustainable development as research has shown that empowering women spurs productivity and economic growth. Women equality and empowerment is not only an objective that must be achieved but is part of the solution,” he said. Stating that NIMASA in addition to 304 female cadets trained under the Nigerian Seafarers Development Programme (NSDP), he assured the agency would go forward, pay greater attention to training female seafarers in specialised courses to enable them take up professional responsibilities in specialised vessels. “In addition, we will sensitise industry operators and players on the significance and economic importance of bridging gender inequality and the need for men to support women towards reaching their potential and navigating workplace challenges, “ he said. He however said the NIMASA resolve to implement New Cabotage Compliance Strategy (NCCS) that suspended waiver on Cabotage manning would enable the placement of women on board vessels.

Nigeria to pioneer Open Banking in Africa, joins UK, others SEGUN ADAMS

igeria has signified a strong desire to become the first country in Africa and the second in EMEA after Bahrain to officially adopt an Open Banking standard. This defines how financial data are created, shared and accessed a system, which also provides users with a network of financial institutions’ data through the use of a standard Application Programming Interface (API). The Central Bank of Nigeria (CBN) recently made this indication as it made public a Request for Information into its Payment Systems Vision (PSV) 2030, which pany Name Change would ‘define the strategic agenda for the Payments System for the next 10 years.’ It comes on the heels of its hugely successful Payments System Vision PSV2020 that wraps up at the end of this year. If Nigeria scales through in good time with the implementation of PSV 2030, central to which is Open Banking now being considered by the country’s highest banking regulator as one of the top global trends and new practices in payments, the country would enact policies to ensure the speedy adoption of Open Banking across its financial services industry. With this, Nigeria would join other countries like Canada, Australia, ally changed its name to and New Zealand, among others, a Limited. that have followed the footsteps of the UK in developing and adopting a single API standard, for their respecemains unaffected by the tive financial ecosystems. According to Nigeria’s central bank, PSV 2030 is necessary because of the importance of having a strategy that is relevant for the Nigerian market domestically and for regional sly Barclays Africa Group) and global markets where Nigeria a role inand international flows. urg Stock plays Exchange “Our goal is a payments system ersified financial that is notservices only nationally utilized but also internationally recognized; one that promotes efficiency supports rated set ofinnovation productswhile and also anticipates and manages the risks from the and business banking, adoption of new technologies,” t banking,Aisha wealth and Ahmad, deputy governor of d insurance.the CBN, said. For a while, advocacy for Open e in 12 countries in Africa, Banking in Nigeria has been led by mployees. the Open Technology Foundation, also known as Open Banking Nigea non-profit founded by payment bout Absaria, Group Limited, industry veteran and open banking ww.absa.africa evangelist, Adedeji Olowe. Open Technology Foundation

ecurities imited

partners Ernst & Young, KPMG, and PwC. It also has some of Africa’s top fintechs including Africa’s Talking, Flutterwave, Paystack and Teamapt. Through its advocacy, the Open Banking Foundation has facilitated the drafting of the alpha version of the API standard and is on course to deliver a sandbox by Q3 of 2019. Speaking at a recent industry event, Olowe highlighted the need for players within the financial services industry in Nigeria to adopt an Open Banking standard. “It is essential never to lose sight of the chief beneficiary of our advocacy. Beyond the benefits that would accrue to the

economy in Nigeria, which would of course trickle to other countries on the continent and to the players in our financial services industry, the ultimate beneficiary is the customer, without whom no business would exist.” For its payment vision for the next decade, along with Open Banking, Nigeria is also considering other payment trends such as digital access, distributed ledger technology, payment methods, big data and artificial intelligence, cyber-security, digital identity, and machine learning and robotics process automation.

Notification of Company Name Change

Absa Capital Representative Office (Nigeria) Limited (the “Company”) has officially changed its name to Absa Representative Office (Nigeria) Limited. The Company’s business remains unaffected by the above change. About Absa Group Absa Group Limited (previously Barclays Africa Group) is listed on the Johannesburg Stock Exchange and is one of Africa’s largest diversified financial services groups. Absa Group offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance. Absa Group has a presence in 12 countries in Africa, with approximately 42,000 employees.

For further information about Absa Group Limited, please visit www.absa.africa www.businessday.ng

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NEWS University education is not meant for everyone - VC Joseph Maurice Ogu

very Nigerian student may not have the opportunity to study at the university, as that level of higher institution is not meant for everyone. Ibrahim Garba, vice chancellor, Ahmadu Bello University, Zaria, Kaduna State, said at an exclusive interaction with BusinessDay in Lagos. According to Garba, the nation’s universities do not have adequate and enough facilities to accommodate every student that aspire to study at the university level. Universities can only admit within the available spaces, he said, and this is the reason each university raises its UTME score even after JAMB has pegged admission marks at 200. The vice chancellor, who

denied that universities use post-UTME exams to generate revenue, said universities introduced post-UTME exams to further cut down the number of students to a manageable number, which is why universities have to raise the admission bar. He said if many students who rush for university education explore opportunities in polytechnics, monotechnics and colleges of education, they would conveniently be admitted. “Universities are not meant for mass education,” he said. While advising students to study hard, he equally encouraged them to apply to other forms of higher learning to be trained as technicians, mechanics, saying such technical knowledge was highly lucrative both at home and abroad.

Coronation Merchant Bank gets 2019 Global Banking & Finance Awards®

lobal Banking and Finance Review has awarded Coronation Merchant Bank in recognition of its dedication to providing leadership and excellence in investment banking. “Coronation Merchant Bank focuses on meeting the needs of their clients offering comprehensive services, strong client-advisor relations and industry leading solutions. Their robust distribution network, risk management, expertise and dedication to excellence is what made them stand out as the clear winner in this category,” said Wanda Rich, editor, Global Banking & Finance Review.

“It’s a pleasure to present Coronation Merchant Bank with this award and we look forward to seeing more from them in the years to come,” Rich said. The awards honour companies that stand out in particular areas of expertise in the banking and finance industry. Coronation Merchant Bank was awarded the Best Investment Bank Nigeria 2019 because of the company’s outstanding performance and achievements in investment banking. They recognise achievement, challenge, progress and inspirational change in finance globally.

Why Lagosians should embrace health insurance - Sanwo-Olu JOSHUA BASSEY

ife of the Lagos State governor, Ibijoke Sanwo-Olu, has emphasised the need for Lagosians to get active about their health by enrolling in the state health insurance scheme. Recall that the immediate past administration of Akinwunmi Ambode launched the Lagos Health Insurance Scheme in December 2018, with the aim to providing access to affordable and quality healthcare services to the growing population. While the population of Lagos is estimated at over 21 million, health facilities in the state are seen in short supply, a development that meant that patients, especially in public health institutions, are put on waiting queue (in some cases, for upwards of three months) to see doctors, with most of the patients struggling to pay out of their pockets. The state health insurance scheme backed by a law enacted by the Lagos State House of Assembly in May 2015 makes it mandatory for residents to

enrol in the scheme, but since the launch, little or nothing has been achieved with the scheme. But speaking on Monday at a medical mission by James Omolaja Odunmbaku Foundation in Ojodu area of Lagos, Sanwo-Olu said: “I must add that the health insurance scheme is a critical game changer in the effort of government to increase access to healthcare services as it is a known fact that out of pocket payment is a major factor that often time limits access to healthcare especially for indigents and other vulnerable persons in society. “As a medical doctor myself, I clearly understand the positive mileage we stand to gain if all residents sign on to the health insurance scheme which has been designed to cater for basic primary and selected secondary healthcare services for beneficiaries such as treatment and management of malaria, hypertension, common childhood illnesses, antenatal care services, delivery, including caesarean section.” www.businessday.ng

Innovation leaders see confluence of techs driving production revolution in Nigeria Chuka Uroko

he Emerging African Innovation Leaders (EAIL), Nigeria chapter, says production revolution in Nigeria will depend largely on the convergence of technologies such as 3D printing, internet of things (IoT), advanced robotics, artificial intelligence (AI), synthetic biology, etc. The leaders therefore advise authorities to embrace knowledge sharing in innovation dynamics and sustainable solutions, stressing that future revolution in production will only occur because of a confluence of these technologies. The association gave this advice at EAIL Nigeria country day at the Centre for Entrepreneurial Studies, Covenant University, Ota, Ogun State.

Demi Oye, CEO, Green Energy & Biofuels (GEB), Nigeria, affirmed at the event that the involvement of these digital technologies would revolutionise the production sector. He said in line with the mission of the association, there was the need to promote partnerships and knowledge sharing across public and private sectors on policy, technologies and other measures that were necessary to enable leap frogging of Nigeria to the next production revolution. The EAIL project was conceived during the Italian G7 Presidency and is focused on boosting African prosperity through the embracement of the Next Production Revolution (NPR). The project is funded by the Italian Agency for Development Cooperation (AICS), jointly managed by Politecnico di Milano and Politecnico di Torino and involves

six African countries - Tunisia, Niger Republic, Nigeria, Ethiopia, Kenya and Mozambique. As part of the programme, each participating country is expected to host a Country Day where it will create further visibility on the EAIL programme, engage with stakeholders and strengthen the network of African Innovation Leaders. It also provides an opportunity to solicit support and commitment towards the establishment of a Next Production Revolution Competence Centre (NPRCC) in Nigeria, and implementation of some pilot projects to demonstrate the next production revolution. “Market opportunities of about $8 billion revenue potential is available for Nigeria mini-grid market, $3 trillion investment opportunity in Nigeria’s transport sector, $13 billion for E-commerce sector while Africa’s largest mobile market has

a potential 162 million subscribers and a penetration rate of 84 percent, ” Oye said. The representative of the Manufacturers Association of Nigeria (MAN), Kanayo Iwuchukwu, told the gathering that the association was making effort to enhance innovations in schools and reduce the gap between industry and academia. Toward achieving this, he said there was an existing partnership with the deans of engineering faculties across universities, stressing that MAN was currently developing a curriculum for cement production. In a remark, Sanni Haruna, executive vice chairman, National Agency for Science and Engineering Infrastructure (NASENI), said the initiative would assist NASENI to achieve its mandate and assured EAIL of supporting its project.

Environmental hygiene emphasised at YMCA’s 175th anniversary TEMITAYO AYETOTO

h e Yo u n g M e n ’s Christian Association ( YMC A) of Ibadan, Nigeria, marked its 175th anniversary (Founders’ Day Celebration)/YMCA World Challenge 2019 early in June, with speakers underscoring the need to ensure proper hygiene in order to guarantee sound health. At the event themed ‘Environmental Hygiene, Clean Water and Good Sanitation in 175 Minutes’, David Olugbade Fakeye, YMCA president, said the World Challenge is YMCA’s annual event to mobilise the association movements to share their great impact with local communities. This year, the association embarked on community development advocacy on hygiene and good sanitation at Gege Olopa, one of the dirtiest communities in Ibadan, Oyo State. The YMCA members focused group discussions

on environmental hygiene, clean water and good sanitation, 175-minute community engagement, clean-up and fumigation, road show and sensitisation, free clean water supply, free medical supplies, free distribution of mosquito nets, etc. F u n m i n i y i Fa g b e m i , YMCA general secretary, said at the community sensitisation rally that the objectives of the programme were to transfer knowledge and understanding of hygiene and associated health risks in order to help people change their behaviour to use better hygiene practices and empower the community that will demand and achieve sustainable access to and use of safe water, improved sanitation and hygiene living condition. The objectives also include engaging policymakers and key actors to promote and enable the sustainable realisation of

the rights to water and sanitation through their policies, programmes and budget allocations and holding them accountable for these achievements. These objectives, Fagbemi said, contribute directly to realisation of SDG6 (Clean Water and Sanitation), adding that YMCA Ibadan would apply intervention strategies that focus on civil society strengthening at community level. Earlier, at the stakeholders meeting with selected leaders at Gege-Olopa com-

munity to raise awareness and recruit high quality 175 volunteers for good sanitation, Gabriel O. Oguntola, permanent secretary, the state Ministry of Environment and Water Resources, who was represented by Adeyemo Johnson Adeyinka, noted that it was impossible to talk of clean water supply without proper environmental hygiene and good sanitation. He added that open defecation was a critical issue, which should be eliminated completely in the society.

Notification of Company Name Change

Barclays Securities Nigeria Limited (the “Company”) has officially changed its name to Absa Capital Markets Nigeria Limited. The Company’s business remains unaffected by the above change. About Absa Group Absa Group Limited (previously Barclays Africa Group) is listed on the Johannesburg Stock Exchange and is one of Africa’s largest diversified financial services groups. Absa Group offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance. Absa Group has a presence in 12 countries in Africa, with approximately 42,000 employees.

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Growing real estate development and homelessness in Lagos AMAMCHUKWU OKAFOR

he real estate sector is a critical sector in the Nigerian economy as it runs from business to welfare. In 2018, it accounted for 6.4 percent of the national GDP (and 5.58 percent in Q1 2019). Since the recession in 2016, the sector has struggled due mainly to financial constraints and debts issues because even though growth remained in the negative region long after the recession, contribution to GDP stayed above 5.5 percent. This is an indicator of the size and activities in the real estate sector. In Q1 2019, the sector broke the trend, emerging from the negative region on a 0.98 percent growth rate. However, while realtors are all in for the abnormal profits in real estate investments, shelter is a basic human need. As globalization of capital makes real estate assets so dear everywhere, the outcome is often lopsided. While the real estate market continues to expand in Nigeria, there seems to be little impact on housing deficit especially in the country’s commercial capital, Lagos. Lagos has a small land mass relative to its population–roughly 23 million people–and in comparison to other states. But it is a coastal state, bounded by the Atlantic Ocean and therefore a port city. It has the country’s major seaports and busiest airport. Joined with its history as the former state capital, it accounts for nearly all the headquarters of the deposit money banks and a significant portion of other financial institutions in the country. Lagos accounts for a significant portion of business tourism to Nigeria as it becomes the tech start-up hub of the country. It holds the bourgeoning music, entertainment and fashion industries. Big investments come to Lagos: for instance, the on-going $15 billion Dangote refineries. Following the discovery of

Source: NBS, BRIU

oil in 2016, Lagos became an oil producing state joining other states like Rivers, Akwa-Ibom, and Bayelsa to receive the statutory 13 percent derivation from oil proceeds. As of 2017, the gross state product of Lagos was estimated at $136 billion. All these economic advantages underlie the daily migration into Lagos from the different parts of Nigeria and other neighbouring countries. However, these trappings of urbanization cause real estate assets in the state to be highly priced. Private developers, seeing the opportunities, swing in to provide high-end properties for a niche market. The state government would not miss out; they map out portions of land assets for development. They are unanimously

roadside, markets, and other nooks. This is the mechanism of the perceived rise in new slums. The Lagos State Urban Renewal Agency (LASURA) builds “affordable housing” that even the middle income class cannot afford. The costs of land and building materials defeat any attempt to make housing cheap and affordable to low-income earners. Changing the terms in the Lagos Home Ownership Mortgage Scheme (Lagos HOMS) from 30 percent down payment to 5 percent in the Rent-to-Own policy will change much. In fact, 33 percent of the monthly income of many adults and families simply cannot cover the monthly service charge on the mortgages over a 10-year period. The new minimum wage is N30,000 , less than $85 per month. The high costs of funds and inflation are other factors that make rental units highly priced. Private developers, businessmen, and wealthy individuals are filling the gap albeit with sub-standard housing. Most new buildings in Lagos are privately owned. The water supply in these buildings are sourced independently and electricity is subject to the supply condition in the area. Accessibility is a common challenge across these private developments: roads are undeveloped, prone to flooding and gullies as drainages are either blocked or nonexistent. Housing is critical to improving the standard of living in Lagos. It is the expectation of Lagos residents that the new administration would put a concerted effort towards mass, affordable housing. 12734BDN

Source: NBS, BRIU

known as Government Reserved Areas (GRAs). The Lagos Island area has seen significant real estate investment over the last 10-15 years. It is the hotbed of real estate investment in arguably the entire country. Some notable areas include Ikoyi, Victoria Island, Lekki Peninsula, Banana Island, and the most recent Eko Atlantic City. Other examples on the Mainland include Ikeja GRA, Magodo GRA, and FESTAC town. Despite these developments in real estate, the homeless rate is arguably on the rise given the housing deficit and rise in new slums. There is an obvious mismatch in the supply and demand for houses. Markets have failed to produce optimal results. The self-interest argument in a market economy is not aggregating to any good for all. The failure originates from the oversupply of luxurious and high-end real estates for the upper class who already own several estates and properties. These estates, highly priced above the reach of the lower and middle class–where there is a critical need for housing– remain largely unoccupied in the face of over 2.5 million housing deficit. The average price of a 2-bedroom apartment is about N800,000. The government, as much as they attempt to intervene, has worsened the situation. The approach to making Lagos a megacity seemed to be gentrification of urban communities. In the past years, there have been accounts of forced eviction instigated by the government without providing alternative accommodation. The evicted residents are then conditioned to squatter around erecting shack houses under bridges,

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Visions of a post-oil Nigerian apocalypse: Stories from down south

David Hundeyin

n 1998, a group of veterans from Zimbabwe’s Chimurenga (Independence) war grew tired of the snail-paced land redistribution program and took matters into their own hands. When word got to Harare about farm seizures and sit-ins targeting the descendants of white settlers, President Robert Mugabe’s response became a defining moment for Zimbabwe. Rather than immediately do something to end the crisis, Mugabe instructed his security forces to stand down, and thus commenced the most chaotic and unplanned land reform process in modern history. Twenty years later, as Zimbabwe still struggles with the disastrous economic effects of trade losses and economic sanctions that followed that episode, Nigeria is in the early stages of its own “1998” moment. Public finances are worse than they have ever been, with debt servicing now taking up 70 percent of all of Nigeria’s income. Of the remaining 30 percent, the majority goes to maintaining the country’s humongous political and civil service structure, and barely anything is left. The clear message is that crude oil is no longer enough to run the country, and that particular resource is a decade and a half away from becoming a worthless antique as alternative energy gains more prominence.

At the moment though, nobody is listening. Maybe we need to look at Zimbabwe’s story to understand what is in the offing. Government Fiat Fixes Nothing Like present-day Venezuela, Zimbabwe was noted for its ridiculous hyperinflation that famously saw it print a fifty trillion Zim dollar note in 2008. As the country’s economy progressively broke down due to lack of liquidity, the government tried to artificially create liquidity through quantitative easing – printing money for the uninitiated. Of course, that only resulted in the Zim dollar becoming worthless as there was no corresponding income in hard currency to justify the official exchange rate. Previously one of Africa’s top agricultural exporters, the chaotic land seizures resulted in a catastrophic drop in exports and a huge hole in the country’s revenue that has still not been filled. In Nigeria, rather than losing our oil exporting capacity, it is more likely that oil buyers will simply stop buying as much as they do, resulting in a major price dip sometime over the next 15 years. When that happens, we should not imagine that we will be able to keep on using the state-backed MMM strategy of obtaining loans to plug our deficit. As with Zimbabwe, lenders will very quickly realise that we have no capacity to pay back with hard currency, and they will instantly turn off the credit money tap that we are currently gorging ourselves on. In that scenario, if the government then decides to start printing Naira to prop up the fake economy, then we might all need to take some tips from middle-aged ex-Yugoslavians, present day Venezuelans, Zimbabweans and anyone else who has lived through the horrors

of hyperinflation. We should never imagine that Nigeria is “bigger” than that scenario because presently, we are living at the mercy of time and international energy markets. All it takes to stop the inflow of dollars to Nigerian government coffers is another breakthrough in electric vehicle technology or trade sanctions that prevent us from selling petroleum. If either of these things happens, we are effectively dead in the water like Zimbabwe in the noughties. The Social Consequences will be Brutal At the height of Zimbabwe’s economic crisis, an estimated three million citizens left the country, with many going to the usual Five-Eyes destinations, and the majority going across the border into South Africa. To put that figure in perspective, Zimbabwe’s population is currently about 16 million people. This means close to 20 percent of the country had to leave due to economic hardship. If Nigeria does not quickly find a solution to its dependence on crude oil for export income, we could face a smilar situation with far more dangerous outcomes. For one thing, Zimbabwe’s neighboring countries are reasonably self-sufficient, ethnically similar countries by African standards, so absorbing one or two million Zimbabwean immigrants with similar languages and shared history did not create excessive social dislocation. Zimbabwe also had one of the best education systems in Africa, with a literacy rate topping 96 percent. This meant that Zimbabweans actually had in-demand skills that made it easy for them to emigrate and settle into the diaspora. During my time in the UK, I met several hundred Zimbabweans who almost without

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All it takes to stop the inflow of dollars to Nigerian government coffers is another breakthrough in electric vehicle technology or trade sanctions that prevent us from selling petroleum. If either of these things happens, we are effectively dead in the water like Zimbabwe in the noughties

exception were gainfully employed in skilled occupations despite attending government schools back home before leaving. The concept of the “private school” as we know it, did not exist there at the time. Nigeria by contrast, has the world’s highest number of out-ofschool children and a famously underdeveloped education system that is unfit for purpose and largely boycotted by anyone who can afford a private education. We also have a unique set of geographical circumstances including Africa’s biggest population inside a land mass smaller than the Canadian province of Saskatchewan, incredible subethnic diversity that makes us very different from most of our neighbours both culturally and linguistically, and perhaps most crucially, a very poor neighbourhood that is already dependent on our economy to stay afloat. In other words, if 20 percent of Nigeria’s alleged 177 million people (about 35 million people) are dislocated by economic hardship, there is nowhere in West or Central Africa for them to settle into. Europe and the world beyond will only take the best of our skilled labour, and even at that they can only absorb so many. It also doesn’t help that as a people, we have a much more negative reputation than Zimbabweans did in the noughties, so nobody really likes us that much. If you put all these variables together, what picture do you see? I will leave that to your imagination. Perhaps it is time for us to stop acting as if it is business as usual, as we steer dangerously close to an extinction-level event. Fellow Nigerians, it is time to panic. David Hundeyin is a writer, travel addict and journalist majoring in politics, tech and finance. He tweets @DavidHundeyin.

Can innovation be taught?

oday’s world is unmistakably digital. At the World Economic Forum this year, it was said that the world has become a computer. Technology is taking over every aspect of our lives, including the workplace, and the future of jobs will look completely different to what it is now. In fact, 65 per cent of children who entered primary school last year will hold jobs that currently do not exist. In the present, there are concerns of a skills gap in the workforce, especially with regards to technological skills, and how to fill that gap with the right people. Global technology leaders are well aware of this gap - partially even responsible for it. And that’s not a bad thing. What I mean is that the technology sector today is experiencing unprecedented levels of innovation, unlocking new opportunities for millions of people and businesses around the world. As a consequence, people have become more important than ever before in helping realize the full potential of both technology, and the innovation it brings. It is up to corporations then to take the lead in closing this skills gap, enabling their people to re-skill, relearn and stay updated with the latest tools to be able to innovate continuously. But how does a company achieve this? To answer this question, an organization needs to consider two fundamental questions. Firstly, what does innovation mean to an organization internally?

Innovation is not just about building the latest technology, or inventing something completely new. Innovation is also about the small achievements that make every day work more efficient and simple. Some of the most interesting innovations I hear about are when a team thinks creatively and differently about an existing process or approach that has served us well for years but needs a refresh. This could be to keep up with customer or user demands, or simply makes it easier for employees to go about their everyday work. That’s why a business that wants to be successful, must focus on achieving innovation within not just its core business, but across all its functions. Innovation needs to be cascaded throughout the company with the responsibility in everyone’s hands to innovate and think differently in the work they do. Which brings us to the second question. Can innovation be taught? This is a question that Human Resources leaders ask themselves all the time – and at Mastercard, we firmly believe – yes. But for innovation to happen at all levels of the company, it is necessary for a range of enablers to support this: talent development, organizational design and structure, and evolving our thinking on leadership. Regardless of their job, employees must have access to the knowledge and tools to innovate every day, and enjoy a culture in which people

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feel empowered to try new things. Training employees across all functions on the latest technological innovations and tools is also crucial. It is only then that they can progress on new ideas like Design Thinking, which can be applied within their own fields of expertise. For instance, at Mastercard, we are leveraging Virtual Reality to help deliver sophisticated training solutions for our people. A practical example of this is the training program we have developed for our sales force, where VR is used as a realistic and immersive environment for our sales teams to experience engaging with a customer. We also recently followed a start-up over the course of a year to video document their business journey, which we built into a training program for our emerging leaders. The video documentary provided real situations the start-up was facing, which our emerging leaders needed to make decisions on and could then see the real-life consequences of those decisions. Artificial Intelligence (AI) too has its own use-cases in HR. The technology is showing significant potential in resource management, organizational planning and identifying required skill sets across markets. By leveraging data analytics, AI enables an organization to identify the current set of skills in their workforce and where there may be future gaps, ultimately helping to inform where investments need to be made for additional resources. Ultimately focusing on people is key

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Carys Richards While it presents several benefits, the use of technologies like AI and VR will not do away with people in HR, but rather complement them and enable them to achieve more innovation within this space. But, technical skills are only part of the equation. An organization’s ability to deliver results now and in the future will depend on building and maintaining a winning culture. That foundational premise and commitment helps to attract the best people from diverse backgrounds. One of the key parts to this is a sincere commitment to inclusion –and an employee experience that creates a sense of community, unified purpose and belonging. Everyone can and should feel that their voice is heard and valued. This care and respect for people at an individual level is what encourages unique insights, new ideas and a passion for the work we do that ultimately drives innovation. After all, the greatest technology will need bright, dedicated people to continually advance the conversation and think about what’s next. It’s for that reason that people should remain at the core of innovation. Richards is Senior Vice President, Human Resources – Middle East and Africa, Mastercard

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The speech I wish President Buhari would give Remi Adekoya

y fellow Nigerians, I come here today to speak to you truthfully about the present situation of our nation. I bring not sweet promises or catchy slogans aimed at applause. For I know that when you wake up tomorrow morning, numerous struggles will await you, the kind I am shielded from by the luxuries of this great office you have bestowed upon me. As your president, I owe you the truth. And I am confident that as a nation, we are strong enough to handle the truth. My fellow Nigerians, our nation is facing a series of crises we must confront with frankness and boldness. Insecurity is rampant; Nigerians are being kidnapped, robbed and killed in unacceptable numbers. Nigerians are experiencing poverty in unacceptable numbers. Our children are being deprived of an education in unacceptable numbers. Our youths are unemployed in unacceptable numbers. Our doctors, our engineers, many of our brightest minds are emigrating in unacceptable numbers. Our under-performing economy and booming population is fuelling struggle for resources that leads some to exploit our ethnic and religious differences, rendering us more divided and mutually suspicious. Our challenges are many; you know them as well as I do.

It is time we shed our national assumption we are pre-ordained for greatness, that God somehow loves and favours us more than he does our fellow African brothers and sisters and other nations. Fellow Nigerians, all tomorrow has to offer a nation is the result of what it does today. We are not entitled to greatness; we have to earn it. At this juncture in our nation’s history, we have reached a cross-road, and if we want to achieve the potential we all believe Nigeria has, it is time to take a sharp turn from the path we are currently travelling and seek the road to deserved greatness. I know decades of corruption and irresponsibility in the political class, to which I belong, have made some of you so disillusioned, you believe nothing we say anymore. I don’t blame you. We have used too many fine words to break too many promises. We have let you down, we have failed you, and we have failed this country. In the name of all who have participated in governing this country and who regret their transgressions, I apologize. I am sorry. We are sorry. But I realize that even in the happy event you grant us your forgiveness, a new direction requires far more than apologies. It requires action. Urgent action. But, my fellow Nigerians, while action must be urgent, it must also be prudent. In our years of military-rule, we often experienced governance by self-declared “men of action”. Indeed, they often governed decisively. The problem was their decisive decisions were more than occasionally decisively wrong. This nation can no longer afford the mistakes of urgent action lacking wise direction. Any emergency requires all hands on deck. Our Nigerian ship is currently sailing in precarious waters and we need everyone on board who can help steer to lend a hand. The most precious resource this country has is not crude oil or natural

gas, it is you. It is what you have in your minds, your ideas, your talents, your creativity that is the most valuable commodity in this country. I know many of you have ideas for resolving our various challenges, but we have not listened to you carefully enough. Many of us in positions of power have let ourselves believe that since we ended up presidents, ministers, governors and senators, surely this must mean we are the smartest in Nigerian society. But the truth is there are Nigerians out there who know things we don’t even know, and we are even ignorant of this lack of knowledge. Many are willing to share their knowledge for love of Nigeria and horror at the direction she is going. They know we all sink or sail in the same boat. Surely if we the governing class knew it all, this country would not be where it is today, would it? So, to those Nigerians willing and able to propose workable solutions to our most pressing problems, be it at local, state or national level, please come forward and make your suggestions. We have 774 local governments. If each chooses from within its constituents’ suggestions one idea, that idea can be presented at a national conference attended by top decision-makers in government. Ultimately, a practicable number of policy suggestions will be chosen and implemented. Those whose ideas are implemented will not receive any direct financial benefit other than a modest travelling allowance for their conference trip. We do not want this to become another government jamboree opportunists are tempted to manipulate for monetary gain. This does not mean those who provide actionable solutions to help salvage this country will not be rewarded for their efforts. They will, in the form of our most prestigious national merit award, which I will consider myself privileged to personally confer them.

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Many of us in positions of power have let ourselves believe that since we ended up presidents, ministers, governors and senators, surely this must mean we are the smartest in Nigerian society. But the truth is there are Nigerians out there who know things we don’t even know

Also, a street will be named after each of them in every Nigerian state. They will enjoy the gratitude and esteem of Nigerian society for the rest of their lives. I believe this will be strong enough motivation for truly patriotic Nigerians with practicable solutions for this country. From 1949 to 1950, when the British were still here, they conducted consultations with Nigerians from every corner of the country, seeking their input on what a new Nigerian constitution should look like. Many of their suggestions were factored into the 1951 Macpherson Constitution. If a British government could absorb the ideas of everyday Nigerians for this country, I see no reason a Nigerian government cannot do the same. Let us tap into our people’s creative juices while offering them the opportunity for meaningful participation in the Nigerian project. My fellow Nigerians, I am not, as your president, attempting to shirk responsibility for Nigeria, I am asking you to share the steers with me. This government is not asking you to do our job for us, we are asking you to help us in doing our job better. To help us in salvaging this country. To help us in atoning for our past sins by creating the environment for a better future. To help us understand things about the world today some of us in government may not understand. To help us finally make this nation the great country we have always dreamed of. Only together can we save this country. Only together can we keep it one. Only together can we survive. Only together can we succeed. Thank you for listening and may God bless the Federal Republic of Nigeria! Dr Adekoya is a journalist and political scientist. He has written for the UK Guardian, Foreign Policy, Foreign Affairs,Washington Post and Politico among others. He tweets @ RemiAdekoya1

Ethics and sustainability in businesses and workplaces

he inculcation of ethics and sustainable practices in any organisation is crucial to its overall success. This is because ethical values create a foundation for a successful business in the long term. This was the focus of the discourse at the recently held Humanistic Management Network (Nigerian Chapter) business meeting, which was anchored by the Christopher Kolade Centre for Research in Leadership and Ethics (CKCRLE) at Lagos Business School (LBS). The theme of the business meeting titled “Ethics and Sustainability in Businesses and Workplaces” was aimed at deliberating on ethical business practices, which focuses on the long-term sustainability of businesses and workplaces. Ethics have been defined as a branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong conduct. It is based on wellfounded standards of right and wrong that define what humans ought to do, in terms of rights, obligations, benefits to society, fairness, or specific virtues. Hence, Business ethics is about knowing what is right or wrong in the workplace and doing it. The World Commission on Environment and Development proposed the concept of sustainability in 1987. It is defined as “devel-

opment that meets the needs of the present generation without compromising the ability of future generations to meet their own needs”. Hence, sustainability would foster organisational longevity. It is concerned about the continued existence of the business or organisation. Scholars have noted that ethics is an issue of growing concern and of great importance to the business. They emphasized that running businesses ethically provide a potential analytical framework for evaluating the employee, management practice and the overall survival of the business. These practices are evaluated using a four-quadrant framework which evaluates them as good or bad, legal or illegal. Generally, a strong foundation in ethical reasoning is the best preparation for business success and its continued existence. A number of practices which drive the ethics and sustainability of an organization were highlighted from both the employee and the employer’s perspective. They include a number of instances of ethical practices that affect sustainability, including short-changing of consumers by businesses, short-changing of the business by employees, product adulteration, over pricing, dangerous/ inhumane work environments which expose employees to work hazards, shareholders

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manipulation, tax evasion, bribery, product misinformation, sales of expired goods etc. These sharp practices have been directly/ indirectly encouraged when an organisation is lacking in standards of morals and ethics that should steer the running of the organisation. Employees who fear the possibilities of losing their jobs will remain and follow suit, while those with personal ethical standards will eventually leave when the system is morally bankrupt. Most Nigerian businesses are founded on principles lacking strong ethical direction; with this representing a major disincentive to the growth and sustainability of existing and potential businesses. They seem to be guided by narrow selfish interests without consideration for the ethical implications of their actions on critical stakeholders, including, consumers, society and general environment. Hence, the absence of core ethical principles tends to expose Nigerian existing businesses to growth retardation and further discourages honest potential investors who might want to invest in Nigerian businesses. It is imperative, therefore, for businesses to have ethical principles enshrined in the organisational culture. It provides a moral compass in times of complexities about what is right or wrong. It guides employees to act

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Zainab Dere diligently in the course of their job function. In general, behaving ethically is germane to business growth and sustainability. Hence, to achieve sustainable growth in business, there must be a deliberate attempt to incorporate ethical principles into business practices as a way of enhancing sustainable business growth and development in Nigeria. Some recommendations to curb unethical business practices include a change/improvement of the organisation’s value system, compliance with regulations as regards the laws, as well as commitment from the government and its agencies to fight unethical practices, amongst others. • This article written by Zainab Dereis an excerpt of the Humanistic Management Network (Nigerian Chapter) Business Meeting anchored by the Christopher Kolade Centre for Research in Leadership and Ethics (CKCRLE) at Lagos Business School (LBS), titled “Ethics and Sustainability in Businesses and Workplaces”. You can contact CRLE at crle@ lbs.edu.ng.

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Thursday 27 June 2019

BUSINESS DAY

Editorial Publisher/CEO

Frank Aigbogun editor Patrick Atuanya DEPUTY EDITORS John Osadolor, Abuja Bill Okonedo NEWS EDITOR Chuks Oluigbo EXECUTIVE DIRECTOR, OPERATIONS Fabian Akagha EXECUTIVE DIRECTOR, STRATEGY, INNOVATION & PARTNERSHIPS Oghenevwoke Ighure GENERAL MANAGER, ADVERT Adeola Ajewole ADVERT MANAGER Ijeoma Ude FINANCE MANAGER Emeka Ifeanyi MANAGER, CONFERENCES & EVENTS Obiora Onyeaso BUSINESS DEVELOPMENT MANAGER (South East, South South) Patrick Ijegbai CIRCULATION MANAGER John Okpaire DIGITAL SALES MANAGER Linda Ochugbua ASSIST. SUBSCRIPTIONS MANAGER Florence Kadiri GM, BUSINESS DEVELOPMENT (North)

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As Ihedioha tackles the challenge of “rebuilding Imo”

rave words, op enness and optimism suffused the inaugural address of Imo State Governor Emeka Ihedioha. The former highranking legislator also came in on the wings of tremendous goodwill. How soon and how much that goodwill subsists and will carry him depends on what he does in the early days, as citizens count down to the end of the first month of Ihedioha in Douglas House, Owerri. The Imo State governor confirmed to Imo citizens that their state is broken, “and the climb out of the depths of despair will be steep, arduous and tortuous”. He then declared famously, “There is nothing wrong with Imo which cannot be cured by all that is right in Imo.” Ihedioha defined a mission to “rebuild, reposition and transform Imo into a modern ecosystem”. His ambitious scope of work encompasses education, agriculture, industry, tourism, and culture. Other areas are sports, entertainment, human capital development, science and technology and exploration of natural resources. Ihedioha’s opening address incorporated his manifesto and reads like the Goodness Script that would change Imo State. As all change managers know, however, each declaration of intent must

have strong backing of execution capacity and capability. It must also contend with resistance to change by sundry stakeholders, including the eventual beneficiaries. A commendable first step is the determination to incorporate the Sustainable Development Goals of the United Nations as a framework for development in Imo State. Many advantages should attend the adoption of the SDGs, including global benchmarking, assistance and partnerships with international development agencies. The state should quickly work out the framework and implementation modalities. Another positive is the prioritisation of “good governance, democracy and the rule of law” with the promise of civil service reforms, due process and compliance with laws. The Ihedioha government intends to establish an Imo Bureau of Public Procurement, grant financial autonomy to the judiciary and work harmoniously with the legislature. Imo State, under Ihedioha also plans to domesticate the Administration of Criminal Justice Act. The state would also develop its version of the Child Rights Act. Ihedioha’s plans for human capital development and youth should make a significant difference. Healthcare is free to pregnant women, under-5s and persons above 70 years. There will also be a health insurance scheme. Technical education gets a

deserved nod with the commitment to revive the four technical colleges in Owerri, Ahiara, Orlu and Okigwe. It is a good start so long as it includes an ICT component and would lead to increased numbers of such schools all over the state. The proposed Imo Job Register would be a good step towards gathering data on employment (or unemployment) status of Imo citizens. Unfortunately, there was no clear path to job creation except the mention of partnerships with the private sector. Governments in Nigeria and Africa would still play vital roles in development economics as not only enablers but also as a stimulator. The sporting academies for football and other sports are welcome ideas. The ecosystem around games is vast and takes in entertainment, physical development, and recreation. Sporting academies and the associated plan of reviving InterSchool competitions should ensure gainful engagement of the young of Imo State. The governor and his team need to review the plans. Ihedioha speaks of dualising the four entry routes into Owerri, the state capital. Most citizens who heard him assume that he meant the expansion of the roads as they all are dual carriage already. There is also the matter of how much of the highways the state would expand. Approaches or the entire stretch? The proposals on various

areas of economic activity are inchoate. Ihedioha declared, for instance, “We shall by Executive Order, and where necessary by Legislation, make it mandatory that all those doing business in our State, and especially with the State Government, must employ qualified Imo citizens and establish functional offices in the State.” While an Imo First in Employment scheme has a ring of populism, the real challenge before Imo State is getting firms that would establish large ventures that generate employment. First things first. Provide an enabling environment for job creation. The programme on cooperatives fascinates for the possibilities. “Every community will be encouraged to set up functional cooperative societies which the State will support with agricultural loans, improved seedlings, and other support services”, Ihedioha declared. So, too, the proposed Imo State Education Trust Fund. What model will it follow? Will it be a backhanded route to imposing additional taxes and levies on citizens supposedly in support of a good cause? Is there enough capacity? Ihedioha only needs proper implementation of the plans he has outlined as well as the application of rigour to dimensioning the broad strokes. Imo State bears the burden of hope for its citizens and their cousins across the South East. Get on with the colossal task already!

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Thursday 27 June 2019

BUSINESS DAY

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The turf wars on valuation between engineers and estate valuers The Public Sphere

CHIDO NWAKANMA

rofessionals in all disciplines should pay more than a passing interest in the ongoing battle for terrain between engineers and estate surveyors and valuers. It concerns professional boundaries, the scope and limitations of practice as well as changing norms regarding barriers to entry. It is also at base a battle for the Naira and Kobo in the specific area. Those new to the issue will benefit from a recap. The terrain of contestation is what the engineers in Nigeria call “engineering valuation”. It traditionally resided in the portfolio of those who by their professional designations everyone knows as estate surveyors and valuers. Beginning in the late 1980s, however, engineers began to eye the market and the opportunities in the area. Surveyors and valuers traditionally carried out valuation. Valuation is ordinarily “an estimation of the worth of something, especially one carried out by a professional valuer.” The valuer professionally interprets the monetary value of tangible and intangible as-

sets. Significant valuation areas are in business (finance) and construction or property. One area of property valuation involves assessing plant, equipment and machinery PEM). The equipment and machinery aspect often involved checking the integrity of those assets. In 2018, Nigerian engineers under the aegis of the Council of Registered Engineers of Nigeria convinced Power, Works and Housing Minister Babatunde Raji Fashola of the need to carve out the valuation of plant and machinery exclusively for them. Government Notice 91 of 31 July 2018 carried the signature of Fashola on the Gazette bearing the CORENRegulations for Engineering Appraisal/ Evaluation. ”Federal Legislation on Engineering Valuation” established engineers trained explicitly for the purpose as fit and capable to handle engineering valuation. They got three gazettes! Since 1989 engineers had sought to carve out this slice of the valuation practice market. The Nigerian Society of Engineers petitioned against the report of the Consultative Assembly on what became the Companies and Allied Matters Act seeking specific mention of engineering valuation. They pursued the matter and succeeded in getting an amendment. COREN says that Decree No 46 of 1991 “made for the inclusion of engineers in the definition of the valuer in Section 137”. According to COREN, engineering appraisal/valuation is “an art of entrenching the value of specific properties where professional engineering knowledge and judgement are essential. Such properties include mines, factories,

buildings, plant and machinery, industrial plants, public utilities, engineering constructions etc.” Valuers argue that valuation involves much more than technical parameters. It is a holistic assessment of the rights that inhere in a property for the owner and takes in legal, commercial, market data and macroeconomic indicators. Property valuation attracts professionals in the built environment field including architects, surveyors, engineers, and extends to lawyers, accountants and finance experts. It is one of those fields that calls for interdisciplinary collaboration with the surveyor as a lead. Engineers in Nigeria want to lead the field and corner a significant slice of the market. The Nigerian Institution of Estate Surveyors and Valuers was somnolent. They did not react to the efforts of the engineers to take a significant slice of the market, even after the issuance of the 2018 gazette until COREN started reaching out to Ministries, Departments and Agencies of government soliciting with the gazettes as tools. Now, NIESV is heading to court for a judicial pronouncement. They should. The dispute brings to the fore the matter of interdisciplinary and crossdisciplinary orientation of some professions. Mores and norms established over the years decided the pecking order. For some others, there has always been disputation over who is the dominant player. The Internet and developments in ICT have complicated the matters the more. ICT tools and templates have removed the mystique from several

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The dispute brings to the fore the matter of interdisciplinary and crossdisciplinary orientation of some professions. Mores and norms established over the years decided the pecking order. For some others, there has always been disputation over who is the dominant player.

practices and procedures in many fields. People easily step in to do what were exclusive preserves before. Should that justify interloping? Many areas witness this matter of either undefined boundaries or boundaries that are easy to cross. Journalism and public relations are related fields in communication. They meet at the intersection called media relations. Public relations people push specific client information with the media as platforms to reach stakeholders. Ethical codes restrain each other from crossing the boundaries. In Nigeria, however, the boundaries have become blurred with many journalists doing media relations and many public relations firms pushing publications as journalists. Many fields replicate this challenge. Is another discipline chipping away at your profession unbeknownst to your members? Does the experience of our surveyors call for greater vigilance by other disciplines to secure their terrain? Are Nigerian engineers crossing the terrain into the fields of other professionals, as the valuers assert? Is the motivation greed for more, because of the broad scope of engineering, or a need to declare the relative importance of engineering in the built environment arena? It would be interesting to watch as the battle of the engineers and valuers unfolds further. Nwakanma is a Visiting Member of the BusinessDay Editorial Board and serves on the Adjunct Faculty at the School of Media and Communication, Pan Atlantic University, Lagos. Email chidonwakanma@ gmail.com.

Our DISCOs, strange dance-steps & citizens furry

ast week we examined a flurry of ‘signs and wonders’ from our electricity distribution companies alias DISCOs. Those of us of the old order (who are nearer to where they are going than where they are coming from), know very well that disco was all about dancing. These electricity DISCOs are also dancing, except that their dance steps are weird and out of the tune with the music and with the expectations of their patrons, the customers. These strange dance steps are in the form of audacious thievery through estimated billing, excuse-based customer relations management strategy, general service failure and inability to profitably exploit the huge market, which was why they jumped into the disco bandwagon in the first instance. They also have this wicked tendency to blackmail customers with power disconnection and this is more worrisome because the disconnection would occur whenever there is light and this may be the only day there has been light in a whole week. At times, they show naked power as when in October 2015, officials of Ikeja Electricity Distribution Company invaded Oke-Abiye in Agbado Oke-Odo area of Lagos State with an armed contingent of the Nigeria Security and Civil Defence Corps, threatening them to pay their bills immediately or face immediate disconnection! The most frustrating to customers are the estimated billing and the disconnection. Incidentally, Engr O Azih, who is VERY knowledgeable in these matters says that estimated billing is neither new nor strange. He however avers that there is a scientific and mathematical method of doing so. I do not understand the jaw-breaking terms he used (he was actually speaking in tongues) and as such, I do not want to spoil the day for my readers by repeating them here. But in Nigeria, the DISCOs resort to a crude and arbitrary estimated billing model, which is based on ‘as the spirit directs’ because they can get away with it and because they have government support, just like a child sent on a thieving mission by his father does so without any fear or caution. I have also wondered why they resort to disconnection

over very petty bills, despite the high-risk nature of such disconnections. And of course they will NEVER give customers the mandatory notice required by law before such disconnections. Customers have over the years complained about this highhandedness, which started since the days of NEPA. They complain verbally to the non-responsive field staff, go to the desk-bound ones who would always assure that ‘we shall look into the matter’, while some undertake the non-sustainable-under-the table negotiations. But since these are not working, the customers upgraded their reactions to writing (as we did in Igbo-Ukwu and Ijebu Ode), telephones, SMS and emails (as we did in Samuel-Ekunola) and public demonstrations, which are commonplace. Some have even gone to court and that was how a staff of PHEDC at Port Harcourt was arrested and remanded in prison for disconnecting a customer’s light without the required 3 months notice! Unfortunately, and dangerously too, the customers tolerance threshold have been exceeded and they have decided to go physical over the matter. It did not start today. Around 20 years ago, some ‘knots in my head’ got off-balance and I used my car to block a NEPA operational vehicle and its staff, who had disconnected my light. In the process, I also blocked the entry and exit into and from the street (Dele Orisabiyi Street, Okota). What happened was that I occupied two flats in a 4-flat building. I paid my bill FULLY but the others did not pay. NEPA staff then disconnected my light, claiming they could not identify which lines supplied which apartment. My level of anger went a notch higher when they threatened me with arrest because it was illegal to disrupt staff on essential duties. That was when I locked the car, abandoned it and walked away from the spot, daring them to effect the arrest. That was a one-off affair and if you want to know how it ended, give me a call. The recent worrisome development is that customers are taking out their frustration on the DISCO disconnection squad, whom I assume, are doing what their ‘oga’s at the top’ have mandated them to do. Customers now attack DISCO officials all

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over the place. Some engage them in full blown free-style wrestling contest, some let lose their dogs after them while some have removed the ladder leaving the DISCO staff literally dangling and dancing from the electric poles. What the DISCOs (IKEDC, IBEDC, ENDEC and PHEDC) have done is to appeal and decry the attack on its staff( see Punch, 7/6/19; Punch,18/5/19; Guardian, 16/3/19 and Today.NG, 15/6/19) . NERC has even joined in the appeal. As you can see, this is a ‘national character’ affair. It was a different matter in Gusau when a Sharia Court-1 jailed Habu Mai Shago to one year imprisonment for assaulting a KDEDC staff. A Sharia Judge? Wetin concern the vulture with the barber? Anyway, I digress. This is a worrisome trend and before it becomes the new normal, the ownership and management of the various DISCOs should strategically review their customer engagement strategies. They don’t need any root-cause analysis because the causes are in the opendential. This crazy billing and highhanded disconnection is not sustainable and treating customers like conquered people, without any dignity and rights, will not do. The other day, one of my students introduced himself as a DISCO staff and I told him that my street was planning to demonstrate to their office and that I would personally come after him on that day. He gleefully replied that they had enough security men to ward off any such invasion. I was shocked at such mentality from an MBA student –and a future DISCO executive. I told him so there and then. You already know that your customers are angry; you know that they would protest or do something funny and you encircle yourself with assorted security personnel rather than taking customer-centric steps and thinking of ways to assuage the customers. You see, NEPA, PHCN, DISCOS are already in the Guinness Book of Records as the only organization in the world that has more customers than it knows what to do with! Other matters: Everybody is mad but the degree of madness varies… It was late Nick Erege, my boss, friend and brother at Cooperative and Commerce bank

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ik MUO Jos, who told me that everybody is mad but the degree of madness varies with individuals. Thus, we consider those below 30 per cent mad as normal and those 70 -100 per cent as, well, MAD. But they are all mad. I have also grown to know from experience and education that the evidence and indicators of madness varies with time, circumstances and environment. The other day, one Sasha Smajic spent 4000 pound-sterling to give her dog, Captain, a befitting burial. The 11 year old Captain, suffered cardiac arrest while undergoing a surgery and died on 25/12/18. The funeral was not just lavish, it was elaborate. Captain’s body was taken from the vets in a horse-drawn carriage to a park where he used to go for walks. His coffin was then transferred to a hearse for the 40-minute drive to Willow Haven Cemetery, where a poem was read at it’s graveside with 11 doves – one for each year of his life – being released at 2pm during the service after he was lowered into the ground. I don’t know if she would have had the presence of mind to do so if she had no light in the previous 4 weeks, suffered a 5-hour traffic gridlock at Sagamu-Benin Highway or has just escaped from herdsmen-kidnappers den! Note: The rest of this article continues in the online edition of Business Day @https://businessday.ng Ik Muo, PhD. Department of Business Administration, OOU, Ago-Iwoye, Ogun State muoigbo@ yahoo.com ;muo.ik@oouagoiwoye.edu.ng ; 08033026625

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Thursday 27 June 2019

BUSINESS DAY

cityfile Residents lament as flood sacks communities in Badagry

Osun State pensioners protesting, over alleged non-payment of 30 months half pensions and backlog of gratuities arrears by the State Government in Osogbo on Monday. NAN

NAPTIP rates Edo, Delta highest in trafficked persons IDRIS UMAR MOMOH & CHURCHILL OKORO, Benin

duka Nwenwene, zonal commander, National Agency for the Prohibition of Trafficking in Persons, (NAPTIP), Benin zone, has rated Edo and Delta States with the highest number of trafficked people out of the country. Nwenwene stated this while addressing students of St. Maria Goretti, during an event organised by Reeducating Africans on the Risk and Dangers in Unplanned Journey Abroad (RARDUJA),

in Benin, the Edo State capital. He said in 2011, NAPTIP brought back 104 girls from Mali, and of this figure, 60 were from Edo and 30 from Delta. “So, you find that the two states of Edo and Delta have taken 90, leaving only 14 for the rest states in the country and it should not be so because Edo and Delta are not the poorest states in Nigeria”, he said. While agreeing that government has not enough to provide jobs for the citizens, he observed, however, this was not a justification for people to embark on deadly journeys out of the country. Nwenwene called on Ni-

gerians to report any cases of human trafficking to NAPTIP, stressing that the battle could only be worn collectively. Earlier, coordinator, RARDUJA International, Eddy Duru, speaking on the theme: “Say No to Unplanned Journey Abroad”, highlighted the dangers in unplanned journey to Europe, saying such should not be encouraged in any schools either by the teachers or the proprietors. “Our quest is to continue to re-educate our people, Nigerians on the risks and hazards that associated with this traveling through the sea and the desert especially unplanned even through the

air. Many who are there right now are frustrated,” he stated. He noted that a lot could be achieved in Nigeria, as all “Nigerians need is the ability to look inward and find something meaningful to do.” Duru observed that while some Nigerians were leaving the country due to insecurity, foreigners were coming in to do businesses “because they are able to see what others are not able to see”. He noted, however, that the agency was not against the citizens traveling abroad but that a prospective traveller should follow due process to avoid the risk of losing one’s life in a bid to travel out of the country.

Insecurity: Police to deploy dogs to railway stations

he Nigeria Police Force says it is deploying personnel and trained dogs to complement existing security apparatus at railway stations across the country. The Inspector-General of Police, Mohammed Adamu, announced in Abuja on Tuesday, saying that the initiative was within the context of the force’s “Operation Puff Adder’’. According to him, the idea is to complement the existing measures emplaced for the security and safety of passengers and critical infrastructure of Nigeria Railway Corporation (NRC).

Adamu disclosed that dog handling section of the police, K9, had professionally trained the dogs and personnel handling them. “The deployment of special breed and exceptionally trained police dogs for security duties is as old as human civilisation. Their utilisation in combating crimes and sundry internal security threats in the 21st century cannot be over emphasised. He said the K9 possess extraordinary capacity for detection of Improvised Explosives Devices (IEDs), narcotics and other illicit drugs, firearms and other prohibited items which criminals usually enwww.businessday.ng

gage for the perfection of their activities. “The deployment of police dogs is, therefore, meant for detection or prevention of crimes along the railway corridors,” he said. The police chief added that the dogs would be used for patrols, surveillance, detection and apprehension of felons in and around railway facilities. According to him, the Nigeria Police Force boost of having one of the most equipped, experienced, highly trained and functional K9 section. He said that the dogs have commendable antecedent of successful anti-crime, crowd

control and civil disorder management operations. “Indeed, it is on record that the Nigeria Police Force Animal Branch has been instrumental to the training and development of similar branches for other security agencies in the country. “Our plan is to maximize our unique K9 strength to complement other sections that have been deployed towards addressing our internal security challenges. It will be recalled that prior to this time, about 1,000 additional police personnel were deployed to the Nigeria Police Railway command,” he said.

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ome communities in Badagr y lo cal government area of Lagos have been sacked by flood worsened by the on-going construction of drainage by the state government. Among the affected communities are Oropo, Yoyowe, Zogbakomeh and Sadoyon, all along the popular Samuel Ekundayo Road in Badagry. It wa s o b s e r v e d o n Monday and Tuesday that many residents of the area abandoned their vehicles at home and waded through the flood to their different places of work, while motorcycles could not access the areas due to the flood. Joseph Ajaji, a resident lamented that his vehicle was damaged while attempting to cross the flood on Monday morning. “Before the construction of drainage on both sides of the road, we used to manage ourselves to get to our destinations, but the flood coupled with construction work is really affecting us. I spent almost one hour before some good Samaritans rescued me out of the flood,” he said, appealing to the state government to accelerate work on the drainage and the road leading to the communities, as the residents are already stranded. Ajayi said that residents of the communities were helpless and urged the state government to compel the contractors handling the project to expedite action on the construction work. Idowu Jimoh, a commu-

nity leader in the 4th Cele Area, said that the water levels has been on the increase “which is usually expected at this time of the year’’. According to him, the water level this year is high and cannot be contained because of the construction work blocking its flow. He said that the water had started entering houses, adding that residents had been put under pressure because of the flood. “Most of us living in this area know that when it rains, the flood used to cut us off from the main town but when they started the drainage construction, we thought it will be all over. “From Mobil Junction, to Oropo, the construction works have blocked water from the gutter resulting to flooding in the area. Even the drivers of granite trucks were dumping the sands, granite and iron rod indiscriminately on the road preventing commercial tricycle “okada’’ from accessing the road. He further lamented that some tenants have relocated to Ajara area pending when the flood will recede. “But we cannot leave here because we are the landlords,” he said. Seweka Amosun, a resident of Ansarudeen area, appealed to the chairman of Badagry local government, Segun Onilude to provide palliative measures to reduce the hardship residents were going through. The rain started in the coastal town since Monday, leaving most of the roads in the town submerged.

Agency nabs 186 suspects, seizes 61.24kg of illicit drugs in Jigawa

igawa command of National Drug Law Enforcement Agency (NDLEA) said it has arrested 186 suspected dealers in illicit drugs in the state. It said that the suspects were nabbed from January to date, adding that it also seized 61.24 kilogrammes of assorted narcotics and psychotic substances during the period. Commandant of the agency in the state, Josephine Ruth, disclosed this at a news briefing as part of activities to commemorate 2019 United Nations’ International Day against Drug Abuse and Illicit Trafficking. Ruth said the suspects were 182 males and four females. “In Jigawa, this involves the abuse of cannabis sativa, codeine and psychotic substances such as Diazepam, Exol, Tramadol and Rohypnol as well as non-conventional substances, including rub@Businessdayng

ber solution, such as die and lizard dung,” she said. She accused dealers of illicit drug of instigating mob to attack the agency’s personnel in some places where they raided hideouts of drug dealers and users. “We are collaborating with sister agencies in our fight against drug abuse .The NDLEA in Jigawa in undaunted and will continue to work to sanitise the state through arrests, seizures, diligent prosecution and counselling,” she said. According to her, 22 of the suspects have been successfully convicted, while 108 persons, including three females, were counselled by the agency within the period. Ruth listed inadequate manpower and poor logistics as major challenges militating against the agency’s effective fight against drug abuse and trafficking in the state. NAN

Thursday 27 June 2019

BUSINESS DAY

BUSINESS TRAVEL How local airlines can spur economic growth Ifeoma Okeke

ver fourteen million passengers passed through the country’s airports in 2018, according to recently released industry figures by Consumer Protection Directorate of the Nigerian Civil Aviation Authority (NCAA). These numbers, compared to 2017 estimate of 11.2 million, represent a 20.8 per cent traffic upsurge apparently a return on investment for committed local operators. Precisely, 4.08 million passengers were flown by 34 airlines on the international routes while nine domestic airlines collectively hit the 10.09 million passengers mark in 2018. Even though these numbers may not be huge on Nigeria’s Gross Domestic Product (GDP), when compared to oil and gas and agriculture, the contribution of local airlines to business facilitation, economic growth and development cannot be too stressed. These achievements exist amid weathering the storm of a toxic business environment that has almost made it impossible for airlines to last beyond the fifth year anniversary. Local airlines’ strides amid hitches Status of the airlines says much about the environment and the potential that abound too. MedView Airlines Plc., with support of First Bank Plc. and foreign partners acquired B777 aircraft for its Hajj operations and revival of the truncated London and Dubai operations. The airline has, however, continued to slide, downsizing more operations and staffers lately. Following the takeover of Arik Air by the Asset Management Corporation of Nigeria (AMCON ) in Februar y 2017 and injection of N1 billion, the airline showed signs of stability but not recovery. Besides paying salaries and meeting basic obligations, about nine out of 30 aircraft owned by Arik returned to operation, sustaining both local and regional operations. Air Peace is, however, the most stable of the airlines and it is not by accident that the airlines account for about 40 per cent of 2018 total passengers on the local front. Indeed, the airlines led the way with an unprecedented investment in aircraft in its bid to make a strong case for Nigerian flag carriers on regional and international skies, even as no city is left behind on the home front. To this effect, the airline recently placed a firm order for 10 brand new Embraer 195-E2 aircraft. The order comprises purchase rights for another 20 E195-E2 jets. Also, 124-seater jet in dual class

and 146-seater jet in single class configurations respectively. With all purchase rights exercised, the contract is valued at N640.5 billion ($2.12 billion) based on current list prices. The carrier also set a regional record in September 2018 when it ordered 10 brand new aircraft from Boeing, increasing its fleet size then to about 37 aircraft. With the new order, Air Peace’s fleet size has increased to 67 aircraft. Air Peace had earlier set a domestic record as the first Nigerian airline to acquire and register the Boeing 777 aircraft in the country. Three of the four wide-body aircraft it acquired for its long-haul operations to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou and Mumbai have so far been delivered. Industry stakeholders though marveled at the unparalleled investment in capacity, they are optimistic that the 14 million passenger record may as well double in a year when at least half of Air Peace new orders join the current operating fleet. But, the worry is the systemic hurdles that will shackle the enormous potential and attendant benefit. Numerous taxes and charges It has been observed that sundry charges, under the guise of taxes and levies at airports nationwide account for at least 65 per cent of revenue accruing to them. Besides the five per cent charge on every ticket bought by passengers, which goes to all five regulatory agencies, there are other frivolous charges on the operators. They include the second popular five per cent Cargo Sales Charge, five per cent Value Added Tax (VAT), Passenger Service Charge of N1000 per ticket on local route, Charter Sales Charge, Aircraft Inspection Fees, Simulator Inspection Fees, Landing Charges, Parking Charges, and Terminal Navigational Charge. Others are Enroute Charge, Fuel Surcharge, Airport Space Rent, www.businessday.ng

Electricity charges, Apron Pass, ODC, Registration Fee, Service Recovery Charge, Processing Fee, Avio Bridge, Aircraft Registration and Processing Fee. The airlines also pay Toll Gate Fee, VIP Lounge, Trolley Service, Clearance Fee, Check-In Counter Charge, Courier/Tarmac/PreRelease charges, Import Charge (Dom), Export Charge (Dom), Import Royalty, Export Royalty, Ports Charge, Exports Charge, Transhipment, and Concession Fee. Together, these charges eat deep into earnings leaving the airlines with less than N10, 000 on a passenger ticket sold at an average price of N30, 000. Allen Onyema, Chief Executive Officer of Air Peace, recently said if this current regime of taxation is not removed, no airline will survive. Onyema said though the charges had been in the system for long and some of them as fallouts of legislation, it was high time they were reviewed to ease the burden on commercial airlines. “Let even the government raise a consulting firm to go round the country to find out why airlines have been dropping off. Heavy taxation is part of it. We are suffering. “Air Peace supports payment of taxes to government; no government runs without the citizens paying tax. Airlines must pay their taxes. What we are asking is for these taxes to be streamlined in such a way that it will help us to help the government and help the country. “Commercial airlines are a catalyst to economic development in any country. That is why every country supports its airlines. We are not asking for any financial assistance but for an enabling environment that makes things work. It is not complimentary for us as a country that all our airlines are dying,” Onyema said. Nogie Meggison, chairman of the Airlines Operators of Nigeria (AON), observed that over 50

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indigenous airlines have existed in the country in the last 18 years, but only nine are flying presently. “The death rate of airlines in Nigeria is high. The owners of the defunct airlines have all been success stories in other business endeavours except in aviation. Could all of them have been responsible for the failure of their airlines? The answer is no! Rather, the unfriendly policies and harsh operating environment have been the bane of the aviation sector’s growth in Nigeria. “We are mindful that if these issues and policies are not addressed urgently, the remaining airlines run the risk of becoming defunct in no time,” Meggison said. Regulate to safety, survival not extinction Safety and security are the major reasons why aviation regulations exist. Aviation rules and regulations are binding, and it must be implemented to the letters. But making it antagonistic by tightening the noose just for the sake of it will not help anyone, but erode confidence and hurt the industry. Bernard Bankole, president of the National Association of Nigerian Travel Agencies (NANTA), said the airlines, as well as other stakeholders, have a lot to gain working in harmony than in silos and with a policy direction for growth and mutual benefit. Bankole said Nigeria should take a cue from countries like Ghana that are creating the enabling environment for aviation to thrive. According to him, today, a lot of airlines still prefer to go to Ghana to fuel up or to make repairs because they have made available the processes and infrastructure for the comfort of any airline that is coming to their country. “I can say to you categorically that it is not possible for Airbus A380 aircraft to land in Nigeria. Even if they want to, we don’t have the infrastructure. That is one of @Businessdayng

the biggest aircraft in the world. But this same aircraft landed in Ghana. “What makes Ghana better off than us? This is not about politics; it is about doing the right thing. We have the capacity to do the right things; we just choose not to do them. There are a lot of things we can tap into. If the plan is to have Nigeria Air as our national carrier and it is not working out yet, are we saying there are no alternative plans to improve the sector? “In what way have we supported the local airlines? Because the same problems facing the local airlines also lie in wait for the Nigeria Air and it will kill it within a short period. So, it will be just another white elephant project. It is high time we wake up from our sleep and understand that the aviation industry is a sensitive one that requires the government’s full attention. “Aviation is the fastest and safest means of moving from point A to point B. More so, when foreigners come into your country that is the first port of entry that showcases your worth as a nation.” A need for mutual benefit It is in this light that airlines like Air Peace are quite central both to the industry and the economy at large. They need all the support to remain in operations and succeed. With about 30 aircraft in its fleet, Air Peace alone has staff strength of over 4000 workers, which more than triples the entire Nigeria-based employees of all 35 foreign carriers plying the Nigerian route. The gradual expansion of its fleet with the arrival of new aircraft will also expand the workforce to about 10,000 direct staffers and more than 50,000 in the auxiliary category. A more stifling operating environment will not only affect jobs, but the connectivity of over 14 million passengers that currently travel the entire network in a year.

Thursday 27 June 2019

BUSINESS DAY

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Thursday 27 June 2019

BUSINESS DAY

COMPANIES & MARKETS

Huawei’s market share dips 8% in Q1 as Apple shipments plunge

COMPANY NEWS ANALYSIS INSIGHT

Pg. 18

INSURANCE

Cornerstone posts N43.6m loss in Q1 as underwriting performance weakens …result trend signals bleak FY’19 performance DAVID IBIDAPO

ornerstone Insurance plc kicked-off the first quarter of the year 2019 with a weakened underwriting performance, making the company’s net income slip back into the loss zone after its exit in 2018. Net income of the insurance company dipped 110 percent year-on-year (y/y) in Q1 2019, this is evident in the recently released financial report of Cornerstone on the Nigerian Stock Exchange (NSE) on Tuesday, June 25. The insurer’s net income declined into a loss of N43.6 million as against a profit of N416.8 million recorded during the corresponding period in 2018, this came on the back of a decline in its underwriting performance and increased total expenses during the period. During the first three months of this year, cornerstone posted an underwriting result to the tone of N370.7 million, representing a decline by 32 percent from N547.3 million profit post-

ed in the same quarter in 2018. This is, however, despite the insurer recording its highest gross premium of N4.7 billion in Q1 2019 compared to corresponding periods in the last 6 years. The impact of the impressive gross premium during period was weighed on by a 41 percent surge in reinsurance expense to N1.5 billion against

N1.1 billion in 2018. Also, the slum in underwriting performance was affected further by an increase in total underwriting expenses during the period which consisted of the insurer’s acquisition cost and maintenance cost. Total cost amounted to N520.02 million, indicating a 35 percent surge from prior period

in 2018 of N384.09 million. However, when compared with net losses of N140.55 million and N278.15 million witnessed in the first quarters of 2016 and 2017 respectively, the 38 percent increase in gross premium income to N4.7 billion improved this year’s loss position. Analysis of Cornerstone’s overhead, operating and fi-

nance costs show total cost was up 18.23 percent from N651.57 million in Q1 2018 to N770.38 million in Q1 2019. This saw the insurer record a loss before tax of N39.67 million against a profit before tax of N463.12 million. This however raises concerns of the full year performance of cornerstones insurance limited given its historical trend where years the insurer begin the year on a weak foot, it ends the year on a loss position. This is evident in 2016 and 2017; meanwhile 2014 and 2018 recorded impressive full year performance on a strong footing into those years. The insurer has seen little or no trade on its stocks as prices have hovered around N0.20 per share on the NSE. In the first quarter of 2019, stock prices of Cornerstone rose 25 percent to N0.25; however investors saw gains reverse by 25 percent to N0.20 in the second quarter of the year. Since the N0.50 price floor had been removed on insurance companies stock prices, market value of Cornerstone have dipped 60 percent in almost 2 years.

Law Union and Rock Insurance declares 2 kobo dividend at AGM ODINAKA ANUDU

aw Union and Rock Insurance Plc, at its 50th Annual General Meeting (AGM), declared a final dividend of 0.02 Kobo per 0.50 Kobo ordinary share, subject to withholding tax and approval will be paid to shareholders whose names appear in the register members as at the close of business on the 31st of May, 2019. Head of corporate communications, Law Union and Rock Insurance Plc, Mobolaji Akerele, who disclosed this in a statement on Friday, said the event will be held at the Agip Recital Hall, Muson Centre, Onikan, Lagos.

The managing director, Ademayowa Adeduro, assured stakeholders that necessary arrangement has been made to ensure a successful outing. According to him, invitations have been sent to shareholders and other stakeholders. “We know that expectations are high on the side of the shareholders, as regards payment of dividend, but we are very optimistic that they would not be disappointed,” he said. Ademayowa urged shareholders who are yet to complete the e-dividend registration to do so and submit filled forms to the registrar or their respective banks ahead of the AGM.

He advised shareholders with dividend warrants and share certificates that have remained unclaimed or are yet to be presented for or returned for validation to also complete the e-dividend registration or contact the Registrar on the way forward. Stakeholders would at the AGM receive and approve the audited financial statement for the year ended 31st December 2018, together with reports of the directors, auditors and audit committee. Dividend would be declared while the AGM would also be a platform to approve the appointment of Ademayowa Adeduro as managing director/C.E.O of the company.

Darlington Igabali, Marketing Manager, Kellogg, Ajoke Yahya, winner’s Mum, Aisha Yahaya, Winner, Abosede Joseph, head teacher, Christ The Redeemers Victors School, Ijesha Tedo, Omotayo Azeez, public relations manager, Tolaram Group, during presentation of cash Scholarship to a winner of the Kellogs Super Stars Essay Competition in Lagos.

Editor: LOLADE AKINMURELE (lolade.akinmurele@businessdayonline.com) Graphics: David Ogar

Thursday 27 June 2019

BUSINESS DAY

COMPANIES&MARKETS

Business Event

TECHNOLOGY

Huawei’s market share dips 8% in Q1 as Apple shipments plunge JONATHAN ADEROJU

arket share of global top smartphone maker, Huawei, declined 8 percent in the first quarter of 2019 as Apple shipments plunged 20 percent, according to a report by Counterpoint Research. According to Counterpoint Research’s ‘Market Monitor Service’ report, during the quarter, Samsung ended up with one-fourth of the global premium segment which is the company’s highest ever share over the past year. This was also the first time that Samsung launched three devices instead of the usual two in its S series, thus covering wider price points. China’s technology gi-

ant Huawei also captured a double-digit share in the highly-concentrated premium market. Impeccable camera quality, Artificial Intelligence (AI) technology and superior build quality of its flagship mate and P series drove the growth for Huawei during the quarter. According to Varun Mishra, Research Analyst, Counterpoint Research “The trend of users holding onto their iPhones for longer has affected Apple’s shipments. The replacement cycle for iPhones has grown to over three years, on an average, from two years. On the other hand, substantial design changes in the Galaxy S10 series and the better value proposition it offers compared to high-end iPhones helped Samsung close the gap to

Apple.” Huawei even surpassed Apple to become the top player in the premium smartphone market in China a market where the iPhone maker has been struggling. “The sluggishness of the Chinese market was the other key reason for the decline in the global premium segment,” Mishra added. Our estimates suggest that almost half of the decline in the global premium segment in Q1 2019 was due to the sluggish Chinese market. “However, we expect that as 5G begins to commercialize in the future, the premium segment will grow. In 2019 and 2020, all the 5G devices are expected to launch in the premium segment,” noted Mishra.

L-R: Oremeyi Akah, COO, Interswitch; Elohor Aiboni Bonga, asset operations manager, Shell Nigeria; Folake Sanu, executive director, Wema Bank; Ezinne Ezeani, founder, She Can Nigeria; Olive Emodi, the Compere of the session; Abimbola Bolarinwa, Nigerian first Female Urologist, and Mabel George, head, business development division West, Sigma Pensions, at the SHECAN conference in Lagos recently

TELECOMMUNICATION

MTN offers superior customer experience, launches 4G+ DAVID IBIDAPO

igeria’s biggest foreign direct investment and telecommunication giant, MTN, has launched a 4G+ service aimed at boosting and delivering a superior experience to more people across the country. In a document by MTN on Tuesday and filed on the NSE, the telecoms firm noted the service is immediately available and would deliver much higher broadband speeds, a more consistent connection and significant improvement in indoor coverage. “MTN 4G+ runs on 4G LTE advance Technology using a combination of the recently acquired 800 MHz spectrum and 2600 MHz,” the telco stated.

The added spectrum and advanced technology are expected to extend the reach and capacity of MTN data network in Nigeria and enable speeds of up to 200 Mbps. “This means a 30 minute HD video would take around eight minutes to download on a standard 4G,” MTN further stated. To this end, MTN customers in Nigeria in covered locations tend to experience “faster downloads and uploads, better browsing and streaming experiences,” the report explained. The 4G+ s er vice was launched in Abuja and Port Harcourt as stated in the published report. Against anticipated positive reaction of investors towards the news, stock price of MTN on the nation bourse

dipped to 1-month low on a marginal decline in share price by 0.77 percent to N129 as at the end of trading on Tuesday. Prevalent negative market sentiment inherent in the equity market weighed on likely response of investors towards the launching of MTN’s 4G+ service in Abuja and Port Harcourt. Investor sentiment as measured by market breadth (advance/decline ratio) weakened to 0.6x from the 1.3x recorded on Monday as 14 stocks advanced relative to 22 decliners. The end of trading on Tuesday saw the Nigerian All share index (ASI) dip by 0.5 percent to further continue its bearish trend as market cap stood at N13.07 trillion.

Outsourcing

L-R: Mazen Mroue chief operating officer, MTN Nigeria; Aisha Sadauki, director MTN Foundation, MTN Nigeria; Richard Igbiriki, winner, MTN Nigeria Hackathon; Frank Atube, representative of Seamfix; Olubayo Adekanmi, chief transformation officer, MTN Nigeria, and Suru Avoseh, partner, Chinook Capital Limited, at the just-concluded MTN 21 Days of Y’ello Care 2019 in Lagos.

L-R: Bisi Adigun; Elvina Ibru; Leke Akinrowo, writer/producer of “Caged In The Creeks”; Zack Orji, Nollywood veteran and award-winning actor, and Terry McMahon, multiple award-winning international film director, at Terry’s second visit to Nigeria for pre-production of “Caged In The Creeks”

Nigeria needs legal frame work, infrastructure to become the next outsourcing hub – AOPN …task outsourcing professionals on innovation JOSEPHINE OKOJIE

he Association of Outsourcing Professionals of Nigeria (AOPN) has said that Nigeria have the capacity to become the next outsourcing hub if the government provides the needed legal framework and infrastructure for the industry. The experts who spoke at the APON 2019 outsourcing expo recently in Lagos said that both the government and professionals have their various roles to play in making the country the next outsourcing hub. “We have everything it takes to be the next hub. The population and we are an English speaking

country but we need the legal framework to guide policies, we need infrastructures and more awareness to achieve this,” Obiora Madu, president of AOPN said. “So many countries are withdrawing their call centres from Indian and the next destination is Africa with Nigeria popping up first but we need to create the environment for it,” Madu said. He stated that the global outsourcing industry is worth $85.6 billion in 2018 and projected to reach $343 billion in 2025. He said that professionals must be innovative to take advantage of the opportunities created by the industry while calling for quality education in the country to

equip the youth population with the right skills. “A lot of Nigerians do not know what outsourcing is and the opportunities therein. They think contracting is outsourcing,” he added. The experts also expressed concerns that growing automation and Artificial Intelligence will lead to job losses, while advising professionals to be innovative to remain relevant in the future workplace. “We need to understand that change consistently happens and we need to respond appropriately to it,” Victor Adebayo, group head- human resources, Fareast Mercantile Co. Limited said.

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L-R: Olajumoke Ajayi, MD, Asharami Energy (A Sahara Group Upstream Company); Pippa Brown, director, EMEA, Oil and Gas Council, and Mariah Luciano-Gabriel, head, commercial and business development, Asharami Energy, at the Oil and Gas Council’s Africa Assembly in Paris.

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Thursday 27 June 2019

BUSINESS DAY

ENERGYREPORT Oil & Gas

Power

Renewables

Environment

Expectations from new NNPC boss amid collapsing oil sector OLUSOLA BELLO AND DIPO OLADEHINDE

xpectations filled with optimism and pessimism has begun to trail the appointment of Mele Kyari as the new Group managing director of NNPC Nigerian National Petroleum Corporation (NNPC) after the state behemoth’s lacklustre performance in the past four years. Four years ago, fixing Nigeria’s refineries, solving pipeline vandalism, listing on the Nigeria Stock Exchange (NSE) and making the corporation profitable were some of the most urgent tasks before the ex-oil firm boss Maikanti Baru, which, unfortunately, didn’t come to limelight. However, President Muhammadu Buhari’s decision to reshuffle the leadership of NNPC on Thursday has once again raised anxiety in the oil sector which is in urgent need of disentangling itself from the web of economic stagnation, stalled reforms and a risk of rising militancy. Kyari, who was previously head of NNPC’s crude oil marketing division and Nigeria’s National Representative to the Organisation of Petroleum Exporting Countries (OPEC), replaced Maikanti Baru who

L-R: Mir Islam, Em-One’s CEO and Paul-Francois Cattier, Schneider’s vice president Business development Africa & Middle East at the MoU signing ceremony.

has held the post since July 2016. A stakeholder close to NNPC said apart from making petroleum products available at all cost, the major hurdle before the new NNPC boss is how to end favouritism and nepotism in the corporation and make the refineries working again knowing that Dangote refinery will be coming on stream during his tenure. “He needs to finally solve the insecurity problems, issues surrounding pipeline vandalism, determine the fate of Brass LNG and Okokola LNG, and move oil exploration to other part of the country,” inside sources told BusinessDay. Toyin Akinosho, publisher

of Africa’s oil and gas report, said the new GMD is a system person because he is coming from the most opaque division of NNPC. Therefore does not expect much from him. “He is not an agent of change. He is from the elite side of NNPC which may not help the industry reforms,” Akinosho told BusinessDay. Godwin Izomor, managing director of MG Vowgas Limited, a Port Harcourt-based Engineering, Procurement and Construction firm, said the new group managing director will work towards increasing the nation’s crude oil reserves and also try to attract investment inflow into the industry. Bank-Anthony Okoroafor,

TCN restricts electricity supply to Enugu disco over failure to comply with operations rules Olusola Bello

he Enugu Electricity Distribution Company has been suspended from Market Operator Administered Markets because of non compliance of the company with some of the agreement it entered with the market operator. Consequently, the company has been restricted from intakes from the national grid through a disconnection order to the Transmission Service Provider to disconnect some facilities of Enugu Electricity Distribution Company until the event of default stated in NIISO/2019/002 is remedied. According an advertisement placed in some dailies by the Transmission Company of Nigeria (TCN) and signed E.A. EJE, Market Operator, it stated that the Independent System Operator, on behalf of the Market Operator, entered into a Market Participation Agreement with Enugu Electricity Distribution PLC (EEDC)on the 23rdofFebruary, 2015. Olusola Bello, Team lead,

In the signed Market Participation Agreement, EEDC agreed to at all times be compliant with the provisions of Clause 3.2 which is that the Participant shall in accordance with the provisions of the Market Rules, Grid Code, Metering Code and the Market Procedures be compliant at all times, particularly by Providing metering information in a timely manner and in the approved format in accordance with the Metering Code and the market procedures. It should also make security deposit when so required of an amount established by Market Operator to serve as a form of guarantee of payment for all amounts due from the Participant to the Market Operator and settling in a timely manner any payment due. The electricity distribution company according to TCN failed to maintain a security covering in respect of Section 15.3.2 of the Market Rules, thereby breaching Section 45.3.1(d) of the Market Rules which says the rule shall apply to any Participant that fails

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the one-digit margin, with an all-time highest contribution of 9.84 per cent in Q3 2017. While other state-owned oil corporation like Brazil’s Petrobras, Russia’s Rosneft, Norway’s Equinor and Mexico’s Pemexv, all saw improved financial results in 2018 and made operating profits, the reverse was the case for Nigeria’s NNPC. BusinessDay analysis of full 2018 report showed between January 2018 to December 2018, Africa biggest oil producing country spent N730.9 billion on under-recovery popularly called subsidy while N140.6 billion was also spent on old perennial problems such as pipeline repairs and management cost. NNPC reports showed gains of N393.5 billion made by its upstream and gas processing subsidiaries such as the Nigerian Petroleum Development Company (NPDC), Integrated Data Service Limited (IDSL), National Engineering and Technical Company Limited (NETCO), Nigerian Gas Company Limited (NGC), Nigerian Gas Marketing Company (NGMC). But the gains were wiped off largely by its downstream subsidiary’s operations which recorded deficits north of N351.7 billion, according to figures from the organization’s operations and financial report for 2018 actual.

Schneider Electric signs renewable energy MoU with EM-ONE

to renew the Security Cover required from each Participant under these Rules within the time specified in that regard by the Market Operator; It stated that when Enugu Electricity Distribution Company was notified about it failure to comply with rules through a default notice and was expected to remedied the situation within a specific time line but it failed to respond. The default notice relates to payment of amounts due to the Market Operator under these Rules, including Rules 45.3.1(b) to 45.3.1(d), 45.3.1(h) and 45.3.1(i) to 45.3.1(n), as follows: (a) by paying all monies due for payment by it under these Rules and the Grid Code, together with any Default Interest calculated in accordance with Rule 38.11 and any costs and expenses determined by the Market Operator to have been incurred by it by reason of the default; and (b) by providing additional Security Cover which complies with the requirements of Rule 15.3.3.

the Chairman of Petroleum Technology Association of Nigeria (PETAN), however believes the new GMD is the right person to grow Nigeria’s oil reserve based on his experience as a geologist. “The promotion of Roland Ewubare, chief operating officer of Upstream is a fantastic move that will solidify what is already on ground because he understands the industry and he will be ready to move it forward it to the next step,” Okoroafor told BusinesDay. President Buhari also approved the appointments of new heads for the company’s upstream and refinery arms, NNPC said in a statement. No official reasons were given

for the changes and all the appointments will take effect from July 8. Some sources in the Nigerian oil industry suggested Baru could retire, while others said he might be transferred to a petroleum ministry office. Although Maikanti Baru deserves credit for easing the bottlenecks in the cash call for upstream work programmes and removing NPDC’s chokehold on Nigerian independents, allowing a more vibrant upstream segment which has allowed investments streamed into many Brownfield projects. However, operations in the oil fields of the Niger Delta have not entirely recovered from the historic MEND attack of February 2006, which reset the dynamics in the region around the distinctions between licence to – and freedom to – operate. Also, there is still a huge refining gap that ensured that over 90 per cent of petroleum products in demand being imported and a commercial model that entitled NNPC to take 445,000 barrels of crude oil per day of oil. Nigeria’s oil sector, the heartbeat of Africa’s biggest economy, though responsible for 90 per cent of the country’s foreign exchange earnings, still contributes little to grow the gross domestic product. Its contribution has remained in

FRANK UZUEGBUNAM AND ISAAC ANYAOGU

n a bid to create an African mini-grid industry involving decentralized electricity generation and distribution networks based on renewable energy, Schneider Electric has signed a Memorandum of Understanding with EM-ONE Energy Solutions, a Nigerian sustainable energy engineering company. Led by its sustainability department, the group has been working to set up an industry based on mini-grids built or operated by local stakeholders for 18 months. This has led to a first MoU with EM-ONE Energy Solutions, a Nigerian company that also operates in Canada. EM-ONE Energy Solutions has already won a contract for 30 mini-grids in Nigeria to power hospitals in Kaduna State, and is also targeting the university and rural electrification market. “The MoU concerns Schneider’s support with optimizing the architecture of these projects and developing an industrial platform to integrate

these mini-grids into containers in Nigeria and manufacture Schneider Electric mini-grid solutions under licence,” explained Paul-François Cattier, Schneider Electric’s Vice President, Business Development, Africa & Middle East. With sales representatives spread out over 12 countries (Chad, Senegal, Côte d’Ivoire, Tanzania and others), Schneider Electric is seeking engineering procurement construction (EPC) companies to locally produce its solutions (e.g. Villaya Community, a mini-grid designed for rural electrification, providing 7-63 kW of power). According to the International Renewable Energy Agency (IRENA), West Africa’s energy consumption could quadruple by 2030 to reach 219 TWh a year, less than half of the 478 TWh already consumed in France in 2018. Part of the solution will come from mini-grids, decentralized networks powered by photovoltaic energy. Demand is high: an estimated 200,000 mini-grids are required to power the continent and reach the United Nations Sustainable Development Goal 7 (“Ensure access to

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affordable, reliable, sustainable and modern energy for all”). “Rather than importing mini-grids produced in Europe, Asia or North America, we want to create an African mini-grid industry with operators, integrators, investors and local jobs,” Paul-François Cattier said. In the past 10 years, the Group has already installed 700 mini-grids in Africa, mainly for rural electrification, through its Access to Energy programme. This has largely been achieved with donations to NGOs and equipment often produced in Europe. Schneider Electric will provide them with advice on setting up an industrial plant and testing. The group is also working with public and private funding bodies. It intends to cover the full range of needs with capacities up to 500 kW (enough to power a city of 10,000 inhabitants in Africa) through its standardized solutions, and from 500 kW to 20 MW through specific architectures (for cities of several hundred thousand inhabitants that are without an electricity grid).

Thursday 27 June 2019

BUSINESS DAY

ENERGYREPORT Nigerian firm, Egyptian government partnership to deepen cylinder manufacture

Olusola Bello

ungas Industries, a subsidiary of Ru nga s G rou p of Companies in collaboration with United Group of Egypt has secured an executive partnership with the National Organisation for Military Production (Egyptian Government) to produce and assist with the distribution of LPG (Liquefied Petroleum Gas) and CNG (Compressed Natural Gas) Composite Cylinders. The Egyptian Government has already allocated 28,000 square meters of land for the $30 million project in Alexandria; which is the home for the Egyptian Gas Industrial Park. The facility will be producing 200,000 LPG Composite Cylinders for domestic use (cooking) and 130,000 CNG cylinders for vehicles and automobiles. Rungas in conjunction with Amtrol-Alfa Worthington of Portugal are providing the technology and technical know how to set up the type III LPG Composite Cylinder Facility which will be dedicated to domestic use whilst the CNG cylinders produced will be used for vehicles across

Lanre Runsewe, founder/ GCEO of Rungas Group, exchanging documents with Hassan Ahmed Abd Elmagied, vice-chairman & managing director of the National Organisation for Military Production who represented Egyptian Minister of State for Military Production after signing the deal to produce LPG and CNG cylinders for Egyptian government

Egypt. Both products will be exported from Egypt to neighbouring Arab Countries as well as serve the North and Eastern African markets (benefiting from international trade agreements that are already in place). The Egyptian Government have mandated Rungas and their partner United Group to set up the facilities after an extensive product research was carried out and Amtrol facility in Portugal was visited by an Egyptian delegation to carry

out a compliance inspection to ensure that cylinders met all standards for cylinder production in Egypt. The Vice Chairman and Managing Director of the National Organisation for Military Production - Hassan Ahmad Ab Elimagied executed the contracts on behalf of the Egyptian Government and provided his support verbally for the project. Lanre Runsewe, the CEO of Rungas Industries and the Group Chief Executive Officer

NNPC/Eni and FAO commission solar-powered water schemes in Northeast Nigeria

n an effort to improve access to water among the conflict-affected in the northeast, The Food and Agriculture Organization of the United Nations (FAO) and Eni, through its Nigerian subsidiary Nigerian Agip Exploration (NAE), commissioned a water scheme in Bama, Borno State, Nigeria on 15June, 2019. The scheme, involving a solar powered borehole, is the 10th established as part of the Access to Water initiative implemented by Eni, FAO in collaboration with Eni partner, the Nigerian National Petroleum Corporation (NNPC). The public-private sector partnership will boost access to water for domestic consumption as well as smallscale agricultural activities like micro-gardening. In Bama alone, the water scheme is expected to reach 40 000 internally displaced people and the host community. Through the provision of clean water, FAO and ENI believes the intervention will improve sanitation and help restore livelihoods by making water available for dry season irrigation. In 2018, FAO and Eni established water schemes in Chibok, Biu, Damboa and Gwoza Local Government Areas, all in Borno state. The

first of the five wells provided for the IDPs and host communities in the Federal Capital Territory (FCT) was commissioned in November 2018. The FAO Country Representative in Nigeria and to ECOWAS, Suffyan Koroma, while commissioning the facility in Bama stressed the importance of the activity. “The solar boreholes and FAO’s larger investment in irrigation and water management is a signal of our commitment to support the government of Nigeria achieve her development goals. In the northeast, the availability of safe drinking water and water for agriculture is central to growth and recovery.” Alberto Piatti, Eni’s Executive Vice President for Responsible and Sustainable Enterprise, said: “Access to water is a prerequisite for life. With the water scheme we commissioned in Borno state, we strive to increase access to clean water, thus impacting overall living conditions in the communities and contributing to the stabilization of the area.” The “Access to Water” initiative is implemented in the framework of the Collaboration Agreement between FAO and Eni in Nigeria, geared towards achieving www.businessday.ng

Sustainable Development Goals (SDGs), particularly SDG1 - No Poverty; SDG2 Zero Hunger; SDG6 - Clean water and Sanitation; SDG13 - Climate Action and SDG17 – Public-Private Partnerships for the Goals. The water schemes are solar-powered, provided with back-up power system to ensure availability and sustainability. Those dedicated to drinking are equipped with a reverseosmosis plant to treat as well as purify the water. As part of the initiative, the relevant local authorities were also involved to provide support in training and sensitizing the communities on water management and practices for long-term sustainability. Eni has been present in Nigeria since 1962 through its subsidiaries NAOC (Nigerian Agip Oil Company), AENR (Agip Energy and Natural Resources) and NAE (Nigerian Agip Exploration), with both onshore and offshore activities. Eni’s sustainability effort in Nigeria includes activities relating to agricultural development, access to energy, health, training, environmental protection, as well as specific initiatives for stakeholder engagement in local communities and promotion of transparency.

of the Rungas Group of Companies, told BusinessDay that with this partnership with the Egyptians coupled with the ongoing launch plans for setting up a state-of- the-art LPG Composite in Nigeria that Rungas would be a continental force. “Rungas has been an agent of Amtrol Alfa- Worthington, promoting their LPG composite cylinders across the West Africa Sub region – whilst operating an import and supply model we have

been supplying composite cylinders to Oil Majors and Independent retailers across 10 states of Nigeria – clients are Oando, MRS, Forte Oil, Ultimate Gas and Sublime to name but a few,” he said. He said the company has gotten approval from the Ghana Standards Authority to supply and distribute the Ghanaian market with Amtrol LPG Composite Cylinders and was in the process of gaining regulatory approvals in Cameroon and Cote D’Ivoire. Runsewe advised that the Type IV CNG Composite Cylinders that would be produced would be the first of its kind in Africa, Asia and Middle East continents. The cylinders according to him would be in two sizes – The LPG Cylinders would have a capacity of 60 Litres for domestic use and the cylinders for the public vehicles would be 80 Litres. He also stated that “CNG is important for the Egyptian Government because of the need to run on cleaner fuel and also to meet IMF condition which advised the country to reduce fuel subsidy”. The Ministry of Armed Production has actually engaged with CNG operators who currently import the

product from India, China and Italy to embrace this new development. In addition to the land contribution, The Egyptian government is also providing regulatory and off take support whilst all funding and financial support for the project is being sourced through private equity. The raw materials to be used for the production are to be sourced locally from SIDPEC which is the largest petrochemical company in Egypt – they are expected to supply a significant portion of the raw materials for both manufacturing lines. Runsewe has revealed that the groundbreaking for the project would be in September 2019 Projecting that production of LPG cylinders is expected to start within nine months from the groundbreaking date whilst the launch date for the CNG Composite Cylinders is 18 months. The Rungas Group of companies is an integrated company whose mission is to expand the use of LPG as a cleaner fuel and fuel of choice for Africa as a whole. Their footprint can be seen across the entire value chain of LPG in Nigeria.

Sahara Group canvasses more investment in Africa’s E&P business

il and Gas businesses in Africa need to intensify exploration efforts to guarantee reserve replacement and enhanced capacity to meet growing demand and global competition, Olajumoke Ajayi, managing director, Asharami Energy (A Sahara Group Upstream Company), has told participants at the Oil and Gas Council’s Africa Assembly in Paris. Ajayi noted that Africa’s large volumes of undiscovered oil and gas make the continent a veritable frontier for investment, adding that operators need to adopt new

technology, explore alternative cost saving measures, ensure sustainable community relations, and build diverse multidisciplinary teams to ensure successful exploration projects. In her presentation, “Renewing Players Commitment to Exploration and the Importance of Community Engagement in Capital Intensive Projects”, Ajayi cited the downturn in global oil prices and the corresponding negative effect on investor funds and returns as factors that have made a good number of Exploration and Production (E&P) compa-

nies in Africa cut down on investments, delay Final Investment Decision (FID) or totally stop embarking on new capital projects. “Consequently, producing companies continue to pump oil from operated mature fields thereby depleting existing reserves with non-corresponding efforts for reserve replacement via new exploration discoveries. The big question remains whether or not E&P players should commit to exploration and how players can justify this commitment in the face of lower oil prices,” she stated.

Total signs SPG with UNITAR to Promote plastic recycling in Nigeria

fforts to reduce plastic pollution and help save the environment have received a boost with the signing of a Special Purpose Grant (SPG) between Total in Nigeria and the United Nations Institute for Training and Research (UNITAR). The agreement was signed on the 1st April 2018 in Lagos, Nigeria and countersigned by the UN Assistant Secretary General Executive Director, UNITAR In his remarks, Nicolas Terraz the Managing Director, Total E&P Nigeria, Ltd., represented by Vincent Nnadi. executive general manager, Corporate Social Responsibility (CSR), said, “We expect that this project will bring a

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turnaround to the Nigerian recycling sector and also create employment at every step of the value chain.” In his response, Country Head & Resident Representative of UNITAR, Lawrence Boms stated, “This is not the first time we’ve been in partnership with Total. We know the Sustainable Development Goals are not done on paper; you have to do practical things to create employability; and do something to save the planet. That is why we are really interested and happy to partner with Total this time again.” The two-year Project is expected to create employment, induce research and finally unbundle opportunities to small @Businessdayng

and medium scale enterprises. The grant will be managed by UNITAR with an implementation committee to create a full cycle recycling plant which will be located in Port Harcourt, Rivers State. As the Responsible Energy Company, Total is committed to the preservation of the environment and considers plastic recycling a sustainable path to this commitment. The company is therefore ready to engage with all stakeholders on specific projects dealing with better recycling, waste management, eco-design, etc. Total also actively supports initiatives in environmental awareness and education.

Thursday 27 June 2019

BUSINESS DAY

Investor

In association with

Helping you to build wealth & make wise decisions Market capitalisation

NSE All Share Index

NSE Premium Index

N11.721 trillion

Week open 14 – 06–19)

31,924.51 30,046.70

N13.233trillion

30,046.70

Week close (21– 06–19)

29,851.29

N13.155trillion

29,851.29

Year Open

2,241.37

The NSE-Main Board

1,456.29 1,236.14 1,230.10

NSE ASeM Index

NSE 30 Index

NSE Banking Index

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

130.95

723.46

NSE Lotus II

NSE Ind. Goods Index

NSE Pension Index

291.84

2,272.45

1,254.54

1,212.79

801.09

1,438.19

426.64

782.29

1,242.32 1,245.28

356.98

115.98

612.95

249.76

1,984.02

1,054.80

1,043.96

366.01

125.65

602.91

251.53

1,953.45

1,088.24

2,410.09

782.29

Percentage change (WoW)

-0.65

-0.77

-0.49

0.00

Percentage change (YTD)

-5.02

9.80

-14.57

-1.45

0.24

2.53 -12.13

-8.25

8.34 -0.66

-1.64 -19.49

0.71 -16.78

-1.54 -12.56

3.17

0.84

-12.09

-12.82

Airtel Africa: Focus shifts to offer price as Book Building closes tomorrow Iheanyi Nwachukwu

irtel Africa, a unit of India’s Bharti Airtel Limited intends to list its shares on the Nigerian Stock Exchange (NSE) at the same time as the London Stock Exchange (NSE). Airtel Africa announced plans of an Initial Public Offering (IPO) of shares worth $780million (N270billion) on the premium board of the London Stock Exchange (LSE) and subsequently, the Nigerian Stock Exchange (NSE). The proceeds from the offer will be used to offset the company’s net debt. The Book Building for the planned Initial Public Offering (IPO) which opened on June 18 closes tomorrow June 28. Through the Book Building process, the underwriters attempt to determine the price at which the IPO will be offered. Offer price, offer size, and allocation The offer price, which ranges from N363 to N454 per share according to the offer document, is still an indicative price subject to the outcome of the ‘Book Building’ exercise by the company. The number of shares at the lower price range is 676.406million units while at the top of the price range are 541.12million units. The Offer size ranges from $501.12million to $716.40million. The market capitalization of the company is $4.18billion. The official announcement of the offer price, offer size, and publication of the pricing statement

and allocation of ordinary shares will be done on same day (June 28). On June 29, new ordinary shares will be allotted to the shareholders, while the shares will be admitted for trading on the Nigerian Stock Exchange (NSE) on July 4. Participation is restricted to Qualified Institutional Investors and High Net worth Individuals. Meanwhile, some market operators are setting up Special Purpose Vehicles (SPVs) to aggregate the demand of retail investors. Upon successful completion and listing on July 4, 2019, all shares will be crossed into investors’ CSCS account. Parties to the offers Barclays Securities Nigeria Limited and Quantum Zenith Capital & Investments Limited are the Nigerian Joint Issuing Houses while Greenwich Securities Limited and Chapel Hill Denham Advisory Limited are the Nigerian Receiving Agents. J.P. Morgan Securities plc is the Sponsor, Joint Global Coordinator and Joint Bookrunner to the Offer; while Citigroup Global Markets Limited and Merrill Lynch International are the Joint Global Coordinators and Joint Bookrunners. Absa Bank Limited, Barclays Bank Plc, BNP PARIBAS, Goldman Sachs International, HSBC Bank plc, and The Standard Bank of South Africa Limited are the Joint Bookrunners to the Airtel offer. Freshfields Bruckhaus Deringer LLP is the English and US legal advisers to the Company. AZB & Partners is the Indian legal advisers to the Company, while Abdullahi

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Ibrahim & Co is the Nigerian legal advisers to the Company. Olaniwun Ajayi LP is the Nigerian legal advisers to the Managers; Zenith Bank Plc is the Receiving Bank, while the Registrars branch in Nigeria is United Securities Limited. Nigerian Joint Stockbrokers are Barclays Stockbrokers Nigeria Limited, Quantum Zenith Securities & Investments Limited, and Chapel Hill Denham Securities Limited. Financials As at 31 December 2018, the Group was the second largest mobile operator in Africa by number of active subscribers, according to Ovum.

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The Group’s footprint is welldiversified, serving an aggregate of 98.9 million subscribers and 14.2 million mobile money customers across its footprint as at 31 March 2019. Nigeria represents the Group’s largest single country subscriber base, comprising 37.6percent of the Group’s total subscribers as at 31 March 2019, with 43.4percent of subscribers in East Africa and the remaining 19.1percent in the Group’s Rest of Africa segment. In the year ended 31 March 2019, revenue in Nigeria was $1,106 million (representing 35.9percent of the Group’s revenue in the year) and

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Underlying EBITDA was $550 million. In the year ended 31 March 2019, revenue in East Africa was $ 1 . 1 0 2 b i l l i o n ( re p re s e n t i n g 35.8percent of the Group’s revenue in the year) and underlying Earnings before interest, tax, depreciation and amortization (EBITDA) was $442 million. In the year ended 31 March 2019, revenue in rest of Africa was $888 million (representing 28.9percent of the Group’s revenue in the year) and Underlying EBITDA was $339 million. Certain significant changes to Continues on Page 23

Thursday 27 June 2019

BUSINESS DAY

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United Capital Investment Views

Investor’s Square

Corporate actions, primary market activities dominate NSE

he equities market closed bearish in the prior week despite a flurry of corporate actions. The NSEASI dipped 0.6percent to close the review week at 29,851.3 points. Consequently, market capitalisation contracted N 7 8 . 1 b i l l i o n t o e n d at N13.1billion while year-todate (YtD) return worsened to -5percent. Except for the Consumer Goods (-2.7percent) and Agricultural (-5.4percent) sectors indices which closed lower, due to price declines in NESTLE (-5.6percent), INTBREW (-10percent) and OKOMUOIL (-10percent), all sector within our coverage had a bullish week. The Insurance (+8.7percent), Industrial (+3percent), Banking (+2.8percent) and Oil & Gas (+1.8percent) all trended nor thwards, buoye d by increased buying interest in WAPCO (+18.5percent), NEM (+33.3percent),

equity stake in Telluria Limited effective from May 7th, 2019. Similarly, Lafarge (WAPCO) Africa Plc released its longawaited financial result for FY-18 and Q1-19 reporting a Revenue growth of 3.1percent to N308.4billion for FY-18 while PAT stayed negative at -N8.8billion. For Q1-19, Revenue fell 2.6percent to N78.5billion while PAT rose 257.1percent to 3.1billion due to tax credit. To resolve its protracted challenges around financing, the company announced the indirect sales of its South African operation to its parent company Lafarge Holcim, subject shareholder approval. Following closely with MTNN’s recent listing on the NSE, Airtel Africa Plc released the prospectus for a global initial public offer (IPO) of ordinary shares worth $780million (or N270billion). The Company is expected to be admitted to the premium listing segment of the main board of the London

A C C E S S ( + 7 . 8 p e rc e n t ) , LINKASSURE (+37.5percent), ETI (+15.2p ercent), FO (+6.1percent) and MOBIL (+4percent). Investors’ sentiment as gauged by market breadth was upbeat at 1.2percent as 34 stocks advanced against 29 decliners for the week. Notably, performance across the market is driven by a flurry of corporate activities across sectors. Forte Oil Plc announced the completion of the transfer of 75percent direct and indirect shareholding of its erstwhile chairman’s interest in the downstream to Prudent Energy through Ignite Investments and Commodities Limited. Also, Ellah Lakes Plc announced the listing of 1.9billion ordinary shares at 50 kobo each on the exchange for the acquisition of 100percent

Stock Exchange (LSE) at the end of the transaction. Additionally, a Nigerian offer of the issue is opened at an offer price expected to be between N363 and N454/share which will be followed with a secondary market listing on the NSE. This week, we expect market on a quiet note, however, we expect portfolio manager to take some adjustment to rebalance their portfolios as Q2-19 closes out by end of the week while positioning for interim dividend in Q3. Money Market: Massive liquidity injection ahead Liquidity position remained at a comfortable level in the prior week as the CBN held off from floating any OMO auction for the second consecutive week, despite an OMO maturity inflow (N74.6bn) that hit the system on Thursday. Key naira

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liquidity outflow for the week was from the weekly wholesale FX funding sales, conducted on Monday. Meanwhile, inflows from Nigerian Treasury Bills (NTB) maturity and Retail FX refunds were later mopped up via NTB and retail FX funding sales. In all, average interbank funding rates (OBB & O/N rates) trended largely in the single digit region to close the week at 9percent. The improved liquidity status and the lack of primary market issuances prompted some banks to stay active at CBN’s Standing Deposit Facility (SDF) to deposit excess funds throughout the week. The Apex bank conducted its bi-monthly NTB auction, wherein it successfully re-financed total maturing bills worth N17.6bn. Given the relatively small size of the amount issued, level of demand improved as average bids worth 7.6x (last auction 2.0x) of the offered amount turned up, though skewed largely to the 364-day tenor with a bid cover ratio of 11.0x. Thus, stop rates at the auction cleared lower to previous levels, declining by 40bps, 6bps and 32bps on the short, mid and long tenors respectively. In the secondary NTB market, the continued absence of an OMO auction and significant declines in stop rates at the primary NTB auction gave the bulls a leg to run. However, bearish sentiments prevailed at the end of the week as average yields increased week-onweek (w/w) by 3bps to close at 12.45percent. This week, we expect market sentiments to remain guided by the level of liquidity in the system. Also, given the significant level of liquidity expected to hit the system during the week – OMO maturity (N33.8bn), Jun-19 Bond maturity (N351.3billion) and May-19 FAAC distribution to States & Local Governments – we expect the CBN to resume OMO sales. Bond Market : Bullish sentiment across segments During the prior week, the Debt Management Office (DMO) reiterated the FG’s stance on giving preference to concessional sources of borrowing to other commercial sources like Eurobonds, in 2019.

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

Economy & markets

Connecting the capital market to infrastructure (2) Continued from last week

Osaro Eghobamien

nvestors in the capital market who have the ability and appetite to sustain long term debt, will be pleased to have their principal and interest paid back through fares and fees from passengers. For those who are unable to wait for such long-term repayment in the capital market, they have the ability to trade their security. In essence, the very idea of converting an asset into capital market security is to raise money from the capital market and create these new classes of investors. The twin objectives of transferring assets to investors and at the same time creating a capital market instrument can only be achieved by using a transformative device known as a Special Purpose Vehicle (SPV). An SPV is like any other company. However, it is specifically created for the purpose of holding assets transferred by the originator and in itself issues the tradable securities. The holders of the security, in a manner of speaking, have a claim toward the assets originally held by the sponsor of the originator. Although this model is slightly more complex in comparison to other financing models, many governments including those of the United States of America, the United Kingdom and India (whose system is very similar to that of Nigeria) have keyed into this innovative means of funding, and applied securitization

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transactions to meet their ever-increasing financial obligations. For secur itization to work effectively, some of the ministries and federal agencies will have to amend their rules to enable them accommodate asset backed security. Fortunately, the SEC and FMDQ (FMDQ OTC Securities Exchange) have since amended their rules to enable the listing of an asset backed security. The Nigeria Stock Exchange and the Corporate Affairs Commission are both in the process of amending their rules to accommodate this method of funding. The lack of clear provisions on taxation of securitization transactions can have negative implications. In this regard, the Federal Inland Revenue Service (FIRS) has not been proactive in creating a clear taxation framework for such transactions. Similarly, though bank assets are susceptible to securitization, the Central Bank of Nigeria (CBN) has been unable to formulate clear rules on how securitization will affect banks’ capital adequacy ratios. Legal issues relating to securitization tend to be complicated; partly because m o s t c o u nt r i e s d o n o t have comprehensive laws. Otherwise, where the laws exist, there is insufficient clarity. Securitization represents a delicate balance between pure financial transactions (economics) and the sale and purchase of financial assets (law). Being a relatively new mechanism, many would-be stakeholders and concerned parties

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(lawyers included) do not have a very deep understanding of securitization. In order to ensure that investors don’t lose money, there is usually protection against all sorts of imaginary risks, making the transaction rather complicated. The sum total of all these, is that there must be an effective training for all stakeholders in the programme as well as advisers. Fortunately, this process has long begun with SEC & FSS (Financial Systems Strategy) taking the lead. Relevant stakeholders have taken the initiative to deepen the capital market to achieve its objective in funding infrastructure. It is now left for the new administration to take advantage of this initiative. The government simply needs to perfect the architecture necessary for alternative funding. Above all, it requires the political will to take what may be perceived as a rather unpleasant economic decision; by introducing a cost reflective tariff in connection with major infrastructure. A failure to take the needed initiative will result in an unreserved apology from the administration concerning the state of infrastructure in the next four years. This would be most unfortunate as they would indeed have spent billions on infrastructure, but this will still be grossly inadequate; bearing in mind the current deficit and with the population growth currently moving at a higher percentage than GDP. Osaro Eghobamien, SAN Managing Partner Perchstone & Graeys

Thursday 27 June 2019

BUSINESS DAY

Investor Helping you to build wealth & make wise decisions

Julius Berger: Advancing into strong phase of growth

Continued from page 25

…Stocks rally by 4% year-to-date, outperform NSEASI Iheanyi Nwachukwu

espite challenges in the building and construction sector of the Nigerian economy, construction giant, Julius Berger Nigeria Plc will continue to be in a strong position to succeed, its Managing Director, Lars Ritcher said. Ritcher also said that notwithstanding the challenges yet to be faced, Julius Berger’s confidence is bolstered by the company’s robust order backlog and diversified portfolio which includes projects of national priority funded reliably from outside the Federal Budget. While stressing that as the company is in a phase of growth, he said it aims to grow with efficiency in resource utilisation and administration, to ensure a strong profit and shareholder value. Furthermore, to remain competitive and cost effective, Julius Berger said it will continue to engage in and build on strategic partnerships as key to improving domestic procurement, where the required quality is available. “We will continue to aggressively tender for high potential projects that fit to our strategy and strengths.” Ritcher spoke at the company’s Annual General Meeting held last Thursday in Abuja. The event at the Shehu Musa Yar’Adua Centre was awash with satisfied shareholders who ceaselessly applauded the encouraging progress Julius Berger has made compared to its fortunes in the not too distant past. As at June 24, the share price of Julius Berger at N20.90kobo indicates a 4 percent gain this year, outperforming the NSE All Share Index (ASI) which was down same period by -5.16percent. The share price had reached a 52-week high of N30 and a corresponding low of N19.50. Julius Berger has 1.32billion units of outstanding shares valued at N27.58billion. In the financial year 2018, Julius Berger Nigeria Plc group’s revenue increased by 37percent; Profit Before Tax (PBT) increased by 173percent, total comprehensive income increased by 47percent; earnings per share increased by 47percent, while shareholders equity rose to N35billion during the review year. Richter further said that Julius Berger’s strength is further reinforced by its commitment to innovation and the pioneering of state-of-theart construction technologies, and by her leading quality management systems, unmatched HSE performance, and highly skilled and dedicated workforce, adding that Julius Berger has a firm competitive edge in Nigeria’s construction sector, underpinned by its unbending pledge to quality, reliability and integrity. Speaking on ongoing projects being undertaken by Julius Berger, Richter said that since its flag-off in June 2018, considerable progress has been achieved on the Abuja-Kaduna-ZariaKano Road. He disclosed that Julius Berger is working across all three road sections simultaneously, he said the objective is to deliver a timely solution for the complete rehabilitation of this key infrastructure which connects half of Nigeria’s population residing in the North to the rest of the country. Furthermore, on the same project the Managing Director said Julius Berger has pioneered the use of cold recycling methodology which provides for the milled-off pavement to be recycled and improved for reuse in paving the base layer of the road. “This solution offers many social and environmental benefits and leads to a more cost effective and timely road rehabilitation. Our strategy is to rollout this solution for other future projects and we believe that as the pio-

Lars Ritcher

neers of Cold Recycling methodology in Nigeria, Julius Berger is in the position to revolutionize road rehabilitation across the nation”, he said. He disclosed that the Lagos-Shagamu Expressway has seen delays and even work stoppage in the past, due to funding challenges. However, Ritcher said that since the resumption of work, a steady pace of progress is being achieved. “Considering that the Expressway is now financed via the Presidential Infrastructure Development Fund, we presume that we will be able to achieve an uninterrupted pace of work with the new funding structure”, Ritcher said. “It is widely understood that this road has a significant impact on the development of Lagos, on the nation’s economic advancement and on safety and quality of life for so many individual road users. “Julius Berger remains fully committed to completion of this complex project, for the benefit of all,” the Managing Director said. On the Bodo-Bonny Road, the Chief Executive told shareholders that in the past year, the company has also made progress on the construction of the Project. “Technically, the road is a massive and highly challenging undertaking –with a scope of work comprising not only roads, but also several bridges and cross culverts… to be realized in a very tough natural environment, through lowlying marsh and swampy areas with tidal movements. Socially and economically, the road is a milestone project for the advancement of the Niger Delta. As the first road link between the Island and the mainland, the Bodo Bonny Road will enable greater access for the development of infrastructure on Bonny Island, particularly in view of the NLNG Train 7 Project which we all hope will come on stream soon,” he stated. According to Ritcher, as the first major contractor to enter Bonny Island over 20 years ago, Julius Berger has the experience and the technical knowhow to deliver the needed solutions the way and pace the company is working now.

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On the Okpai Power Plant, Phase 2, Ritcher said that Julius Berger’s expansion into the Power Sector has proven successful. He said this is because with the commissioning of the Azura IPP, the high potential tender for the Ikeja Power Plant, and the success we continue to achieve in carrying out our scope of work on phase 2 of the Okpai Power Plant. “The scope comprises mainly piling, foundation and infrastructure works for the extension of the existing power plant. Construction activities continue to meet client expectations as well as the highest Health, Safety and Environmental industry standards”, he added. Besides, he said Julius Berger has been able to align itself as a strong logistics partner by handling the clearing, marine transport and land transport of the Plant’s Gas Turbine, adding, this was done via Julius Berger Services Nigeria’s Warri Port operations, together with Julius Berger’s land transport fleet. “Power is a key sector for the future of Nigeria and for Julius Berger. We now have the proven experience and knowhow to continue growing our portfolio in the sector,” the Managing Director said. Emphasising that in terms of mega-projects, Julius Berger’s latest project, Dangote’s Petroleum Refinery Project is clearly one where the company is proving its expertise, Ritcher said that Julius Berger has been successful in delivering the needed basic infrastructure within its scope of work, and due to good performance, have achieved additional scope. Even as he highlighted the giant strides of the company in several other spheres, the Managing Director was hopeful that Julius Berger will continue to strengthen its core construction business, balancing drive for efficiency and effectiveness with commitment to a standard of excellence second to none. He was thus quick to announce that just last month, “We have been awarded a substantial building project, the NSA headquarters in Abuja, further bolstering our portfolio of key acquisitions.”

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Airtel Africa: Focus... the Group’s financial condition and results of operations occurred during the year ended March 31, 2019, 2018 and 2017. Revenue increased by $167 million, or 5.74percent, to $3.077 billion in the year ended March 31, 2019 from $2.910bmillion in the year ended March 31, 2018. Revenue increased by $26 million, or 0.90percent, to $2.910 billion in the year ended March 31, 2018 from $2.884 billion in the year ended March 31, 2017. Profit for the year increased by $584 million, to a profit of $450 million in the year ended March 31, 2019 from a loss of $134 million in the year ended March 31, 2018. Loss for the year decreased by $635 million to $134 million in the year ended March 31, 2018 from a loss of $769 million in the year ended March 31, 2017. Dividend policy Airtel Africa board understands the importance of dividend payments to shareholders and of maintaining a reasonably conservative policy in respect of liquidity and leverage. As such the Group’s dividend policy is to return surplus cash to shareholders when it is concluded by the Board that: the Group does not have suitable avenues to generate significantly higher returns on such surplus than what a common shareholder can generate or that by returning such surplus, the Group would be able to improve its return on equity, while simultaneously maintaining a prudent and reasonably conservative leverage. In line with this policy, at the individual operating country level, the Company will recommend to the local boards a dividend payout of a minimum of 80percent of the free cash flow at the country level as long as a ratio of net debt to underlying Earnings before interest, tax, depreciation and amortization (EBITDA) between 2.5 to 3.5 times is maintained, subject to all regulatory, statutory and monetary restrictions. Trends affecting the Group and the industry it operates Africa is one of the world’s fastest growing regions, whether measured by GDP growth, population and urbanisation growth, or in terms of rising income levels and an increasing middle class. The group Airtel Africa Limited is the holding company of the Group. The Group has a number of direct and indirect subsidiaries, including telecommunications companies, through which the Group provides mobile and fixed voice and data services, mobile commerce companies, through which the Group provides mobile financial services (“MFS”), tower companies, through which the Group holds its tower portfolio and a submarine cable company, through which the Group has access to submarine cables to support the provision of international voice and data services. Major shareholders As at the date of the Offer prospectus, the major shareholders of the Company are Bharti Airtel Limited, through Airtel Africa Mauritius Limited and Network i2i Limited (the “Major Shareholder”), Dawn L.P., Dawn 2 L.P., Warburg Pincus (Ganymede) Private Equity XII (Cayman), L.P., Warburg Pincus (Europa) Private Equity XII (Cayman), L.P., Warburg Pincus (Callisto) Private Equity XII (Cayman), L.P., Warburg Pincus Private Equity XII-B (Cayman), L.P., Warburg Pincus Private Equity XII-E (Cayman), L.P., Warburg Pincus XII Partners (Cayman), L.P., WP XII Partners (Cayman), L.P., Warburg Pincus Private Equity XII-D (Cayman), L.P., (together, the “Warburg Pincus Parties”), Singapore Telecom International Pte Ltd (“Singtel”), Evans Investments Pte. Ltd (“Temasek”), Hero Inc. Limited (“Hero”), Indian Continent Investment Limited (“ICIL”), SB Fast Holdings (Cayman) Limited (“Softbank”) and Qatar Holding LLC (“QIA”, and together with the Warburg Pincus Parties, Singtel, Temasek, Hero, ICIL and Softbank, the “Pre-IPO Investors”, and together with Airtel Africa Mauritius Limited (“AAML”), the “Existing Shareholders”).

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Thursday 27 June 2019

BUSINESS DAY

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Thursday 27 June 2019

BUSINESS DAY

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Thursday 27 June 2019

BUSINESS DAY

FEATURE

How NMRC is driving longer term mortgage loans in Nigeria Besides clarity which is a major issue Nigerians have with the mortgage system in the country, accessibility and affordability remain daunting challenges that have denied many home seekers the opportunity to build or buy homes. But efforts by the Nigerian Mortgage Refinance Company (NMRC) at increasing liquidity in the mortgage system is yielding fruit which, though not yet where it is supposed to be, has made significant improvement in both rate and tenor of mortgage loans that could help housing demand side, writes CHUKA UROKO, Property Editor

vailability of liquidity for mortgage lending in Nigeria is a critical factor in driving the demand side of the housing market, especially towards reducing the growing housing deficit. The affordability of mortgage loan is further determined by mortgage interest rate, the tenor of the loan, the cost of the house as well as the earning potential of the prospective homeowners. Five years ago, prospective homeowners seeking a mortgage loan from commercial banks and primary mortgage lenders to build or purchase a property had to confront, on a greater scale, the twin problems of housing finance availability and affordability. During that period, banks were only giving loans to a select circle of clients under very stringent conditions. This included short mortgage loan tenors of not more than two years and high interest rates that ranged between 17 – 28 percent per annum. Underlying this reality were fundamental weaknesses in the country’s housing finance market. First, 90 percent of funds available to commercial banks were short-term deposits that are not appropriate for funding long-term assets such as mortgages. Second was the dearth of long- term commercial mortgage facilities. Primary mortgage lenders and other financial institutions held a paltry 1.0 percent of institutional savings, which were grossly inadequate to create any meaningful impact on the growing housing deficit. Above all was the complete absence of a secondary mortgage market to drive access to long-term liquidity and act as catalyst for sustainable mortgage and housing development. Early positives of a new housing finance market Today, the situation has improved significantly. A notable example is the dramatic increase in the tenors of private sector mortgage loans in the past four years. Commercial and primary mortgage lenders now offer housing loans that are payable over periods of up to 15 to 20 years. This is a significant increase in the maximum tenors of two years obtainable before now. The implication for potential homeowners is that there are now convenient payment options that enable them to own their dream homes and pay over a long stretch. There is also a deepening of mortgage penetration and adoption of mortgage as the pre-

Kehinde Ogundimu, MD/CEO NMRC

ferred option for homeownership by potential homeowners. Additionally, interest rates charged on mortgage loans have also dropped. Housing industry statistics reveal that interest rates on housing loans charged by commercial banks and mortgage lenders now range between 17 – 19 percent. This represents an appreciable comparative decline from the interest rate cap of 28 percent that held sway in the industry over a long time. The NMRC difference These historic improvements on the path to affordable homeownership in the mortgage industry are due, largely, to the role that the Nigerian Mortgage Refinance Company (NMRC) is playing in boosting availability and access to long-term funds by financial institutions. The company, which commenced operations in 2015, has done a decent job of laying the groundwork for a modern housing finance system for the country. This includes taking initial strong steps to enhance access to long-term finance that has constituted a major barrier to homeownership and the standardization of mortgage lending through the adoption of a Uniform Underwriting Standards aimed at setting a foundation for homogeneous mortgage origination At the heart of this development has been the company’s ability to create a handshake of trust and mutual benefit between the mortgage www.businessday.ng

industry and the capital market, thus unlocking its long-known potential as a source of long-term finance for driving mortgage and housing growth and development in the country. One notable implication of NMRC’s work is that Nigeria now boasts of a viable secondary mortgage-based housing finance system that was completely absent five years ago. The world over, secondary mortgage market system is believed to be the one that best serves the long-term liquidity needs of the housing market with the United States and Malaysia as prime examples. Under it, the market is regarded as an organized system that involves loan origination, warehousing, securitization and sale to investors. Funds realized from sale of mortgages are ploughed back into the system to create more mortgages, thereby deepening the system and increasing accessibility and affordability to housing finance in the economy. The secondary market system begins with the borrower, who takes a decision to access a mortgage loan and approaches a mortgage institution (primary market) to express his intention. The mortgage firm determines the loan affordability, based on the borrower’s disclosures, credit score and standardized underwriting criteria. Upon satisfactory assessment of the borrower, the mortgage is granted by the bank, a primary market operator. The banks turn around and sell

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the mortgages to secondary mortgage market operators like NMRC. The secondary mortgage operators pool loans of similar characteristics together, transfer/sell the pools to a special purpose vehicle (SPV) from where they are securitized for onward sales to investors as mortgage backed securities (MBS). The funds obtained from these sales are ploughed back into the mortgages. This cash flow sustains and promotes home ownership and delivery by ensuring constant liquidity in the system. Interest and principal payable to investors are expected to be funded from mortgage loan repayments of borrowers. The foregoing, except securitization, describes the current scenario that has been made possible by the NMRC. Since the company commenced operations in 2015, it has pooled mortgage portfolios of its member banks comprising leading commercial and primary mortgage banks and deployed N19 billion raised from the capital market through bond issuances to refinance them. This has empowered mortgage lenders with long term liquidity thereby enabling them to extend mortgage tenors and reduce interest rates. NMRC’s interventions have supported and encouraged commercial banks such as Access Bank, StanBic IBTC, Sterling Bank, Sun Trust Bank, to ramp up their activities in the mortgage space. These banks listed among NMRC’s member mortgage lending partners now have dedicated mortgage desks and innovative mortgage products that target potential homeowners. As NMRC partner banks, they have their mortgage loan portfolios totaling several billions refinanced by the institution. Primary mortgage banks are also enjoying a boost in their liquidity positions because of NMRC’s refinancing of their mortgage portfolios. Examples include TrustBond Mortgage Bank, Imperial Homes, Abbey Mortgage Bank Plc, Homebase Mortgage Bank, Infinity Trust Bank amongst others that are listed as partner mortgage lending institutions. Stakeholder Reactions In his reaction to the positive trend, the CEO of Trustbond Mortgage, Adeniyi Akinlusi, who is also the President of the Mortgage Bankers Association of Nigeria (MBAN) stressed that “before now, there was no long-term fund. But with the entrance of NMRC, there is long-term fund such that @Businessdayng

there is even mortgage for 15 years and more, up from 4-5 years. Again, before now, interest rate on housing loans used to be variable, but today, we have a fixed interest rate which borrowers and lenders can work with. From an interest rate of 22 percent and above, one can today get a mortgage at 17 percent mortgage”. “NMRC has had impact on the housing and the real estate sector generally. This was reflected in the first quarter growth as revealed by the NBS report on the sector. The growth the sector recorded is a result of the increase in investment with loans from NMRC refinanced banks,” he added. Another mortgage operator who preferred anonymity confirmed that before NMRC’s entry into the mortgage space “interest rates on mortgage loans were between 22 percent per annum and 25 percent per annum. In some cases, they were as high as 28 percent per annum, and tenors were mostly 5 years, in a few cases 7 years, and in very rare cases, maybe 10 years. “With NMRC now, we lend at 17 percent per annum and for tenors of up to 20 years, depending on the number of years left to retirement of the borrower. I believe NMRC has impacted positively on the market, based on the above indices and the many market development initiatives they have deployed” The Mortgage operator stated however, that “interest rates still need to come down significantly, pointing out however, that there is nothing NMRC can do about this, as rates are market-driven, and they can’t give out money below the rate they are raising funds from the market, or below the rates government is raising fund from the market. This needs to be addressed by the government and maybe the Central Bank. Overall, positives recorded by the mortgage market in the past four years such as access to longerterm finance by mortgage lenders, increase in mortgage loan tenors for periods of up to 20 years and lowering of interest rates on private sector-driven mortgage loans provide practical proof of NMRC’s potential as an institutional catalyst for sustained mortgage and housing market growth. As the company seeks to expand and deepen its interventions, it inspires hope for a new era of private sectordriven affordable homeownership to complement government owned housing programmes.

Thursday 27 June 2019

BUSINESS DAY

INTERVIEW

‘With our strategies, we will join league of the Big Four’ Having spent 25 years of his career as partner with Ernst & Young, Dayo Elliot Babatunde, started up DEB and CO Chartered Accountants, which specialises in taxation, consulting, advisory services, due diligence, among others. In this interview with BusinessDay analyst, Michael Ani, he explains how the firm is forging on operations in delivering quality services aimed at solving clients’ worries. Excerpt: Kindly give us an overview of this new firm you started he name of the new company or firm is DEB and CO Chartered Accountants. It was coined from the initials of my name meaning Dayo Elliot Babatunde. It is a professional service firm that provides audit services, consulting, tax and advisory to clients in various industries both home and abroad. In this firm, we have a team of professionals equipped with knowledge, skills competence and experience to assist our clients in their various areas of need. So, it is a firm that is forward looking and we want to make sure we contribute our quota to the development of the economy.

am now on what sociologist call reversal of roles by putting myself in the shoes of these clients. For me, my biggest worries would be that these are a new set of people in the industry, would they be able to meet me at the point of quality, efficiency and integrity. All these are worries that would be in their heart. However, like I said before, ones any of them get satisfied by us fulfilling those worries, they would be the ones telling others.

What sector of the economy does DEB falls in DEB falls in what we can call the public accountancy practice industry. Can you give us an overview of this industry and how has it evolved over time? The industry is what people refer to its players as auditors and it has been in existence for several years in Nigeria. In this industry, you have what we call the big players, the middle players and others. The big players are in their own league with very wide international network since they have been around for several years. Some of them have been in existence for over 12o year and are represented in about 170 countries. They are the big players and we refer to them as the four big accounting firms. For the middle players, they are not as big as the big four, but they are firms with many partners. We also have the very small firms, especially the ones with one partner, two partner firms. So it suffices to say that the industry is filled with players at different levels. Also, in this industry, you have those who specialize in public accounting practice. They are referred to as auditors. We also have those specializing in taxation, consulting, advisory and lastly, those involved in carrying out due diligence. In all these, what can we say is your firm’s core area of specialization? Here in DEB, we will specialise and generalise but our main focus will be in consulting, taxation and audit. You are coming into an industry where you have giants. What kind of strategy do you intend to roll out to succeed? I have been in this industry for over three decades so it is not a new terrain for me and my team. Let me be modest by saying that my associate partners also have a robust experi-

Dayo Elliot Babatunde

ence of this industry and they are professionals per excellence. So it is a market that i understand very well and a market that i have been in all through my life because if you mortgage over 30 years of your life in a market, at least you should have understood the market better. So to me, it is not a big deal. I am at home with the dynamism and challenges that the market offers. In coming in, we are creating our own share of the market by anchoring our value proposition which accentuates in providing the best professional and quality service to our clients and growing with their businesses. For us here, our business model is built on three pillars – efficiency, impactful and effectiveness. What really motivated you to take up the mantle in starting up DEB? The prime motivation was that when I exited from EY, I discovered that there were some untapped potentials in the industry and that the energy to serve is still very much in me. I had the burden that there is a need for indigenous firms to change their techniques in the way they service their clients. For me, i want to send filler that even in the professional circle; indigenous firms can still play better with the right orientation, thinking and the right strategies. So I am coming there to contribute my own quota as partners to the economy. You said you are not unaware of some of the challenges that this industry face. Can you tell us some of these challenges? The industry is not insulated from the general economy so most of the challenges faced in the industry www.businessday.ng

are a reflection of the sad economic realities of this nation. First, we have the issue of manpower and it is not that Nigerians are not brilliant, in fact, we are one of the best in the world, I tell you. But the issue is the failed educational system and now, because of the erratic nature of our academic calendar, strike today, strike tomorrow, we discover that people are not well grounded. So, there is need for you as a practitioner to invest in the training of your staff. After their education in the university, you need to shape them before they can satisfy you, so manpower is very important. The second one is the erratic nature of the policies of government. You are not able to accurately project the direction of the economy because of the somersaulting in policies. If you are basing your expectations on a set of statistics, before you wake up, you discover that there is a turn around. That is a big challenge for the industry. What is going to be your niche market? Who are the persons going to need your services? We will be selling our expertise to companies both in the private and public sectors. To individuals, start-ups, businesses etc. However, creating a niche at this time, we are yet to do so because we are plain, focusing on auditing and consulting. Everybody can seek our service. What do you think is going to be the biggest worries for your clients seeking your services? They are in the best position to know what keeps them awake at night. However, without putting any angelic quality to myself, i think I

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What are some of the qualities you expect to see on the path of the regulator that would spur growth? I will love to break the answer of this question into two fold. First is government actions and inactions affecting our clients and affecting our practice. When government enacts new laws, regulations and issues new guideline or directive that have effect on the clients in which we render services to and with new laws and regulations come with the need to change certain practices or services. Government decisions could come in either negative or positive consequences that are capable of instigating social economic growth and development and some of these policies could encourage foreign investment and development in the local market etc. But we are better position as a firm to render proactive services to help clients navigate the uncertainties created by government decisions, actions and inactions. For the president, we expect his cabinet formation to be devoid of any kind of political consideration rather it should be based on merit. The president should consider the pedigree of these people and put the right people in the right position. Also, his ministers should be one that is known for integrity and with relevant experience because it matters a lot. Is there any kind of synergy or collaboration between players in the industry you play? In our industry, there are rooms for collaboration but there are rules that support it. Before you collaborate, you must codify it in a written document that will serve as a memorandum of understanding so you don’t start running to the institute or the regulator to start resolving dispute all the time. However, if you do not have the expertise or you have the expertise but don’t have the capacity, nothing stops you from reaching out to other professionals. How well can you say your pricing is compared to your competitors? As a professional, you should have an idea of your overhead. You will do your costing, you will have total knowledge of the cost, it will take @Businessdayng

you in rendering quality services to your client and that is what you base your pricing on. In the industry, we have what we call the charge out rate, which you use depending on the quality of the professional you are bringing and the time input into that service. We are not saying you will keep others in the dark, but competitors shouldn’t be what drive you in considering your own pricing. The Institute of Chartered Accountant has gotten suggestive guidelines on pricing which you could use to mirror your own. Do you see DEB reaching out to becoming in the middle or among the top four? The big four that you see today, were the tilapias of yesterday. They were able to metamorphose from a tilapia to a whale shark, because of their strategies, policies, because of the way they practice and because if their integrity. This made them able to migrate to this level. So, if they could get there, then what stops me with all these parameters from getting there and even over taking them? In fact, I see myself being there, that’s the truth. I don’t want to be a global accountant with a local mind-set, i don’t want to be a local accountant with a global mind-set, no but that’s the second level, I want to be a global accountant with a global mind-set. And that is what will take me above. You are aiming to get to the league or surpass the big four. Is it going to be by organic or inorganic growth? If you go through the history of the big four, you will discover that most of their growths are not really internal. Somewhere some time in their life, they would move sideways maybe through mergers, acquisition, and affiliation or through globalization. To me, if you want to get there, it depends on the outside. Mind you the big four could have been big two or big one if not for the regulation that prohibits them from coming together. There was a time there was a discussion, between two players in the big four, planning to merge so they could become one, but because of the regulation, they could not see it through. So if you want to become a world player you can’t say you want to rely only on your organic growth because at a point, the demand will be too much on you and that’s why you see some sole practitioner dying in their practice because they want to depend on organic growth. In most cases, it cannot work. So I will get there and it may be through merger, through acquisition, that is something for the future to say but I will gladly take it if I know it is the route that will take me there.

Thursday 27 June 2019

BUSINESS DAY

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Thursday 27 June 2019

BUSINESS DAY

LegalBusiness BD Business Law Industry Report Practice Intelligence Partnerships

NERC consultation paper on the development of a regulatory framework for electricity distribution franchising in Nigeria

n April 18 2019, the Nigerian Electricity Regulatory Commission (“NERC”), published a consultation paper on the development of a regulatory framework for electricity distribution sub-franchising in Nigeria (the “Consultation Paper”).The Consultation Paper was published to intimate the general public regarding NERC’s unwavering intention of improving the access of Nigerians to efficient power supply and comments were to be provided to NERC, by interested parties no later than May 6, 2019. The writer understands that, the precursor to the proposed regulatory framework was a particular electricity distribution company, which wanted to undertake a pilot, in relation to sub-franchising and in its wisdom; NERC sought to have a comprehensive framework for the entire distribution arm of the entire electricity value chain. According to the United States Agency for International Development (USAID) Fact Sheet on Nigeria (last updated March 12, 2019), only 36% of people living in rural areas have access to electricity with 55% of people living in urban areas having access

to electricity. Additionally, the Nigerian Power Baseline Report 2015 (developed by the Advisory Power Team, Office of the Vice President, Federal Government of Nigeria in conjunction with Power Africa) estimated that 95

million Nigerians (approx. 55% of the population) have no access to electricity and those who are connected to the grid face extensive power interruptions. The Power Generation Report dated February 28 2019 released

by the Federal Ministry of Power indicates that the peak power demand for the country currently stands at 23,960 mw (per day) with data from the Office of the Vice President showing that about 4,002 mw (per day) was generated during the month of April 2019. This power deficit has necessitated NERC, as the regulator of the Nigerian Power Sector, to consider alternative options to bolster access of Nigerians to electric power supply. The Consultation Paper issued by NERC, sets out the regulator’s strategy at increasing the number of Nigerians with access to electricity. The aim of this paper is to set out the elements of the Consultation Paper and consider its potential impacts on the Nigerian Electricity Supply Industry (“NESI”). As a starting point, it is pertinent to note that the Consultation Paper is a precursor to the regulation which is to be implemented by NERC upon receipt and further consideration of the theme of the Consultation Paper. As such, the Consultation Paper is not law, but is merely indicative as to what can be expected to be in the regulation to be issued to give the necessary legal regulatory framework.

Key Elements of the Consultation Paper a. Disco Franchising Structure & Exclusivity The Consultation Paper sets the tone for sub-franchising of disco operations to improve efficiency. According to the Consultation Paper, sub-franchising means “the business model applied by a Disco to authorize a 3rd party to provide electric distribution utility services on its behalf in a particular area within the Disco’s area of supply”. The franchising arrangement, thus, contemplates that Discos may engage 3rd parties to undertake activities, which ordinarily be within the Discos scope such as electricity supply, metering, billing and collection. This franchising arrangement may be initiated by either the Disco itself or the community (through registered association) within the Disco’s area of operation. The franchising arrangement may include the following: The Disco supplying electricity to the Franchisee at an identified injection point for a pre-determined fee; The Franchisee supplying power to identified customers of

Continues on page 30

Leveraging general counsel for business growth, expansion G one are the days when inhouse lawyers/general counsel were only attached to organisations or companies to perform the sole responsibility of just being legal advisers. This narrative is gradually changing with in-house counsel becoming part of the people that make key decisions in the organisations or companies they find themselves. However, this evolution is yet to achieve its full potential in organisations across Africa and Nigeria is not left out. It is for this reason that legal experts, Senior in-house lawyers and General Counsels (GCs) from top corporate organisations across Africa met in Lagos on Tuesday June 25, at a summit organised by Nigerian Bar Association section on business law incolaboration with International Lawyers for Africa (ILFA) for GCs and Senior in-house lawyers in Africa to chart ways to shape the role of the African general counsel. The summit which held at Eko Hotel, Lagos brought together large community of in-house counsel to share experiences and learn from each other on how to shape situations around the businesses and companies they operate. Speaking during the event, Ad-

L-R: Cynthia Lareine, ILFA Executive Director, Bidemi Adekola, L-R: Melissa Butler of White & case, Cecilia Akintomide, independent Adeoye Adefulu, NBA-SBL General Secretary/2019 Conference non-executive director, FBN Holdings, Adeola Adebonojo of Cherie Chair and Mellisa Butler, Partner White & Case. Blair foundation and Olatowun Candide-Johnson, GAIA Women Club.

eoye Adefulu Chairman of NBA SBL conference planning committee said the Nigeria Bar Association (NBA) section of Business Law organises an Annual Business Law Conference and this year, it decided to add to it a conference focused on General Counsel and Senior in house lawyers. “In the conference, they share things that deal with the very peculiar issues they face as business leaders and lawyers within the organisation and also issues that deal with their relationships with external lawyers as well. “We have quite a large community of in-house lawyers and because we hold our business law www.businessday.ng

conference every year either in Lagos or Abuja, we thought it was a good idea to come up with this. So we thought doing this event, which precedes the conference, will help create the needed synergies. “It is great to get in-house counsel together for them to sit in a room. They all work in different companies and are from different sectors. This way, they can network and learn from each other. They are able to share their experiences. We think that we can achieve a lot of synergies from internal counsel,” Adefulu said. Speaking on the future of the African GC, he said “If you look at the successes of GCs, a lot of it comes with integrated approach

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with their legal services. GCs play much higher roles whereas before they were very limited to reviewing a few contracts. Right now, people work with the GCs in partnership; they shape the situations around the business. “We now have chief legal officers really being at very high levels of the business because they are integral to making business successful. We have over 100 people in the room and that is a good turnout as those were the people we were expecting.” Also speaking at the event, Cynthia Lareine, ILFA Executive Director, Founder, Lareine Gold Consulting (African focused business development advisory) and organiser of the conference disclosed that it has @Businessdayng

been her desire to do something in relation to corporate counsel, not just in Nigeria but Africa. According to her, this is the first time an event focused on African corporate counsel is holding in Nigeria, adding that the conference gives corporate counsel the opportunity to speak in their own voice and tell their own stories about the things that they need. “The legal community is very diverse. What we are trying to do today is really engage corporate counsel in talking to each other about the differences and similarities of different organisations and also inviting external legal counsel; having them here first hand. This way, they are better positioned to support. The reality is that when you are working in a corporate organisation as a lawyer, it is a very different experience when you are in private practice,” Lareine added. Melisa Butler, partner, White & Case who spoke on ‘Gaining Perspective: Shaping the role of African GC’, said that the importance of the theme was to increase permanence of African companies in international business and finance, which means that as these companies become increasingly

Thursday 27 June 2019

BUSINESS DAY

INTERVIEW

LegalBusiness

AGC delegates to get free copies of supreme court judgments

s part of measures to ensure that the 2019 Annual General Conference (AGC) of the Nigerian Bar Association lives up to its billing as a world-class Conference and to ensure that delegates are FACING THE FUTURE, the Technical Committee for the Conference Planning has firmed up partnership with one of Nigeria’s Law publishers, Legal Jurisprudence Ltd, the publishers of Erudite Judgments of the Supreme Court (EJSC) to give 500 up-

dated copies of reported Supreme court judgments FREE of charge to all confirmed delegates at the 2019 Nigerian Bar Association 2019 Annual General Conference, who register for the early bird. Delegates would be required to bring their laptops, tablets, iPads and Android devices to the EJSC’s pavilion at the Friendship Centre located at Harbour Point, Victoria Island, Lagos.

NERC consultation paper on the development..... may include meter financing, procurement, supply, installation, maintenance and replacement. In the light of this, it may be argued that there is overlap between the Model 1 and the MAP Regulations. It would be crucial for NERC to clarify if the MAP Regulations have been rendered redundant, since the Disco can basically franchise the role of the meter asset provider to a Franchisee. However, it must be noted that the meter asset provider may be blended with the Model 1 such that meter asset providers may be able to qualify as franchisees and undertake metering, billing and collection on behalf of the Disco.

Continued from page 29 the Discos at a tariff approved by NERC; The Franchisee may undertake metering, billing and collection activities or manage the distribution system (including operations, maintenance and upgrade) of the Disco’s system; The Franchisee retaining a portion of the revenue collected from the consumers after the Franchisee has paid the full cost of bulk energy to the Disco; The Franchisee shall work within the ambit and restrictions of the Disco’s licence; The Franchisee may also procure additional generation from off grid sources to augment the Disco’s power from the Grid; The Franchisee may also sell surplus power to the Disco Prior to the issuance of the NERC Eligible Customer Regulations 2017, the Discos were under the assumption that the areas allocated to such Discos in their licence terms and conditions was to be their exclusive preserve. As such, only they could deal with such customers with respect to electricity transactions. Following the enactment of the Eligible Customer Regulations, many of the Discos had claimed that it would not be feasible to comply with the projects and estimations in the Performance Agreements they executed with the Federal Government. Nothing in the law or the licences of the Discos rants them exclusivity and the Consultation Paper further confirms that the Discos have no exclusivity in terms of the customers within their area of operation. With the Consultation Paper, there is a possibility that the Discos may further clamour that their ability to inject CAPEX and OPEX to undertake their obligations under the Performance as well as reap sufficient revenues may be impeded by the Consultation Paper. The necessary response to this would be that to the extent that, the Consultation Paper contemplates that the

Franchisee would pay the Disco the full cost of bulk energy, the Disco’s revenue stream would be sufficiently protected. b. Franchisee Models A cursory review of the Consultation Paper reveals the key franchise models that NERC is proposing for the purpose of the Distribution Franchising. These models are: Model 1: Metering, Billing and Collection (MBC): This Distribution Franchising Model contemplates that the metering, billing and collection of a 33kV or 11kV or a cluster of feeders may be outsourced to a third party, with a view to supplying electricity to rural, semi-urban or urban areas. Model 2: Total Management of Electricity Distribution (TMED): Under the TMED Model, the Franchisee is allowed to maintain the electricity distribution system. Responsibilities of the Franchisee under this arrangement includes meters, distribution transformers, breakers, www.businessday.ng

MBC functions, amongst others. The Franchisee would also be required to undertake rehabilitation and upgrade of the distribution system by investing its own funds and recovering same via a Project Agreement executed with the Disco Model 3: Distributed Generation based Electricity Distribution (DGED): With respect to DGED Model, the Franchisee can undertake procurement of more energy either through bilateral arrangements over the transmission network or embedded at local distribution networks level to meet the electricity deficit of customers within the franchise area. It would be essential to understand how these 3 models would be implemented (particularly Model 1 and Model 3 in view of other NERC Regulations being in effect. In respect to Model 1, there is already the NERC Meter Asset Regulation 2018 which permits Discos to appoint Meter Asset Providers for the purpose of providing metering services which

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In respect to Model 3, the Consultation Paper seems to imply that the Franchisee can indeed supply power to the Discos. It is germane to reiterate that the section 62(2) of the Nigerian Electric Power Sector Reform Act (EPSRA) 2005 states that no person shall own or generate a power generation facility without obtaining a licence from NERC. Thus, where the Franchisee is supplying the Disco with power above 1mw, such Franchisee would be required to obtain a generation licence from NERC (except if NERC grants a derogation in this regard). If this is the case, we are of the view that the whole licensing regime under the Franchisee arrangement may be blurred and cause confusion among prospective investors. It is also crucial to note that even the Franchisee obtains a generation licence, the licence terms and conditions issued to generation licences prohibit generation licensees from engaging in distribution activities. Thus, from a legal perspective, it may not be workable for the franchisee who obtains a generation licensee to supply power to the Disco to also undertake its obligations as a “mini-distributor” under the franchise arrangement. NERC must take note of these dynamics and potential conflicts that may @Businessdayng

arise from the implementation of Model 3. c. Franchising Contractual Framework The element elucidated on, in items (a) and (b) would be outlined in a Franchise Agreement to be executed between the Disco and the Franchisee. According to the Consultation Paper, the Franchise Agreement would provide for Performance delivery/ performance parameters; Asset register; Ownership of assets; Investment plan; Frequency and mode of payment; Payment guarantee; Default events and conditions of termination; Other parameters inclusive of contract period, baseline data, energy NERC is yet to issue a draft/ template Franchise Agreement which would provide potential investors with more clarity as to the how the franchising contracting structure would work. In order to ensure industry contribution to the proposed franchising arrangement, NERC should invite members of the NESI to comment on the draft Franchise Agreement so as to tackle any bankability issues arising therefrom. d. Competitive Procurement of Distribution Franchisees The Consultation Paper indicates that the distribution franchisees would be engaged through a competitive procurement process which would culminate in such franchisee being issued a Franchise Permit. However, in view of Model 1 (described in item b above), it would be necessary for NERC to clarify as to whether meter asset providers would be required to also obtain franchise permits in order to participate in the franchise arrangement.

To be continued from next week

Thursday 27 June 2019

BUSINESS DAY

JEE SECTOR INSIGHT

LegalBusiness

Experts optimistic about changing landscape for competition and consumer protection

xperts at the seminar organised by Nigerian law firm Jackson, Etti & Edu in collaboration with international law firm, Norton Rose Fulbright on Tuesday June 18th, 2019, have expressed hope that the new legislation would bring about best practices in competition, anti-trust and in encouraging business growth Giving his keynote speech at the event, Hon. Justice Nnamdi Dimgba, who set the conversations of the day in motion, shared a historic overview of the developments in competition law in the global scene in a bid to highlight developments in the sphere of competition law up till the current Act. He spoke extensively on the positive change the new legislation would bring about best practices in competition and anti-trust and in encouraging business growth. Dimgba concluded by commending the realistic approach of the Act, adding that the new Act could be likened to a new Riot Act, with the Federal Competition and Consumer Protection Commission (FCCPC) as the new sheriff to keep everybody in line. The seminar, which had four sessions, was attended by industry specialists, regulators, manufacturers, businessmen, finance and legal service providers and other players in the competition and consumer protection sphere. Each session covered unique angles on the Federal Competition and Consumer Protection Act (FCCPA) constituted of three panel sessions and a lone presentation by Mark Griffin of Norton Rose Fulbright. Earlier, Mark Griffins, Director, Norton Rose Fulbright, in his opening remarks set the tempo for what turned out to be a most enlightening and engaging series of discussion on dicey issues pertaining to the new Act, which the event had in focus. The first full session was a panel discussion moderated by Kunle Soyibo of Jackson, Etti and Edu, and was constituted by Babatunde Irukera, Chief Executive of the Federal Competition and Consumer Protection Commission, Prof. Ademola Oyedije, Profesor Emeritus, Department of Economics, University of Ibadan), Hon. Justice Dr. Nnamdi Dimgba (Competition Expert and Justice of the Federal High Court) and Mrs. Folasade Olusanya, (Industry Specialist and Partner, Corporate Commercial Practice, Jackson, Etti and Edu. The topic ‘The FCCPA and what it means for business in Nigeria; an expert’s perspective’ and it was aimed at unraveling the realities the new act was set to introduce into the business sector, addressed from the combined viewpoint of industry specialists, academic specialists and the key regulator. They touched on issues such as how the FCCPC intends to manage

L-R: Babatunde Irukera, Chief Executive, FCCPC; Prof Ademola Oyejide, Professor of Economics, University of Ibadan; Hon. Justice Nnamdi Dimgba, Judge, Federal High Court of Nigeria (Keynote Speaker); Adekunle Soyibo, Sector Co-Head Financial Services, Jackson, Etti & Edu (Moderator); Folasade Olusanya, Partner, Jackson, Etti & Edu (Convener) at the 2019 JEE FCCPA Conference.

L-R: Tobechukwu Okigbo, Executive Corporate Services, MTN Nigeria; Taiwo Adeshina, Partner, Jackson, Etti & Edu; Olusola Carrena, Head of Corporate Finance, Stanbic IBTC Capital; Abidemi Ademola, General Counsel & Company Secretary, Unilever Nigeria; Obafemi Agaba, Partner, Jackson, Etti & Edu; Deputy Director Legal, Regulatory & Tax, NECA at the 2019 JEE FCCPA Conference.

L-R: Dafe Akpeneye, Commissioner, Licensing, Legal & Compliance, NERC; Mfon JEE Partners, Uwa Ohiku, Femi Agaba and Chinyere Okorocha Bassey, Deputy Director Mergers & Acquisitions, SEC; Okey Nnebedum, Deputy Sector Head, Health & Pharmaceuticals, Jackson, Etti & Edu; Dr. Terhemen Andz- roadmap towards dealing with Dr. Terhemen Andzenge noted enge, Head of Strategy & Planning, Bureau of Public Enterprises; all Panelists at the future as created by the Act. that the new Act has its opponents, the 2019 JEE FCCPA Conference.

the transition into a new competition landscape, the formula for prioritization the various needs for rules and regulations on different areas of concern, the Commissions approach to delineating regulations and guidelines affected players can follow in obeisance with the new Act as well as options businesses can exploit towards ensuring compliance with the New Act across board. The second session was a singular presentation by competition specialist and cross-jurisdictional competition practitioner, Mark Griffin on the topic ‘Trend in Competition Laws in other jurisdiction’. Griffin engaged the audience with a rich exposition on the competition law systems of other African countries, highlighting areas of similarities between the FCCPA and the competition laws of other jurisdictions and possible areas of operational focus from comparative perspective.

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He particularly directed attention to key areas the FCCPC may be likely to address first in the nascent stages of its operations, drawing from trends noticed in other countries; pointing out merger control and cartel enforcement as key suspects. He concluded by emphasizing the need for regulations to provide clear-cut rubrics on such areas as merger control and restrictive agreements, particularly advising a more relaxed approach towards authorization for agreements with restrictive implications. The third session was another panel discussion, moderated by Taiwo Adeshina of Jackson, Etti and Edu, and had Thompson Akpabio (Deputy-Director of NECA) Abidemi Ademola, General Counsel, GN and Company Secretary to Unilever Nigeria PLC, obechukwu Okigbo, Executive, Corporate Relations MTN Nigeria, Olusola Carrena (Head of Corporate Finance, Stanbic IBTC Capital Limited), and Obafemi Agaba, Partner and FMCG Sector Head, Jackson, Etti and Edu giving industry insight to the implications of the new regime introduced by the FCCPA, to complement earlier discussion on the Act from the experts perspective during the first panel. Abidemi Ademola shared her perspective on how the act affects her company, highlighting that their approach was that of first understanding the act thoroughly rather than jumping into a frenzy, and to subsequently devise a

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Tobechukwu Okigbo, averred that as for his company, being a player in the communications scene, they already had strict regulatory rubrics to work within at the instance of the NCC. He was however quick to note that they are positively disposed to regulation as it may not only be necessary to protect everybody but could also have positive business implications for them too. His only concern, as he noted was how well the various agencies now having concurrent jurisdiction in industries like his such as the NCC and the FCCPC, would be able to properly navigate through cross agency relations and work towards an inclusive, robust and efficient regulatory environment. He shared that with respect to companies with dominate status the new regime should focus more on breaches of competition laws per say, rather than taking an ex ante approach aimed at limiting dominance rather than punishing its abuse. The Final engagement for the day was another panel session, moderated by Mr. Okey Nnebedum and had Dafe Akpeneye, Commissioner Legal, Licensing and Compliance, Nigerian Electricity Regulatory Commission, Mfon Bassey, Deputy Director, Mergers and Acquisitions Division of the Securities and Exchange Commision, and Dr. Terhemen Andzenge, Head of Strategy and Planning, Bureau of Public Enterprises, who wound down the sessions with insights into the regulators perspective on the new regime. @Businessdayng

some being other industry regulators, due to its radical approach to revitalizing the competition plains in the country but insisted that the Act would be a success. He shared that the Act rather than being divisive, created a forum of sorts where regulators can come together under one single mandate and work in synergy. Mfon Bassey averred that monopoly is the enemy of development and insisted that shifting of it’s merger control mandate to the FCCPC need be viewed from a utility perspective as it is a move to further counter the true evil. Dafe Akpeneye enthused that the relationship between NERC and the FCCPC was completely complimentary and creates as avenue for a more robust engagement towards more utility for consumers across board. He further shared his disagreement with the viewpoint that FCCPC was to be a regulator of regulators as regulators are equally given mandate within definite parameters, without one being necessarily above another. The sessions were wound down by the event compere, Adewale Fajana of Jackson, Etti and Edu, who gave a quick vote of thanks to the speakers, panelists and audience for their brilliant indulgence, while Ms. Folashade Olusanya, giving a quick summary of the discussions of the day and highlighted the key takeaways from the engagement to bring the event to a close, shortly afterwards.

Thursday 27 June 2019

BUSINESS DAY

GARDEN CITYBUSINESS DIGEST Rivers Revenue Board completes delineation, set for July 1 rollout of informal sector tax drive IGNATIUS CHUKWU

he Rivers State government through the state’s Internal Revenue Service (RIRS) has announced completion of the delineation exercise embarked upon sometime ago to group the state into various tax zones for effective roll out of its planned Informal Sector Tax Drive (ISTD). The executive chairman of RIRS, Adoage Norteh, who announced this at the conclusion of tax sessions in Port Harcourt last week Friday also announced the setting up of a joint committee with traders unions an other informal sector groups in the state to review processes already worked out and make input to make the harvesting of the tax sources seamless and without chaos, as is the desire of the state governor, Nyesom Wike. He told the well-attended session at the Hotel Presidential thus: “Delineation has placed tax collection into tax zones for the purpose of effective rollout. It is like administrative delineation, too. It helps to place the state in various classifications and net worth categories”. He went on: “We are ready to set up a committee with the informal sector leaders to help on the strategies: They will

••• sets up committee to drive informal sector tax drive ••• says no more space for touting, chaos, in Rivers tax space

help us to work out how to pay (method); how much to pay (rates) that would be fair; and how to protect the interest of everybody (win-win) so as to induce self-compliance and remove touting and chaos in tax collection in the informal sector in Rivers State.” He gave the committee one week to conclude. On the vexed issue of what to do with the unions that had been collecting taxes on behalf of traders but with a lot of confusion, Norteh made it clear thus: “We have decided to work with the unions but not to surrender our responsibilities to them. They can help in generating some tax intelligence such as list of their members and their locations. Assessment is strictly to be done by RIRS. We can even ask the unions to collect and pay into Government account directly and I can approve some commissions for them from what we would have paid tax consultants. We need the unions but they do not have the capacity to help you traders dodge tax payment this time. I am prepared to listen to the unions and work out strategies for effective tax collection in a seamless way. That is all.” He however appointed the

PORT HARCOURT BY BOAT

IGNATIUS CHUKWU

kama, wife of Anthony Akpan, is the immediate past national vice chairman of the Manufacturers Association of Nigeria (South East and South-South) but is more known as ‘Madam Showers’, founder of the Showers Group that has the Showers International Schools. Many say the school is one of the best but arguably the most consistent school in terms of character, ethics and standards in the oil region. Thursday last week, the area around her residence at Woji (Culvert) was jam-packed. Inside, a human traffic trailed to her dining section. There; it was a festival of Akwa Ibom foods. People from Anambra were given priority; for it was in honour (or awe) of their son, Nzubechukwu Peter Ikechukwu, who found love in Uduak, another e of the confident daughters of the Akpans. Nzube is the son of the General Overseer (GO) of Charismatic Renewal Ministries, Cosmas Ikechukwu and wife,

Nabil Saleh of PHCCIMA tells Adoage Norteh of RIRSafter the session

leader of taxi drivers as automatic member of the committee based on the startling revelations he tabled and his offer to help snuff out touting and extortion in the state tax system. He made it clear, too, that chaos would not be allowed to become part of tax collection system in Rivers State. “Look,

we wont accept chaos in tax administration. Be ready to confront touts and put them out of the system. Arrest them if possible. Do not send anybody to come and lobby me. They will extort you and tell you lies. I do not have such relationships that would force me to do what is wrong. I have no father again, no mother anymore”

He reminded the business people how in 2017, the state government shut down payment of all taxes in the informal sector in the state just to provide relief and work out equitable and fair collection and assessment processes. Now, it is time to collect, he stated. He threw more light on the issues of ‘director’s salary’; “There is need to explain this concept again because of several inquiries about it. Directors are taxed for their salaries and this is income tax. When the director earns profit in his business, that profit is also taxed. He cannot use the income tax on his salary to cover for profit made in his firm. Some directors even earn the major income from their profit and depress the salary.” He said the payment platform is almost ready. “The ICT unit has helped us to do that. A seamless process is on the way. All payments are to be made on only one platform; vehicles, land, etc, through your TIN (Tax Identification Number). We are not there yet but we want to ensure things are done properly.’ He went on: Tax consultants are not quacks. So, feel free to consult them, but quacks also exist who promise to help you

fix things in the tax office based on real or imagined contacts they claim to have. “I will help you talk to the executive chairman. Do not believe it. Nobody talks to me for tax.” He threw some light on some issues such as ‘retained earning’: “This is undistributed earning or profit which is taxable.” He talked about ‘small things that cause trouble’ Avoid them, because they are convenient to ignore but cause huge tax troubles for tax payers later, he stated. “Example is when there is disconnection between what you declared and what you really earned as shown in what you really paid”, he said. Norteh announced that RIRS is about to launch its ‘Life style taxation scheme’. “We are perfecting plans to begin lifestyle taxation. This is by assessing your lifestyle against your tax declarations. You may be spending about N10m per year by the school fees of your children, house rent or your own house, your cars and fueling, feeding, medicals, etc, but you file N2.5m as your annual income. How do you run such a lifestyle? Something must be wrong. We want to probe deeper into this to get our taxes.

Ekama’s Akwa Ibom ‘food festival’ for Uduak and Nzube Adeola. Dignitaries filed in from one door and left from the other, after ‘inspecting’ the endless rows of food items and picking the much and the combinations they wanted for sampling. Bonny-born Victoria Brown who attempted to identify the menu penned down at least 17 different types including jollof rice, white rice, fried rice, ukom, editan soup, okoro soup, akang egbang, afang with cow meat and stock fish, curry stew with chicken, unripe plantain with red oil sauce, tapioca, vegetable soup, and many uncountable ones. After the encounter at the food summit, guests retired to canopies outside the building to begin the ritual of seeking the hand of Uduak and getting consent; the tradition that makes African marriages the best and most stable in the world. It may be Akwa Ibom and Igbo cultures but the General Overseer told this writer that the two ethnic groups were geographically contiguous and did not have shocking dissimilarities, and not the food array would dazzle him out of his senses. He said he was rather impressed and reassured that his son was in good hands. Ekama on her own explained that the food summit was only to demonstrate the cultural assets that the daughter came from and her ability www.businessday.ng

‘‘

Ekama Akpan

to handle the most important task in her marriage, food. She said a woman must aim to get to her husband’s heart through the stomach. She said Uduak had been drilled in the complex art of cooking all of them. Two days later, Uduak and Nzubechukwu stepped out in grand style at the Love International Centre of the Church (CRM) on Igwe Street at Railway Junction (Rumurolu) to make the vows. Later at the Hub Event Cen-

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Dignitaries filed in from one door and left from the other, after ‘inspecting’ the endless rows of food items and picking the much and the combinations they wanted for sampling

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tre on Peter Odili Road, both young man and wife thrilled the oil city with latest ballet dance steps before doing the African beats; probably to satisfy both continents (London – Europe; and Nigeria - Africa). They mounted a cake tall enough to compete with the height of their aspirations and size of their love. Yet, both Uduak and Nzubechukwu oozed with practised confidence that seem to be the hallmarks of the discipline and competence of the homes both of them were made in. Dignitaries were topnotch and manners were top class. On display were complete social etiquettes that both families were steeped in. Little wonder the just-wedded blended so easily and naturally; same standards, same academic shout-outs, same church, same sense of discipline, etc. Many saw compatibility ready to gum the union for the journey of life. Ekama has a love story that tells of how the Holy Spirit whispered that the dashing young man with afro heading her way years back was to be her husband. It came to pass. One day, Uduak would reveal how she knew Nzubechukwu was the one. They both come from families of whispers; Holy Spirit and all. But the joy on that day and the romance in the air were far louder than whispers.

Thursday 27 June 2019

BUSINESS DAY

Investing in Rivers State Niger Delta social media supplicants find treasure in Belemaoil • As Tamunoemi Gold, others run into gold in Jackrich Tein’s arm Stories by Ignatius Chukwu

radually, Belemaoil and its founder/president, Jackrich Tein Junior, have steadily grown into a kind of ‘Pillar of Rescue’ in the Niger Delta and maybe Nigeria at large. Hardly any day passes without a shout of ecstasy from some indigent seekers who ran into fortune and rescue. Now, 10 indigenes of the oil region who took to social media to solicit for financial rescue have just picked N30m cheques at the headquarters of the indigenous oil company to start live afresh. Since August 2017 when Belemaoil Producing Limited (BPL) unveiled what is today known in the oil industry and the oil region as the Belema Model, no month passes without an aspect of the community development model provoking exclamations and joy in one community or the other. The federal government is said to increasingly look to Belemaoil for inspiration on how oil could provoke peace, not violence, from the oil region. The latest is the shout of joy from a man over 70 years who sang alongside the legendary Rex Cardinal Lawson years ago. His song-mates have all died, almost in penury, but Tamunoemi Gold is alive but in penury too, until the helping hands of Belemaoil whooshed his way. Gold is now clutching a gold in his hands, a plastic cheque containing N5m with which he is to bounce back into music. He is eagerly waiting to move into a bungalow (one storey building) being constructed for him in his Buguma native land by Belemaoil, just to rehabilitate the only surviving member of the Lawson group that beamed joy to Nigerians

helped me to set up a fish farm. We shall reciprocate by making good use of the grants. Mine is fish farming. Let him push forward and God will do it for him. Gloria Ekaro – Ahoada I am really shut of words because I am not even from the Belemaoil zone, but from Ahoada East. By the way Nigerians reason these days, nobody expected the hand of support from one area to reach someone like me from another area. It is difficult to find a gesture in Nigeria of today. I thank him immensely. Why we did this - Mufaa Welsch, Director, Production & Engineering This is to assist the Government to reduce unemployment in Nigeria to reduce crime. We are hundred per cent committed in ensuring reduction of unemployment in Nigeria. My charge to the beneficiaries is to judiciously use the funds provided Management team of Belemaoil Producing Limited in group photogragh with beneficiaries of the NNPC/Belemaoil Economic and to create employment for others Empowerment Programme not yet employed. Sam Abel-Jumbo: We are a JV (Joint Venture) and and made the Niger Delta region during the governorship election an engineer, Tolofari. I will train this is a Joint Venture programme. proud, even he is mostly remem- which was somehow manipulated, I musicians. bered in nostalgia without concrete was inspired to sing a song which was In the whole of Kalabri, no musi- We are an operator and the NNPC is support. Belemaoil is said to have posted on facebook. Jackrich Tein Jnr, cian is senior to me. All my contem- the senior partner. This programme changed all of that. the founder of Belemaoil, saw me and poraries are late, but God kept me to is about the beneficiaries and as my On Monday, June 24, 2019, 10 in- arranged help for me. see this day. My master, Lawson loved director has said, we are starting it digent entrepreneurs sat at the board I will sing many more songs for me and taught me how to play guitar. with them. This is not a loan but a gift, preroom of Belemaoil on Peter Odili him. He is building a house for me in I lived at Number 2 Aggrey Road (Port mised on the understanding that they Road in Port Harcourt and waited for Buguma. When it’s built, I will move Harcourt) where he discovered me. cheques amounting to N30m. in and sing again. I am above 70 years Bethel Oko-Jaja (PhD): Fishing will do what they said they would do. Tamunoemi Bedle Gold but I will be young again because Belemaoil has shown the differ- We will ensure we do what we promSo, I will sing again? I am now happy. Sadness makes a ence between deployment of rhetoric ised to do. If they do it, it will make us Explaining more, Gold told jour- man old but happiness will make a or theories and practical in relating happy and make others to benefit. nalists thus: “I am a fisherman but man live longer. We pray God to keep with oil communities. He is doing If we do not see robust outcome, we I am actually a singer, a musician. Belema alive. what the eye can see, what touches would not continue. We will monitor them strictly and if we do not see the I sang with my king of highlife, Rex I will buy instruments with this the people. Cardinal Lawson., until he died. N5m and put them to immediate use. He has shown that we are now commitment, we will not know how Then, I formed my own band in 1968 I had pleaded for a house because prepared for national development, to support more people. We want a until my elder brother who was the after all these years, I have no house. and for this, God will pay him back. better society for the Niger Delta and chairman died. I was the composer, If I take the instruments to a rented This is my second benefit from Nigeria. Ordinarily we would not have arranger, guitarist, vocalist, every- ramshackle, they will perish and be Belemaoil. The company sponsored the opportunity to give such support thing, until they left me. stolen. Workers are currently build- us on scholarship where I did my but it is because of the opportunity we Surprisingly, on March 11, 2019, ing the house for me, supervised by doctorate degree. Now, they have too were given.

Why Govt must support mental mathematics competition – Ifeoma Ogbuonu

very year, pupils from some private schools in Port Harcourt meet at the Garden City Amusement Park in Port Harcourt located opposite the Hotel Presidential on Aba Road for the annul Garden City Mental Mathematics Competition organized by Ifeoma Egbuonu, child lover and education investment promoter. Egbuonu, also an event manager and consultant, is behind ‘Spelling Bee’ competition in Port Harcourt where children brainstorm in spelling fight under the Kaodili Cares in collaboration with Garden City Amusement Park. The 2019 edition of the Mathematics competition came to an

end last week Friday, June 21, 2019, to mark another year of hot contest amongst young brains in Maths. In an interview on the sidelines of the contest, the promoter of entertainment industry ‘Amusement & Theme Park’ wondered why governments hardly see the huge benefits in the promotion of brain contests and education programmes. She said: “Government should show interest in this kind of project because it is the kind of thing to build the child; their intellect, personality, confidence and other attributes. People like to support socials but when you bring what will change lives, they stay away. It iss difficult getting sponsors www.businessday.ng

Ifeoma Ogbuonu

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for education programmes. Government should join in sponsoring education programmes. Let the budgeting process accommodate this.” Egbuonu went on: “Today is mental mathematics. I love kids and that is my passion. I call myself an edutainment organizer. I intend to make the kids get it right. If you fail to make your child get it right during the primary level of education, it is going to be difficult. This is the time to start, not in secondary school. “We have been doing it for a while and the kids are happy. The schools think they are good, so it is by competing that they can really confirm. “Step out and show @Businessdayng

yourself and see what others have.” She said it was sad that governments seem to be aloof on the opportunity. “Government schools do not join. They will promise but they will not come. We have been trying to get them but no way; it is the private schools that continue to compete here. No child is useless. It is when you have not found the child’s key that you may think that child is a failure. Also, we do not give our children time to develop in every side so you can judge them.” It was Graceland Montessori School that topped the deal followed by Bereton Montessori School and Pleroma International School.

Thursday 27 June 2019

BUSINESS DAY

Retail &

consumer business Luxury

Malls

Companies

Deals

Spending Trends

COMPANY

Analysts see limited upside for brewery stocks as earnings capitulate to economic woes BALA AUGIE

nalysts do not see an upwards movement in brewers’ stock price in the medium term as earnings will continue to capitulate to the harsh and unpredictable macroeconomic environment. Analysts at Cordros Securities Limited cited weak economic outlook, pressured consumer wallets, high production levies, and intense competition for market share as impediments to the growth of companies operating in the industry. “Although, the negative effects of the aforementioned appear to have all reached respective peak impact, we do not expect a rapid recovery in the near term,” said analysts at Cordros Securities. “We see limited upside for these stocks, with market prices barely in line with fair values. On expected 2019 numbers, we believe the brewers under our coverage will report flatto-negative volume growth, with revenue growth below inflation, with higher oper-

ating costs leading to decline in earnings,” said analysts at Cordros Capital. All three brewing stocks listed on the Nigerian Stock Exchange currently underperform the broad market. While the All Share index is down by 5.16 percent Yearto-date, Guinness Nigeria has shed 35.28 percent since the start of the year where it opened at N72 per share. International Breweries on the other hand has plunged by 45.25 percent and closed trading at N16.7 per share on Tuesday while Nigerian Breweries has pared 31.58 percent of its share value down to N58 Nigeria per share. Nigerians have refused to open their purse string and hit the bar as over 50 percent of a population of 200 million live on less than $1.90 a day, while inflation and high transportation fare are increasingly eroding the purchasing of power of consumers. Ni g e r i a’s e c o n o m i c growth slowed in the first quarter after the oil sector, the country’s biggest foreign-exchange earner, contracted. Gross domestic product in Africa’s largest oil producer expanded by 2.01 percent in the three months

through March from a year earlier, according to a recent report by the National Bureau of Statistics (NBS). That compares with 2.4 percent expansion in the fourth quarter. The country’s inflation has jumped to 11.40 percent in May 2019 from 11.37 percent in April. To further exacerbate the already anemic position of beer makers is the recent decision by Federal Government to hike excise duty on alcoholic and beverage drinks. In

order to shore up government revenue and diversify the economy away from overreliance on crude oil revenue, President Muhammadu in January, implemented another phase of 17 percent increase in duties on alcoholic beverages. “The tax increase is hitting revenue,” Michael Famoroti, economist and partner at Stears Business, said by phone from Lagos, the commercial capital. “You are unlikely to see healthy revenue growth in

the industry as the phased implementation continues. Companies will not be able to pass on the full burden of the tax. Brewers are grappling with rising costs and deteriorating margins. For the third quarter ended September 2019, Guinness Nigeria’s revenue reduced by 3.78 percent to N33.60 billion as against N34.92 billion the previous year. Net margin, a measure of profitability and efficiency fell to 4.97 percent in the pe-

riod under review from 8.55 percent the previous year. Nigerian Breweries’ revenue was flat at N83.0 billion while net margin fell to 9.64 percent in March 2019 from 12.30 percent the previous year. Consumers remain highly sensitive to price movements following the broad-based cost escalation in the past few years amid little-to-no-income growth,” said Ifedayo Olowoporoku, a markets analyst at Lagos-based Vetiva Capital Management Ltd. “We expect higher pressure on discretionar y, non-essential products such as beer.” Analysts say they see respite from the rise in young, middle-class consumers, presenting companies the opportunity to sell more premium brands, particularly into the leisure segment of the sector. “We believe this helps in easing the price mix pressure that producers have faced in recent years, especially as the ability to increase prices is still constrained. The premium segment has been resilient in recent years, gaining 2 percent in market share in 2018FY,” said analysts at Cordros Limited.

SPENDING TREND

Seamans, Action Bitters, make top 100 fastest growing spirit brands list OLUFIKAYO OWOEYE

n a report by the International Wines and Spirits Record (IWSR), Nigerian alcohol spirits brands made the list of world’s Top 100 fastest growing spirits brands. The 100 brands came from the major spirits categories, including whiskey, gin, and vodka among others. Jinro Soju, a product of Hite-Jinro of South Korea took claimed the top spot as the world’s fastest growing spirit brand by volume, Seaman Schnapps, a brand of Nigerian Distilleries Limited

(NDL) made a respectable showing at No. 42. According to IWSR, Seaman Schnapps grew 33% in volume from 2017 to 2018.

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Action Bitters from International Distilleries Limited (IDL) was another Nigerian spirits brand that made the list at No. 52 with a 28% vol-

ume growth. Captain Jack Rum brewed by Stellar Beverages Limited also made the list at No. 63, other notable mentions in-

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clude global spirits maker – Diageo’s McDowell’s No. 1 whiskey at No. 5 with 7.8% volume growth; Diageo’s McDowell’s Brandy at No. 8 with 17.8% volume growth; Gordon’s Gin, and Bailey’s Cream Liqueur also from Diageo at No. 49 According to the report, the world’s leading spirits brands’ volume sales grew by 11% in 2018 with Indian whiskeys performing strongly. The analysis shows that spirits continue to enjoy great consumer loyalty against a backdrop of beer and wine declines. Growth was calculated on the actual increase in the @Businessdayng

number of 9liters cases that each brand grew (regardless of brand total volume size) globally between 2017 and 2018. Globally, beer volume declined 2.2% in 2018, impacted greatly from volume decreases in China (-13%). Other large markets such as the US and Brazil also fell (-1.6% and -2.3%, respectively), while Mexico and Germany saw growth (6.6% and 1%, respectively). The future outlook for beer, however, paints a more positive picture, as the category is expected to show a slight increase in 2019 and post a 0.7% CAGR 2018-2023.

Thursday 27 June 2019

BUSINESS DAY

Retail &

consumer business

Nigerian women seek convenience as demand for wigs spike BUNMI BAiLEY

ust like the one ring created by Dark lord Sauron-in T.R Tokens 1937 book The Lod of the Ring, delays ageing, Nigerian ladies are seeking wigs for convenience, longevity, cost savings , time savings and limitless style. The urge to look younger than ones age is also increasingly underpinning the demand for wig. Wigs are popularly known as head covering made from human, animal hairs or synthetic fibres. “Apart from the limitless styles and convenience, wigs help to hide the thinning and restore my confidence, it protects the health of my hair and also helps to save cost and time since I won’t need as many salon appointments,” Wunmi Oke, a banker said in a discussion with BusinessDay. The wig industry is fast becoming a lucrative one in Nigeria. Wearing

wig is now becoming a tread among ladies than the traditional way of making the hair. According to ladies, wigs have been trending for three years and are still trending very fast. “The sale of wigs has been booming for like three years now. Mostly ladies come here to buy the weaves so that they can make a wig out of it. Ladies love it especially in this hot season. It is versatile, saves cost and time of going to the salon, and it is convenient,” Choice Goodwin, a salesgirl at Wholesalenaija, said. The New International Version Bible, 1 Corinthians 11:15, states that but that if a woman has long hair, it is her glory? For long hair is given to her as a covering. So it is a known fact that women can spend more when it comes to looking good especially when it comes to hair. In the streets of Lagos markets, you see stalls mostly full of wigs with sales women or men mostly displaying the wigs to attract the attention of ladies.

The most expensive ones are human hair wigs that are hand-crafted and have monofilament cap. They look very natural, are made of quality materials while the cheapest wigs are synthetic hair wigs for entertainment (Halloween wigs and etc.), they look unnatural and can be worn not for a long time. “We sell more wigs than normal weaves here. A normal synthetic wig costs like N5, 000- N10,000 while the human hair can go as high as N15,000-N 20,000 without closure but with closure it can go as high as N30,000,” a sales girl said. Human hairs are usually imported and the market is booming in Africa because millions of people, predominantly women, are demanding for it. And as a result of this a lot of people are going into the human hair business. Although the demand for wigs has led to low patronage for hair stylelists, it has made them to learn the skill of making wigs especially the braided ones.

Shoppers to access more fashion, lifestyle products with new PayPorte Website BUNMI BAiLEY

ayPorte Global Systems, Nigeria’s first Omni-channel retail company, has launched a redesign of their website, payporte.com; featuring more unique contemporary designs and interface. The new website which officially went live for shopping on Monday, June 24, 2019 embodies aesthetic enhancements, improved functionality to provide a smooth shopping experience and enhanced navigation to help shoppers easily find and shop products faster and easier. Adenike Bankole, Head of Product Management, Payporte Global Systems said “In line with our promise to provide the best quality products to our customers, we have also partnered with top fashion brands in the world to stock new products. Our goal is to be the one-stop-shop retail store for urban fashion and lifestyle products in Nigeria and Africa hence we have made our store available online and offline as well.

“On the new site, we worked towards improving some of the functionalities such as improved zoom-in features which would enable shoppers to magnify and enlarge product images as close as possible before making buying decisions. Also, the search feature of the site has been great for easy location of products on the site and these are some of the exciting new features on the new PayPorte site.” According to Eyo Bassey, Chief Executive Officer, Payporte Global Systems, “We are excited about our newly redesigned website which is far more improved than the updated version of the old site released last year. We took a lot of customers’ feedback into our business strategy and this led us to take certain strategic decisions including suspending the old site so as to effectively redesign a new one from scratch for improved shopping experiences for our customers. “We believe the new site will offer greater shopping experience to our customers as we continue to provide them with top quality products that meet their fashion and lifestyle needs.”

NEWS

Danjuma bets on property with fortune made in oil

he Kings Arms Hotel is a 300-year-old inn next to London’s Hampton Court Palace, once the home of Henry VIII. It’s poised to open soon after refurbishment, with rooms costing about 250 pounds ($318) a night. Guests can dine on traditional fare in the Six restaurant, a reference to the monarch’s many wives, or grab a pint on the terrace. In this most English of settings, it’s fitting the owner is a retired military man still referred to as “General.” But for Theophilus Danjuma, this is just one investment in a network of assets that span at least three continents. The 80-year-old Nigerian is worth $1.2 billion, according to the Bloomberg Billionaires Index, with his family office managing a portion of that wealth, often through low-key holdings such as the 14-room hotel. “We never tend to look at trophy assets,” said daughter Hannatu Gentles, the second of Danjuma’s five children and chief operating officer of his London-based family office. “We’re not going to head to Mayfair to buy a 15 million-pound apartment primarily because we are a yield business.” Danjuma’s new venture is far removed from civil war and deepwater oil fields, the spheres where he amassed his power and fortune. In 2006, his South Atlantic Petroleum Limited. sold almost half its contractor rights for a section off Nigeria’s coast to a state-backed Chinese firm for $1.8 billion. Danjuma was awarded the bloc in 1998 by the regime of former dictator and fellow army officer Sani Abacha,

making him one of a handful of Nigerians made extraordinarily wealthy from the country’s energy reserves. “Basically, these people got winning lottery tickets,” said Antony Goldman, founder of West Africafocused ProMedia Consulting. “At the time, you had a government desperate for credibility that was isolated internationally.” Danjuma was “someone who’s not really a politician, who is respected in business and in the army.” Danjuma was born in 1938, the year Royal Dutch Shell received its first oil exploration licence for the country and more than two decades

before it gained independence from Britain. He dropped out of college in 1960 to join the army, according to “Nigerian Politics in the Age of Yar’Adua” by Bayode Ogunmupe. He gained prominence after participating in the 1966 counter-coup against Nigeria’s first military dictator. A decade later, he was stepping out of a Rolls-Royce in central London to meet British military officials in his role as chief of staff for Nigeria’s army. He left the military in 1979 and founded his oil firm and a shipping company, NAL-Comet, which now has more than 2,000 employees in

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Nigeria. Danjuma paid $25 million in 1998 for the oil field exploration license that made him a billionaire. A year later, he became Nigeria’s defense minister as the country returned to democracy. He originally teamed up with Total SA and Brazil’s Petroleo Brasileiro SA on the block. The minority stake that Danjuma’s company now owns is worth $450 million, according to Bloomberg’s wealth index. While Mayfair is the hub of London’s family offices, the Danjumas chose the city’s southwest suburbs to set up their investment firm a decade ago. They’ve since invested in property in that area, including the 2.5 million-pound purchase in 2010 of the building where their office is now based, according to filings. Beyond the UK, they own real estate in California and have bought and sold property in Singapore. Their family office also oversees private equity investments, trust funds and a venture capital arm that backs family-run art and film companies. The Danjumas own more than 30 properties worldwide, filings show. “We invest in real estate in other jurisdictions, but in the U.K. we always thought let’s stick to areas that we know,” Gentles said. Her father bought a residence in Singapore years ago, “and it made sense then to buy some more,” she said, adding they’ve since sold the properties because of tax law changes. In addition to the Kings Arms Hotel, the Danjumas have developed residential properties this year in Esher and Wimbledon. @Businessdayng

They also own a boutique hotel in Lagos, serving beef carpaccio and lobster bisque in one of three dining areas and displaying works from the family’s art firm. Nigeria’s leaders have often faced public ire -- with good reason at times. Yet Danjuma was able to avoid much of that wrath because of his role shepherding the nation toward democracy, according to Pallavi Roy, a lecturer at London’s School of Oriental & African Studies. Danjuma also pledged to give away $100 million through his foundation, with recent donations aimed at improving vision care, literacy rates and rural farming. “It might seem contradictory given the extent of his wealth, but he is quite well respected and almost looked upon as an elder in political circles,” said Roy, co-research director of the SOAS-led Anti-Corruption Evidence initiative. “The military held him in such high regard that he was able to help manage Nigeria’s transition from military rule to democracy.” Owning a hotel in Nigeria led the family to look for a similar deal in the UK Two years ago, they paid 2.4 million pounds for the Kings Arms. Redevelopment work was expected to end in March, filings show, but the inn’s age and protected status resulted in higher costs and delays. “This is the first, and will possibly be the last, listed building we’ve worked on,” Gentles said. “It’s taken longer than we wanted, but our name is attached to the building and we want to be proud of our work. It’s been a hard slog.”

Thursday 27 June 2019

BUSINESS DAY

13TH ANNUAL BUSINESS LAW CONFERENCE Moghalu, Nevin, Ola Brown, others to speak at 2019 NBA-SBL business law conference today OLUWASEGUN OLAKOYENIKAN

he presidential candidate of the Young Progressives Party (YPP) in the 2019 elections, Kingsley Moghalu, is among experts from different fields that are expected to speak at the 13th Nigerian Bar Association Section on Business Law (NBA-SBL) Conference today, June 27, 2019. Others include Andrew Nevin, chief economist at PwC Nigeria, Ola Brown, CEO of Flying Doctors Nigeria, Abimbola Ogunbanjo, president of the Nigerian Stock Exchange, Toyin Sanni, Group CEO of Emerging Africa Capital Group, Cecilia Akintomide, independent director of FBN Holdings Plc, Oliver Andrews, chief investment officer of African Finance Corporation, among others. Themed “Growth, Investment & Employment, Beyond Rhetoric”, the 2019 conference is expected to focus on practical and pragmatic solutions to achieving inclusive economic growth, maintaining, attracting and retaining investment in the Nigerian economy, according to Adeoye Adefulu, chairman of the 2019 Conference Planning Committee. The three-day conference, which kicked off with an opening ceremony and dinner at Eko Hotel & Suites in Lagos on Wednesday, June 26, will feature eight sessions in all comprising four plenary sessions, three breakout sessions and a debate session. Of the eight sessions, two plenary sessions will be held today at the same venue with

a breakout session. The first plenary session will focus on the Nigerian economy where Abimbola Ogunbanjo, president of the NSE, Toyin Sanni, Group CEO of Emerging Africa Capital Group, Cecilia Akintomide, independent director of FBN Holdings Plc, and Oliver Andrews, chief investment officer of African Finance Corporation, will be joined by Nevin and Moghalu as panellists. Ola Brown is expected to speak at the second plenary with Patrick Okigbo, CEO of Nextier Advisor, Folawe Omikunle, CEO of Teach for Nigeria, Tom Griffin, senior partner at Control Risks, Leke Oshunniyi, managing director of AIICO Multishield Ltd, and Rodio Diallo, senior program officer at Bill & Melinda Gates Foundation. The panellists will be addressing issues relating to health, security and education to build a foundation for inclusive growth in Nigeria. Furthermore, today’s programme will continue with a breakout session where four groups of experts will meet simultaneously to share their thoughts on key topics that affect the country. The first group comprising six experts from the oil and gas industry, including Chiedu Ugbo, managing director of Niger Delta Power Holding plc, will discuss the topic “Moving from Crude Exports to Value Addition”, while the second group will focus on “Sexual Harassment in the Workplace” with Justice Obaseki-Osagie of the Lagos division of the National Industrial Court of Nigeria expected to be in attendance.

L-R: Seni Adio, SAN, chairman, Nigerian Bar Association-Section on Business Law (NBA-SBL); Femi Gbajabiamila, speaker, House of Representatives, and Babajide Sanwo-Olu, governor, Lagos State, at the opening ceremony of the 13th annual business law conference in Lagos. Pic by Olawale Amoo

Members of the NBA-SBL and the 2018 conference planning committee at the 12th Annual Business Law Conference in Abuja.

L-R: Justice Atilade, former chief judge of Lagos High Court; Gbenga Oyebode, SBL chair; Babatunde Raji Fashola, guest speaker; Lord Mark Malloch Brown, and Okey Wali, former NBA president, at the 9th Annual Business Law Conference

Yemi Osinbajo, Nigeria’s vice president; rep. of the CJN, and Asue Ighodalo, former chairman, NBA Section on Business Law, at the 2018 conference in Abuja.

Thursday 27 June 2019

BUSINESS DAY

news A problem of two halves: Poverty and... Continued from page 1

Some stakeholders have also questioned why a country with over 60 percent of the population living in poverty has one of the highest paid lawmakers in the world. These lawmakers representing a fraction of the country’s population are some of the highest paid in the world, earning as much as $118,000 a year which comes at the expense of infrastructure and similar investments. Similarly, widespread bribery and corruption, whether in the form of withholding the salaries and pensions of civil servants, nepotism, or greasing the palms of police officers, continue to contribute to income inequality. UK-based Oxfam International in a report stated that economic inequality in Nigeria has reached extreme levels, despite being the largest economy in the continent. The country, it noted, has a large economy with abundant human capital and the economic potential to lift millions out of poverty. Why security, health, education and agriculture (SHEA) matter in reducing inequality Everywhere in the world, from China to Brazil and India, rapid economic growth that generates jobs has lifted millions from poverty. Unequal access to health and education, pre-conditions for being employed, risks leaving many behind, hence the need for progressive social reforms alongside macroeconomic policies that drive growth. Analysts have said Nigeria’s economy could grow as much as 11 percent per annum and lift its over 90 million people that are living below $1.90 a day if it invested the huge amount of money it spends on fuel subsidy on providing social security, education, agriculture and health. Nigeria spent an estimated N623 billion ($1.7 billion) on fuel subsidies last year, according to International Monetary Fund (IMF) estimates. Such bold reforms would enable the country tackle its current illiteracy rate which limits access to information about basic things such as the right medication or credit facility, according to Charles Robertson, global chief economist of Renaissance Capital, an investment banking and advisory firm. Nigeria has been faced with a failing educational system where out-of-school children more than doubled to 13.5 million in 2015, according to Universal Basic Educa-

tion Commission. The surge in out-of-school children is attributed to the low budgetary funding (way below the global standard of 21 percent) and the lack of investment in education. “To avoid this tsunami coming on its citizenry, Africa’s biggest oil producer would have to pivot away from oil and grow its adult literacy rate from the current 60 percent to 80 percent by 2030,” Robertson said in a research note to clients. Insecurity in the northern part of the country, where illiteracy is highest, further worsens inequality. Data from the United Nations Development Programme (UNDP) for 2017 ranked Nigeria 157 out of 189 countries in terms of Human Development Index, while its life expectancy at birth stood at 53.9 years. A life expectancy of 53.9 years means that an average Nigerian dies around 54 years of age. “Nigeria needs to find sustainable ways to fund its education and health sector if it wants to empower its citizens and one of such sustainable strategies is through the adoption of endowment funds, which have successfully established in the West and will take little or nothing to implement in Nigeria,” PricewaterhouseCoopers (PwC) said in its report titled ‘Closing social infrastructural gap’. Endowments are restricted funds that are essentially got from charitable donations, private investments, among other sources. This becomes the principal, which is then invested with a fund manager to earn income. The income earned is then used for very specific purposes that are articulated in a charter. What Nigeria is doing wrong President Muhammadu Buhari in his Democracy Day speech on June 12, 2019 set a 10-year target for Nigeria to lift at least 100 million people out of poverty. But he didn’t really specify how this would be possible. “This task is by no means unattainable. China has done it. India has done it. Indonesia has done it. Nigeria can do it. These are all countries characterised by huge burdens of population. China and Indonesia succeeded under authoritarian regimes. India succeeded in a democratic setting. We can do it,” Buhari said. There are views that the National Social Investment Programmes (NSIP) such as TraderMoni scheme, N-

Bitcoin surge pushes weekly gain to... Continued from page 1

bad as we are seeing more

mainstreamadoptionbutitmay be naive to think that it can’t come crashing down again.” Its relative strength index, a gauge of momentum, is now within the level when

the cryptocurrency peaked around $19,500 in 2017. Accelerating gains have raised the stakes for traders as they try to gauge whether this month’s rally has more staying power than the bubble that ended with a $700 billion crypto wipeout in 2018. www.businessday.ng

L-R: Adunola Arowolo, CEO, K4 Twins Enterprise; Tokunbo Abiru, MD/CEO, Polaris Bank; Adenike Adeyemi, executive director, Fate Foundation; Ayo Abina, directorate head, southern business, Polaris Bank, and Beauty Johnson, CEO, Diet Munchies, when participants of Class 24 of Fate Foundation’s Emerging Entrepreneurs Programme paid a business visit to Polaris Bank headquarters in Lagos.

Power and the rest are still not enough to improve the poverty situation in the country. In 2018, the government disclosed that 500,000 graduates had been employed under the N-Power which was a part of NSIP for providing jobs to graduates, and the TraderMoni scheme, a micro-credit scheme aimed at the empowering 2 million petty traders. “This TraderMoni that we have been doing, how many people has it lifted out of poverty? It has not been able to combat poverty. How are we sure that the people who are given this money really need it? Or maybe some of them have exhausted it by only feeding themselves,” Maduka Maxwell, an investment administrator at ARM Holding Company, said. “Right now inflation has eroded the value of the naira, that N10,000 is nothing. Assuming you give that N10,000 to a market woman selling tomatoes at Yaba and she gets them from Mile 12, she will spend out of that money for transportation and logistics,” Maduka further said. What India is doing right Nigeria and India share a common similarity in terms of population. Nigeria’s population estimated at 198 million people is the largest in Africa, while India is the secondmost populous country in the world with 1.3 billion people. However, while Nigeria still struggles with millions of people in poverty, Indian government seems to be having a positive impact on its citizens thanks to structural poverty reduction policies such as India’s Aadhaar programme. India’s Aadhaar programme is a platform whereby India’s residents obtain a 12-digit unique identity number, based on their biometric and demographic data which is collected by the Unique Identification Authority of India (UIDAI). The programme which was introduced in 2009 was

designed to help the poor by providing welfare payments and social services. Each user of this programme receives a card with that number on it, which can be cross-referenced with the biometric data held in a database. As of April 2018, more than 1.2 billion people, which is over 99.7 percent of India’s population, had enrolled under the programme. Also in 2015, India established Payment Service Banks (PSBs) to bring the huge unbanked population of India under the formal banking system, thereby deepening financial inclusion after research showed most rural Indian people who are poor don’t have access to banking services due to the high operational costs of running a traditional bank branch in rural areas as sufficient volume of funds is not deposited by the account-holders and loan disbursement is low. So far, looking at India, the number of people living in extreme poverty is falling. According to a 2018 report by UNDP and the Oxford Poverty and Human Development Initiative (OPHI), over 270 million people in India moved out of poverty as the country halved its poverty rate from 55 percent in 2006 to 28 percent in 2016. “Although the level of poverty – particularly in children – is staggering, so is the progress that can be made in tackling it. In India alone some 271 million have escaped multidimensional poverty in just 10 years,” UNDP Administrator Achim Steiner said in the report. Brazil lifted 36 million people out of extreme poverty, here is how Another country which shares similar population with Nigeria is Brazil. Nigeria’s estimated population of 201 million people is the largest in Africa, while Brazil is the world’s fifth-largest country by area and the fifth most populous with a population

of 209.3 million people. Learning from Brazil would mean Nigeria would have to effectively utilise the billions of naira it currently spends on petroleum subsidy if it truly desires to lift millions of people away from poverty. The starting point and inspiration for this effort is the most successful Brazilian programme of all time – Bolsa Familia – which in its decade of implementation has managed to reduce poverty by half in Brazil (from 9.7 percent to 4.3 percent), with over 50 million low income Brazilians (a quarter of the total population) lifted out of poverty, thanks to its broad scope and coverage. Unlike subsidies and other general social programmes, Bolsa Familia is a conditional cash transfer programme which awards poor families a monthly cash payment on the condition that children are sent to school and vaccinated. It was introduced to combat extreme poverty by reducing hunger and malnutrition. Bolsa Familia pays out £10 to £100 ($14 to $140) a month depending on family earnings and the number of dependents. The subsidies are only paid to women. Empowerment of women has long been cited by the UN as key for poor children to grow up healthy. According to the International Social Security Association (ISSA), the world’s leading social security body, Bolsa Familia is the largest programme of its kind in the world. Today it reaches 13.8 million families, or 50 million people, around 26 percent of Brazil’s population. Government statistics say that Bolsa Familia has lifted 36 million Brazilians out of extreme poverty, which the Brazilian government calls those who live on less than 70 real a month – or £23. The scheme has been most successful in Brazil’s arid North-east, where more than half of the receiving fami-

lies live. Much lauded by the World Bank, other governments, in India and Africa in particular, are looking into adopting similar schemes. As of 2013, the number of recipient families had risen from 3.6 million to 13.8 million, which means Bolsa Familia now covers about a quarter of Brazil’s population of 199 million. What Nigeria can do right Some stakeholders are also of the view that Nigeria can go policy fishing from Brazil or India or even both for its social security programmes which can be reformed or reviewed the same way the country reformed its pension laws in 2014 and 2014. In order to ensure that every worker receives his retirement benefits as and when due, Nigeria went on policy fishing from Chile and thereafter adopted Contributory Pension Scheme for public and private sectors which was established under the Pension Reform Act, 2004. Before the pension reforms that ushered in the contributory scheme, the public sector operated the old Defined Benefits Scheme (DBF), bedevilled by many challenges, including the accumulation of over N2 trillion pension liabilities, according to data sourced from the National Pension Commission (PenCom). So far, Nigeria has been able to offset the trillions of liabilities in the pension sector, and also pull together funds that are readily available to settle retirement benefits of workers as well as invested in the economy. Some economists have recommended that Nigeria can replace its current subsidy regime and either learn from Brazil’s Bolsa Familia or India’s PSB policy to reduce Nigeria’s alarming poverty rate.

While bulls have cheered signs of growing interest in virtual currencies from major companies like Facebook Inc. and JPMorgan Chase & C0., skeptics say it’s unclear how those initiatives will ultimately benefit Bitcoin and its peers. A break above the $12,720 level “will allow

for a complete retracement of the 2018 bear market,” according to John Kolovos, chief technical strategist at New York-based Macro Risk Advisors, though he noted in comments Tuesday that the rally was “turning more and more impulsive.” The last time Bitcoin rose above $12,000 was in De-

cember 2017. It rallied further, eventually reaching as high as $19,511 later in the month, but the surge was followed by a precipitous fall that saw it drop below $6,000 by February. All in all, in December 2017 and January 2018, Bitcoin spent about six weeks above $12,000. “Bitcoin is very much in

the driver’s seat of the crypto market right now,” wrote Mati Greenspan, senior market analyst at trading platform eToro, in a recent note. “After the prolonged crypto winter that was 2018, this year has seen the crypto market as the best performing asset class of 2019 by far, and that was just Spring.”

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Thursday 27 June 2019

BUSINESS DAY

INSIGHT

Osun uses school-feeding to fight poverty and improve education SEGUN ADAMS

n the fight against poverty in Nigeria, the Federal Government (FG) has tried many social welfare programs, from the N-Power jobs scheme for youths to TraderMoni, which gives micro-loans to petty traders. But none are as ambitious as the Home-Grown SchoolFeeding (HGSF) program which aims to provide a free meal to every primary school student in the federation. But the HGSF is not an original idea; it has been used in Osun State for the best part of the last decade. And what looks simple (giving free meals to schoolchildren) is actually one of the most complex and impactful social welfare schemes in the world. School-feeding programs have common objectives: improve child nutrition and classroom performance, increase enrolment rates, and, in low-income countries, boost the local economy by sourcing food through local suppliers. This sounds like a lot, but there is enough evidence to show that school-feeding programs are pretty successful. The Bolsa Familia model in Brazil is one of the most successful social welfare schemes in history, feeding over 43 million children and providing steady incomes for 120,000 family farmers, according to the Food and Agriculture Organisation (FAO) of the United States. Partnership for Child Development (PCD) is a research group based in the world renowned Imperial College of London and is funded by the World Bank and the Bill and Melinda Gates Foundation. The PCD is also the world’s leading authority on school feeding programs, and estimated a 15% increase in enrolment and a 70% increase in productivity of farmers after the program was implemented in Côte d’Ivoire. Finally, in Egypt, a school-feeding program enacted in vulnerable regions helped reduce child labour as 7,000 additional children were enrolled in schools. Given these effects, it is no surprise that school-feeding is the most popular social welfare scheme in the world. PCD estimates that 368 million children received free school meals around the world in 2013, at the cost of at least $47 billion. Of this, 121 million were in South Asia, 85 million were in Latin America & the Caribbean while only 30 million were in Sub-Saharan Africa. Thus, school-feeding is yet to take off where it is really needed, given the poverty levels and the number of children in SSA. That year, Nigeria was feeding roughly 1% of its schoolchildren, much less than 7%, 44% and 64% in Ghana, Senegal, and Egypt, respectively. The last state standing It wasn’t always this way. Way back in 2004, the FG initiated a national school-feeding program as part of the Universal Basic Education Act. Thirteen states were chosen to pilot the program, but only Kano State and Osun state remained after just a few years. It turns out the FG was not entirely convinced by the project so did not pressure the state governments, who had discretionary power on how to implement the program. Amid dwindling funds and a flawed set-up, many states abandoned the program. Eventually, Kano State also faded away, and even the Osun program was on its last leg until the administration of Rauf Aregbesola suspended the program in April 2011 and reinstated it a year later, giving it a new name: O-Meals. This bold change proved pivotal in transforming the Osun schoolfeeding program into one of the standardbearers of school-feeding programs in developing countries, leading to the Osun State Governor Rauf Aregbesola receiving an invitation to the United Kingdom House of Commons (Parliament) to speak about the state’s approach to school-feeding.

The success of such an internationally recognised poverty-tackling tool in a part of Nigeria can teach us many things about how to implement policies for development. A novel way to boost local agriculture As you would expect for a program used in 169 different countries, there are many ways of implementing school-feeding initiatives. One key feature in low-income countries is the focus on domestic agriculture and local content. For example, in Brazil, 30% of funding must be used to procure food from local farmers. Osun State adopted a similar approach, and some of the most significant effects of the O-Meals program have been on local agriculture value chains. Here’s how it works: Once a menu is chosen and the local produce required is known (cocoyam, orange flesh potatoes, and bananas in Osun State), farmers are trained on how best to produce those crops. Some of them get free seedlings, and the Osun State government set up supportive programs like the Osun Fish out-growers scheme and Osun Boilers out-growers scheme for local catfish and chicken. This meant that there was a deliberate effort to improve the productivity of local farmers and reduce the project costs in the long-run. These steps helped avoid problems in other African countries where local farmers were not able to match the demand for school food. The World Bank praised this approach to implementing school-feeding programs, emphasising, “Nigeria’s decentralized, informal procurement system, for instance, allows each school management committee to purchase foodstuffs and develop menus that reflect local dietary patterns and traditions. Such services are better able to use locally adapted technologies, support coordinated community action, and promote partnerships.” One thing Nigerian farmers struggle with is access to markets. A farmer will only produce as much as he believes he can quickly sell because he does not have the storage space to store the excess. The O-meals program matched farmers with guaranteed off-takers for their produce, enabling them to boost output and also plugging them into the local food value chain. O-Meals and female empowerment True to its name as a social welfare program, school-feeding can have a significant multiplier effect on the domestic economy. The United Nations World Food Programme estimates that for every $1 spent by governments and donors on school-feeding, at least $3 is gained in economic returns. For low-income countries, these gains are easily reflected through job creation. The Osun State government estimates that over 7,000 jobs were created through the scheme, and Osun State now has one of the lowest

unemployment rates in the country: 10.1% compared to a national average of 23.1%. Yet the O-Meals program added another twist: female empowerment. All 3,007 cooks hired were female. These women were screened for education and physical fitness and had to take a course on food quality, preparation and basic hygiene. Each cook received a 3-year interest-free loan to buy cooking materials and a regular transport subsidy for trips to the market and school. The cooks were paid fortnightly in advance, and although they purchased most of the produce from local markets, some (like beef and eggs) were distributed centrally. The emphasis on female cooks is rare across global school-feeding programs and particularly unusual in a country like Nigeria. However, it was one of the drivers of the programs sustainability and a considerable boost to diversity and equity in the state. More students in classrooms No matter the economic impact of the Omeals programme, the acid test is its effect on schooling. So, did it work? Yes. The proportion of out-of-school children in Osun State fell from 12.8% in 2011 to 10.5% in 2017. Furthermore, there was a 60% jump in enrolment rates over the same period, with Osun State now having one of the highest enrolment rates in Nigeria. Overall, the program grew from serving 155,000 children at inception to over 250,000 children in all 1,382 public elementary schools in the state. The O-Meals program was so successful that it partly inspired the FG decision to resurrect it. The way school-feeding works in Nigeria is that although the FG drives the program, it is the state’s prerogative to implement. Over the past few years, as many as tweny-five states understudied the O-meals program, and many have so far adopted similar initiatives, to varying degrees of success. Meanwhile, the PCD enshrined the legacy of O-Meals as a social welfare tool in Nigeria by including it in its first Global School Feeding Sourcebook (2016), where it uses fourteen countries as case studies of how to successfully implement school-feeding programs anywhere in the world. In the document, Dr. Jim Yong Kim, president of The World Bank at the time, highlighted case studies like Osun State as “good examples of how school feeding programs in low income countries are implemented in a cost-effective and sustainable way to benefit and protect those most in need”. Political support and supervision was critical Successful large-scale government policy is unusual anywhere in Nigeria, so why did O-meals work? Let’s look at what the international observers (PCD) said: “The O-MEALS Programme… represents a model of good practice amongst other

school feeding initiatives in Nigeria… The innovative system of checks and balances that have been developed over the years has ensured good governance and is also a model of good practice within the country and the region. The O-MEALS Programme has not only benefited from the inspiring leadership of the program, but the engagement in program monitoring from different stakeholders at many levels has provided a strong platform for improved transparency and accountability.” The Osun State government has played a huge role in this, throwing its political weight behind the program without politicising, which is usually the problem with well-meaning economic policies in Nigeria. The World Bank echoed the point, highlighting the link between the success of school-feeding in Osun State and the level of political backing the program received. Somewhat unusually, the monitoring and governance framework employed for O-Meals was pretty robust. In particular, local communities were crucial in a couple of ways. First, female leaders in local communities often paid unscheduled visits to schools to inspect the meals, complementing the role of planning officers in Local Government offices who are in charge of liaising with the cooks. Second, the recruitment of cooks is done at the community level which introduces an element of social censure into the program as cooks knew they would have to deal with both O-Meals staff and their local community if they caused any trouble. This cleverly avoided the problem the United States Department of Agriculture observed in Ghana in 2009 where cooks deviated funds, usually by reducing the quality of the food served. Another important innovation was the set-up of finances. Before the program was revamped in 2011, funds were disbursed to Local Government Areas and then to schools before getting to the cooks. This system was subject to a lot of leakages, and upon commencement of the O-Meals programme in 2012, cooks received direct payments into their bank accounts. A national blueprint The O-Meals programme still has its shortcomings. The program is very expensive; according to PCD, it costs the government ₦2.6 billion a year. Meanwhile, the cost of feeding a single child has increased from ₦50 to ₦70 in just a few years. Given the financial constraints the state faces, the government showed admirable commitment to the program, and its success should be considered in light of these constraints. Meanwhile, although program monitoring was robust, evaluation has so far fallen short due to a shortage of funds. The State Universal Basic Education Board (SUBEB) collects data on school enrolment, but there has been no rigorous study into the micro and macro effects of the O-Meals program. As a result, we do not have enough clarity on which aspects of the program design were particularly useful, even though the aggregate positive effect is evident. Finally, the increase in school enrolment comes with a caveat. Getting more children in school is only good when the education they receive is of a certain quality. Unfortunately, this is out of the state governments hands. But the reality is that the increase in enrolment in Osun State would have been a lot more beneficial with a stronger education system. Understanding the success of the OMeals program puts the FG’s efforts in a different light. So far, the FG claims to have reached over 9 million children in 29 states. As Nigerian states will ultimately implement, the jury is open on the effect the program will have. But, for once, Nigerian states do not have to look far for good examples; one of the world’s most successful case studies can be found close to home in Osun State.

Thursday 27 June 2019

BUSINESS DAY

INSIGHT

AMCON goes into unsparing enforcement mode to recover assets Bashir Ibrahim Hassan

lthough Asset Management Corporation of Nigeria (AMCON) has recovered about N1.22 trillion of the bad debt – with about 5trillion still outstanding –the agency’s reputation has for long been blemished by the impression that, while recoveries are made from those without political clout, well-connected people known to be big debtors walk the streets freely. The situation is about to change for the better. “I think the time has come for us (Federal Government) to set some examples with some of these top debtors of AMCON, which… will serve as deterrent to others.” These were the words of VicePresident Prof. Yemi Osinbajo while reading the riot act that sets the enforcement mode that Asset Management Corporation of Nigeria (AMCON) has just entered. It is not going to be kid-globe treatment for obligors, he seems to be saying. The Vice President commended the management of AMCON under the indefatigable Kuru for its high performance so far and pledged the Federal Government’s resolve to support the corporation in its recovery efforts. How the Federal Government will do this? The VP gave a hint. He said in essence the Federal Government will set up an interagency collaboration framework that would comprise relevant government Ministries, Departments and Agencies supervised by his office to ensure that institutions and individuals indebted to AMCON were not allowed to do business with government henceforth. This will hit the obligors hard and will force them to cough some millions to settle the debt they owe AMCON. This is a welcome development and it will strengthen AMCON in its arduous task of enforcement of recovery efforts. It is a task, as the VP confirmed, that is not easy. “The work you do as a recovery agency is not something that is particularly easy or encouraging because we all know how Nigeria works.” He then assured the management and the board that paid him a visit that the Federal Government is “committed to working more closely with your administration to ensure that these monies are recovered from AMCON obligors, because it will help our economy and provide the government with more money to continue to improve on

Ahmed Kuru

the development of infrastructure across the nation.” AMCON was created to be a key stabilizing and re-vitalizing tool to revive the financial system. It went ahead to efficiently resolve the nonperforming loans (NPL) assets of the banks in the Nigerian economy. Its objectives include: assist eligible financial institutions to efficiently dispose of eligible bank assets; efficiently manage and dispose of eligible bank assets acquired by it; and obtain the best achievable financial returns on eligible bank assets or other assets acquired by it. Early in its operations AMCON acquired about 13,774 Non-Performing Loans (NPLs) worth N3.6 trillion from 22 commercial banks in Nigeria and provided financial accommodation of N2.2billion, a protected N4.7trillion of depositors’ funds and interbank takings as well as saved approximately 14,000 jobs. No one can deny the fact that, through AMCON’s intervention, the Federal Government successfully managed the nation’s debt crises and saved the banking system from imminent systemic collapse. But this achievement will not be complete until and unless it recovers those bad debts, which it uses tax payers’ money to purchase. AMCON has applied all the strategies in debt recovery that can be found in the books. Some of its recovery strategies also include divestments. www.businessday.ng

For example, AMCON recovered the sum of N152.3 billion from its equity injection of N1.49 trillion to the five EFIs. This represents a 10% recovery rate on investment. Similarly, AMCON successfully divested the three bridge banks to private investors for a combined sum ofN207.8 billion. This represents a 23% recovery rate on amount invested. It then went out of its way to apply very novel Asset Management Partners (AMPs) model. The AMPs are consortiums with specialist skills required to ensure recovery and debt resolution from banking, legal, valuation and accounting backgrounds. The move is AMCON’s strategy to resolve over six thousand accounts with loan balances of N100 million and below. In this arduous task of debt

recovery Ahmed, Lawan Kuru, the managing director and CEO of AMCON, who is a seasoned banker, is not oblivious of the fact that debtors are not necessarily enemies and that they should be supported to transform their NPLs to RPLs (re-performing loans) through enhancing their productivity. That has been tried successfully with some obligors. The case of Skye bank (now Polaris bank) in 2018 and Arik air take over by AMCON the year before are good examples here. AMCON, in accordance with the takeover objective of the Federal Government of Nigeria, provided working capital in excess of about N4 billion to Arik Air Limited (“Arik Air”) to salvage its operations. It is important to note that Arik Air, prior to the injection of the working capital, was indebted to AMCON to the tune of N142 billion. But on 9th February 2017, following Arik Air’s persistent failure to honour its obligations, Oluseye Opasanya, SAN (“Receiver Manager”) of the firm Olaniwun Ajayi LP sought and obtained a court order to put Arik Air into receivership. The efforts have since effectively stabilized the operation of the airline. AMCON was instrumental to the rescue of Skye Bank Plc. (now Polaris Bank Limited) orchestrated by the CBN and the Nigerian Deposit Insurance Corporation. In September 2018, AMCON injected the sum of N898 billion into Polaris Bank Limited to prevent it from financial collapse. Under Kuru, AMCON has demonstrated through these approaches that they knew the import of balancing the act of giving a breather to debtors to meet their obligations and the need for AMCON to realise its own mandate. But some obligors are recalcitrant about this window of opportunity and hence the need to adopt this enforcement mode. Kuru’s vast experience as a risk management expert prepared him

‘‘

The work you do as a recovery agency is not something that is particularly easy or encouraging because we all know how Nigeria works

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for his current lead position in AMCON. He knew his onions well, having played at the top echelon of the defunct Bank PHB as executive Director overseeing critical areas like Risk Management, Compliance, Commercial Banking, Northern Operations, Public Sector, Multilateral Agencies and the West Coast, East and Central Africa expansion programme of the bank. Nigeria has had its own fair share of the impact of the 2008 global financial meltdown on its banking and other financial sector that made the government to adopt some innovative measures to prevent systemic collapse of our banking system. Three prominent ones stand out -- bailout, bridge banking and, perhaps the most significant of all, the establishment of Assets Management Corporation of Nigeria (AMCON) in 2010. Thus far AMCON’s interventions have worked. The debt recovery should not be allowed to mar the successful stabilization of the economy we all are happy with. Therefore, all hands must be on deck to ensure few individuals do not hold the country at ransom and turn otherwise a very good idea into a bad dream. I have argued somewhere that the truth about debt is, no company or individual is forced to borrow money in the first place. Ultimately, if companies owe a debt, it’s because they chose to borrow money. Their lenders made that loan, or offered the credit line, contingent upon a documented pledge to pay it back. This means creditors do have a right to their money, and a debt collector is simply trying to reclaim what is legally and ethically owed by the debtor. If having followed all the avenues to recover the debts owed AMCON, giving all the windows of opportunity to renegotiate the terms and yet some obligors are failing or even dodging their responsibilities, there is no harm if AMCON runs to Federal Government and indeed to any other body that can help with ways and means to force the obligor to pay off. Perhaps this kind of stern warning from the serious-minded VP that the Federal Government under the leadership of President Muhammadu Buhari, would no longer fold its hands and allowed a few individuals that owed AMCON huge sums of money walk freely on the streets in the country is what is needed for high profile obligors to comply and do the needful. • Hassan, a financial analyst, wrote from Abuja

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Thursday 27 June 2019

BUSINESS DAY

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Thursday 27 June 2019

BUSINESS DAY

NEWS Dubai’s global business forum targets NDLEA records seizure of 146.820kg UN lauds Solution 17 for SDGs, Africa, UAE governments, corporate leaders of illicit drugs in 6 months unveils in Lagos MIKE OCHONMA

eaders from Africa and the United Arab Emirates (UAE), including corporate leaders, will be meeting in the fifth edition of the Global Business Forum (GBF) on Africa November 18 - 19, in Dubai, the UAE. The event is being organised by the Dubai Chamber of Commerce and Industry. Organised under the theme “Scale Up Africa,” GBF on Africa 2019 will bring together African and UAE governments and business leaders to explore avenues of economic cooperation and facilitate bilateral trade and investment flows. The high-level forum will place a key focus on forging the connections that will enable scale-up and explore how public and private sector players in Africa and the UAE can work together to establish sustainable partnerships. “Over the years, the GBF on Africa has established itself as one of the world’s leading platforms that fosters cooperation between Africa and the UAE and positions Dubai

as a global gateway for African companies,” Dubai Chamber president/CEO, Hamad Buamim, says. “The forum offers an unrivalled opportunity for key decision-makers to explore investment opportunities in Africa and forge new partnerships that pave the way for mutual benefits and economic growth,” he states. He indicates that this year’s theme will highlight the importance of sustainable development as an engine and catalyst for economic and social progress in Africa and will also set the tone for constructive dialogue about key trends that are driving the continent’s next phase of growth. The CEO notes that the GBF on Africa supports Dubai Chamber’s international strategy and ongoing expansion efforts in Africa, where the organisation currently operates four representative offices in Ethiopia, Ghana, Mozambique and Kenya. The upcoming forum will offer valuable insights on business potential in promising African markets that have yet to be fully explored, he notes.

… arrests 33 suspects at MMIA IFEOMA OKEKE

ational Drug Law Enforcement Agency (NDLEA) Murtala Muhammed International Airport (MMIA) Command has recorded a seizure of 146.820 kilograms of drugs from 33 suspected traffickers in the last six months, the department says. Garba Ahmadu, NDLEA airport commander, who disclosed this in an interview with newsmen as the world celebrates International Day Against Drug Abuse and Illicit Trafficking, said 28 males and five females were nabbed with various illicit drugs carefully concealed in different ways. The drugs include cocaine, methamphetamine, cannabis sativa, heroine and ephedrine. According to the NDLEA commander, the drugs were concealed in tomato cans, baby diapers, foodstuff, body lotion containers, and ingestion. Giving a breakdown of the drugs, he said, “Cocaine 15.580kg; heroin 14.720kg; cannabis sativa 54.140kg; methamphetamine 34.240kg, and ephedrine 28.140kg. “We had three internal concealments- that’s the ones that

were swallowed.” Speaking on cartels that plant drugs in passengers’ luggage in connivance with airline staff and ground handling staff, Ahmadu advised airlines to always deploy senior officials to airports for baggage tagging to avoid the Kano incident. Recall that Zainab Habibu, a student of Maitama Sule University, Kano, was arrested after a banned drug, Tramadol, was found in her bag. She claimed it was planted in her luggage by unknown persons. The student had travelled from Mallam Aminu Kano International Airport in company of her mother, Maryam Aliyu, and sister, Hajara Aliyu, but she was arrested over allegations that a bag bearing her name tag contained the an unlawful substance. After investigation, the lady was found innocent as some workers at the airport planted the drugs in her luggage. In 2016 at the MMIA, NDLEA seized a total of 779.916kg of different drugs. In 2017 this rose to 12666.400kg, and 5375.985 kg in 2018. Total number of suspects arrested: 2016, 103; 2017, 85 and 2018, 93.

reative Youth Community Development Initiative (CYCDI), Nigeria’s United Nation Sustainable Development Goals Action Award winner, has announced plans to officially unveil Solution 17, her custom solutions for positively addressing global problems that earned the organisation the coveted SDG Awards, in Lagos on July 2, 2019. Instructively, the UN, after due consideration, has also just recently published Solution 17 on its website as Good Practise, Success Story and Inspiring Breakthrough that can be replicated and scaled up to help galvanise the momentum for implementation of the 2030 Agenda and the SDGs. Foluke Michael, coordinator of the project, states that it is high time more organisations in Nigeria were engaged in the line of thoughts that developed the award winning solution, which had now been adopted in three different countries. “It is our belief that having locally developed a concept that is being applauded globally to address the 17 SDGs with three countries, namely India, Switzerland and Morocco, having adopted it, it is expedient to publicly engage stakeholders in Nigeria on this Model, so that more people, governments and organisations can join us in accelerating solutions to tackling identified world problems,

Michael states. She says CYCDI would be involving as many stakeholders as possible at the event including the corporates, diplomatic communities, and individuals that are committed to the cause, and indicates that the launch event would also feature panel discussions that would engender robust perspectives on the solutions and implementation ideas. “We have very good rapport with the United Nations office in Nigeria, diplomatic missions and various corporate organizations that would all be fully represented to further contribute to the discourse on the Solutions that has won us accolades as well as contribute to the deployment processes,” she notes. However, Tayo Orekoya, senior partner at CITC, whose firm has worked closely with the CYCDI to align the solutions to suit different environments, plans and policies, says he is very positive the event would be a major shift for the SDGs stakeholders in Nigeria. “We are very happy for the level of support and interest we have received following the global impact and acceptance that the solutions by CYDCI has generated. This gives us the confidence that the Nigerian SDG communities have a lot to look forward to at the event,” he notes.

Housing reforms: EDPA to revive red brick production factory … state assesses impact of flooding, assures victims of relief materials s part of efforts to boost providereliefmaterialsforhardest housing development, hit communities after the heavy the Edo State govern- rainfall on Monday. ment has concluded plans to At the assessment tour, Yakurevive its Red Brick Production bu Gowon, special adviser to the Factory operated by Edo Devel- governor on special duties, said opment and Property Agency thestategovernmentwouldassist (EDPA) in Benin City, the state the victims with relief materials capital. while measures were being put Isoken Omo, executive chair- in place to control flooding in man, EDPA, who disclosed this the future. in an interview with journalists, Hesaid,“Thefirstformofrelief said plans were ongoing to revive for these victims is to empathise the factory to meet the need for with them. We are here to do that, alternatives in addressing the high to see where the pain itches the cost of procuring the conventional most. We are assessing the extent or imported building materials. of damage caused by the floods “We discovered that the old and are making arrangement to EDPAhadmachinesforredbricks, have relief items provided to the which have gone moribund. We hardest-hit communities and have gotten approval to bring the victims.” factory back to life,” she noted. He decried that the flooding She said the factory would be at the Ugbor area in the city was located at Ugbiyokho axis of Eke- caused by a building erected on huan Road, for the production of the natural flow path of the drains, red bricks and interlocking bricks urging residents to seek approval for internal and external use, add- from the appropriate authority ing,“Wehavecontactedengineers before they construct buildings. to assess the old brick machines Omua Oni-Okpaku, comandtheysaidthemachinesarestill missioner for environment and okay. We will buy two additional sustainability, said a permanent machinestomeetmarketdemand solution was being worked out for the products. We already have to control flooding challenges interested buyers who have ap- in the state. She said the drains proached us and want us to revive in Erediauwa area would be dethe brick factory.” silted while the water would be She said the construction of channelledtothemoatinthearea, the factory would commence as asapermanentsolutionwouldbe soon as the designs were ready, provided soon. noting, “Land preparation has The commissioner tasked commenced. The land has been residents on proper waste disfenced and we have sent the plan posal, regular clearing of drains for the factory to engineers for and adjusting to new behaviours the designs. Once the designs are to mitigateclimatechange,noting, ready, the construction work will “Sensitisation is ongoing against start at the site. The bricks will also indiscriminate building and on be used in some of our housing improperwastedisposal.Wewant projects.” to revive neighbourhood watch Meanwhile, the state govern- through which traditional rulment has assessed the impact of ers will help check against indisfloodingindifferentpartsofBenin criminate building in their area of City, and has concluded plans to jurisdiction.”

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R-L: Dakuku Peterside, director-general, Nigerian Maritime Administration and Safety Agency (NIMASA); Dolapo Osinbajo, wife of the vice president of Nigeria; Sabiu Zakari, permanent secretary, Federal Ministry of Transportation, and Jonathan India Garba, NIMASA board chairman, at the 2019 celebration of the Day of the Seafarer in Lagos.

Election review: INEC scores self high on polls conduct James Kwen, Abuja

espite the barrage of criticisms that have always characterised Nigerian elections since the return to democratic rule in 1999, the country’s electoral body, the Independent National Electoral Commission (INEC), has scored itself high. This is as Mahmood Yakubu, INEC chairman, on Wednesday said the Commission was the most improved public service in the country, which had improved

consistently since it started conducting elections in 1999. Yakubu, who spoke at the review of the 2019 general elections conduct for the second batch of 387 Election Officers (EOs) from the Southern states of Nigeria, said INEC had significantly improved with every election. “If you look at what happened to our elections since 1999, you will know that INEC is the most improve public service in Nigeria. “We have offices at the grassroots but we can do more. Feel free to make the observation and necessary suggestions. It is an op-

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portunity to make our elections better,” he told the EOs. On how INEC had enhanced the operational capacity of the EOs, Yakubu noted, “Every organisation should be interested in the succession plan. The Commission will not lose experienced hands soon. We try to build the capacity of our EOs by giving them the needed exposure. “We involved the EOs in foreign election observation including various trips to Kenya, Liberia America. It helped me to assess the EO and I’ve not been disappointed with the quality of @Businessdayng

our EOs. You do more than just election-day activity.” Earlier, Mustapha Lecky, INEC national commissioner and chairman, Planning, Monitoring and Strategy Committee, said it was the second and final batch of the review from the remaining EOs from the 18 Southern states. Lecky stressed that it was because of the critical roles EOs play in the elections that the Commission wanted them to make suggestions and recommendations that would improve on future polls.

Thursday 27 June 2019

BUSINESS DAY

news Abiru stresses importance of SMEs to economic growth ... as Fate Foundation’s EEP Class 24 visit Polaris Bank

olaris Bank managing director/CEO, Tokunbo Abiru, has described SMEs as catalyst for economic growth while pledging the support of the bank to advance the growth of entrepreneurs and businesses that operate in that space. Abiru stated this last week while playing host to the Class 24 of Fate Foundation’s Emerging Entrepreneurs Programme (EEP) at the bank’s head office. Notably, Polaris Bank provided funding for four of the participants on the EEP programme. The EEP, a flagship training programme of FATE Foundation, is a highly interactive indepth leadership and business management training aimed at equipping participants with the necessary tools and knowledge required to re-vision, grow and scale their businesses. The visit is part of the team’s learning process aimed at providing mentorship for the 17 entrepreneurs on the EEP programme; the opportunity to rub minds with the Polaris CEO who fielded

different leadership and business questions from the team. Abiru, who received the delegation, welcomed the team and commended the 17 entrepreneurs of Class 24. The delegation represents key growth segments of the economy from different sectors such as: food, clothing, drinks, sustainability, manufacturing and real estate. According to Abiru, “It is interesting to note that some of you are already employing a minimum of 5-8 staff in your respective businesses and some even more. For us however as lenders and enablers of business, we must deliberately continue to look at your business segment and the likely areas we can continue to give support and encouragement.” On her part, Adenike Adeyemi, executive director, Fate Foundation, after introducing the entrepreneurs, said the programme was in its ninth week and they had so far covered a lot of grounds viz: strategy, financial management, cash flow management, talent manage-

6 of 10 Nigerians have no access to finance - NDIC OWEDE AGBAJILEKE, Abuja

igeria Deposit Insurance Corporation (NDIC) on Wednesday said six out of 10 Nigerians have no access to finance. This comes as the Corporation harps on the need for financial inclusion as the only means of pulling Nigerians out of poverty. The NDIC’s submission comes at a time Nigeria is the poverty capital of the world, where some 94 million people live on less than $1.90 a day. Latest figures from the National Bureau of Statistics (NBS) put the country’s unemployment rate at over 23 percent. Speaking when he led top management of the agency to President of the Senate in Abuja, NDIC managing director/CEO, Umar Ibrahim, explained that creating the required financial accessibility for downtrodden Nigerians, more micro finance and payment service banks would have to be licensed and established at the hinterlands across the country. “The issue of financial inclusion is very critical globally. We have a lot of statistics that indicate clearly that about 60 percent of Nigerians do not have access to finance. “People travel for hundreds of kilometres before they can reach a branch of commercial or microfinance bank. There are local government and communities that do not have a branch, they do not have ATMs, they have nothing and you cannot achieve those without some kind of sustainable financial inclusion. “We are working hard to ensure that the situation is changed in addressing the problem of poverty. “In achieving this, Nigeria has signed ombudsman to eradicate or to eliminate the problem of access to finance, measures have been taken to ensure that we gain

more mileage in this area by way of establishing more microfinance banks, licensing mobile banks, creation of agents banks,” he said. Access to financial inclusion speaks not only to people walking into a bank or using their phones to make transactions but also allowing citizens to access information, get help, get small loans in a very responsive and responsible manner so that they can have sustainable livelihood and thriving business, he said. He, however, urged the Ninth National Assembly to revisit the request of the Corporation for repeal and re-enactment of its Act, which did not scale through during the Eighth Assembly. He assured that the Corporation was putting on ground stringent measures against financial and cyber frauds. “We are working very hard on Issues pertaining to fraud and forgery in the baking space. We are interfacing with the office of the NBA and all other stakeholders to minimise incidences of cyber crime in our banking system. “The banks are being encouraged to ensure that they have full proof cyber security system so as to minimise the incidences of hacking which results in serious loses to the banking system and loss of earnings and loss of confidence. “Part of the emerging trends globally in the banking space is the emergence of block chains technology and crypto currency. Crypto currency is one example of block chain technology. These are new innovations that can be effectively used in checkmating fraud”. In his remarks, Lawan tasked the NDIC and the banking sector generally to provide the required financial facilities for Nigerians interested in agriculture in line with the diversification policy of the present government. www.businessday.ng

Nation building: Deeper Life Church hosts mega summit for young professionals … to graduate 800 young Nigerians through capacity building

SEYI JOHN SALAU

s part of efforts to augment government’snationbuilding efforts across Nigeria, the Deeper Life Bible Church is set to host her maiden edition of the Mega Summit for young professionalsacrossvariousprofessions. The summit tagged, “Gaining the Edge,” will run concurrently with the graduation ceremony of over 800 young Nigerians who participated in the third edition of her Skills Acquisition Programme (SAP 3.0) at the main bowl of the church auditorium in Gbagada, Lagos, June 29, 2019. The programme, being organised in conjunction with the Young Professionals Forum (YPF) of the ministry, is intended to bring together about 5,000 young adults to discuss salient issues relating to career growth and development, becoming an entrepreneur, growing individual businesses and remaining focused in the midst of the challenges facing the larger society, with the overall goal of promoting integrity and hard work in their various fields of endeavour.

The YPF Mega Summit is an annual leadership and capacity building event for young professionals. With this maiden edition, the organisers hope to expose participants to insights that will either help them land their dream job, grow on their current job or build their own business. “Seasoned speakers with hands-on experience will facilitate on contemporaryprofessionalexpertiseneeded to excel in today’s workplace and businesses,” Daniel Bamigbayan, president of the YPF, said. Speaking ahead of the programme, Bamigbayan disclosed that preparations for the event have been in top gear. He also expressed optimism that the programme will reach the target audience in the society. “In YPF, integrity is our watchword and we intend to inculcate it in our colleagues in the larger society; this programme is the maiden edition and we have specifically invited various reputable speakers from all walks of life with the Grand Patron, Dr. William Folorunsho Kumuyi as the Chief Host”, he said.

PenCom says N3.4bn pension contribution not remitted into states employees’ RSAs

ational Pension Commission (PenCom) on Wednesday said over N3.4 billion pension contribution fund deducted by states from employees’ salaries was yet to be remitted into the employees’ Retired Savings Accounts (RSAs). AishaDahir-Umar,actingdirectorgeneral, PenCom, disclosed this at the 2019 second quarter consultative forum consisting of critical pension stakeholders in Lagos. The News Agency of Nigeria reports that the forum, organised by the commission, consists of critical pension stakeholders from all states of the federation and the Federal Capital Territory (FCT). The PenCom acting directorgeneral was represented by Dan Ndackson, PenCom’s head, State Operations Department. The platform enables the stakeholders to brainstorm on challenges in the implementation of the Contributory Pension Scheme (CPS) with a view to proffering solutions to such challenge within the ambit of the CPS. She said all compliance officers of the Pension Fund Administrators (PFA’s) have just been inculcated into the forum to ensure that the issue of service delivery occupies a pride of place in the forum’s deliberations. The PenCom boss urged the stakeholders to deliberate on the recurring issue of unremitted pensions remorsefully.

She said a major item, which should occupy a front burner during the deliberations, is the recurring issue of non-remittances, which denies concerned employees the investment income that should have accrued to them. According to her, based on the N3.4billionpensioncontributions,not remitted into the RSA’s as May 31, over 38 percent of the amount had been outstanding for over one year. “All hands must be on deck to address this problem holistically. The stakeholders must be mindful that the hopes of prospective retirees are hingedonthesuccessfulimplementation of the CPS, which was instituted in response to the failure of the Defined Benefits Scheme (DBS). “It is also heart-warming to observe the steady progress of CPS in some states, especially with regards to remittance of pension contributions. “Returns submitted to the commission by the PFAs further revealed that over N8.09 billion were remitted as pension contributions of state employees in the first quarter of 2019,” Dahir-Umar said. She said the second quarter in the country’spensionlandscaperecorded remarkable achievements. Dahir-Umar said the commission, so far, has conducted three PFA branches inspections in Edo, Ondo and Ekiti states.

L-R: Adebayo Akolade, Olora of Ora kingdom, Kwara State; Muhammad Babandede, comptroller general, Nigeria Immigration Service; Munir Yari, deputy comptroller general and PCO, Ikoyi passport office, and Lanre Oladimeji, group head, retail banking, Zenith Bank Plc, at the commissioning of the office building donated by Zenith Bank to the Nigeria Immigration Service, Ikoyi Office.

Jaiz Bank reports 55% net profit increase in 2018 Onyinye Nwachukwu, Abuja

aiz Bank, Nigeria’s only noninterest taking Islamic bank, grew its net profit by 55 percent in 2018, the bank said Wednesday. Income after tax rose to N834 million, from N537 million in 2017, Hassan Usman, the bank’s CEO, told shareholders at the bank’s seventh Annual General Meeting (AGM) in Abuja. Jaiz also reported a 25 percent expansion on its balance sheet to N109bn in 2018, having grown steadily by 20 percent in the past few years from just N12 billion in 2012. Its branch network has also grown to 39. “This shows acceptance,” Usman told the shareholders. “Currently, 50% of Nigeria’s total population are a captive market for such Non-interest Banking services,” he said.

The bank which has a key long term goal of becoming the leader of ethical banking in sub-Saharan Africa also saw its total customer deposits grow to N85bn in 2018 from N68 billion the previous year due to improved customer confidence, according to Usman. There was also an increase in income-generating assets by 37 percent from N50.64 billion to N69.18bn, despite challenges. One of those challenges, Usman said at the meeting, was that the bank in 2018 paid out more return to Investment Account Shareholders (IAH)- 37% higher than what was paid out the previous year, which partly suppressed the bottom line targeted for the year. The calculation and distribution of profit between Mudaraba Investment Account Shareholders and a Bank is one of the central performance metrics in the noninterest (Islamic) Banks. The CEO explained that the

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profit-sharing, risk-bearing nature of this kind of investment deposit makes it somewhat a quasi-equity, but unlike equity holders, they do not share in the profit after tax but the gross income. According to him, “A material change in the deposit mix or the IAH’s participation factor can drastically affect the profitability of an Islamic Bank.” Until October 2017, the participation factor of IAH in the bank has been 67.5 percent of every naira they deposited, Usman explained. But thereafter, the factor was changed to 90 percent following a central bank regulation that approved the exemption of Mudaraba Deposits from Cash Reserve Requirement. “This change in participation factor brought about an increase in profit paid to IAH from N1.4 billion in 2017 to N1.9 billion by 2018. Consequently, profit share paid to them as a percentage of Gross Income @Businessdayng

from financing and investment grew from 20% in 2017 to 26% in 2018, a growth of about 30%.” Usman, however, said 2019 looks even brighter, and indicted a possibility of dividend payout by next year. He said they were poised to creating a responsible business that better meets their customer needs and puts them first. He said for an exceptional institution with a humble beginning, and optimistic outlook, the bank will continuously redefine standards, pledging commitment to the development of the Micro, Small and Medium enterprises and that their engagement with the financially excluded would be boldly innovative as well as transformative. “This is key to our long-term success,” he stressed, noting that pioneering for over seven years had been another key challenge, and wished more partners would come into the market.

Thursday 27 June 2019

ness-like, working three shots on target including one that rattled Daniel Akpeyi, before Moses Simon fired wide over the bar when he freed himself from the right. Coach Gernot Rohr rested captain Mikel Obi and William Ekong, with Chukwueze also benched for Simon and Ighalo starting in place of Paul Onuachu. Yet, the Super Eagles did not look intensely creative in the first half hour and it was largely the organization of Kenneth Omeruo, Leon Balogun, Chidozie Awaziem and Ola Aina at the back that ensured a barren scoreline at the interval. Iwobi had movement and endeavour but gave the

ANTHONY NLEBEM

igeria senior male football team, the Super Eagles became the first team to qualify for the Round of 16 of the ongoing Africa Cup of Nations (AFCON) as they narrowly defeated Guinea 1-0. The three-time AFCON winners scored the only goal in the 73rd minute when Kenneth Omeruo headed Moses Simon’s right-wing corner in at the near post. Super Eagles now have six points from their two games after a 1-0 win over Burundi in their first match on Saturday. A below –par first half gave way to a lively second half, during which Odion Ighalo, who earned all the three points for Nigeria after

xcitement returned to Super Eagles camp on Tuesday as Nigeria Football Federation (NFF) confirmed receiving part of the money approved by the Federal Government for participation of some National Teams in international competitions, including the Super Eagles’ participation at the ongoing 32nd Africa Cup of Nations (AFCON) in Egypt. NFF’s Acting President, Barrister Seyi Akinwunmi (in the absence of President Amaju Pinnick who is fully involved with organization as President of AFCON) said on Tuesday

coming on as a substitute against Burundi on Saturday, could have scored if the Guinean defenders had not checkmated Ahmed Musa’s pass from a swift

counter-attack, and Alex Iwobi forced a smart one – handed save from Guinea’s goalkeeper Ibrahim Kone from a snap shot. The result means that for

that the Federation received part of the money on Tuesday morning and had immediately launched the process to convert the sum to American Dollars to pay the players their only outstanding entitlement – the win bonus for the match against Burundi in Alexandria on Saturday evening – and for subsequent matches. “We want to specially thank His Excellency, President Muhammadu Buhari for his keen interest in resolving this matter quickly, which has enabled us to receive part of the money in record time. We have immediately started the process of converting the money to American Dollars at the Central Bank in order to pay the players the bonus for the win over Burundi three days ago as well as plan for subsequent games.” Akinwunmi added that on Monday, 24th June, the NFF had transferred to the players and their officials their camp allowances up to the last day of the group phase matches at the AFCON 2019, as well as the appearance fee for the friendly against Zimbabwe in Asaba on 8th June. “We have paid these mon-

ies through our funds managers, Financial Derivatives Company on Monday, 24th June 2019. The only issue we had was that some of the players did not send their bank accounts and instead authorized the bank to pay their monies to some other individuals. The bank requested clear authorization for this to happen. “I was on a telephone discussion with the Captain of the team Mikel Obi this morning and can safely say that all clarifications have been made and the usual cordial relationship and understanding between the players and we the administrators is still intact. I have challenged them to go all out and win the trophy assuring them that their monies all the way to the final is guaranteed. It is now for the players to focus on the championship and deliver glory to the nation. I have no doubt of their ability to do that.” Akinwunmi also specially commended the maturity of the team and its leaders, including skipper Mikel John Obi and for their unflinching focus on the job at hand, which is winning the AFCON Trophy.

the first time since the AFCON finals (also staged in Egypt), Nigeria won their two matches of the finals. At the beginning, the Syli Nationale were more busi-

ball away severally, and Ighalo must have punched himself after side-netting with Musa waiting eagerly to raze the net from close range in the 32nd minute. Earlier, Ighalo had, with a poor first touch, fumbled a good pass from Musa after the latter’s run down the left, and Iwobi also wasted another excellent pass by the pacy deputy captain. The Super Eagles need only a draw from their last match of the group phase against Madagascar on Sunday to finish top of the group and remain in Alexandria for their Round of 16 fixture. The top two nations in each of the six groups qualify, along with the four best third-placed countries.

Thursday 27 June 2019

BUSINESS DAY

Live @ The Exchanges Market Statistics as at Tuesday 26 June 2019

Top Gainers/Losers as at Tuesday 26 June 2019 LOSERS

GAINERS

ASI (Points)

Company

Opening

Closing

Change

NESTLE

N1399.2

N1350

-49.2

N62

BETAGLAS

N73.7

N66.35

-7.35

N29

N30.4

1.4

CCNN

N13.3

N12

-1.3

VOLUME (Numbers)

BERGER

N6.7

N7.15

0.45

CADBURY

N10.95

N10.25

-0.7

VALUE (N billion)

WAPCO

N11.55

N11.85

0.3

MTNN

N129

N128.5

-0.5

Company

Opening

Closing

Change

N495

N500

N58

SEPLAT

DEALS (Numbers)

MARKET CAP (N Trn)

29,609.00 3,377.00 394,062,557.00 3.268

...as NSE makes case for ETFs Stories by Iheanyi Nwachukwu

L-R: Tony Ibeziako, head Primary Market, NSE, Olumide Bolumole, divisional head, Listings Business, NSE, Theophilus Eniola Netufo, chief operating officer, Ikeja Hotel Plc; Barry Curran, general manager, Ikeja Hotel Plc; Chisom Umeofia, company secretary , Ikeja Hotel Plc; Alex Thomopulos, non-executive director, Ikeja Hotel Plc during the Facts Behind the Figures Presentation of Ikeja Hotels today at the Exchange.

dipped by 0.20percent at the sound of trade closing gong on Wednesday June 26, as its ASI closed at 29,609 points from 29,668.68 point recorded the preceding trading day. The value of listed stocks decreased from N13.074trillion to N13.047trillion, indicating a loss of N27billion. Wema Bank, GTBank, Unilever, FBN Holdings and Flourmills were

actively traded stocks on the review trading day. In 3,377 deals, equity traders exchanged 394,062,557 units valued at N3.268billion. Nestle Nigeria Plc recorded the highest loss after its share price moved down from N1399.2 to N1350, losing N49.2 or 3.52percent, while Seplat Plc advanced most, from N495 to N500, adding N5 or 1.01percent.

“As first-half (H1) 2019 comes to an end, we may see a spike in activity as investors rebalance their portfolios and position for the second half (H2) of the year. “The Airtel Africa IPO on the NSE expected at the start of H2’ 2019 could act as a lifeline like its competitor MTN Nigeria did”, according to Lagosbased analysts at Vetiva Securities Limited.

SEC, Oando crisis: Expert calls for dialogue

capital market operator has called for dialogue in the crisis between the Securities and Exchange Commission (SEC) and Oando Plc, saying it will help to maintain market integrity. Andrew Tsaku, a trader at Kapital Care Trust who is also a financial market analyst noted that SEC no doubt is empowered by law to oversee all companies’ activities in the Nigerian capital market, corporate governance issues among others. “Market is information driven as this will have impact on the companies’ share price and performance on the Exchange. The issue about regulation is not just to hit the ham-

mer, also to supervise; and the supervision involves collaboration, engagement and dialogue”, he said. The Commission had on May 31, 2019, released a report of the forensic audit carried out by Deloitte which indicted the oil firm of various grievous infractions. The forensic audit alleged infractions such as false disclosures, market abuses, misstatements in financial statements, internal control failures, and corporate governance lapses stemming from poor board oversight, irregular approval of directors’ remuneration, unjustified disbursements to directors and management of the company, rewww.businessday.ng

lated party transactions not conducted at arm’s length, among others. As a result, SEC ordered among other directives the removal of the GCEO and his deputy. Meanwhile, a Federal High Court sitting in Lagos had on Monday June 24, adjourned till July 22 for the hearing of the substantive suit brought by the Group Chief Executive Officers of Oando Plc and his Deputy, seeking enforcement of their rights. The court also fixed July 4 to hear arguments on the motion for consolidation. “At this point it is almost prejudicial to say whether or not SEC is right or Oando is right because the issue is in the law court. As an observer and as a participant in the market I think what

is germane for both parties is the fact that Oando is a local indigenous company that is interested in creating value for stakeholders”, he further said. “Whether it is the Board, the Management, the Staff and indeed the shareholders, it should continue to play the role to satisfy the very interest upon which it is founded and I think over the years they have tried to ensure that such interest are largely protected,” Tsaku noted. Tsaku, who further said that the company has its challenges in terms of the urge and the desire to grow by leaps and bounds, which has put Oando into some trouble waters, noted that “it is trying to come out of it.”

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FTSE 100 Index 7,416.39GBP -6.04-0.08% S&P 500 Index 2,923.63USD +6.25+0.21% Generic 1st ‘DM’ Future 26,637.00USD +75.00+0.28%

13.047

Stock market falls further by 0.20% he Nigerian stock market routed further into the negative territory on Wednesday June 26 following losses recorded in heavyweights like Nestle Nigeria Plc and MTN Nigeria Plc (MTNN). Week-to-date (Wtd), the market has decreased by 0.81percent, while year-to-date (ytd) negative return increased to -5.80percent. Market watchers see no respite for the Nigerian Stock Exchange (NSE) All Share Index (ASI) on Thursday June 27 in the absence of catalysts in sight to boost the index. Amid this trend, the NSE has started making case for investments in Exchange Traded Funds (ETFs) and has commenced an enlightenment campaign to increase investors’ awareness and participation in the ETFs as transparent and low cost investment option. The Lagos Bourse

Global market indicators Deutsche Boerse AG German Stock Index DAX 12,245.32EUR +16.88+0.14% Nikkei 225 21,086.59JPY -107.22-0.51% Shanghai Stock Exchange Composite Index 2,976.28CNY -5.79-0.19%

CWG seeks to maximise growth opportunities for increased shareholder

he Board of Directors, CWG Plc said the company has been positioned to take advantage of improving macroeconomic conditions to grow its business for increased shareholder value. Philip Obioha, chairman of CWG Plc who disclosed this during the firms 14thAnnual General Meeting in Lagos said the organisation remains resolute in taking advantage of these opportunities to grow earnings, enhance profitability and deliver returns to her esteemed shareholders. Obioha said the strategic initiatives already implemented by the company will strengthen its revenue beyond the N7.4 billion recorded in 2018. Adewale Adeyipo, group managing director, CWG Plc commenting during the meeting said the company’s business engagements and results reflect strongly on the underlying performance and leadership positions it held across virtually all activities. “We created significant partnerships, through which we can aggressively launch

out most of our platform businesses and subsequently grow revenue.” He stated that as a result of relative stability in the foreign exchange, the company has also taken strategic initiatives to reintroduce the profitability traditional business models of IT services. This will help to improve the revenue and profitability in our ever-changing market environment while we continue to develop our platform businesses.” “We put our customers to heart in all that we do through the CWG 2.0 platforms as we are always seeking to create an enabling business environment for all.” He said that CWG today, has been able to acquire 22 new customers in 2018 showing a 21 percent growth from 2017, and there are several business engagements ongoing with these customers and we are positive that it will yield some significant results for the company’s revenue in 2019. Adewale stated.

SUNU Assurances chairman visits IDP camps, commits to raise $80m

he Chairman of SUNU Assurances Kyari Abba Bukar and private sector leaders under the aegis of the Nigerian Humanitarian Fund Private Sector Initiative (NHF-PSI), along with the United Nations (UN) visited Borno State last Tuesday. During the visit which was part of efforts to provide indigenous support and the second time to assess the condition of internally displaced persons, Kyari Abba Bukar noted his commitment to raise the sum of $80million in financial aid to support thousands of displaced people currently living in IDP Camps spread across Maiduguri state. Bukar led the delegation of Nigerian entrepreneurs and CEOs who paid a visit to the state’s IDP Camps last week on a second assessment tour of the facilities. The delegation was in Maiduguri in May for the first visit, led by UN Country Director, Edward Kallon the co-chairmen of NHF-PSI, Kyari Bukar who is also a former chairperson Nigerian Economic Summit Group. Speaking on his experi@Businessdayng

Kyari Abba Bukar, Chairman of SUNU Assurances

ence visiting the Camps last May, Bukar said, “It is quite encouraging to see how Nigerian corporates are responding to what the United Nations is doing. It was a day trip but at the same time, it had touched their lives. As we were returning, many of them didn’t realise how dire the situation is over there. He expressed delight about the private sector in Nigeria’s enthusiasm in mobilizing resources and expertise to provide home-grown humanitarian assistance to the IDPs in the North East.”

Thursday 27 June 2019

BUSINESS DAY

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Thursday 27 June 2019

BUSINESS DAY

Live @ The STOCK Exchanges Prices for Securities Traded as of Thursday 26 June 2019 Company

Market cap(nm)

Price (N)

Change

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Volume

Company

Market cap(nm)

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PRICES FOR MAIN BOARD SECURITIES (Equities) BANKING ACCESS BANK PLC. 236,375.75 6.65 0.76 148 13,977,276 UNITED BANK FOR AFRICA PLC 210,326.44 6.15 0.81 206 13,608,864 ZENITH BANK PLC 627,929.88 20.00 0.25 293 8,994,818 647 36,580,958 OTHER FINANCIAL INSTITUTIONS FBN HOLDINGS PLC 244,087.99 6.80 -1.45 144 17,364,639 144 17,364,639 791 53,945,597 TELECOMMUNICATIONS SERVICES MTN NIGERIA COMMUNICATIONS PLC 2,615,554.93 128.50 -0.39 144 2,920,158 144 2,920,158 144 2,920,158 BUILDING MATERIALS DANGOTE CEMENT PLC 3,135,453.36 184.00 - 43 37,843 190,877.38 11.85 2.60 115 1,428,344 LAFARGE AFRICA PLC. 158 1,466,187 158 1,466,187 EXPLORATION AND PRODUCTION SEPLAT PETROLEUM DEVELOPMENT COMPANY PLC 294,222.28 500.00 1.01 33 296,646 33 296,646 33 296,646 1,126 58,628,588 REAL ESTATE INVESTMENT TRUSTS (REITS) SKYE SHELTER FUND PLC 1,710.00 85.50 - 0 0 UNION HOMES REAL ESTATE INVESTMENT TRUST (REIT) 10,175.81 40.70 - 0 0 UPDC REAL ESTATE INVESTMENT TRUST 14,408.66 5.40 - 0 0 0 0 0 0 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 0 0 CROP PRODUCTION FTN COCOA PROCESSORS PLC 440.00 0.20 - 0 0 OKOMU OIL PALM PLC. 63,530.41 66.60 - 10 7,126 PRESCO PLC 52,000.00 52.00 - 18 147,631 28 154,757 FISHING/HUNTING/TRAPPING ELLAH LAKES PLC. 8,520.00 4.26 - 0 0 0 0 LIVESTOCK/ANIMAL SPECIALTIES LIVESTOCK FEEDS PLC. 1,620.00 0.54 -3.57 10 733,700 10 733,700 38 888,457 DIVERSIFIED INDUSTRIES A.G. LEVENTIS NIGERIA PLC. 794.19 0.30 - 2 5,251 JOHN HOLT PLC. 182.90 0.47 - 3 8,379 S C O A NIG. PLC. 1,903.99 2.93 - 4 300 TRANSNATIONAL CORPORATION OF NIGERIA PLC 46,338.71 1.14 -0.88 84 5,255,587 U A C N PLC. 17,864.04 6.20 2.48 104 5,034,101 197 10,303,618 197 10,303,618 BUILDING CONSTRUCTION ARBICO PLC. 711.32 4.79 - 0 0 0 0 INFRASTRUCTURE/HEAVY CONSTRUCTION JULIUS BERGER NIG. PLC. 27,588.00 20.90 - 6 17,100 ROADS NIG PLC. 165.00 6.60 - 0 0 6 17,100 REAL ESTATE DEVELOPMENT UACN PROPERTY DEVELOPMENT COMPANY PLC 4,027.51 1.55 - 7 97,687 7 97,687 13 114,787 AUTOMOBILES/AUTO PARTS DN TYRE & RUBBER PLC 954.53 0.20 - 0 0 0 0 BEVERAGES--BREWERS/DISTILLERS CHAMPION BREW. PLC. 13,231.85 1.69 -9.47 17 623,460 GOLDEN GUINEA BREW. PLC. 242.22 0.89 - 0 0 GUINNESS NIG PLC 104,152.70 47.55 - 28 56,674 INTERNATIONAL BREWERIES PLC. 143,550.89 16.70 - 11 184,250 NIGERIAN BREW. PLC. 495,807.93 62.00 6.90 66 2,528,383 122 3,392,767 FOOD PRODUCTS DANGOTE FLOUR MILLS PLC 87,500.00 17.50 - 62 521,037 DANGOTE SUGAR REFINERY PLC 136,200.00 11.35 - 43 158,145 FLOUR MILLS NIG. PLC. 57,405.31 14.00 -0.71 82 14,626,025 HONEYWELL FLOUR MILL PLC 8,168.10 1.03 - 37 960,186 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 39,741.58 15.00 - 13 23,773 UNION DICON SALT PLC. 3,321.07 12.15 - 1 50 238 16,289,216 FOOD PRODUCTS--DIVERSIFIED CADBURY NIGERIA PLC. 19,251.57 10.25 -6.39 31 482,139 NESTLE NIGERIA PLC. 1,070,085.94 1,350.00 -3.52 62 129,774 93 611,913 HOUSEHOLD DURABLES NIGERIAN ENAMELWARE PLC. 1,680.31 22.10 - 0 0 VITAFOAM NIG PLC. 4,753.21 3.80 - 23 113,287 23 113,287 PERSONAL/HOUSEHOLD PRODUCTS P Z CUSSONS NIGERIA PLC. 28,190.39 7.10 - 34 155,297 UNILEVER NIGERIA PLC. 183,840.17 32.00 - 29 20,095,842 63 20,251,139 539 40,658,322 BANKING ECOBANK TRANSNATIONAL INCORPORATED 193,587.77 10.55 2.93 65 2,480,795 FIDELITY BANK PLC 49,257.15 1.70 -1.16 81 2,317,651 GUARANTY TRUST BANK PLC. 902,065.64 30.65 0.16 157 20,394,098 JAIZ BANK PLC 13,258.91 0.45 -4.26 19 706,829 SKYE BANK PLC 10,687.83 0.77 - 0 0 STERLING BANK PLC. 67,657.48 2.35 -2.89 27 3,639,469 UNION BANK NIG.PLC. 200,933.19 6.90 - 41 1,012,340 UNITY BANK PLC 7,481.18 0.64 -7.25 15 1,250,578 WEMA BANK PLC. 25,459.15 0.66 -1.52 27 194,666,633 432 226,468,393 INSURANCE CARRIERS, BROKERS AND SERVICES AFRICAN ALLIANCE INSURANCE PLC 4,117.00 0.20 - 0 0 AIICO INSURANCE PLC. 4,851.14 0.70 6.06 16 924,202 AXAMANSARD INSURANCE PLC 20,370.00 1.94 - 8 519,230 CONSOLIDATED HALLMARK INSURANCE PLC 1,951.20 0.24 9.09 10 1,122,724 CONTINENTAL REINSURANCE PLC 19,811.94 1.91 - 0 0 CORNERSTONE INSURANCE PLC 2,945.90 0.20 - 2 1,500 GOLDLINK INSURANCE PLC 909.99 0.20 - 1 2,000 GUINEA INSURANCE PLC. 1,228.00 0.20 - 1 50 487.95 0.38 - 0 0 INTERNATIONAL ENERGY INSURANCE PLC LASACO ASSURANCE PLC. 2,123.80 0.29 -6.45 5 218,049 LAW UNION AND ROCK INS. PLC. 2,234.09 0.52 4.00 9 144,210 LINKAGE ASSURANCE PLC 5,680.00 0.71 7.58 6 144,036 MUTUAL BENEFITS ASSURANCE PLC. 2,458.00 0.22 4.76 11 1,492,456 12,145.16 2.30 - 11 130,308 NEM INSURANCE PLC NIGER INSURANCE PLC 1,547.90 0.20 - 7 100,994 PRESTIGE ASSURANCE PLC 2,691.28 0.50 -7.41 8 206,592 REGENCY ASSURANCE PLC 1,333.75 0.20 - 1 200,000 SOVEREIGN TRUST INSURANCE PLC 1,918.39 0.23 - 7 2,004,500 STACO INSURANCE PLC 4,483.72 0.48 - 0 0 STANDARD ALLIANCE INSURANCE PLC. 2,582.21 0.20 - 3 7,000 SUNU ASSURANCES NIGERIA PLC. 2,800.00 0.20 - 0 0 UNIC DIVERSIFIED HOLDINGS PLC. 516.46 0.20 - 0 0 UNIVERSAL INSURANCE PLC 3,200.00 0.20 - 0 0 VERITAS KAPITAL ASSURANCE PLC 2,773.33 0.20 - 1 2,000 WAPIC INSURANCE PLC 5,620.75 0.42 -2.33 21 1,891,612 128 9,111,463

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MICRO-FINANCE BANKS FORTIS MICROFINANCE BANK PLC 11,799.67 2.58 - 0 0 NPF MICROFINANCE BANK PLC 2,743.97 1.20 - 19 171,436 19 171,436 MORTGAGE CARRIERS, BROKERS AND SERVICES ABBEY MORTGAGE BANK PLC 3,780.00 0.90 - 4 1,900 7,370.87 0.50 - 0 0 ASO SAVINGS AND LOANS PLC INFINITY TRUST MORTGAGE BANK PLC 5,796.93 1.39 - 3 300 RESORT SAVINGS & LOANS PLC 2,265.95 0.20 - 0 0 UNION HOMES SAVINGS AND LOANS PLC. 2,949.22 3.02 - 0 0 7 2,200 OTHER FINANCIAL INSTITUTIONS AFRICA PRUDENTIAL PLC 7,040.00 3.52 - 49 883,362 CUSTODIAN INVESTMENT PLC 35,585.28 6.05 - 3 1,359 DEAP CAPITAL MANAGEMENT & TRUST PLC 660.00 0.44 - 0 0 FCMB GROUP PLC. 31,684.34 1.60 -0.62 61 4,720,430 1,131.98 0.22 - 2 4,415 ROYAL EXCHANGE PLC. STANBIC IBTC HOLDINGS PLC 409,622.12 40.00 - 23 513,548 UNITED CAPITAL PLC 13,740.00 2.29 -2.55 80 2,711,919 218 8,835,033 804 244,588,525 HEALTHCARE PROVIDERS EKOCORP PLC. 1,680.29 3.37 - 0 0 UNION DIAGNOSTIC & CLINICAL SERVICES PLC 852.75 0.24 - 2 307,464 2 307,464 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 7,575.00 5.05 - 1 70 11,958.76 10.00 0.50 31 1,588,482 GLAXO SMITHKLINE CONSUMER NIG. PLC. MAY & BAKER NIGERIA PLC. 4,140.56 2.40 - 10 241,940 NEIMETH INTERNATIONAL PHARMACEUTICALS PLC 987.56 0.52 - 3 103,969 NIGERIA-GERMAN CHEMICALS PLC. 556.71 3.62 - 0 0 PHARMA-DEKO PLC. 325.23 1.50 - 0 0 45 1,934,461 47 2,241,925 COMPUTER BASED SYSTEMS COURTEVILLE BUSINESS SOLUTIONS PLC 816.96 0.23 9.52 24 7,463,175 24 7,463,175 COMPUTERS AND PERIPHERALS OMATEK VENTURES PLC 1,470.89 0.50 - 0 0 0 0 IT SERVICES CWG PLC 6,413.06 2.54 - 1 100 NCR (NIGERIA) PLC. 648.00 6.00 - 0 0 TRIPPLE GEE AND COMPANY PLC. 346.47 0.70 - 0 0 1 100 PROCESSING SYSTEMS CHAMS PLC 1,267.94 0.27 -10.00 41 9,041,868 E-TRANZACT INTERNATIONAL PLC 9,996.00 2.38 - 2 200 43 9,042,068 68 16,505,343 BUILDING MATERIALS BERGER PAINTS PLC 2,072.24 7.15 6.72 16 190,403 CAP PLC 19,250.00 27.50 - 24 65,690 CEMENT CO. OF NORTH.NIG. PLC 157,722.01 12.00 -9.77 48 1,340,885 FIRST ALUMINIUM NIGERIA PLC 844.14 0.40 - 0 0 MEYER PLC. 313.43 0.59 - 0 0 PORTLAND PAINTS & PRODUCTS NIGERIA PLC 1,959.74 2.47 - 2 405 PREMIER PAINTS PLC. 1,156.20 9.40 - 1 50 91 1,597,433 ELECTRONIC AND ELECTRICAL PRODUCTS AUSTIN LAZ & COMPANY PLC 2,256.91 2.09 - 0 0 2,553.92 1.45 - 10 146,710 CUTIX PLC. 10 146,710 PACKAGING/CONTAINERS BETA GLASS PLC. 33,173.14 66.35 -9.97 1 131,556 GREIF NIGERIA PLC 388.02 9.10 - 0 0 1 131,556 AGRO-ALLIED & CHEMICALS NOTORE CHEMICAL IND PLC 100,754.14 62.50 - 0 0 0 0 102 1,875,699 CHEMICALS B.O.C. GASES PLC. 1,565.08 3.76 - 0 0 0 0 METALS ALUMINIUM EXTRUSION IND. PLC. 1,781.64 8.10 - 2 210 2 210 MINING SERVICES MULTIVERSE MINING AND EXPLORATION PLC 852.39 0.20 - 0 0 0 0 PAPER/FOREST PRODUCTS THOMAS WYATT NIG. PLC. 92.40 0.42 - 0 0 0 0 2 210 ENERGY EQUIPMENT AND SERVICES JAPAUL OIL & MARITIME SERVICES PLC 1,440.42 0.23 - 17 120,631 17 120,631 INTEGRATED OIL AND GAS SERVICES OANDO PLC 49,725.65 4.00 -1.25 91 2,406,360 91 2,406,360 PETROLEUM AND PETROLEUM PRODUCTS DISTRIBUTORS 11 PLC 61,301.19 170.00 - 14 4,866 CONOIL PLC 15,024.06 21.65 - 28 133,417 ETERNA PLC. 4,760.13 3.65 - 11 72,944 FORTE OIL PLC. 39,595.43 30.40 4.83 83 685,798 MRS OIL NIGERIA PLC. 6,354.80 20.85 - 9 3,025 TOTAL NIGERIA PLC. 50,928.28 150.00 - 22 19,193 167 919,243 275 3,446,234 ADVERTISING AFROMEDIA PLC 1,820.01 0.41 - 1 300 1 300 AIRLINES MEDVIEW AIRLINE PLC 17,551.17 1.80 - 1 100 1 100 AUTOMOBILE/AUTO PART RETAILERS R T BRISCOE PLC. 341.14 0.29 - 0 0 0 0 COURIER/FREIGHT/DELIVERY RED STAR EXPRESS PLC 3,242.23 5.50 - 2 1,890 TRANS-NATIONWIDE EXPRESS PLC. 342.26 0.73 - 3 58,468 5 60,358 HOSPITALITY TANTALIZERS PLC 642.33 0.20 - 1 750 1 750 HOTELS/LODGING CAPITAL HOTEL PLC 4,723.78 3.05 - 1 2,000 IKEJA HOTEL PLC 2,702.44 1.30 - 8 7,530 TOURIST COMPANY OF NIGERIA PLC. 7,862.53 3.50 - 11 1,910 TRANSCORP HOTELS PLC 41,042.18 5.40 - 0 0 20 11,440 MEDIA/ENTERTAINMENT DAAR COMMUNICATIONS PLC 4,800.00 0.40 - 0 0 0 0 PRINTING/PUBLISHING ACADEMY PRESS PLC. 163.30 0.27 - 0 0 LEARN AFRICA PLC 1,033.74 1.34 - 10 65,214 STUDIO PRESS (NIG) PLC. 1,183.82 1.99 - 1 20 UNIVERSITY PRESS PLC. 798.11 1.85 7.03 18 1,935,633 29 2,000,867

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Thursday 27 June 2019

BUSINESS DAY

TECHTALK Innovation

Apps

Fin-Tech

Start-up

Gadgets

Ecommerce

IOTs

Broadband Infrastructure

Bank IT Security

How Arnergy’s tech powered solution could dent Nigeria’s energy poverty FRANK ELEANYA

igeria requires about 200,000 megawatts of electricity and an investment of over $100 billion in the next 20 years to sufficiently provide energy and make daily supply of 24-hour electricity to every Nigerian. For a country that currently manages to only generate about 4,000MW, it may appear like a very tall reality to achieve. However, for Femi Adeyemo, the founder of Arnergy, Nigeria’s energy poverty can be turned around by leveraging technology and alternative energy sources. A report by BloombergNEF (BNEF) released in June 2019, showed that global investment in renewable energy hit $288.9 billion in 2018, with the amount spent on new capacity far exceeding the financial backing for new fossil fuel power. Although the investment was 11 per cent down compared to the previous year, 2018 was however the ninth successive year in which it exceeded $200 billion and the fifth successive year above $250 billion.

Investors are clearly seeing opportunities to invest in new energy sources and in Nigeria, technology enabled startups like Arnergy has attracted significant investments which they are deploying to solve Nigeria’s energy problem. “We believe that energy needs in Nigeria have surpassed rudimentary requirements of low power utilization and our product offerings are solving for reliability and not just access,” says Adeyemo in a statement announcing that his startup which he founded in 2014 has raised $9 million in a Series A round. The investment was led by Breakthrough Energy Ventures, a global group of 28 high net-worth investors

from 10 countries, spearheaded by Bill Gates. Bill Gates has a personal $2 billion investment in the firm. Other participators in the $9 million funding include the Norwegian Investment Fund for Developing Countries (Norfund), EDFI ElectriFI and All On which invest exclusively in Nigerian energy startups. Arnergy’s strategy is a distributed renewable energy systems that harness the combination of power, superior storage solutions and proprietary remote management technologies to deliver scalable, reliable and affordable energy solutions that are tailored to tackle issues related to intermittency and grid unreliability. Arnergy, in a statement,

said since it began operations it has delivered over 2MW of installed capacity and over 5MW of storage capacity to business and residential clients across Nigeria. It also has over 5MWh of storage capacity to business and residential clients across Nigeria. 2MW may look like scratching the surface of the energy poverty. To be sure, watts are a measurement of power, describing the rate at which electricity is being used at a specific moment. A 15-watt LED light bulb draws 16 watts of electricity at any moment when turned on. One kilo watt (kW) equals 1,000 watts and one kilowatthour (kWh) is one hour of using electricity at a rate of 1,000 watts. On the other

CALEB OJEWALE

Kenyan digital banking start-up that focuses on cooperatives grew its user base from 200 to 20,000 in 3-months, after participating in the Google Launchpad Accelerator Africa programme, along with 11 other start-ups across Africa; three of which came from Nigeria. It was not an isolated success story when the third class of the programme graduated last week, and with applications now open, more startups can hope to become success stories in a near future. The Launchpad programme has over the years, assisted start-ups to scale and become competitive to deliver value across the African continent. During the graduation event in Lagos, BusinessDay got to interact with some of the recent success stories, including Kwara, a digital banking platform from Kenya that has seen its user base grow by a 100-fold. Cynthia Wandia, CEO of Kwara in an interview, said the platform had 200 members on its platform before joining the

23 startups from Classes 1 and 2 who between them, Google says have created 385 direct jobs and raised over $19-million before, during and after they participated in the programme. Class 4 will kick off later this year, and see another 1012 African start-ups complete the three-month acceleration programme. Applications for Class 4 opened on 21 June and will be open until 26 July. It would not be out place to say it is currently innovation season at Google, as, apart from the launchpad applications, this week the Google News Initiative also opened for applications in the Middle East, Africa and Turkey. The Google News Initiative (GNI) Innovation Challenge is now accepting proposals for projects from news organisations of every size to address increasing engagement with readers and/ or exploring new business models in any form such as subscriptions, membership programmes, and so on. Traditional publishers, news start-ups and associations that aim to build innovative digital media projects are all eligible to apply. Projects can

be highly experimental, but must have well-defined goals and have a significant digital component. A panel will evaluate the submissions and fund selected projects up to $150 thousand, with funding for up to 70 percent of the total project cost. The funding will be reviewed against several criteria, including a “sharing component” - for example, a project proposal can include publishing findings or holding a public seminar to encourage applicants to share the knowledge and learnings to others. Applicants can make project submissions until Monday, September 2 at 23:59 GMT. More information on eligibility, rules and criteria, and funding will be published on the GNI website. For more information, applicants may reach out directly to the GNI Project team, by emailing meagnichallenge@ google.com. The GNI Project Team will also be holding an online town hall webinar session to give further information and to answer questions. This will take place on Wednesday, July 3rd at 10 AM GMT (11 AM London time).

FRANK ELEANYA

undreds of enthusiasts and investors in Port Harcourt, the Rivers State capital and surrounding communities participated in the third leg of the quarterly cryptocurrency literacy tour organised by Luno Nigeria. The global cryptocurrency company which provides a localised platform for customers to buy and sell Bitcoin and Ethereum has already held successful literacy tours in Lagos and Abuja which saw many people gain fresh perspectives and knowledge about the cryptocurrency market. The Port-harcourt meetup also helped existing customers give feedback to the company. Chinedu Obidiegwu, marketing and community lead at Luno said the meetups targeted at the six geopolitical zones in Nigeria was born out of the need to provide a safer market for Nigerians through customer education and engagement. Given its general anonymity, cryptocurrencies have attracted some criminal elements that target unsuspecting users. In recent times,

Team: Frank Eleanya, frank.eleanya@businessdayonline.com; Caleb Ojewale, caleb.ojewale@businessdayonline.com www.businessday.ng

beyond just powering offices and homes in Nigeria, as it also provides access to clean and stable energy which is a prerequisite for job creation and development. “This is a deal that is particularly exciting for us at All On as a Nigerian impact investor because it reinforces our belief that local energy companies like Arnergy with innovative technology and business models can attract investments from global giants like Breakthrough Energy Ventures, Norfund and ElectriFI, and are ready and able to compete on a global stage,” said Wiebe Boer, CEO of All On. With the new investment, Adeyemo said Arnergy plans to include new business models and tap new partnership opportunities, as well as consumer financing and channel expansion activities. Targeted verticals for the company’s 5kW modular systems will include small businesses, healthcare, hospitality, financial services, agribusiness and education. The company is already providing energy services to health businesses and plans to scale this up as it sees huge opportunities in lighting up the health sector.

Luno deepens cryptocurrency literacy in Port Harcourt, targets more regions

Innovation season at Google as applications open for Launchpad programme, Google News Initiative launchpad programme, and 3 months later, has grown its user base to 20,000. Furthermore, from less than 1,000 loans disbursed in over a year of being in operation, it now currently has 11,000 loans on its platform. “Some of the experiences from LaunchPad helped us to focus on one product,” said Wandia, CEO of Kwara in an interview. “We had multiple products for which we had ideas, but one key learning was to focus on just one.” Over the three month period, the start-up was able to validate this by bringing onboard a large customer (a cooperative in Kenya), and this, Wandia said was “definitely as a result of putting their attention on the main product,” courtesy of knowledge from the programme. Kwara provides cooperatives with an affordable platform that can be used to run their daily operations; keep records of members, take deposits, calculating loans and digitizing process of approvals for loans. The graduating startups now form part of Google Launchpad Accelerator Africa’s alumni along with the

hand, one megawatt (MW) equals 1,000 kilowatts which equals 1,000,000 watts. The amount of electricity consumed per year in the average UK home is approximately 4,000kWh. Adeyemo said there is no one-size-fits-all solution to the energy problem but by focusing on small businesses which contributes significantly to the Ni g e r i a n e c o n o m y a n d leveraging solar energy, the company intends to cut a huge footprint in the energy market. With solar energy there is every reason to be optimistic. Unlike fossil fuel which is said to be fast depleting (projected to run out in next 52 years at current rate of production), the sun which is the solar’s primary source will never stop shinning. Technology research in solar technology is also on the increase. In 2018, $139.7 billion investment went to solar projects around the world. Emerging markets continued to attract the most investors’ attention with investment rising by 6 per cent to $61.6 billion to make it the highest of any year. Mark Davis, EVP Clean Energy from Norfund, said solar energy’s attraction goes

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some exchanges have been compromised by the activities of hackers. At the same time, as the market becomes more attractive due to rise in the prices of cryptocurrencies such as Bitcoin, new investors buy without a full awareness of how the market works. “We have seen over the years that educated users make better decisions and they hardly get exposed to cyber criminals,” said Owenize Odia, country manager of Luno. “This is why we are willing to ensure that Nigerians are informed.” Luno has over time invested in a learning portal and it employs talents to create exciting articles on different aspects of the cryptocurrency market. “Our learning portal has a rich resource for different topics regarding cryptocurrency to help beginners as well as experienced sellers and buyers on our platform,” she said. At the Port Harcourt meetup, Olaleye Awe, a cryptocurrency expert thrilled participants with different strategies in trading cryptocurrency as part of its many use cases. Awe described Luno as the ideal exchange for beginners. “It is easy to learn and start trading Bitcoins on Luno.

Thursday 27 June 2019

BUSINESS DAY

FINANCIAL TIMES

World Business Newspaper KADHIM SHUBBER

obert Mueller, the former special counsel who investigated Ru ssia’s role in the 2016 US presidential election, has agreed to testify before Congress on July 17 in response to a subpoena, House Democrats said on Tuesday evening. The appearance by Mr Mueller before two congressional committees will mark only the second time that he has spoken publicly about his investigation into possible links between Donald Trump’s election campaign and Russia, as well as potential obstruction by the US president. Last month, Mr Mueller discussed his findings at a brief press conference and said he hoped it would be the last time he would speak publicly about the investigation. The former FBI director warned that he would not go beyond his written report in any congressional testimony. However, Democrats have been keen to secure his appearance in the belief that any televised comments will have greater political impact than the 448-page tome Mr Mueller submitted in March at the end of his almost two-year investigation. Jerrold Nadler, chairman of the House of Representatives judiciary committee, and Adam Schiff, who chairs the House intelligence committee, acknowledged Mr Mueller’s reluctance to testify in a letter sent to him on Tuesday. “The American public deserves to hear directly from you about your investigation and conclusions. We will work with you to address legitimate concerns about preserving the integrity of your

Robert Mueller to testify before Congress on July 17

Special counsel agrees to request from Democratic-led House committees

work, but we expect that you will appear before our committees as scheduled,” the Democrats said. Mr Mueller said in his report that he had not found sufficient evidence to establish a conspiracy between Russia and the Trump campaign. He did not decide whether Mr Trump attempted to obstruct justice, pointing to a Department of Justice policy that prohibits the indictment of a sitting president. The findings allowed Mr Trump to claim vindication on the question of whether he worked with the Russian government to win election in 2016. But it also provided ammunition to the president’s critics in the section of the report that dealt with whether Mr Trump tried to obstruct justice. In the report and his comments last month, Mr Mueller pointedly noted that he had not cleared Mr Trump on the question of obstruction. “If we had confidence that the president clearly did not commit a crime, we would have said that,” he said at the press conference. The hearing next month will be the first time Mr Mueller will face questions about his findings and the decisions he made during the investigation. It will come

Natixis fund fall passes €5bn as H2O asset bleed continues

he six funds at the heart of H2O Asset Management’s illiquid bond crisis have now lost more than €5bn in value, as investors pull their money on concerns about an outsized bet on debt linked to a controversial German financier. Fresh data showed shrinkage accelerated on Monday, with six of the Natixis subsidiary’s 18 funds losing close to €2.4bn in a single day, as jitters intensified around H2O’s relationship with Lars Windhorst, a flamboyant entrepreneur with a history of legal troubles. Adding to the strain, H2O is cutting its estimates for the value of some assets linked to Mr Windhorst. The six funds — named Adagio, Allegro, Moderato, Multibonds, Multistrategies and Vivace — had assets of €17.2bn before the outflows began last week, when the Financial Times reported on their exposure to Mr Windhorst. Their assets have now dropped by close to 30 per cent. The biggest of the funds — Adagio — lost more than €1bn on Monday. A spokesman for Mayfair-based H2O declined to comment on Wednesday. In a statement on Tuesday afternoon, the asset manager

during his 12 years as FBI director. In May, he indicated that any testimony would probably disappoint those expecting him to veer off script and reveal new details not already disclosed in his report. “The report is my testimony. I would not provide information beyond that which is already public in any appearance before Congress,” he said. Jonathan Yarowsky, a partner

at Mr Mueller’s former law firm WilmerHale who was listed on the congressional subpoena, did not immediately return a request for comment on Tuesday evening. Doug Collins, the ranking Republican member on the House judiciary committee, said he hoped Mr Mueller’s appearance would “bring to House Democrats that closure that the rest of America has enjoyed for months”.

Pipeline failures and drugs coming off patent lead to tie-up of pharma companies DONATO PAOLO MANCINI AND ARASH MASSOUDI

said that “net outflows have slowed significantly” since Monday, adding that its funds had since received “some material inflows”, without providing details of their scale or source. The fund manager, whose main focus is on government bonds, said in a letter to investors on Monday that it would revalue any of its other debt linked to the German financier at “a very significant discount” to previous calculations. It has also begun to offload hundreds of millions of euros of these illiquid bonds. H2O told clients on Monday that it sold€300mofthebondslastweek,leaving it with a €1bn exposure. It then publicly announced that it had less than €500m of exposure left by the end of Monday. It didnotspecifywhatproportionofthiswas due to revaluations or to sales. Several traders and distressed debt investors said that a “large holder” had been looking to sell bonds from Italian lingerie maker La Perla and Abu Dhabi brokerage ADS Securities — two of the nine companies with bonds linked to Mr Windhorst that are in H2O’s portfolios. ADS Securities separately said on Monday that its chief Philippe Ghanem was leaving, but also said that the decision was unrelated to the recent events at H2O. www.businessday.ng

as Democrats weigh whether to pursue the impeachment of Mr Trump, with the party establishment warning that the public does not support such a move and advocates pointing to Mr Mueller’s report as evidence enough to impeach the president. Mr Mueller will appear before the committees with more experience than most congressional witnesses, having testified repeatedly

AbbVie hopes Botox-maker Allergan can iron out its wrinkles

Six funds shed nearly 30 per cent of value on concerns over illiquid holdings ROBERT SMITH AND CYNTHIA O’MURCHU

wo months ago, AbbVie chief executive Rick Gonzalez approached his counterpart at Allergan, Brent Saunders, with a proposition he believed could solve a series of problems facing their respective drug companies. The discussion culminated on Tuesday with the second blockbuster acquisition in the drug industry this year: AbbVie would buy Allergan in a cash-andstock deal that valued its shares at $63bn before the addition of about $20bn in net debt. For Mr Saunders, a serial dealmaker who had pieced together Allergan through a succession of takeovers, the deal provided relief from a tumbling share price and attacks from a hedge fund pushing to divide his chief executive and chairman roles. Once the darling of stock market investors, Allergan’s fall from grace meant that the sale at an enterprise value of $83bn equates to roughly half the value of its previously agreed deal to sell itself to Pfizer back in late 2015.

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That transaction, which was worth $160bn, would have allowed Pfizer to redomicile to Ireland by merging into Allergan and allow the US drugmaker to escape US taxes. The move was blocked by changes in tax policy by the Obama administration and in hindsight marked the high-water mark of Mr Saunders tenure. Since then, Allergan — best known for its cosmetic drug Botox — has been struggling to keep pace with Wall Street’s thirst for growth. The business was pummelled by a series of pipeline failures that pushed shares to multiyear lows, leading to calls for the company to consider a breakup. The 45 per cent premium paid by AbbVie only values Allergan at levels it was trading at last August. For Mr Gonzalez, whose shares plunged 15 per cent after the deal was announced, the threat to AbbVie had been clear for years. Its blockbuster drug, Humira, which treats autoimmune diseases, has allowed company to print money — but for a finite period. Accounting for 60 per cent of AbbVie’s $33bn in annual sales, it will go off patent in the US in @Businessdayng

2023, all the while facing increased competition from rivals who are developing generic versions. How to find sources to replenish those sales once the tick lower was a source of constant consternation. “Humira is essentially buying the assets that replace it over the long term,” Mr Gonzalez said in a call with analysts on Tuesday. Another person close to the talks said: “This gives the company an insurance policy and Humira itself will pay down the debt.” The new group, which would sit close to rivals Pfizer and Novartis in terms of revenues, will retain an important presence in immunology — with Humira and Skyrizi — hematologic oncology — with Imbruvica and Venclexta — and virology — with drugs used to treat hepatitis C — among other areas. Humira, whose sales AbbVie projects will stay stable at $19bn a year, will generate cash flow that will be used to pay down the enormous debt that is required to fund the deal. It will also help AbbVie try to mine Allergan’s own pipeline of drugs for new products. AbbVie hopes that its global sales force will also help bolster Botox revenues.

Thursday 27 June 2019

BUSINESS DAY

NATIONAL NEWS

Bitcoin surges towards $13,000, boosted by ‘Facebank’

Cryptocurrency’s value has jumped for eight trading sessions in a row DANIEL SHANE AND SIDDARTH SHRIKANTH

he price of bitcoin has soared to its highest level in a year and a half, as a breathless rally in the digital asset evokes memories of the cryptocurrency’s last boom-andbust cycle. In Asian trading hours on Wednesday, bitcoin traded on the Bitstamp exchange rose as much as 10 per cent to as high as $12,935.58, putting the digital asset on track for its biggest one-day jump in more than a month. Bitcoin’s price later pulled back to less than $12,600 as European traders came online. Bitcoin’s value has now jumped for the past eight trading sessions in a row, bringing its overall return for the year to more than 250 per cent — more than 12 times the return of the next best-performing currency or commodity, palladium. Much of those gains have come in the past eight weeks, with the price of one bitcoin more than doubling since the start of May alone. The euphoria surrounding bitcoin is sweeping up other digital currencies. Ethereum, the second-biggest cryptocurrency, was up 5.5 per cent on Wednesday, according to Coindesk, a cryptocurrency information provider, taking its gains to 150 per cent for the year. Analysts say the bout of enthusiasm for virtual currencies is being stoked by a confluence of factors. Among the most significant is Facebook’s move into the world of crypto, launching its own currency called Libra in an attack by Big Tech on the payments industry. Analysts

are optimistic that Libra could help cryptocurrencies generally gain more mainstream acceptance, both as means of payment and as a store of wealth. “Adoption is obviously key for this space so the Facebook news is . . . being viewed positively,” said Craig Erlam, senior market analyst at Oanda. Mr Erlam added that bitcoin has struggled for legitimacy among traders since the last crypto bubble burst at the end of 2017, prompting the bitcoin price to plunge about 80 per cent from its peak of more than $19,000. But analysts caution that traders are ignoring crucial differences between Libra and more established digital currencies such as bitcoin. “Libra is backed by a reserve of real assets — such as bank deposits and treasury bills. That gives it intrinsic value,” said Margaret Yang, an analyst at CMC Markets. She noted that, in theory, that should ensure some stability in its price. Many other major cryptocurrencies, most notably bitcoin, are “backed by nothing”. Demand for cryptocurrencies is also being fanned by a recent dovish shift by the world’s biggest central banks, say analysts. Both the US Federal Reserve and the European Central Bank have strongly hinted that they will tilt towards monetary easing in the coming months amid increasing signs the global economy is cooling. Meanwhile, the value of negative-yielding bonds has reached a record high of $13tn globally, increasing the relative appeal of yieldless assets such as gold, whose price has soared to more than $1,400 per troy ounce this week.

Nike pulls line of shoes from China over Instagram post Limited-edition range by Japanese designer targeted after support for Hong Kong protests TOM HANCOCK

ike cancelled the sale of a line of limited-edition sports shoes in China after their Japanese designer expressed support for protests against a proposed bill that would enable extradition to the mainland, highlighting the political risks for western businesses operating in the country. Chinese retailers halted sales of the trainers designed by Undercover, the studio of Japanese designer Jun Takahashi, after it posted a picture of protesters with the slogan “no extradition to China” on its Instagram account earlier this month. The post provoked a backlash from Chinese Instagram users, who use VPN software to access the platform as it is blocked on the mainland. Undercover deleted the post, which it said was an “individual opinion” posted by mistake. YYSports, a Chinese retailer owned by Hong Kong-listed Pou Sheng International, Nike’s strategic partner in China, said in a social media post that it had received an “urgent notice” from the US sportswear maker resulting in the

cancellation of the shoe’s release on June 14. Other Chinese vendors withdrew the shoes from sale without explanation. Online vendor Douniu said it had removed all products related to the Undercover brand due to “special reasons”, without giving details. Nike did not respond to repeated requests for comment. The controversy is unlikely to have a significant impact on Nike’s revenues in China, as it was swiftly dealt with and the shoes were designed as a collector’s item rather than a mass-market product, said a person close to the company. But the issue highlights the difficulties multinational companies face adjusting to political sensitivities in China without being seen by consumers in more politically liberal countries as yielding to authoritarian demands. Nike has marketed itself as a champion of social causes. This included last year hiring Colin Kaepernick, an American football player who was part of a protest movement against US police brutality against African-Americans, as the face of a high-profile advertising campaign. www.businessday.ng

Donald Trump’s impulsive approach to China makes US vulnerable

Meeting at G20 unlike to resolve the complex conflict between Beijing and Washington ROBERT ZOELLICK

hy have the US-China trade negotiations stalled — and what will Presidents Donald Trump and Xi Jinping need to do to revive the talks when they meet in Japan this week? The US administration’s current position reflects an internal division. One faction wants to decouple the American economy from China; this group favours tariffs, barriers to cross-border investment, and uncertainties that would compel companies to break supply chains. The other faction seeks to change China’s practices in order to boost US exports, protect intellectual property and technology, and counter discrimination against overseas investors; these actions would expand American economic ties with China. To reconcile these conflicting aims, the compromise has been to make extraordinary demands — and rely on Mr Trump’s instincts to decide whether to do a deal. The principal problem in the negotiation now is what America will do in return if China takes steps to open markets, buy goods, and secure US interests. For now, Washington

has insisted on retaining the tariffs it imposed until Beijing delivers on its promises. US negotiators also want the right to reimpose tariffs whenever America chooses — and to prohibit Chinese retaliation. When China’s politburo reviewed the prospective deal, it choked on the lack of mutual obligations. The two sides also failed to agree on Beijing’s shopping list for buying US goods. To China, the terms looked unequal, raising old ghosts from 19th-century diplomacy about foreigners treating them with a lack of dignity and respect. Mr Trump’s decision to blacklist Huawei adds another obstacle. The Chinese do not know whether Washington is seeking to destroy the telecoms equipment group by starving it of critical inputs, to block the company’s business in the US and elsewhere, or to use it as a bargaining chip. Along with the rest of the world, China has observed that trade protectionism, like immigration and the wall on the border with Mexico, appears to be a core political issue for Mr Trump. Those topics signal authenticity to his political base, so he needs to keep protectionism and hostility to immigrants in the news to show supporters he is true to his word — and different

from other politicians. (Mr Trump’s political image is also to avoid military action and to break with his predecessors on North Korea and Iran.) Mr Trump’s dealmaking is impulsive, based on his political assessment of the moment. If financial markets tumble, he is likely to trim his demands or at least pull back from the brink. If he is concerned about business complaints, consumer costs, and threats to the economy, he could well hold off on more tariff increases, while restarting talks. And if he decides to close after more negotiations, he will trumpet any deal as the “greatest ever”, regardless of the terms. The biggest weakness of this approach is that tariffs and even a trade deal will not address the full range of Sino-American differences — and opportunities. That extensive docket requires persistent, in-depth interaction. Under Mr Trump, other work streams with China have been consumed by the trade talks. The full agenda must address limits on China’s use of state capitalism, its Belt and Road infrastructure initiative, maritime and regional security, new technologies and human rights. If Mr Trump decides he wants a trade agreement, he will also need a way of reviewing outcomes and adjusting for new needs.

Europe on alert as ‘dangerous’ heatwave approaches Plans to prevent heat-related deaths in place as temperatures set to top 40C LESLIE HOOK, HARRIET AGNEW, TOBIAS BUCK AND IAN MOUNT

uch of Europe is braced for “dangerous” high temperatures this week, triggering public warnings in France, Spain and Germany as authorities put in place measures to prevent a recurrence of the deadly heatwaves in previous years. The unusually early surge in temperatures has led to the rescheduling of exams for hundreds of thousands of French students, the opening of so-called cool rooms in government buildings to provide shelter and speed restrictions on parts of Germany’s motorway network amid fears that roads could crack in the sweltering summer heat. “Hell is coming,” said Spanish meteorologist Silvia Laplana in a tweet showing a time-lapse map of red heat spreading across Spain, where tem-

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peratures in some parts are predicted to exceed 40C. As heatwaves become more frequent and more intense, European governments have stepped up early warning systems and even faced accusations of doing “too much” as they seek to limit the worst health impacts of the heat. By Tuesday, about half of France was placed on orange alert — the second highest warning — by forecaster Météo France ahead of the arrival of what Accuweather called a “potentially dangerous” heatwave. Others suggested a new French record could be set on Friday, when a high of 45C is predicted in the southern city of Nîmes. In Spain, the hot, dry and dust-filled air arriving from north Africa would drive temperatures as high as 42C in some areas, according to Spain’s weather service. Germany, too, is readying for an @Businessdayng

unusually intense heatwave, with meteorologists predicting temperatures of up to 40C on Wednesday. That would set a German record for June, eclipsing a level set in 1947. The German authorities have also warned of an increased risk of forest fires, though there is no sign so far of a repeat of last year’s damaging drought — and the resulting closure of parts of the river Rhine to commercial shipping. Extreme heatwaves are expected to become more frequent owing to climate change, particularly in southern Europe, where the likelihood of heatwaves is already 10 times greater than it was during pre-industrial times, according to Friederike Otto, acting director at the Environmental Change Institute at Oxford university. “Heatwaves in Europe are one of the types of extreme events where we see most clearly the impact of man-made climate change,” said Prof Otto.

Thursday 27 June 2019

BUSINESS DAY

FINANCIAL TIMES

COMPANIES & MARKETS

@ FINANCIAL TIMES LIMITED

Why are central banks fixated on inflation expectations? Two metrics in particular are attracting the attention of Fed and ECB policymakers JOE RENNISON

he European Central Bank and the US Federal Reserve have both opened the door to easing monetary policy, succumbing to fears about slowing global growth and fading inflation expectations. In particular, two metrics have received a lot of attention: European five-year five-year swaps — typically written “5y5y” — and US breakevens. But what are they? What do they tell us? And why are central banks paying them so much attention? Firstly, what is inflation? In simple terms, it’s about prices rising for goods and services. That could be how much consumers pay at the supermarket for a loaf of bread or the cost of oil for industrial companies. The effect of inflation is to reduce the purchasing power of money. Basically, goods cost more. Central bankers typically try to keep inflation low but above zero, with both the ECB and Fed targeting a rate of about 2 per cent annually. Current inflation is measured in a variety of ways. The Fed pays the most attention to the personal consumption index (PCE), tracking how much consumers pay for a range of household items. The ECB looks at the consumer price index (CPI), a similar measure that tracks price changes on a basket of goods and services. Both measures have been lagging behind the central banks’ targets lately. So why do we need these other measures of inflation? Measures that collate recent data — such as PCE and CPI — are fine for giving policymakers a sense of what inflation is like now, but they do not offer insights into the outlook. For that, investors and policymakers turn to 5y5y swaps and breakeven inflation rates. The 5y5y swap rate is a market measure of what five-year inflation expectations will be in five years’ time. It gives a window into how expectations for inflation may change in the future, which tells policymakers whether markets are convinced a central bank has the tools to keep the inflation rate within its set target. The US 10-year breakeven rate is slightly different. It measures what investors think inflation will be in teb years’ time, derived from inflation-protected government securities. If inflation erodes the value of an investment, so goes the theory, then investors want to be paid more now to account for that. This “inflation compensation” is effectively what is represented in

the breakeven rate. Why have these measures been getting so much attention? Primarily because they have dropped so precipitously. Earlier this month Mario Draghi, the ECB president, said he was taking the sharp move lower in 5y5y swaps “seriously”. The rate has fallen from 1.6 per cent at the start of the year to a low of 1.22 per cent this month. The 10-year US breakeven rate has this year dropped from 1.98 per cent in April to a low of 1.62 per cent in June. When the Fed met in May several participants commented that if inflation expectations did not move higher soon then the rate could become anchored below the Fed’s 2 per cent target. “If inflation breakevens don’t move back toward 2 per cent from here that really starts to incentive easing,” said Jon Hill, an interest rate strategist at BMO Capital Markets. “Inflation expectations matter for current inflation. You price to it today. It is concerning how low these levels have been.” Are there drawbacks to these measures of inflation expectations? Central bankers certainly prefer to focus on current conditions. Measures of expected inflation are predictions — and policymakers sometimes disagree with what the market is telling them. Furthermore, inflation expectations see-saw a lot more than actual measures of inflation. The primary driving force lately has been the ongoing trade war between the US and China, with investors fearing it could dampen global growth. After the ECB and Fed signalled earlier this month that they may be open to more accommodative policies to support markets, inflation expectations jumped. The 5y5y rate rose back up to 1.30 per cent while the 10-year US breakeven rate hit 1.78 per cent. Both measures are also susceptible to movements in the price of oil, given crude prices are a large input in how each is calculated. Rising energy prices typically correspond with rising inflation expectations, and vice versa. “The correlation between breakevens and the spot price of oil is extremely high,” said Seth Carpenter, chief US economist at UBS. “You have to tell a completely convoluted story about why the current oil price should affect the growth rate of all prices ten years from now. It doesn’t make sense. That alone means you should very much downplay breakevens, if pay attention to them at all.” www.businessday.ng

ECB president Mario Draghi, left, with US Federal Reserve chairman Jay Powell. After the ECB and Fed signalled earlier this month that they may be open to more accommodative monetary policies to support markets, inflation expectations jumped © AP

Wall Street rises as hopes remain for US/China trade deal MICHAEL HUNTER AND SIDDARTH SHRIKANTH

all Street stocks were positive on Wednesday as investors measured hopes for a breakthrough in the trade dispute between the US and China against the latest rhetoric from Washington. Presidents Donald Trump and Xi Jinping are expected to meet on the fringes of this week’s G20 summit in Osaka. Mr Trump told Fox News that it was possible the US would reach a deal with China, but additional tariffs remained an option if not. Beforehand, US Treasury Secretary Steven Mnuchin told CNBC that a deal was “90 per cent complete”. That assessment echoed remarks made in April, but it was enough to lift risk appetite, an effect that was sustained in the run-up to the New York open as Mr Trump

gave his latest interview. Wall Street’s S&P 500 rose 0.3 per cent, bouncing higher after three consecutive negative sessions. The tech-heavy Nasdaq, seen as exposed to any further tariffs, which are thought likely to hit the sector, rose 0.8 per cent. Investors continued to move out of US government debt, lifting the yield on 10-year Treasuries by 2.4 basis points to 2.0158 per cent, with the two-year yield up 3.7 bps to 1.7429 per cent. The trading pattern survived bleak US data, which pointed towards slowing economic growth. Durable goods orders for May fell 1.3 per cent month-on-month, significantly worse than the decline of 0.3 per cent forecast, stoking fears about the impact of the trade dispute on demand for products such as cars and domestic appliances. European bourses were steady having turned around from modest

declines as the US trade rhetoric improved. They were led higher by sectors exposed to the dispute. The export-heavy Xetra Dax 30 rose 0.4 per cent against a steady showing for the region-wide Stoxx 600. The index tracking industrial metals stocks rose over 3 per cent. The dollar index, which hit a three-month intraday low on Tuesday, strengthened by 0.1 per cent to 96.253. Gold’s brisk run higher cooled, with the metal shrinking back from six-year highs, down 0.8 per cent to $1,411.41. That leaves it up by over 8 per cent this month, amid demand from investors seeking protection from wider macroeconomic uncertainty. Brent crude continued to rise, with attention also on tense geopolitics in the Middle East. The international oil marker was up 1.5 per cent at $66.05, taking it up over 10 per cent from its June lows.

Foreign investment into UK falls to lowest level in six years Analysts blame Brexit for further decline in the number of projects VALENTINA ROMEI

oreign investment into the UK’s most productive industries has plunged since the 2016 Brexit referendum, official data showed, suggesting that uncertainty over future trading arrangements with the EU is stopping businesses from committing to the country. The number of foreign investment projects into the UK dropped by 14 per cent to 1,782 in the fiscal year ending March 2019, marking the lowest level in six years, according to a report published on Wednesday by the UK’s Department for International Trade. It is the second consecutive annual fall since March 2017. The data suggests that “foreign companies have become more cautious about investing in the UK due to Brexit uncertainties”, said Archer Howard, chief economic adviser at EY Item Club, a consultancy. “This may have led to the significant delaying of investment projects, at the very least, if not outright cancellation.”

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Investors have historically seen the UK as one of the most attractive destinations, providing support for economic growth, job creation and technological progress. Figures from fDi Markets, a research firm that helps the DIT compile its investment data, show that the fall in foreign investment in the UK during the past three years came as the rest of the EU experienced an increase. “The Brexit vote is undoubtedly denting FDI in the country,” said Andy Baldwin, global managing partner at EY. The DIT report also showed the fall in foreign investment had a knock on effect for employment, with a 29 per cent decrease in jobs created in the year ending in March compared with the previous year. In key sectors for the UK economy, such as financial services and automotives, the number of jobs created fell by about a third. The contraction was even larger in advanced engineering, environment and infrastructure investment, which saw job creation shrink by @Businessdayng

about 40 per cent. London remained the part of the UK that attracted the largest amount of investment. However, even the capital was hit by the decline with the number of jobs created by foreign investment falling by 14 per cent compared with March 2018 and by 28 per cent compared with 2017. EY’s annual Europe FDI attractiveness survey, released earlier this month, said that only 25 per cent of global investors saw London as one of their top three investment destinations, down from 34 per cent last year. Elsewhere the fall was even more stark. In Scotland and the Yorkshire and Humber regions the number of jobs created as a result of foreign investment more than halved in the year ending in March. “My department will continue to promote the strengths of the UK as a great inward investment destination, with an open, liberal economy, world-class talent and business friendly environment,” said Liam Fox, the international trade secretary.

Thursday 27 June 2019

BUSINESS DAY

ANALYSIS

FT US and North Korea in talks over another Trump-Kim summit South Korea optimistic Washington and Pyongyang are moving in the right direction EDWARD WHITE AND DEMETRI SEVASTOPULO

he US and North Korea have held discussions about a third summit between President Donald Trump and Supreme Leader Kim Jong Un, according to South Korean president Moon Jae-in. Mr Moon said the US and North Korea had held “behindthe-scenes talks” about a meeting between the two leaders since their February summit in Hanoi, which collapsed after both sides remained far apart over denuclearisation. He said Seoul and Pyongyang had also held talks via “diverse channels” to help facilitate ar-

the significance of the tests, which his aides said violated UN sanctions. In defending his stance, Mr Trump has also touted the fact that Pyongyang has not conducted any nuclear tests recently. Mr Trump recently wrote to Mr Kim after receiving what he called a “beautiful” letter from the North Korean leader, in one sign that relations between the two sides might be improving after four months of almost no contact. Mr Kim on Sunday said he had received a letter from Mr Trump that had “excellent content”. The first summit between the leaders, in Singapore, came after they exchanged a series of letters

ranging a third summit. The White House declined to comment. Mr Trump this week said he would meet Mr Kim “at some point”, but there has been no talk about preparations. A US official said there were no plans for Mr Trump to meet Mr Kim during his trip to Asia this week. Mr Trump will spend two days in South Korea this weekend after he attends the G20 summit in Osaka, Japan. In a written response to questions from a group of news agencies, Mr Moon said there had been “considerable headway made in the peace process on the Korean peninsula”. “The resumption of negotiations between North Korea and the United States will take it to the next level. I believe everything has now fallen into place for that to happen,” he wrote. While Mr Moon expressed optimism that the US and North Korea were moving in the right direction, talks between the US and North Korean officials had ground to a halt since the Hanoi summit. Expectations for progress declined further after Pyongyang last month tested shortrange ballistic missiles for the first time since 2017. Mr Trump has played down

over months. Yet analysts remain wary over the chances of significant near-term progress given the complexities of both unwinding the international economic sanctions regime and the dismantling of North Korea’s nuclear weapons programme. The Hanoi summit failed because North Korea proposed an incremental process whereby small steps towards denuclearisation would be rewarded with the gradual removal of sanctions. Mr Trump however insisted that any agreement should involve Pyongyang ending its entire nuclear weapons programme and giving up its existing arsenal before any relief from sanctions could be given. Most experts believe that Mr Kim would be unwilling to agree to US demands because that would mean he would lose all leverage. The CIA has also said it believes that Mr Kim has no intention of getting rid of all the elements of his nuclear programme. Mr Trump will hold a summit with Mr Moon on Sunday after both leaders attend the G20. Stephen Biegun, the US special envoy for North Korea, is scheduled to meet officials in Seoul on Thursday. www.businessday.ng

Argentina: can Fernández capitalise on Macri’s failings? The economic crisis has opened the door to a possible return to power for Cristina Fernández de Kirchner BENEDICT MANDER

o good to see you back again,” says Gustavo García, warmly embracing a young man with fresh cuts on his face and torn clothes, as he welcomes him to a drug rehabilitation centre in Puerta de Hierro, one of the grittiest slums on the edge of Buenos Aires, the Argentine capital. “You are always welcome.” The centre was set up by Father Nicolás Angelotti, the local Catholic priest better known as Padre Tano, who founded the parish two years ago, hoping to alleviate a drug epidemic which barely existed two decades ago. Puerta de Hierro, which is now overrun by drug-trafficking gangs, has been hit especially hard. “Paco is the cruellest face of marginality [caused by] many decades of neglect,” says Father Angelotti, referring to the name given to a crude form of cocaine that has taken hold in the shanty towns around the capital. “The state is absent here,” he adds, explaining that more help is needed for addicts, as well as more jobs. The failure of the state to solve the problems of the poorest Argentines — many of whom are worse off after utility tariffs were raised over the past four years — is endangering the re-election prospects of President Mauricio Macri. A currency crisis last year that forced him to seek a record $56bn bailout from the IMF was especially damaging for a president struggling to reverse a grinding recession and rocketing inflation. The centre-right leader swept to power in late 2015 promising to put an end to poverty and more than half a century of recurring economic crises. His pledges prompted some to ask whether Argentina could even return to its former glories. One of the 10 richest countries in the world a century ago, it is unique in modern history in its regression to developing country status. Although many Argentines are severely disappointed with what Mr Macri has achieved since 2015 the blame goes back further. The last 10 years are now being described as yet another “lost decade” of minimal economic growth and many query whether the next decade will be any better. “Argentina today is not a feasible economy,” says Guillermo Nielsen, an economic adviser to Alberto Fernández, Mr Macri’s main rival in October’s presidential race, pointing to “incred-

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ibly high” taxes and public spending. Mr Fernández’s running mate is the former populist president Cristina Fernández de Kirchner (no relation). She left office in 2015 amid economic chaos after a presidency marked by tub-thumping nationalism and economic interventionism. Ms Fernández — who is facing a series of corruption charges from her time in office including bribery, embezzlement and money laundering — took the electorate, and her opponents, by surprise, opting to run for vice-president and hand-picking her former cabinet chief to campaign for the top job. But few doubt that it is Ms Fernández, who remains popular with voters in places like Puerta de Hierro, is pulling the strings. “Everyone is scared to death of Cristina coming back,” says Mr Nielsen, mocking the hysteria that surrounds her campaign. He is tipped to run the economy ministry if the Fernández duo triumphs, and served as finance secretary under Néstor Kirchner, Ms Fernández’s husband and predecessor. “The government is pushing very strongly to depict what is coming as [a bunch of] very irresponsible people — as if they had behaved responsibly themselves. “Macri has inflicted an incredible loss on bondholders and shareholders,” he adds, ridiculing the issue of a 100-year bond at the height of market euphoria over Mr Macri’s reformist, “supposedly” investor-friendly government in mid-2017. The bond has since lost a quarter of its value and is trading at 73 cents to the dollar. Whoever wins the upcoming elections, “it is going to be very difficult to run this country,” says Father Angelotti, a disciple of Pope Francis I, who is said to follow closely the 34-year-old priest’s ambitious project that also includes schools, a health clinic, and a sports and recreation centre. “Argentina is in a very complicated situation, with much division and confrontation,” says Father Angelotti gravely. “We never learn.” Inaugurating a $700m underpass that connects two main highways feeding into opposite sides of central Buenos Aires in May, Mr Macri crouched down and laid an open hand on the asphalt. “This paving that I am touching is not made up, it is real,” he said. It was a less than subtle nod to the accusations of corruption that dogged the Kirchner years and which many Argentines blame for the failure to finish multiple infrastructure projects promised by the old administration. Numerous @Businessdayng

projects in her husband’s home state in Patagonia were never even started. With campaigning under way, the underpass project was also an attempt by Mr Macri to deflect attention from his failure to deliver on a 2015 campaign pledge for “zero poverty”. The poverty rate remains roughly the same as it was when he took office — around 32 per cent — although it did dip to 25.7 per cent in mid-2017 before the currency crisis struck. Some critics say he has over-promised and underdelivered. Mr Macri boasted that he had put in place “the best economic team in the last 50 years” when he came to power. It enjoyed important early successes, such as putting an end to a seemingly intractable decade-long bondholder dispute. Yet the macroeconomic statistics are disappointing: inflation is running at 57 per cent, more than double the unofficial rate in 2015, and the economy has shrunk by 4.1 per cent over the same period. In his defence, say his backers, Mr Macri inherited an economy in a dire condition. Argentina was on the brink of a balance of payments crisis, with central bank reserves running on empty; it relied on unsustainably high subsidies to keep supporters on side, creating a big fiscal deficit; and inflation was so high that the former government stopped publishing reliable statistics. The Macri administration has also been hit by misfortune. Last year it suffered the worst drought in half a century, devastating for a country that relies heavily on agricultural exports. And when investors began to withdraw funds from emerging markets after US interest rate rises last year, Argentina was hit particularly hard, given that it relies on international borrowing to keep the economy afloat. Without those two factors, the currency crisis — that halved the value of the peso last year — might have been avoided. But even those close to the Macri camp admit that the government has made mistakes. “We sold too much optimism,” says a senior official, pointing to inflation targets that aimed to bring price rises down to single digits this year. “There were serious problems of co-ordination and implementation, but the general direction was always correct.” The issue now is whether the next government can do any better. “No matter who wins, the great question is whether Argentina is ever going to grow again, after four decades of stagnation,” says Ignacio Labaqui, an analyst at Medley Global Advisors.

Thursday 27 June 2019

BUSINESS DAY

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

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POS transactions rise amid economic challenges ISAAC ESOWE

he volume of Point of Sale (POS) transactions keeps rising amid challenging political and economic environment. Over the past 5 years, the volume of POS transactions has grown at a compound annual growth rate (CAGR) of 69 per cent while the global POS terminal market is projected to grow at 8 per cent CAGR over the next 5 years. The growth in the volume of POS transaction makes the payment channel one of the active contributors to Central Bank of Nigeria’s (CBN) bid to drive a cashless economy. Global Point of Sale (POS) Market The explosion of payments in the global financial services system has unquestionably risen over time. The market is expected to cross $9.8 billion (N352.8 trillion) which is projected to grow significantly with a CAGR of about 12 per cent during the period of 2017 to 2023; thus, the market is expected to grow in volume and value of transactions respectively. Similarly, POS transactions in Nigeria rose steeply in 2018 according to the Nigeria Inter-Bank Settlement System (NIBSS) data. Interestingly, POS transaction was valued at N2.3 trillion in 2018 which was a 65 per cent increase over the preceding year of 2017. In 2017, the total POS transactions were up by 75 per cent to N1.4 trillion from N0.8 trillion in 2016. It is expected to rise to N4.69 trillion in 2019 (FY) and further increases by 104 per cent to N9.55 trillion in 2020. The volume of transaction in the period under review also improved impressively as more adoptions of the payment channel were utilized

Source: NIBSS, BRIU

for the settlement of bills and other business obligations. Excitingly, the volume of POS transaction significantly rose by 95 per cent from N146.3 million in 2017 to N285.9 million in 2018. This implies that N139.6 million worth of successful transactions were added in 2018 over those recorded in 2017. This is the highest addition when compared with preceding years: N20.8 million in 2014; N33.7 million in 2015 and N63.7 million in 2016. From the data compiled and analysed by the BusinessDay Research and Intelligence Unit (BRIU), results indicate that over the period of 5 years, the volume of POS transaction has grown in a geometrical progression. This is evidence that the figure grew from double-digit in 2015 to a triple-digit in 2017. Based on the 2019 monthly data on the volume of POS transactions as released by the NIBSS, the volume of transactions dropped by 8 per cent from N28 .16 million in January to N25.78 million in

February 2019. This decline in the transactions could be attributed to a number of factors which include – political environment, economic environment among others. The consumers became more rationale or rather conservative in their spending patterns due to the electioneering period, fear of security, instability and policies change that might impede their businesses. In March, after the electioneering period, the POS volume increased by 16 per to N29.82 million; it further increased by 12 per cent in April to N33.36 million compared to the previous month; the figure also increased but in a declining rate of 6 per cent from N33.37 million in April to N35.47 million in May. In addition, the figure is expected to rise to N37.72 million at the end of June; N40.11 million in July and N42.66 million in August 2019. Sectoral adoption of the POS Among the sectors that adopted the usage of POS, the retail sector continues to lead in terms of usage. Other sectors with high POS usage include– wholesale, fuel sta-

tion, fast food, unclassified, hotels, pharmacies, financial institutions, telecom services and telecom equipment. The foremost sector of the economy in POS usage remains retail with 86 per cent growth rate which resulted in transactions worth N73.9 million when compared to N39.56 million in 2017. But the data did not specify how much of the retail sale are e-commerce. Wholesale recorded an increase of 134 per cent from N28.73 million in 2017 to N67.4 million in 2019. The fuel stations also recorded an impressive growth of 159 per cent from N5.23

the transactions occurred although declined by 15 per cent when compared to 68 per cent growth in the previous year. Others include Abuja, Ogun, Rivers and Delta which collectively accounted for 25 per cent of adoption. Despite these impressive feats recorded in the POS payment channel in term of volume and value, as the usage grew so also the failed transactions. In 2018, POS transactions recorded 15 per cent transaction failure which was as a result of the regulatory requirements while 63 per cent of the transaction failure

Source: NIBSS, BRIU

million in 2017 to N36.6 million in 2019 as adoption continues to grow among fuel station nationwide. Fast food POS transactions were up by 67 per cent from N17.63 million in 2017 to N29.6 million; hotels usage rate increased by 31 per cent from N7.01 million in 2017 to N9.2 million; pharmacies rose by 77 per cent from N3.22 million in 2017 to N5.7 million 2018; financial institutions increased by 194 per cent in terms of usage from N1.19 million to N3.5 million in 2018. POS adoption by location Lagos, the 5th largest economy in Africa continues to represent the biggest POS market across the federation. In 2018, 53 per cent of

Source: NIBSS, BRIU www.businessday.ng

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could be directly or indirectly attributed to customers’ errors – errors like insufficient fund and wrong selection of account options. However, without these errors the industry failure rate would have been dropped drastically to 5 per cent based on the POS transactions. Notwithstanding, there has been a massive fundamental shift taking place across all the payments platforms which is driven by partly public and private sector efforts to integrate the banking public into the formal economic fold. Also, it could be attributed to a high level of mobile phone penetration which is connecting the bankable public to vital information and applicationbased service.

Thursday 27 June 2019

BUSINESS DAY

Corporate Social Impact

Onuwa Lucky Joseph (08023314782) Editor.

Jane Maduegbuna’s Afrinolly:

Giving creative ideas room to thrive sustainably ONUWA LUCKY JOSEPH

he Afrinolly office is set up is like a big communal homestead with many rooms. Some of these rooms are big walk-through settings with well-appointed seating arrangements for those who appreciate ample space for the creative exploits they can help engender. Some rooms are smaller and therefore a bit more private. There is the training room, the theatre room, and then the somewhat restricted places e.g. the sound recording and editing suites, etc. for which the curious wanderer would require a pass, sort of, to access. The place is a creative person’s idea of paradise. A slew of lounge chairs at different spots to enable that seeming leisurely but mentally grueling period of ideation and contemplation, and just before execution when a more upright, (literally), kind of seating position is required. The place has the languid ease and feel of the Commodores 1977 hit track Easy (as Sunday Morning). Okay, maybe because I was there on a weekend first and thereafter on a public holiday. But don’t be deceived: the look and feel is deliberate: to create the ambience desired for achievement of predetermined results. Afrinolly is a creative hub, and by definition hubs are about interaction and movements, about talents using the hub space, physical or virtual, to co-create. It’s a synergistic environment for maximized output. And with regards to management, it’s not your typical top/down place where everyone ‘knows their place’. Rather, there is structured fluidity and an overriding sense of purpose that requires the contribution of everyone involved in whatever project at hand but who may not necessarily be on the team for the next project. Afrinolly, in view of its growing clout in the industry and its stated reason for being has become the place where young creatives go to ‘receive sense’, as we say in these parts. The days of the ultra creative but freewheeling artist destined for poverty are over. Afrinolly has made it its business to give structure and business smarts to a new generation of creatives so they don’t end up a liability to society when they should be some of society’s best assets. In doing this, the company has “supported several creative entrepreneurs by incubating their projects and we have also facilitated the rebranding of those who own their own products/businesses”. We just quoted Jane Maduegbuna, by the way, the Executive Director and acknowledged Mother Hen of Afrinolly. You’ll be hearing a lot from her in this write-up. Jane, the warm, enthusiastic and highly engaging woman who is the soul of Afrinolly is a lawyer by training, who, together with her husband Chike, founded Afrinolly and have pivoted it over time from one focus area to another, their eyes on the opportunities in the environment and the value that can be added by diligent application and collaboration. The company’s clear focus on producing wellrounded creatives who combine business-savvy with advanced digital marketing skills is evident in its partnerships with global brands including Facebook and Henley Business School. To hear Jane say it, “A large crop of journalists, digital storytellers (photographers, visual artists, writers, etc.) and content creators have benefited from the various initiatives under our partnership with social media giant, Facebook.” Beyond building capacity in the creative industry, Afrinolly has also been able to create a system whereby young content creators within the hub can conceptualize and produce behavioral/ social change contents. Some of these contents are developed in partnership with multinationals like Ford Foundation and MacArthur Foundation who

know firsthand the power of the media as a tool to address certain social issues and ills. Jane also reveals with an understandable sense of accomplishment that “Afrinolly has become the go-to establishment for companies – whether they are governmental institutions, non-governmental organisations or private sector companies - who are interested in advancing our creative economy.” They know they can count on the expertise Afrinolly provides; a prime example of this being “our International exchange and knowledge transfer programs which commenced in 2018, with Film and Business Schools in Europe. The first set of student will be attending the Film Akademie Film School in Germany, for the 1st batch of Nigerian students.” Applause is in order, we think. But I jumped ahead of myself. It was the ambience that had me spellbound in the beginning before I got caught up in the awesome produce from the place. We’ll go back to talking with Jane in a bit, but as I sip my coffee now I remember how especially enamored I was with the percolator that had its own special perch in the Afrinolly office and which had this unerring habit of gushing good coffee on demand. I’m hoping that someday, maybe while working on some carefully contrived collaborative project, I can have the right excuse for unhindered access to the pot. Hey, don’t blame me. There’s a feel-at-home sensation that the creature comforts, all of which are, by design, authentically African, stimulate. Beautiful, bright hued fabric runs through the settees, and is set in eye catching frames all through the facility. Those, in and by themselves serve to capture the creative essence of our multicoloured culture which dates back to the time before time was a chronological concept. Like Jane would say, “We try to showcase Nigeria/Africa in a great and formidable light. Some young folks are milling about, as artists are wont to do, surreptitiously trying for answers that are www.businessday.ng

challenges within our ecosystem. Besides our in-house initiatives, we have delivered projects in partnership with many local and international organisations. One of such is the Cinema4change project, supported by Ford Foundation, where some young filmmakers were trained and produced short films around diverse social themes. In addition to that is our series content now in postproduction on Social justice theme in partnership with the MacArthur Foundation. Also, our partnership with social media giant, Facebook, to improve creativity and storytelling skills, manage their brand and Increase reach; through various initiatives targeted at content creators/creative entrepreneurs. We had Naija Story Builders and then Facebook for Creators/ Journalist for social media users. We also have the Lagos State Employability, a very important program where we equipped a very large pool of young people with various skills needed within the production/social media value chain. The most recent of these transnational partnerships is the hub’s collaboration with British Council for the Nigeria Creative Enterprise (Support) programme, which involved training, consulting and incubating businesses of up and coming film and media entrepreneurs. Jane Maduegbuna

hardly ever straight lined to the point. It sometimes takes all of that meandering and back and forth to make bulls eye, a target that the company has made many times. So let’s hear it from Jane Maduegbuna: Reeling out the success stories It started from back when Afrinolly was known as FansConnectOnline Limited, a Digital Agency that won 1st place at the Google Android Developers Challenge in 2011, for Best Entertainment App. Before then, we had participated in and won the Samsung Developers Challenge with ‘Naija Places’. Afrinolly app was a product of R&D within the hub (we’ve always tasked ourselves with providing solutions – via technology, to help solve or mitigate

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We are for content creators; not just the film industry We cater to other creative entrepreneurs outside the mediatech sphere. For example, we mentored Adire Lounge (a fabric designer & fashion entrepreneur) during the 2018 Ayada Lab Programme, and we’ve have also had collaborations with Graphic Designers (Bolanle Banwo) and animators (now currently undergoing incubation at the hub). We’ve also left our mark in literature: alongside Goethe Institut, Saraba Magazine, Bakwa Magazine and few others, we supported the creation of ‘Limbe to Lagos’, a collection of non-fiction works from Nigeria and Cameroon. In essence, Afrinolly Creative Hub is not limited to video or film, our hub is for content creators, which includes filmmakers, musicians, animators, visual artists, spoken word artists and entrepreneurs in the media technology space.

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Thursday 27 June 2019

BUSINESS DAY

Corporate Social Impact ability? Is it an issue in your line of business? It is a big issue in our line of business. In developed economies, government actively works with the creative hubs, to stimulate the creative economy. You work closely with the Nigerian film industry. How is Afrinolly adding value to it? Afrinolly adds value to the film industry by engendering quality content production and capacitybuilding for entrepreneurs. We improve the film industry’s value chain by providing skill acquisition and development programmes, plus we also offer post-production services to fine-tune productions. The hub has served as the think-tank and rendezvous for Nigeria film professionals and their counterparts from around the world, who visit from time to time.

These media tech entrepreneurs include editors, visual effects artists, colorists and finishing artists, and web developers, in short all arts and artists within the creative spectrum.

support from multinationals have helped defray the costs of sustainably investing in the creative economy. Why Collaboration and not Competition? There is always a time to collaborate and a time to compete. Both serve different purposes and are needed to drive innovation, creativity and growth. We play in an industry that is particularly driven by collaborations, which will always be a win-win situation for all parties involved and which will also help develop sustainability and drive up and advance the industry’s profile. Life by nature encourages collaboration, collaboration among highly independent and effective people who are capable of achieving more with shared resources over a short period.

Some highlights of the journey so far A major highlight is the Afrinolly Short Film Competition; a first of its kind competition that empowered aspiring African filmmakers by offering cash prizes totaling $100,000. The excitement the Award night generated for these young people is one of our major highpoints. Another would be the periods Mark Zuckerberg, Facebook CEO; and Darren Walker, President of the Ford Foundation visited the Afrinolly Creative Hub and both gave a riveting endorsement to us – Now these were truly epic! What it feels like to work with and mentor young people Working with a younger generation of creatives has been an impactful experience for us. They are usually hungry for success, eager to learn, fresh and fertile minds and their passion is usually unparalleled. Seeing the world they are willing to create and the ideas they are birthing is always a pleasure and an inspiration. The hub gives them the opportunity to collaborate/connect with their peers, thereby encouraging ideas exchanges, and inspiring heightened levels of creativity within the hub space. Afrinolly gives these creative ideas an enabling environment to thrive. The relationship has been very reciprocal and we’ve been able to share experiences and expertise that has helped advance the cause of the creative ecosystem.

What Africa’s is competitive advantage? Yes, Africa still has a competitive advantage - especially in the cultural sector. This is because we have not yet lost all of our cultural values, stories and identity. We must quickly explore these cultures and tell our stories around them, before others exploit them as they have tried to do with some stories. Our narratives can only be better served when told by us. Who have been your biggest champions so far? Within the creative Industry, Femi Odugbemi is our biggest champion and evangelist.

What’s the Social Enterprise component of your business? We are driven to create lasting social impact and have developed a business model to suit these intents. Partnerships and

Did you envision yourself here when you started? Every entrepreneur dreams big. They envision greatness for their business and product. I mean, why go

into business if you can’t conceive something so much more and bigger than you? However, life teaches you to season it with reality. But yes, we have envisioned our business reaching a grand master scale. Nevertheless, we know without a doubt that GRACE has brought us thus far – truth be told. How did you snag the Mark Zuckerberg visit to your office in Lagos? I think, like every place he visited during his African tour, his team had thoroughly researched every company: Who is doing what? Where? Who is providing support for young people in media and technology? Who is organizing or trying to organize the ecosystem. Above all, we are blessed because they acknowledged and endorsed the work we do by visiting our office and by meeting with our team. Which global business would you want to be like? Before we’d set-up the Afrinolly Creative Hub a few years ago, we visited the YouTube Space in London. While there, we realised what a hub for creators could do and could be; as well as how we could play a crucial role in the future of the creative economy, by incubating products, enhancing collaboration, service innovations, experimenting and creating new ways of working and thinking, boosting economic value and being an advocate and a voice for the sector. There were YouTube Spaces in just 4 cities in the world then, but today they have in 10 cities around the world. It’s only logical for us to want to be like them. How do you engage with the issue of sustain-

You straddle the creative and entertainment industry. Which would you rather be more closely identified with? Why choose? We live in a time where both sectors have successfully intersected. Do you see Afrinolly someday playing bigger in entertainment? Yes, I do. We are always ready to contribute to the development of our entertainment sector and because we are open to collaboration, we believe that achieving bigger things with others is quite possible. People say “Business is business”. Is that true? There’s always a human side to business. How has your law background facilitated your business growth? I must say, it has helped a great deal. Knowing where your right ends and where others begin makes life and business relations more fluid and boundaries appropriately set. You and your husband are partners. Is that a business model you would advise others to go for? We complement each other. Furthermore, we were business partners before we got married. This business model works really well for us. It involves high level of transparency in and outside the workplace. Everyone will have to decide for themselves what works for them. You know the saying, “To each his/her own”. • Do you consider yourself a diversity champion? How is that playing out at Afrinolly? Everything I have said prior to this attests to who we are and what our beliefs are hinged upon. We believe in the power of diversity and collaboration.

From Peter Bamkole’s Wall on LinkedIn R

ecently, I was appointed the Chairman of the Advisory Board of International Breweries Foundation and today we launched hashtag#KickStart2019 – a Social Investment Initiative that focuses on the capacity building, seed funding and a year-long support for youth run businesses. Now in its 4th season, apart from the capacity building and post training support, the sum of N150m has been set aside as seed funding to be given to deserving winners. Can you imagine 10 Large Corporates coming together over the next 10 years to provide an even BIGGER intervention? Can you imagine the impact that would create and how the Youth unemployment narrative would change? While International Breweries have several brands, the hashtag#Hero and hashtag#Trophy brands fund the hashtag#KickStart Program which has now gone national from its erstwhile regional focus. Two of the past beneficiaries gave testimonies of how hashtag#Kickstart truly kicked their businesses to success, with revenues reaching 10X in 3years and Job creation of 17 within the same period; but it was their “Paying forward” that caught my attention.

Michael Dell (Net worth: $35.2 billion) “Your generation has already made it clear that you’re committed to fairness and justice for all. You are as engaged as any group of graduates who ever walked the 40 acres. You’re going to demand that technology not only do new things, but do the right things. And you see your role in making that so. You have the drive to align your work with a greater purpose. You have the ambition not only to succeed, but to serve. This, you might say, is humanity’s source code.” –The University of Texas at Austin

Jonathan Gray

Michael Dell

So it dawned on me that “While every HERO deserves a TROPHY, the Grand TROPHY is kept for the HERO that makes more HEROs from self!” Watch out! Application opens Monday

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June 24, 2019. Who Spoke at Your Graduation? Do You Remember? (2)

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Jonathan Gray (Net worth: $3.2 billion) “Find the right partner when you can. Life is often unforgiving; having someone you love to share it with is invaluable. I know today it is hip to swipe left and right, but there is nothing like having that perfect partner to make everything better. Hold tight if you find them.” –The Wharton School at University of Pennsylvania, MBA

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industry Insight

BUSINESS DAY Thursday 27 June 2019 www.businessday.ng

Transforming manufacturing value chain to achieve economic prosperity Odinaka Anudu, Joseph Maurice Ogu & Gbemi Faminu

manufacturing value chain looks at the link between input and output. It starts from the raw materials process and ends when the output reaches the final consumer. In Nigeria today, there is a haphazard link between the input and the output processes. Many manufacturers struggle to acquire raw materials in the right quantity locally owing to issues around availability and quality. Due to lack of funds, low technology adaptability and absence of hi-tech machinery, farmers do not often meet the quantity and quality requirements of manufacturers, especially multinationals. For instance, Nigeria is the biggest producer of cassava in the world but cassava starch is rarely used by manufacturers. The reason is that starch from smallholder farmers is often not acceptable to many companies owing to quality issues. In fact, producing cassava starch is expensive for smallholder farmers and processors because equipment cost is high. Yet, cassava starch has alternatives that can be imported. Even when manufacturers embark on backward integration to get raw materials locally, issues around land disputes, insurgency, herdsmen onslaught and high cost of agricultural inputs ( seeds, and fertilizers, among others) make the entire exercise very expensive. This is one reason why manufacturers are among the biggest importers—theirs are, of course, raw materials. For cement, ceramics and glass makers whose inputs are solid minerals, inputs like limestone and gypsum, among others, are readily available, but they are not always there in the right quantity and quality. It is true that no country gets all of its raw materials locally, but it is also true that in a country where local currency and purchasing power of consumers are getting weaker, manufacturers would do well to get its inputs locally. Constant scramble for foreign exchange further weakens the Naira and creates jobs in countries where raw materials are brought in from. Experts believe that many more manufacturers must fund and partner local farmers. Nigerian Breweries has done well by supporting Psaltry International to produce high quality sorghum and cassava. Nestlé Nigeria is also doing well in this area. By providing the necessary environment for farmers to thrive, companies can get their inputs cheaper while leveraging the expertise of local farmers. Moreover, experts say the Nigerian government needs to attract investors to explore the solid minerals

still lying fallow. One key reason why raw materials have low quality is the seed type. Research institutes in Nigeria struggle to come up with good seeds and findings regularly owing to poor funding. Consequently, Nigeria’s smallholder farmers are yet to make significant increase on their yield per hectare as the nation still records the lowest in this area among its peers. For tomatoes, the average yield per hectare in Nigeria is 7 metric tons (MT); Kenya’s average yield for the crop is 20MT, tomato yield in Ghana is 8MT, and South Africa’s average yield for the crop is 76MT, according to the Food and Agricultural Organisation (FOA)’s 2017 data. Similarly, for maize – which is the most consumed grain on the continent— Nigeria’s yield per hectare is 1.6 MT on the average despite being the second largest producer of the crop. Kenya and Ghana have same average yield of 2MT per hectare while South Africa’s average yield is 6MT per hectare. For potato, which is the best rounded and nutrient root in all of Africa, Nigeria’s yield per hectare for the crop is 3.7 metric tons (MT) per hectare. Kenya’s average is 15.5MT and South Africa’s average yield for the crop is 38.8MT. Nigeria’s average yield per hectare for rice paddy, which is the most consumed staple in the country, is 2MT, while Kenya, South Africa and Ghana have same average yield per hectare of 3MT. Analysts want improved funding of agric research institutes and exposure of farmers to modern best practices in crop planting. The country must also

checkmate the type of seeds imported, especially from Asia, as they are often cheap but substandard, experts say. Logistics is also a critical issue in the value chain. Importing inputs and taking them to the factory is a big issue today. The state of Apapa and Tin Can ports in Lagos leaves much to be desired. Businesses lose billions every day in Apapa where the federal government makes over N10 billion each day. “Of particular concern and importance to us (MAN) are the challenges we face in moving our raw materials and goods to and from the ports,” Seleem Adegunwa, chairman, Manufacturers Association of Nigeria (MAN), Ogun State chapter, said at a recent CEOs business luncheon at Agbara, Ogun State. He said that the resultant effect is that the production costs of members have increased tremendously. He added that if the trend is not checked by the relevant government agencies, it could result in collapse of more factories and businesses, noting that some factories and businesses have already shutdown their operations and relocated to neighbouring countries. Solving this is not a rocket science as Nigeria has the capacity to develop other ports across the country. Generally, Nigerian roads are bad and apart from Abuja-Kaduna track, railways are almost non-existent at the moment. It is said that it is cheaper to move goods from Lagos to Dubai (Nigeria to Asia) than move them from Adamawa to Lagos (both in Nigeria). At the factory, energy is provided by the manufacturers themselves at very

high costs. Expenditure on alternative energy sources by members of MAN in 2018 was N93.1 billion, according to the association’s economic review. Manufacturers believe that the country will make headway only when energy is cheap and regular. Funding is also a crucial issue. Nigeria’s benchmark interest rate is among the highest in Africa at 13.5 percent. Ethiopia’s is 7 percent; Kenya is 9 percent; South Africa is 6.75 percent; Zambia is 10.25 percent, and Cameroon is 4.25 percent. Similarly, Rwanda is 5 percent; Mauritius, 3.5 percent; Algeria is 8 percent, and Senegal is 4.5 percent. Manufacturers are asking the Federal Government to recapitalise especially the Bank of Industry, which reliably provides single-digit funding to them. Doing this, they say, will increase lending to the real sector. Manufacturers’ production cost is also high, and they sell to a population that is majorly poor. Nigeria has almost 100 million people living in extreme poverty and purchasing power of even the middleclass has been on the downward slope since economic recession of 2016. Analysts believe Nigeria must begin to think less socialist by chanelling resources to areas that boost human development index while removing petrol subsidy and allowing the market mechanism to determine electricity charges. Resources must be channeled to infrastructure, education, and health. More so, Nigeria must harmonise multiple regulatory agencies and deregulate the foreign exchange market to attract foreign capital and boost employment.

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